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Executive management is responsible for the Company’s enterprise risk management program and regularly considers cybersecurity risks alongside other operational, financial, and strategic risks. Cybersecurity risks are assessed for potential materiality and are incorporated into management decision-making where appropriate. We maintain a structured and risk-based process for identifying, assessing, and managing material risks arising from cybersecurity threats as part of our broader enterprise risk management framework. Our cybersecurity risk management activities are integrated into the Company’s overall risk management processes and are designed to address prevention, detection, response, and recovery. We monitor security industry developments and global threat trends on an ongoing basis. Cybersecurity risk management and mitigation are overseen by dedicated privacy, safety, and security professionals, including our Information Security & Quality Manager, who has primary responsibility for overseeing cybersecurity operations. Our cybersecurity program is supported by both internal resources and external service providers with relevant expertise across multiple industries. Executive management is responsible for the Company’s enterprise risk management program and regularly considers cybersecurity risks alongside other operational, financial, and strategic risks. Cybersecurity risks are assessed for potential materiality and are incorporated into management decision-making where appropriate. We maintain a structured and risk-based process for identifying, assessing, and managing material risks arising from cybersecurity threats as part of our broader enterprise risk management framework. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File No. 001-35526

NEONODE INC.

(Exact name of Registrant as specified in its charter)

Delaware

94-1517641

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer
identification number)

Karlavägen 100, 115 26 Stockholm, Sweden		N/A
(Address of principal executive offices and zip code)		(ZIP code)

+46 (0) 70 29 58 519

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.001 per share		NEON		The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price for the registrant’s common stock on June 30, 2025 (the last business day of the registrant’s most recently completed second fiscal quarter) as reported on the Nasdaq Stock Market, was $334,359,366.

The number of shares of the registrant’s common stock outstanding as of March 16, 2026 was 16,782,922.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the registrant’s 2026 Annual Meeting of Stockholders are incorporated by reference as set forth in Part III of this Annual Report. The registrant intends to file such definitive proxy statement with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2025.

Table of Contents

NEONODE INC.

2025 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

	SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS	ii

PART I

Item 1.	BUSINESS	1
Item 1A.	RISK FACTORS	6
Item 1B.	UNRESOLVED STAFF COMMENTS	14
Item 1C.	CYBERSECURITY	14
Item 2.	PROPERTIES	15
Item 3.	LEGAL PROCEEDINGS	15
Item 4.	MINE SAFETY DISCLOSURES	15

PART II

Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	16
Item 6.	[RESERVED]	16
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	23
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	F-1
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	24
Item 9A.	CONTROLS AND PROCEDURES	24
Item 9B.	OTHER INFORMATION	25
Item 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	25

PART III

Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	26
Item 11.	EXECUTIVE COMPENSATION	26
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	26
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	26
Item 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	26

PART IV

Item 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	27
Item 16.	FORM 10-K SUMMARY	27
	SIGNATURES	28

Table of Contents

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report”) 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. For example, statements in this Annual Report regarding our plans, strategy and focus areas are forward-looking statements. You can identify some forward-looking statements by the use of words such as “believe,” “anticipate,” “expect,” “intend,” “goal,” “plan,” 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 our history of losses since inception, our dependence on a limited number of customers, our reliance on our customers’ ability to design, manufacture and sell products that incorporate our touch technology, the length of a product development and release cycle, our and our customers’ reliance on component suppliers, the difficulty in verifying royalty amounts owed to us, our ability to remain competitive in response to new technologies, our dependence on key members of our management and development team, the costs to defend, as well as risks of losing, patents and intellectual property rights, our ability to obtain adequate capital to fund future operations, and general economic conditions, including inflation, or other effects related to future pandemics or epidemics, or geopolitical conflicts such as the ongoing war in Ukraine or the Gaza Strip. 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 “Item 1A. Risk Factors” and elsewhere in this Annual Report, and in our publicly available filings with the Securities and Exchange Commission. Forward-looking statements reflect our analysis only as of the date of this Annual Report. 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.

Table of Contents

PART I

Neonode Inc., collectively with its subsidiaries, is referred to in this Annual Report as “Neonode”, “we”, “us”, “our”, “registrant”, or “Company”.

We use Neonode, our logo, zForce, MultiSensing and other marks as trademarks. This Annual Report contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Annual Report, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names.

ITEM 1. BUSINESS

About Us

Neonode provides software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams from cameras and other types of imagers. We base our machine perception solutions on our MultiSensing® technology platform. We market and sell our solutions to customers mainly in the automotive market. However, our solution can also be used in many other markets, and we plan to expand our solutions into new markets in the future.

Neonode also provides advanced optical sensing solutions for touch, contactless touch, and gesture sensing using our zForce® technology platform. In 2010, we began licensing to Original Equipment Manufacturers (“OEMs”) and automotive Tier 1 suppliers who embed our technology into products they develop, manufacture, and sell. Since 2010, our licensing customers have sold over 95 million products that feature our technology. In October 2017, we augmented our licensing business and began manufacturing and shipping touch sensor modules (“TSMs”) that incorporate our patented technology. On December 12, 2023, we announced a new, sharpened strategy with full focus on the licensing business. Consequently, we phased out the TSM product business during 2024 through licensing of the TSM technology to strategic partners and in parallel we sold parts of the remaining TSMs. The phase out of our TSM product business meets the criteria to be reported as discontinued operations. Refer to Note 2 of Notes to the Consolidated Financial Statements for additional discussion of discontinued operations. All following information presents continuing operations. In September 2025, we made the strategic decision to transition the zForce platform into maintenance mode. We are no longer selling the zForce technology to new customers but will continue supporting existing customers in various markets and segments such as office equipment, automotive, industrial automation, medical, military, and avionics.

Licensing

We license our MultiSensing and zForce technology to OEMs and automotive Tier 1 suppliers who embed our technology into products that they develop, manufacture and sell. Since 2010, our licensing customers have sold over 95 million devices that use our patented technology.

As of December 31, 2025, we had 36 valid technology license agreements with global OEMs, Original Design Manufacturers ("ODMs") and automotive Tier 1 suppliers.

Our licensing customer base is primarily in the automotive and printer segments. Nine of our licensing customers are currently shipping products that embed our technology. We anticipate current customers will continue to ship products with our technology in 2026 and in future years. We also expect to expand our customer base with a number of new customers who will be looking to ship new products incorporating our MultiSensing technologies as they complete final product development and release cycles. We typically earn our license fees on a per unit basis when our customers ship products using our technology, but in the future, we may use other business models as well.

Table of Contents

Non-recurring Engineering Services

We also offer non-recurring engineering (“NRE”) services related to application development linked to our technology platform on a flat rate or hourly rate basis.

Typically, our licensing customers require engineering support during the development and initial manufacturing phase for their products using our technology.

Strategy and Focus Areas

Our customers use machine perception technologies to grow their businesses, drive efficiencies, and seek competitive advantages. Our strategy is to deliver value-adding human-machine interaction (“HMI”) and machine perception solutions that enable our customers to achieve these targets. We offer specialized NRE services related to the integration of our solutions into customer systems and products to ensure that optimal functionality and performance is achieved.

With the strategic decision in September 2025 to transition the zForce platform into maintenance mode, we are no longer selling the zForce technology to new customers. We instead aim to capture a significant share of the growing automotive driver and in-cabin monitoring market by developing our machine perception business. We are innovators in the HMI and machine perception areas and our goal is to introduce next-generation products in these areas that offer better price, performance, and architectural advantages compared to our current offers and those of our competitors. We intend to execute on this strategy through portfolio transformation, internal innovation, and co-development of products with our customers and the building of strategic partnerships with other technology companies.

Markets

Automotive

The automotive value chain consists of OEMs (vehicle manufacturers) and tiered suppliers (Tier 1 system suppliers, Tier 2 component suppliers and etc.). In this market, we mainly act as a Tier 2 technology provider to Tier 1 suppliers who license our technology and deliver different types of systems to OEMs (e.g. our driver and in-cabin monitoring solution or our touch technology). In some cases, we are also engaged directly by OEMs, following the trend that OEMs are insourcing more and more of their systems and software development.

During 2025 and 2024, our automotive customers shipped approximately 0.3 million and 0.5 million products with our technology, respectively. Accumulated, since 2014, our automotive customers have shipped approximately 8.8 million products featuring our technology.

Printers and Office Equipment

Multi-function printers typically feature touch displays for user interaction with feature-rich menus and settings. We have operational license agreements with three of the leading global printers and office equipment OEMs. During 2025 and 2024, our customers shipped approximately 1.7 million and 2.4 million printers using our touch technology, respectively, and since mid-2014 they have shipped approximately 58.9 million printers using our touch technology.

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Amusement

Following the announcement that Nexty Electronics has selected Neonode’s TSM technology for sensor development and manufacturing of the next-generation slot machines for a leading manufacturer in Japan’s amusement market, we see further potential to deliver our technology to companies in the Japanese amusement market as well as in other markets that desire high quality, cost-effective touch functionality on large displays and surfaces.

Holographic Interaction

Using our TSM technology to facilitate interaction with a hologram allows us to create immersive experiences with a “wow factor” in the infotainment sector, e.g. museums, receptions, AI avatars and etc. We also see an increasing potential for surgical planning and education, enabling virtual explorations and interactive learning.

New Business Development

Our strategy process ensures continuous evaluation of the market opportunities we are pursuing. During the past year we identified a new potential vertical segment to pursue, which is the automated self-service check-out systems within retail. If we see, after we complete the evaluation of the full potential, evidence of market pull, this segment may become an important new growth bet.

Customers

Our customers are primarily located in North America, Europe and Asia.

As of December 31, 2025, four of our customers represented approximately 95.4% of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2024, four of our customers represented approximately 80.9% of our consolidated accounts receivable and unbilled revenues.

Customers who accounted for 10% or more of our revenues during the year ended December 31, 2025 are as follows.

●	Seiko Epson – 34.3%

●	Alps Alpine – 19.4%

●	Hewlett-Packard – 19.0%

●	Commercial Vehicle OEM – 14.6%

Customers who accounted for 10% or more of our revenues during the year ended December 31, 2024 are as follows.

●	Seiko Epson – 27.3%

●	Alps Alpine – 20.7%

●	Hewlett-Packard – 20.4%

●	Commercial Vehicle OEM – 11.8%

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Customers by Market

The following table presents our revenues by market as a percentage of total revenues:

	Years ended December 31,
	2025			2024
Net license revenues from amusement		6.7	%		4.8	%
Net license revenues from automotive		26.0	%		30.5	%
Net license revenues from consumer electronics		55.7	%		51.2	%
Net non-recurring engineering services revenues		11.6	%		13.5	%
		100.0	%		100.0	%

Geographical Data

The following table presents our revenues by geographic region as a percentage of total revenues:

	Years ended December 31,
	2025			2024
Japan		62.0	%		55.8	%
Sweden		14.5	%		11.7	%
Germany		2.0	%		3.7	%
China		0.8	%		3.1	%
South Korea		-	%		1.0	%
Other		0.1	%		0.2	%
		79.4	%		75.5	%
United States		20.6	%		24.5	%
Total		100.0	%		100.0	%

The following table presents our total assets by geographic region (in thousands):

	December 31,
	2025		2024
United States	$	25,324	$	16,951
Sweden		1,555		1,406
Asia		6		24
Total	$	26,885	$	18,381

Competition

There are various driver and in-cabin monitoring solutions that compete with our MultiSensing technology. Our competitors among Tier 2 software providers include SmartEye, Cipia, Xperi, Seeing Machines, PUX and Jungo.

There are various technologies for touch and gesture control solutions available that compete with our optical zForce technology. The competing technologies have differing profiles such as performance, power consumption, level of maturity and cost. For touch solutions, the main competition comes from resistive and capacitive touch solutions. For touch displays, projective capacitive technology is the prevalent standard in mobile phones and tablets and therefore an important competing technology to ours that many suppliers offer with price being a major differentiation point. For gesture control the main competition comes from other optical technologies and from both ultrasonic and radar technologies. Examples of competitors active in the area of gesture sensing include Ultraleap and suppliers of radar and ultrasonic sensor chips, for instance Texas Instruments and Acconeer. Detection range, resolution and cost are the main differentiators.

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Intellectual Property

We rely on a combination of intellectual property laws and contractual provisions to establish and protect the proprietary rights in our technology. The number of our issued and pending patents and patents filed in each jurisdiction as of December 31, 2025 is set forth in the following table:

Jurisdiction	No. of Reg. Designs		No. of Issued Patents		No. of Patents Pending
United States		5		40		5
Europe		-		6		3
Japan		-		5		0
China		-		2		1
South Korea		-		3		0
Patent Convention Treaty	Not Applicable		Not Applicable			0
Total:		5		56		9

Our patents cover optical blocking technologies for touchscreens and head-up displays, optical reflective technologies for contactless interaction with kiosks and elevators, as well as machine perception solutions for driver and in-cabin monitoring.

Our software may also be protected by copyright laws in most countries, including Sweden and the European Union, if the software is deemed new and original. Protection can be claimed from the date of creation.

In 2025 we filed one new patent application and had three patent grants issued; two patents lapsed, twenty-four patents and five patent applications were abandoned.

The duration of our patent protection for utility patents is generally 20 years. The duration of our patent protection for design patents varies throughout the world between 10 and 25 years, depending on the jurisdiction. We believe the duration of our intellectual property rights is adequate relative to the expected lives of our products.

We also protect and promote our brand by registering trademarks in key markets around the world. Our trademarks include: Neonode (27 registrations, 1 pending application), the Neonode logo (8 registrations), zForce (9 registrations), and MultiSensing (3 registrations).

Research and Development

In fiscal years 2025 and 2024, we incurred $3.8 million and $3.4 million, respectively, on research and development activities. Our research and development is performed predominantly in-house, but may also be performed in collaboration with external partners and specialists.

Human Capital

We recognize that the development, attraction and retention of employees is critical to our success. For this reason, we strive to provide a positive work culture for our employees.

We focus on skills enhancement, leadership development, innovation excellence and professional growth throughout our employees’ careers. Our leadership program provides leadership training to our high-potential emerging leaders.

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We provide competitive market compensation aligned with company performance. We provide a comprehensive benefits package to our employees, including healthcare and retirement plans. We work proactively against all discrimination, harassment and other abusive behavior to ensure the work environment at Neonode is good and healthy. We believe that a diverse workforce provides different viewpoints on business strategy, risk and innovation.

We have adopted a hybrid workplace and while we encourage employees to work from the office as much as possible, employees are permitted to work part time from home.

As of December 31, 2025, we had 39 employees (including 35 full-time employees) and 6 consultants. We have employees and/or consultants located in the United States, Sweden, Japan and Taiwan. None of our employees are represented by a labor union. We have experienced no work stoppages. We believe our employee relations are positive.

Additional Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and we file or furnish reports, proxy statements, and other information with the Securities and Exchange Commission (“SEC”). The reports and other information filed by us with the SEC are available free of charge on the SEC’s website at www.sec.gov.

Our website is www.neonode.com. We make available free of charge through our website all of our filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K as well as Form 3, Form 4, and Form 5 reports for our directors, officers, and principal stockholders, together with amendments to those reports filed or furnished pursuant to Sections 13(a), 15(d), or 16 under the Exchange Act. These reports are available as soon as reasonably practicable after their electronic filing or furnishing with the SEC. Our website also includes corporate governance information, such as our Code of Business Conduct (including a Code of Ethics for the Chief Executive Officer and Senior Financial Officers) and our Board of Directors’ Committee Charters. The information contained on our website is not a part of, nor is it incorporated by reference into, this Annual Report.

ITEM 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk. Before deciding to purchase, hold, or sell our common stock, you should consider carefully the risks described below in addition to the cautionary statements and risks described elsewhere in this Annual Report and in our other filings with the SEC, including subsequent reports on Forms 10-Q and 8-K. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of these known or unknown risks or uncertainties actually occur, our business, financial condition, results of operations or cash flows could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment.

Risks Related to Our Business

We have had a history of losses and may require additional capital to fund our operations, which may not be available to us on commercially attractive terms or at all.

We have experienced substantial net losses in each fiscal period since our inception, except for fiscal year 2025, in which we recorded a gain related to a patent assignment. These net losses have resulted from a lack of substantial revenues and the significant costs incurred in the development and commercial acceptance of our technologies. Our ability to continue as a going concern is dependent on our ability to implement our business plan. If our operations do not become cash flow positive, we may be forced to seek sources of capital to continue operations. 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 when needed on acceptable terms, or at all, we may be unable to adequately fund our business plan, which could have a negative effect on our business, results of operations, and financial condition.

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We may, in the short and long-term, seek to raise capital through the issuance of equity securities or through other financing sources. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may include financial and other covenants that could restrict our use of the proceeds from such financing or impose other business and financial restrictions on us. In addition, we may consider alternative approaches such as licensing, joint ventures, or partnership arrangements to provide long-term capital.

We are dependent on a limited number of customers.

Our licensing revenues for the year ended December 31, 2025 were earned from eight OEM, ODM and Tier 1 customers. We generated NRE revenues from two customers for the year ended December 31, 2025. During the year ended December 31, 2025, four customers represented approximately 95.4% of our consolidated net revenues. Our customer concentration may change significantly from period-to-period depending on a customer’s product cycle and changes in our industry. The loss of a major customer, a reduction in net revenues of a major customer for any reason, or a failure of a major customer to fulfill its financial or other obligations due to us could have a material adverse effect on our business, financial condition, and future revenue stream. The new business strategy with 100% focus on technology and software licensing that we launched in December 2023 is likely to trigger changes in our customer composition and an overall reduction of the number of customers we have active engagements with.

We rely on the ability of our customers to design, manufacture and sell their products that incorporate our touch technology.

We have historically generated revenue through technology licensing agreements with companies that design, manufacture, and sell their own products incorporating our touch technology. The majority of our license fees earned in 2025 and 2024 were from customer shipments of printer products and automotive infotainment systems. We continue to rely on licensing revenues from current and new customers whose products are still in the development cycle. If our customers are not able to design, manufacture and sell their products, or are delayed in producing and selling their products, our revenues, profitability, and liquidity, as well as our brand image, may be adversely affected.

The length of a customer’s product development and release cycle depends on many factors outside of our control and any delays could cause us to incur significant expenses without offsetting revenues, or revenues that vary significantly from quarter to quarter.

The development and release cycle for customer products is lengthy and unpredictable. Our customers often undertake significant evaluation and design in the qualification of our solutions, which contributes to a lengthy product release cycle. The typical product development and release cycle is 18 to 36 months. The development and release cycle may be longer in some cases, particularly for automotive vehicle products. There is no assurance that a customer will adopt our technology after the evaluation or design phase, in which case we would not be entitled to any revenues from the customer moving forward. The lengthy and variable development and release cycle for products may also have a negative impact on the timing of our revenues, causing our revenues and results of operations to vary significantly from quarter to quarter.

Our license customers rely upon component suppliers to manufacture and sell products containing our technology and limited availability of components may adversely affect our and our customers’ businesses.

Under our licensing model, OEMs, ODMs and Tier 1 suppliers manufacture or contract to manufacture products that include Neonode’s special Application Specific Integrated Circuits (“ASICs”) that incorporate our patented technology. The Neonode ASICs are manufactured by Texas Instruments and ST Microelectronics. Texas Instruments manufactures two ASIC components that are purchased by our license customers. As part of their product development process, our customers must qualify these components for use in their products, thus making the components difficult to replace.

Our dependence on third parties to supply core components that incorporate our patented technology exposes us to a number of risks including the risk that these suppliers will not be able to obtain an adequate supply of raw materials or components, the risk that these suppliers will not be able to meet our customer requirements, and the risk that these suppliers will not be able to remain in business or adjust to market conditions. If our customers are unable to obtain ASICs that incorporate our patented technology, we may not be able to meet the demand, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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It can be difficult for us to verify royalty amounts owed to us under licensing agreements, and this may cause us to lose potential revenue.

Our license agreements typically require our licensees to document the sale of licensed products and report this data to us on a quarterly basis. Although our standard license terms give us the right to audit books and records of our licensees to verify this information, audits can be expensive, time-consuming, incomplete, and subject to dispute. From time to time, we audit certain of our licensees to verify independently the accuracy of the information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty revenues to which we are entitled under the terms of our license agreements, but we can give no assurances that these audits will be effective.

If we fail to develop and introduce new technology successfully, and in a cost-effective and timely manner, we will not be able to compete effectively and our ability to generate revenues will suffer.

We operate in a highly competitive, rapidly evolving environment, and our success depends on our ability to develop and introduce new technology that our customers and end users choose to buy. If we are unsuccessful at developing new technologies that are appealing to our customers and end users, with acceptable functionality, quality, prices, and terms, we will not be able to compete effectively and our ability to generate revenues will suffer. The development of new technology is very difficult and requires high levels of innovation and competence. The development process is typically also very lengthy and costly. If we fail to anticipate our end users’ needs or technological trends accurately or if we are unable to complete development in a cost effective and timely fashion, we will be unable to introduce new technology into the market or successfully compete with other providers. As we introduce new or enhanced technology or integrate new technology into new or existing customer products, we face risks including, among other things, disruption in customers’ ordering patterns, inability to deliver new technology to meet customers’ demand, possible product and technology defects, and potentially unfamiliar sales and support environments. Premature announcements or leaks of new products, features, or technologies may exacerbate some of these risks. Our failure to manage the transition to newer technology or the integration of newer technology into new or existing customer products could adversely affect our business, results of operations, and financial condition.

Our operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control.

As a result of the unpredictability of our customer product development and the nature of the markets in which we compete, it is very difficult for us to forecast accurately. We base our current and future expense estimates largely on our investment plans and estimates of future needs, although some of our expenses are, to a large extent, fixed. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues relative to our planned expenditures would have an immediate adverse effect on our business, results of operations and financial condition.

In addition, the following factors, among others, may negatively affect and cause fluctuations in our operating results:

	●	the announcement or introduction of new products or technologies by our competitors;

	●	our ability to upgrade and develop our infrastructure to accommodate growth;

	●	our ability to attract and retain key personnel in a timely and cost-effective manner;

	●	technical difficulties;

	●	the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations, and infrastructure;

	●	economic conditions specific to the industries and segments where we are active, for instance printers, automotive, elevators, and interactive kiosks; and

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general economic conditions including as a result of pandemics or epidemics, or geopolitical conflicts such as the ongoing war in Ukraine or the Israel-Palestine conflict.

Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service, or marketing decisions that could have a material and adverse effect on our business, results of operations, and financial condition. Due to the foregoing factors, our revenues and operating results are and will remain difficult to forecast.

We must enhance our sales and technology development organizations. If we are unable to identify, hire, or retain qualified sales, marketing, and technical personnel, our ability to achieve future revenue may be adversely affected.

We continually monitor and enhance the effectiveness and breadth of our sales efforts in order to increase market awareness and sales of our technology, especially as we expand into new market areas. Competition for qualified sales personnel is intense, and we may not be able to hire the kind and number of sales personnel we are targeting. Likewise, our efforts to improve and refine our technology require skilled engineers and programmers. Competition for professionals capable of expanding our research and development efforts is intense due to the limited number of people available with the necessary technical skills. If we are unable to identify, hire, or retain qualified sales, marketing, and technical personnel, our ability to achieve future revenue may be adversely affected.

We may make acquisitions and strategic investments that are dilutive to existing stockholders, result in unanticipated accounting charges or otherwise adversely affect our results of operations.

We may decide to grow our business through business combinations or other acquisitions of businesses, products or technologies that allow us to complement our existing technology offerings, expand our market coverage, increase our workforce, or enhance our technological capabilities. If we make any future acquisitions, we could issue stock that would dilute our stockholders’ percentage ownership, or we may incur substantial debt, reduce our cash reserves and/or assume contingent liabilities. Further, acquisitions and strategic investments may result in material charges, adverse tax consequences, substantial depreciation, deferred compensation charges, in-process research and development charges, and the amortization of amounts related to deferred compensation and identifiable purchased intangible assets or impairment of goodwill. Any of these could negatively impact our results of operations.

We are dependent on the services of our key personnel.

We are highly dependent on our senior management team, including Pierre Daniel Alexus, our Chief Executive Officer, and Fredrik Nihlén, our Chief Financial Officer. Changes in our senior management team or the unplanned loss of the services of either member of our senior management team could have a material adverse effect on our operations and future prospects.

If we are unable to obtain and maintain patent or other intellectual property protection for any products we develop or for our technologies, or if the scope of the patents and other intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technologies similar or identical to ours, and our ability to successfully commercialize any products we may develop, and our technologies, may be harmed.

Our success depends in large part on our proprietary technology and other intellectual property rights. We rely on a combination of patents, copyrights, trademarks and trade secrets, confidentiality provisions, and licensing arrangements to establish and protect our proprietary rights. Our intellectual property, particularly our patents, may not provide us with a significant competitive advantage. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations. Our pending patent applications for registration may not be allowed, or others may challenge the validity or scope of our patents. Even if our patent registrations are issued and maintained, these patents may not be of adequate scope or benefit to us or may be held invalid and unenforceable against third parties. We may need to expend significant resources to secure and protect our intellectual property. The loss of intellectual property rights may adversely impact our ability to generate revenues and expand our business.

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We may not be successful in our strategic efforts around patent monetization.

Our success depends in part on our ability to effectively utilize our intellectual property. Our policy is to always try to protect our innovations using patents. Our patent portfolio is an important prerequisite for our licensing business and also protects our investments in product development. From time to time, we also explore opportunities to monetize our patents per se. As an example of this, on May 6, 2019, we assigned a portfolio of patents to Aequitas Technologies LLC to license or otherwise monetize those patents. In the future we may enter into additional alternative patent monetization strategies, including the sale of patents. Our patent monetization strategies may negatively impact our financial condition, revenues, and results of operations. No assurance can be given that we will enter into agreements related to our patent portfolio or that we will be successful in any strategic efforts around patent monetization.

If third parties infringe upon our intellectual property, we may expend significant resources enforcing our rights or suffer competitive injury.

Existing laws, contractual provisions and remedies afford only limited protection for our intellectual property. We may be required to spend significant resources to monitor and police our intellectual property rights. Effective policing of the unauthorized use of our technology or intellectual property is difficult, and litigation may be necessary in the future to enforce our intellectual property rights. Intellectual property litigation is not only expensive, but time-consuming, regardless of the merits of any claim, and could divert attention of our management from operating the business. Intellectual property lawsuits are subject to inherent uncertainties due to, among other things, the complexity of the technical issues involved, and we cannot assure you that we will be successful in asserting our intellectual property rights. Attempts may be made to copy or reverse engineer aspects of our technology or to obtain and use information that we regard as proprietary. We may not be able to detect infringement and may lose competitive position in the market as a result. In addition, competitors may design around our technology or develop competing technologies. We cannot assure you that we will be able to protect our proprietary rights against unauthorized third party copying or use. The unauthorized use of our technology or of our proprietary information by competitors could have an adverse effect on our ability to sell our technology.

The laws of certain foreign countries may not provide sufficient protection of our intellectual property rights to the same extent as the laws of the United States, which may make it more difficult for us to protect our intellectual property.

As part of our business strategy, we target customers and relationships with suppliers and OEMs in countries with large populations and propensities for adopting new technologies. However, many of these countries do not address misappropriation of intellectual property nor deter others from developing similar, competing technologies or intellectual property. Effective protection of patents, copyrights, trademarks, trade secrets and other intellectual property may be unavailable or limited in some foreign countries. In particular, the laws of some foreign countries in which we do business may not protect our intellectual property rights to the same extent as the laws of the United States. As a result, we may not be able to effectively prevent competitors in these regions from infringing our intellectual property rights, which could reduce our competitive advantage and ability to compete in those regions and negatively impact our business.

We have an international presence in countries and must manage currency risks.

A significant portion of our business is conducted in currencies other than the U.S. dollar (the currency in which our consolidated financial statements are reported), primarily the Swedish Krona and, to a lesser extent, the Euro, Japanese Yen and Korean Won. For the year ended December 31, 2025, our revenues from Asia, North America and Europe were 20.6%, 62.8%, and 16.6%, respectively. We incur a significant portion of our expenses in Swedish Krona, including a significant portion of our research and development expenses and a substantial portion of our general and administrative expenses. As a result, appreciation of the value of the Swedish Krona relative to the other currencies, particularly the U.S. dollar, could adversely affect operating results. We do not currently undertake hedging transactions to cover our currency exposure, but we may choose to hedge a portion of our currency exposure in the future as we deem appropriate.

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We have concentration of cash balance at various banks in the United States, Japan and Sweden.

Cash and cash equivalents balances are maintained at various banks in the United States, Japan and Sweden. For deposits held with financial institutions in the United States, 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 1,050,000 Krona per customer and covers deposits in all types of accounts. For bank accounts of the category held by Neonode, the Japanese government provides full insurance coverage. At times, deposits held with financial institutions may exceed the amount of insurance provided.

Security breaches and other disruptions to our information technology infrastructure could interfere with our operations, compromise confidential information, and expose us to liability which could materially adversely impact our business and reputation.

In the normal course of business, we rely on information technology networks and systems to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities. Additionally, we collect and store certain data, including proprietary business information and customer and employee data, and may have access to confidential or personal information in certain of our businesses that is subject to privacy and security laws, regulations, and customer-imposed controls. Despite our cybersecurity measures, our information technology networks, and infrastructure may be vulnerable to damage, disruptions, or shutdowns due to attacks by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters, or other catastrophic events. Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could materially adversely affect our business.

Third parties that maintain our confidential and proprietary information could experience a cybersecurity incident.

We rely on third parties to provide or maintain some of our information technology and related services. We do not exercise direct control over these systems. Despite the implementation of security measures at third party locations, these services are also vulnerable to security breaches or other disruptions. Despite assurances from third parties to protect this information and, where we believe appropriate, our monitoring of the protections employed by these third parties, there is a risk that the confidentiality of the data held by these third parties on our behalf may be compromised and expose us to liability for any security breach or disruption.

While we have identified material weaknesses in our internal control, if we are unable to detect additional material weaknesses in our internal control, our financial reporting and our business may be adversely affected.

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal controls over financial reporting as of the end of each fiscal year, and to include a management report assessing the effectiveness of our internal controls over financial reporting in our annual report on Form 10-K for that fiscal year. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud involving a company have been, or will be, detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become ineffective because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. As described below, we have identified material weaknesses in our internal control over financial reporting. As a result of the material weaknesses, our management concluded that our internal control over financial reporting was not effective based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission. Consequently, we may experience a loss of public confidence, which could have an adverse effect on our business and on the market price of our common stock. We cannot assure you that we or our independent registered public accounting firm will not identify an additional material weakness in our internal controls in the future.

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We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended.

In the course of our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025, our management identified material weaknesses in our internal control over financial reporting. The material weaknesses are discussed in more detail in this Annual Report under “Item 9A. Controls and Procedures.”

A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Our management is actively engaged in developing a remediation plan designed to address these material weaknesses. We cannot assure you that any measures we may take in the near future will be sufficient to remediate these material weaknesses or avoid potential future material weaknesses. In addition, we may suffer adverse regulatory or other consequences, as well as negative market reaction, as a result of any material weaknesses, and we will incur additional costs as we seek to remediate these material weaknesses.

If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, or identify any additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, the accuracy and timing of our financial reporting may be negatively impacted, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, and our stock price may decline as a result.

Risks Related to Owning Our Stock

Future sales of our common stock by us or our insiders could adversely affect the trading price of our common stock and dilute your investment.

Our long-term success is dependent on us obtaining sufficient capital to fund our operations, develop our technology and bring our technology to the worldwide market in order to generate sufficient sales volume to be profitable. We may sell securities in the public or private equity markets if and when conditions are favorable, even if we do not have an immediate need for additional capital at that time. We may also issue additional common stock in future financing transactions or as incentive compensation for our executive management and other key personnel, consultants, and advisors.

Sales of substantial amounts of common stock by us or by our insiders or large stockholders, or the perception that such sales could occur, could adversely affect the prevailing market price of our common stock and our ability to raise capital. Issuing equity securities would also be dilutive to the equity interests represented by our then-outstanding shares of common stock. The market price for our common stock could decrease as the market takes into account the dilutive effect of any of these issuances. Furthermore, we may enter into financing transactions at prices that represent a substantial discount to the market price of our common stock. A negative reaction by investors and securities analysts to any discounted sale of our equity securities could result in a decline in the trading price of our common stock.

We currently have fewer than 300 stockholders of record and, therefore, are eligible to terminate the registration of our common stock under the Exchange Act and cease being a U.S. public company with reporting obligations.

Section 12(g)(4) of the Exchange Act allows for the registration of any class of securities to be terminated after a company files a certification with the SEC that the number of holders of record of such class of security is fewer than 300 persons. As of January 26, 2026, there were 53 stockholders of record of our common stock. This does not include the number of shareholders that hold shares in “street name” through banks, brokers and other financial institutions. Accordingly, we are eligible to deregister our common stock and suspend our reporting obligations under the Exchange Act. If we were to terminate our registration and suspend our reporting obligations under the Exchange Act, we would no longer be required to comply with U.S. public company disclosure requirements under the Exchange Act, including, but not limited to, annual and quarterly report filings, proxy statement filings and filings by insiders to disclose the acquisition and disposition of our securities.

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Our stock price has been volatile, and your investment in our common stock could suffer a decline in value.

There has been significant volatility in the market price and trading volume of equity securities, which is unrelated to the financial performance of the companies issuing the securities. These broad market fluctuations may negatively affect the market price of our common stock. You may not be able to resell your shares at or above the price you pay for those shares due to fluctuations in the market price of our common stock caused by changes in our operating performance or prospects, and other factors.

Some factors that may have a significant effect on our common stock market price include:

	●	actual or anticipated fluctuations in our operating results or future prospects;

	●	our announcements or our competitors’ announcements of new technology;

	●	the public’s reaction to our press releases, our other public announcements, and our filings with the SEC;

	●	strategic actions by us or our competitors, such as acquisitions or restructurings;

	●	new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

	●	changes in accounting standards, policies, guidance, interpretations, or principles;

	●	changes in our growth rates or our competitors’ growth rates;

	●	developments regarding our patents or proprietary rights or those of our competitors;

	●	the public’s reaction to news concerning Aequitas Technologies LLC’s patent litigations against Apple and Samsung;

	●	our inability to raise additional capital as needed;

	●	concern as to the efficacy of our technology;

	●	changes in financial markets or general economic conditions, including as a result of war, terrorism, pandemics or other catastrophes;

	●	sales of common stock by us or members of our management team; and

	●	changes in stock market analyst recommendations or earnings estimates regarding our common stock, other comparable companies, or our industry generally.

A limited number of stockholders, including directors, hold a significant number of shares of our outstanding common stock.

Our two largest stockholders, who both are members of our Board of Directors, hold approximately one-fifth of the shares of our outstanding voting stock. This concentration of ownership could impact the outcome of stockholder votes, including votes concerning the election of directors, the adoption or amendment of provisions in our certificate of incorporation and our bylaws, and the approval of mergers and other significant corporate transactions. These factors may also have the effect of delaying or preventing a change in our management or our voting control.

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Our certificate of incorporation and bylaws and the Delaware General Corporation Law contain provisions that could delay or prevent a change in control.

Our Board of Directors has the authority to issue up to 1,000,000 shares of preferred stock and to determine the price, rights, preferences, and privileges of those shares without any further vote or action by the stockholders. The rights of the holders of common stock will be subject to, and may be materially adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock. Furthermore, certain other provisions of our certificate of incorporation and bylaws may have the effect of delaying or preventing changes in control or management, which could adversely affect the market price of our common stock. In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law.

If securities analysts do not publish research or if securities analysts or other third parties publish inaccurate or unfavorable research about us, the price of our common stock could decline.

The trading market for our common stock may rely in part on the research and reports that securities analysts and other third parties choose to publish about us. We do not control these analysts or other third parties. The price of our common stock could be negatively impacted by insufficient analyst coverage or if one or more analysts or other third parties publish inaccurate or unfavorable research about us.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

We maintain a structured and risk-based process for identifying, assessing, and managing material risks arising from cybersecurity threats as part of our broader enterprise risk management framework. Our cybersecurity risk management activities are integrated into the Company’s overall risk management processes and are designed to address prevention, detection, response, and recovery. We monitor security industry developments and global threat trends on an ongoing basis. Cybersecurity risk management and mitigation are overseen by dedicated privacy, safety, and security professionals, including our Information Security & Quality Manager, who has primary responsibility for overseeing cybersecurity operations. Our cybersecurity program is supported by both internal resources and external service providers with relevant expertise across multiple industries. Executive management is responsible for the Company’s enterprise risk management program and regularly considers cybersecurity risks alongside other operational, financial, and strategic risks. Cybersecurity risks are assessed for potential materiality and are incorporated into management decision-making where appropriate.

As part of our cybersecurity risk management program, we track, log, and manage privacy and security incidents across Neonode, as well as incidents involving vendors and other third-party service providers. Reported incidents are evaluated in accordance with established procedures to determine severity, potential impact, and required remediation. Significant incidents are reviewed by a cross-functional team, and any incident assessed as potentially material, or potentially becoming material, is escalated promptly to senior management for further evaluation. Where appropriate, we consult external advisors, including legal counsel, to support materiality assessments, regulatory considerations, and disclosure obligations. Senior management is responsible for making final determinations regarding materiality and related disclosure or compliance actions.

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The Board of Directors has oversight responsibility for cybersecurity risks, including oversight of material cybersecurity incidents, compliance with applicable disclosure requirements, and the potential impact of cybersecurity risks on the Company’s financial condition, results of operations, and business strategy. Senior management provides updates to the Board of Directors regarding cybersecurity risks, trends, and, if applicable, material incidents.

To date, our business strategy, results of operations, and financial condition have not been materially affected by risks arising from cybersecurity threats, including as a result of previously identified cybersecurity incidents. However, cybersecurity risks continue to evolve, and we cannot provide assurance that future incidents or emerging threats will not have a material adverse effect. For additional information regarding cybersecurity-related risks, see Item 1A – Risk Factors of this Annual Report on Form 10-K.

ITEM 2. PROPERTIES

As of December 31, 2025, we leased office facilities of approximately 6,700 square feet for our corporate headquarters in Stockholm.

We believe our facilities are adequate and suitable for our current needs and that suitable additional or alternative space will be available to accommodate our operations if needed.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any pending legal proceedings. 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 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the Nasdaq Stock Market under the symbol “NEON.”

Holders

As of January 26, 2026, there were 53 stockholders of record of our common stock. This does not include the number of stockholders that hold shares in “street name” through banks, brokers, and other financial institutions.

Securities Authorized for Issuance Under Equity Compensation Plans

See Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters” for information relating to our equity compensation plans.

Recent Sale of Unregistered Securities and Use of Proceeds

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report. All information in the following discussion and analysis presents the results of continuing operations and excludes amounts related to discontinued operations for all periods presented unless otherwise stated.

Overview

Neonode also provides advanced optical sensing solutions for touch, contactless touch, and gesture sensing using our zForce® technology platform. In September 2025, we made the strategic decision to transition the zForce platform into maintenance mode. We are no longer selling zForce technology to new customers but will continue supporting existing customers in various markets and segments such as office equipment, automotive, industrial automation, medical, military, and avionics.

Recent Accounting Pronouncements

The information set forth under Note 1 to the consolidated financial statements is incorporated herein by reference.

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Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires us to make certain estimates, judgments and assumptions that can affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure. Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. We have not identified any critical accounting estimate. Refer to Note 1 of our consolidated financial statements for more discussion of our significant accounting policies.

Results of Operations

The following table provides our consolidated results (in thousands, except percentages):

	Years ended December 31,						Variance in
	2025			2024			Dollars			Percent
Revenues:
License fees	$	1,822		$	2,687		$	(865	)		(32.2	)%
Percentage of revenue		88.4	%		86.5	%
Non-recurring engineering		240			421			(181	)		(43.0	)%
Percentage of revenue		11.6	%		13.5	%
Total revenues	$	2,062		$	3,108		$	(1,046	)		(33.7	)%

Cost of revenues:
Non-recurring engineering		26			116			(90	)		(77.6	)%
Percentage of revenue		1.3	%		3.7	%
Total cost of revenues	$	26		$	116		$	(90	)		(77.6	)%
Gross margin	$	2,036		$	2,992		$	(956	)		(32.0	)%

Operating expenses:
Research and development	$	3,779		$	3,444		$	335			9.7	%
Percentage of revenue		183.3	%		110.8	%
Sales and marketing		2,274			2,328			(54	)		(2.3	)%
Percentage of revenue		110.3	%		74.9	%
General and administrative		4,123			3,767			356			9.5	%
Percentage of revenue		200.0	%		121.2	%
Total operating expenses	$	10,176		$	9,539		$	637			6.7	%
Percentage of revenue		493.5	%		306.9	%

Gain from patent assignment	$	19,389		$	-		$	19,389			-	%
Percentage of revenue		940.3	%		-	%
Broker fee from patent assignment		(3,878	)		-			(3,878	)		-	%
Percentage of revenue		(188.1	)%		-	%

Operating income (loss)	$	7,371		$	(6,547	)	$	13,918			(212.6	)%
Percentage of revenue		357.5	%		(210.6	)%
Other income, net		657			687			(30	)		(4.4	)%
Percentage of revenue		31.9	%		22.1	%
Provision (benefit) for income taxes		(9	)		15			(24	)		(160.0	)%
Percentage of revenue		(0.4	)%		0.5	%
Income (loss) from continuing operations	$	8,037		$	(5,875	)	$	13,912			(236.8	)%
Percentage of revenue		389.8	%		(189.0	)%
Basic and diluted income (loss) per share from continuing operations	$	0.48		$	(0.37	)	$	0.85			(229.7	)%

Revenues

All of our sales for the years ended December 31, 2025 and 2024 were to customers located in the United States, Europe and Asia.

Total net revenues were $2.1 million and $3.1 million for the years ended December 31, 2025 and 2024, respectively. The decrease in total net revenues by 33.7% for the year ended December 31, 2025 as compared to 2024 was caused by lower revenues from both license revenues and non-recurring engineering.

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The following table presents the net revenues distribution by business area and revenue stream (in thousands, except percentages):

	Years ended December 31,
	2025					2024
	Amount		Percentage			Amount		Percentage
Automotive:
License fees	$	537		72.9	%	$	949		77.9	%
Non-recurring engineering		200		27.1	%		270		22.1	%
	$	737		100.0	%	$	1,219		100.0	%

IT & Industrial:
License fees	$	1,285		97.0	%	$	1,738		92.0	%
Non-recurring engineering		40		3.0	%		151		8.0	%
	$	1,325		100.0	%	$	1,889		100.0	%

The following table presents disaggregated revenues by revenue stream (in thousands, except percentages):

	Years ended December 31,
	2025					2024
	Amount		Percentage			Amount		Percentage
Net license revenues from amusement	$	138		6.7	%	$	150		4.8	%
Net license revenues from automotive	$	537		26.0	%		948		30.5	%
Net license revenues from consumer electronics	$	1,147		55.7	%		1,589		51.2	%
Net non-recurring engineering services revenues		240		11.6	%		421		13.5	%
	$	2,062		100.0	%	$	3,108		100.0	%

Revenues from license fees were $1.8 million and $2.7 million for the years ended December 31, 2025 and 2024, respectively. The decrease of 32.2% in 2025 as compared to 2024 was mainly due to lower demand for our legacy customers products within printer and passenger car touch applications offset by revenues from new licensing customers.

Revenues from non-recurring engineering revenues were $0.2 million and $0.4 million for the years ended December 31, 2025 and 2024. Our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our zForce and MultiSensing technology platforms. The decrease of 43.0% in 2025 compared to 2024 was the result of decreased delivery in projects.

Gross Margin

Our gross margin was 98.7% in 2025 compared to 96.3% in 2024. The increase in 2025 compared to 2024 were due to decrease in NRE revenues.

Our cost of revenues includes the direct cost of production of certain customer prototypes, costs of engineering personnel, engineering consultants to complete the engineering design contracts.

Research and Development

R&D expenses for 2025 and 2024 were $3.8 million and $3.4 million, respectively. R&D expenses primarily consist of personnel-related costs in addition to external consultancy costs, such as testing, certifying and measurements, along with costs related to developing and building new product prototypes. The increase of 9.7% in 2025 compared to 2024 was primarily related to unfavorable exchange rate development and lower NRE revenues causing less costs to be allocated to cost of sales.

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Sales and Marketing

Sales and marketing expenses for 2025 and 2024 were $2.3 million and $2.3 million, respectively. Sales and marketing expenses in 2025 decreased 2.3% compared to 2024, despite unfavorable exchange rate development, primarily due to lower costs for marketing and lower legal fees.

Our sales and marketing activities focus on OEM, ODM and Tier 1 customers who will license our technology.

General and Administrative

General and administrative (“G&A”) expenses for 2025 and 2024 were $4.1 million and $3.8 million, respectively. The increase of 9.5% compared to 2024 was primarily due to unfavorable exchange rate development and higher professional fees. There is no non-cash stock-based compensation included in G&A expenses for the year ended December 31, 2025 compared to $3,000 for the year ended December 31, 2024.

Gain from Patent Assignment and Broker Fee from Patent Assignment

Gain from the patent assignment to Aequitas Technologies LLC ("Aequitas") was $19.4 million for the year ended December 31, 2025. The Company recognized a brokerage fee from the patent assignment of $3.8 million for the year ended December 31, 2025. The amount represents the final outcome from the legal proceedings between Neonode Smartphone LLC, an unrelated third party that is a subsidiary of Aequitas (“Aequitas Sub”), and Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. (collectively, “Samsung”), excluding any potential tax recoveries.

Other Income

Other income for the year ended December 31, 2025 was $0.7 million compared to $0.7 million for the year ended December 31, 2024. The other income for 2025 and 2024 was mainly related to interest income earned.

Income Taxes

Our effective tax rate was (0.1)% for the year ended December 31, 2025 and (0.3)% for the year ended December 31, 2024. We recorded valuation allowances in 2025 and 2024 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 income of $8.0 million for the year ended December 31, 2025, compared to a net loss of $5.9 million for the year ended December 31, 2024.

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:

	●	licensing of our technology;

	●	operating expenses;

	●	timing of our OEM customer product shipments;

	●	timing of payment for our technology licensing agreements;

	●	gross profit margin; and

	●	ability to raise additional capital, if necessary.

As of December 31, 2025, we had cash and cash equivalents of $25.4 million, as compared to $16.4 million as of December 31, 2024. Based on our current cash position, and assuming currently planned expenditures and level of operations, we believe we have sufficient capital to fund operations for the twelve-month period subsequent to the date of this Annual Report.

Working capital (current assets less current liabilities) was $24.1 million as of December 31, 2025, compared to working capital of $16.1 million as of December 31, 2024.

Net cash used in operating activities for combined continuing and discontinued operations for the year ended December 31, 2025 was $10.3 million and was primarily the result of a net income of $8.5 million and approximately $19.2 million in adjustments to reconcile net loss to net cash used in operating activities, comprised of recoveries of bad debt, gain from patent assignment, loss on disposal of assets, depreciation and amortization and amortization of operating lease right-of-use assets, and changes in operating assets and liabilities of $444,000. Net cash used in operating activities for the year ended December 31, 2024 was $5.6 million and was primarily the result of a net loss of $6.5 million and approximately $687,000 in non-cash operating expenses, comprised of stock-based compensation expense, bad debt expense, loss on disposal of assets, depreciation and amortization, amortization of operating lease right-of-use assets, and inventory impairment loss and changes in operating assets and liabilities of $187,000.

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Accounts receivable and unbilled revenues for combined continuing and discontinued operations decreased by approximately $300,000 as of December 31, 2025 compared to December 31, 2024, due to lower revenues. Prepaid expenses and other current assets for combined continuing and discontinued operations increased by approximately $20,000, mainly due to increased tax receivables. Accounts payable, accrued payroll and employee benefits, and accrued expenses for combined continuing and discontinued operations increased approximately $395,000 as of December 31, 2025 compared to December 31, 2024.

Net cash provided by investing activities for the year ended December 31, 2025 was $19.3 million and consisted primarily of the proceeds from the patent assignment.

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net income for combined continuing and discontinued operations of approximately $8.5 million for the year ended December 31, 2025 and net loss of $6.5 million for the year ended December 31, 2024, and had an accumulated deficit of approximately $215.6 million and $224.1 million as of December 31, 2025 and 2024, respectively. In addition, operating activities used cash of approximately $10.3 million and $5.6 million for the years ended December 31, 2025 and 2024, respectively.

The consolidated financial statements included herein have been prepared on a going concern basis, which contemplates continuity of operations and the realization of assets and the repayment of liabilities in the ordinary course of business. Management evaluated the significance of the Company’s operating loss and negative cash flows from operations and determined that the Company’s current operating plan and sources of liquidity would be sufficient to alleviate concerns about the Company’s ability to continue as a going concern. Management has prepared an operating plan and believes that the Company has sufficient cash to meet its obligations as they come due for a year from the date the financial statements were issued. During the year ended December 31, 2024, we sold an aggregate of 1,423,441 of our common stock under the Ladenburg ATM Facility (as defined below) with aggregate net proceeds to us of $5.8 million, after payment of commissions to Ladenburg Thalmann & Co. Inc. (“Ladenburg”) and other expenses of $0.2 million. During the year ended December 31, 2025, no shares were sold under the Ladenburg ATM Facility.

In the future, we may require sources of capital in addition to cash on hand and our Ladenburg ATM Facility to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek equity investments or debt arrangements. Historically, we have been able to access the capital markets through sales of common stock and warrants to generate liquidity. Our management believes it could raise capital through public or private offerings if needed to provide us with sufficient liquidity.

No assurances can be given, however, 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, no assurance can be given that stockholders will approve an increase in the number of our authorized shares of common stock if needed. 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.

The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen and the South Korean Won. 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 or South Korean Won will impact our future operating results.

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Contractual Obligation and 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 the operating leases incurred in the normal course of business.

We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support. We do not 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 consolidated financial statements.

Operating Leases

Neonode Inc. operates solely through a virtual office in California.

On December 1, 2020, Neonode Technologies AB entered into a lease for 6,684 square feet of office space located at Karlavägen 100, Stockholm, Sweden. The lease agreement has been extended and is valid through January 2027. It is extended on a yearly basis unless written notice is provided nine months prior to the expiration date.

For the years ended December 31, 2025 and 2024, we recorded approximately $455,000 and $449,000, respectively, for rent expense in continuing operations.

Equipment Subject to Finance Leases

In 2025, we entered into a lease for a Volkswagen ID Buzz to be used as a demo car for our technology. Under the terms of the agreement, the lease will be renewed within two years of the original three-year lease term. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation periods began in March 2025 when the equipment went into service. The implicit interest rate of the lease is currently approximately 3.47% per annum.

Non-Recurring Engineering Development Costs

On April 25, 2013, we entered into an Analog Device Development Agreement with an effective date of December 6, 2012 (the “NN1002 Agreement”) with Texas Instruments (“TI”) pursuant to which TI agreed to integrate our intellectual property into an Application Specific Integrated Circuit (“ASIC”). Under the terms of the NN1002 Agreement, we agreed to pay TI $500,000 of non-recurring engineering costs at the rate of $0.25 per ASIC for each of the first 2,000,000 ASICs sold. As of December 31, 2025, we had made no payments to TI under the NN1002 Agreement.

At-the-Market Offering Program

On May 10, 2021, we entered into an At Market Issuance Sales Agreement (the “B. Riley Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley Securities”) with respect to an “at the market” offering program (the “B. Riley ATM Facility”), under which we may, from time to time, in our sole discretion, issue and sell through B. Riley Securities, acting as sales agent, up to $25 million of shares of our common stock, in any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. On May 29, 2024, we terminated the B. Riley Sales Agreement with B. Riley Securities.

On June 4, 2024, we entered into an At The Market Offering Agreement (the “Ladenburg Sales Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”) with respect to an “at the market” offering program (the “Ladenburg ATM Facility”), under which we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, up to approximately $10 million of shares of our common stock.

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Pursuant to the Ladenburg Sales Agreement, we may sell the shares through Ladenburg by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. Ladenburg will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us (including any price or size limits or other customary parameters or conditions we may impose). We will pay Ladenburg a commission of 3.0% of the gross sales price per share sold under the Ladenburg Sales Agreement.

We are not obligated to sell any shares under the Ladenburg Sales Agreement. The offering of shares pursuant to the Ladenburg Sales Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through Ladenburg, of all of the shares of our common stock subject to the Ladenburg Sales Agreement and (ii) termination of the Ladenburg Sales Agreement in accordance with its terms.

During the year ended December 31, 2025, we sold no shares under the Ladenburg ATM Facility.

During the year ended December 31, 2024, we sold an aggregate of 1,423,441 shares of our common stock under the Ladenburg ATM Facility with aggregate net proceeds to us of $5.8 million, after payment of commissions to Ladenburg and other expenses of $0.2 million.

Future Sources of Liquidity

Patent Assignment

On May 6, 2019, the Company assigned a portfolio of patents to Aequitas Technologies LLC (“Aequitas”), an unrelated third party. The assignment provides the Company the right to share the potential net proceeds generated from possible licensing and monetization program that Aequitas may enter into. Under the terms of the assignment, net proceeds mean gross proceeds less out of pocket expenses and legal fees paid by Aequitas. The Company’s share would also be net of the Company’s own fees and expenses, including a brokerage fee payable by the Company in connection with the original assignment to Aequitas.

As reflected in publicly available court filings, on June 8, 2020, Aequitas Sub, filed complaints against Apple Inc. (“Apple”) (assigned docket number 6:20-cv-00505-ADA), and Samsung Electronics Co., Ltd., and Samsung Electronics America, Inc. (collectively, “Samsung”) (assigned docket number 6:20-cv -00507-ADA; see also 6:23-cv-00204-ADA), in the Western District of Texas alleging infringement of two patents, U.S. Patent Nos. 8,095,879 and 8,812,993.

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U.S. Patent No. 8,095,879

In November 2020, Samsung and Apple filed a petition for inter partes review of certain challenged claims in U.S. Patent No. 8,095,879, assigned proceeding number IPR2021-00144. As reflected in publicly available records, the U.S. Patent and Trademark Office Patent Trial and Appeal Board (“PTAB”) denied the petition in June 2021. Apple and Samsung filed a request for rehearing, which was ultimately granted on December 3, 2021, and inter partes review was instituted. The court case against Apple was subsequently transferred to the Northern District of California in November 2021 and assigned docket number 3:21-cv-08872, which was subsequently stayed pending the PTAB’s decision. The case against Samsung in the Western District of Texas was likewise stayed pending PTAB ruling.

Meanwhile, in June 2021, Google LLC (“Google”) filed a separate petition with the PTAB seeking inter partes review of certain challenged claims in U.S. Patent No. 8,095,879, assigned proceeding number IPR2021-01041. As reflected in publicly available records, the PTAB granted the petition in January 2022.

The PTAB found in favor of Aequitas Sub and against Apple and Samsung in December 2022 in connection with the inter partes review proceedings, ruling that none of the challenged claims were unpatentable. The PTAB similarly held in favor of Aequitas Sub and against Google in January 2023. Apple and Samsung appealed to the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”) in February 2023 (assigned docket number 23-1464, and Google filed its appeal in the Federal Circuit in March 2023 (assigned docket number 23-1638. On July 18, 2024, the Federal Circuit affirmed the PTAB’s rulings, found in favor of Aequitas Sub and against Google and Apple/Samsung, and held that none of the challenged claims in U.S. Patent No. 8,095,879 are unpatentable.

As reflected in publicly available court records, on July 14, 2023, the United States District Court for the Western District of Texas entered its final claim constructions in the Samsung case (docket number 6:20-cv-507), and based on those claim constructions, entered judgment in favor of Samsung and against Aequitas Sub. Aequitas Sub filed an appeal with the Federal Circuit in August 2023 (assigned docket number 23-2304), and oral argument was held on June 6, 2024 As reflected on the public court docket, on August 20, 2024, the Federal Circuit issued its written opinion, reversing and remanding the case to the Western District of Texas for further proceedings. Specifically, the Federal Circuit held that claim 1 of the ‘879 patent was not indefinite. Mandate issued returning the case to the Western District of Texas on September 26, 2024. On November 5, 2024, Samsung filed its Answer to the Complaint. On June 13, 2025, the parties submitted a joint motion to stay all deadlines for thirty (30) days as the parties had reached a “settlement in principle.” On June 20, 2025, the Court granted the motion to stay and ordered that all deadlines be stayed until July 21, 2025. On July 17, 2025, the parties submitted a joint motion to extend the stay for an additional thirty days “so that the settlement agreement can be finalized and appropriate dismissal papers submitted.” On August 5, 2025, the Court granted the parties request to extend the stay until August 20, 2025. On August 29, 2025, following a settlement between Aequitas Sub and Samsung, the parties submitted a joint motion to vacate the claim construction order and to dismiss the matter with prejudice. On September 2, 2025, the Court granted the motion. As of September 2, 2025, the case in the Western District of Texas is now closed. For additional information regarding the settlement, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Gain from Patent Assignment and Broker Fee from Patent Assignment.”

The case against Apple remains pending in the United States District Court for the Northern District of California (docket number 21-cv-8872). On November 13, 2024, the Court granted the parties’ motion to continue the stay pending resolution of the Samsung case pending in the Western District of Texas (case number 20-cv-00507-ADA) by settlement or final judgment. On September 15, 2025 the Court lifted the stay upon stipulation of the parties. On October 27, 2025, the parties submitted a stipulated scheduling order for the remainder of the case. On December 15, 2025, the Court entered a modified order for scheduling. Among other dates, the Court ordered (i) a close of fact discovery on July 31, 2026, (ii) mediation by December 8, 2026, and (iii) trial by February 22, 2027. The Court also ordered claim construction briefing beginning March 27, 2026 and concluding April 17, 2026. Further, on February 10, 2026, the case was referred to private alternative dispute resolution to be completed by December 8, 2026.

U.S. Patent No. 8,812,993

Based on information in public records, in November 2020, Samsung and Apple collectively sought inter partes review of certain claims in U.S. Patent No. 8,812,993 (assigned proceeding number IPR2021-00145). In June 2022, the PTAB invalidated U.S. Patent No. 8,812,993, which Aequitas Sub appealed to the Federal Circuit in August 2022 (assigned docket number 22-2134). The Federal Circuit affirmed the PTAB’s decision on June 11, 2024.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to the Consolidated Financial Statements		Page

Report of Independent Registered Public Accounting Firm (PCAOB ID: 173)		F-2

Consolidated Balance Sheets as of December 31, 2025 and 2024		F-3

Consolidated Statements of Operations for the years ended December 31, 2025 and 2024		F-4

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2025 and 2024		F-5

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024		F-6

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024		F-7

Notes to the Consolidated Financial Statements		F-8

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of Neonode Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Neonode Inc. (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ Crowe LLP

We have served as the Company’s auditor since 2024.

New York, New York

March 18, 2026

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NEONODE INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	December 31, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	25,358		$	16,427
Accounts receivable and unbilled revenues, net		391			732
Contract asset		-			51
Prepaid expenses and other current assets		495			475
Current assets of discontinued operations		41			-
Total current assets		26,285			17,685

Non-current assets:
Property and equipment, net		145			62
Operating lease right-of-use assets, net		455			634
Total non-current assets		600			696
Total assets	$	26,885		$	18,381

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	464		$	229
Accrued payroll and employee benefits		865			760
Accrued expenses		459			404
Contract liabilities		37			-
Current portion of finance lease obligations		12			2
Current portion of operating lease obligations		344			225
Total current liabilities		2,181			1,620

Non-current liabilities:
Finance lease obligations, net of current portion		15			-
Operating lease obligations, net of current portion		-			319
Total non-current liabilities		15			319
Total liabilities		2,196			1,939

Commitments and contingencies (Note 8)

Stockholders’ equity:
Preferred stock, 1,000,000 shares authorized, with par value of $0.001; no shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively.		-			-
Common stock, 25,000,000 shares authorized, with par value of $0.001; 16,782,922 and 16,782,922 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively.		17			17
Additional paid-in capital		240,955			240,955
Accumulated other comprehensive loss		(696	)		(450	)
Accumulated deficit		(215,587	)		(224,080	)
Total stockholders’ equity		24,689			16,442
Total liabilities and stockholders’ equity	$	26,885		$	18,381

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

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NEONODE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Years ended December 31,
	2025			2024
Revenues:
License fees	$	1,822		$	2,687
Non-recurring engineering		240			421
Total revenues		2,062			3,108

Cost of revenues:
Non-recurring engineering		26			116
Total cost of revenues		26			116
Gross margin		2,036			2,992

Operating expenses:
Research and development		3,779			3,444
Sales and marketing		2,274			2,328
General and administrative		4,123			3,767
Total operating expenses		10,176			9,539

Gain from patent assignment		19,389			-
Broker fee from patent assignment		(3,878	)		-

Operating income (loss)		7,371			(6,547	)
Other income, net		657			687
Income (loss) before provision (benefit) for income taxes		8,028			(5,860	)
Provision (benefit) for income taxes		(9	)		15
Income (loss) from continuing operations		8,037			(5,875	)
Income (loss) from discontinued operations		456			(591	)
Net income (loss)	$	8,493		$	(6,466	)

Income (loss) per common share:
Basic and diluted income (loss) per share from continuing operations	$	0.48		$	(0.37	)
Basic and diluted income (loss) per share from discontinued operations		0.03			(0.04	)
Basic and diluted net income (loss) per share	$	0.51		$	(0.41	)
Basic and diluted – weighted average number of common shares outstanding		16,783			15,873

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

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NEONODE INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Years ended December 31,
	2025			2024
Net income (loss)	$	8,493		$	(6,466	)

Other comprehensive loss:
Foreign currency translation adjustments		(246	)		(54	)
Total other comprehensive loss		(246	)		(54	)
Comprehensive income (loss)	$	8,247		$	(6,520	)

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

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NEONODE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

	Common Stock Shares Issued		Common Stock Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balances, January 1, 2024		15,359	$	15	$	235,158	$	(396	)	$	(217,614	)	$	17,163
Issuance of shares for cash, net of offering costs		1,424		2		5,794		-			-			5,796
Stock-based compensation		-		-		3		-			-			3
Foreign currency translation adjustment		-		-		-		(54	)		-			(54	)
Net loss		-		-		-		-			(6,466	)		(6,466	)
Balances, December 31, 2024		16,783	$	17	$	240,955	$	(450	)	$	(224,080	)	$	16,442
Foreign currency translation adjustment		-		-		-		(246	)		-			(246	)
Net income		-		-		-		-			8,493			8,493
Balances, December 31, 2025		16,783	$	17	$	240,955	$	(696	)	$	(215,587	)	$	24,689

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

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NEONODE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years ended December 31,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	8,493		$	(6,466	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		-			3
Bad debt expense		-			172
Recoveries of bad debt		(140	)		-
Gain from patent assignment		(19,389	)		-
Loss on disposal of assets		2			18
Depreciation and amortization		50			58
Amortization of operating lease right-of-use assets		286			79
Inventory impairment loss		-			357
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues		494			(51	)
Inventory		-			223
Prepaid expenses and other current assets		44			382
Accounts payable, accrued payroll and employee benefits, and accrued expenses		157			(213	)
Contract liabilities		37			(10	)
Operating lease obligations		(288	)		(144	)
Net cash used in operating activities		(10,254	)		(5,592	)

Cash flows from investing activities:
Purchase of property and equipment		(91	)		(37	)
Proceeds from patent assignment		19,389			-
Proceeds from sale of property and equipment		-			189
Net cash provided by investing activities		19,298			152

Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs		-			5,796
Principal payments on finance lease obligations		(11	)		(17	)
Net cash provided by (used in) financing activities		(11	)		5,779

Effect of exchange rate changes on cash and cash equivalents		(102	)		(67	)

Net change in cash and cash equivalents		8,931			272
Cash and cash equivalents at beginning of period		16,427			16,155
Cash and cash equivalents at end of period	$	25,358		$	16,427


Supplemental disclosure of cash flow information:
Cash paid for interest	$	-		$	1
Cash paid (received) for income taxes	$	(9	)	$	15

Supplemental disclosure of non-cash activities:
Property and equipment obtained in exchange for finance lease obligations	$	35		$	-
Right-of-use asset obtained in exchange for lease obligations	$	-		$	668

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

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NEONODE INC.

Notes to the Consolidated Financial Statements

1. Organization and Summary of Significant Accounting Policies

Basis of Presentation and Preparation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Neonode Inc. and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires making estimates and judgments that affect, at the date of the financial statements, the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Significant estimates and judgments include, but are not limited to: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, the standalone selling price of performance obligations, and transaction prices and assessing transfer of control; provisions for uncollectible receivables; for leases, determining whether a contract contains a lease, allocating consideration between lease and non-lease components, determining incremental borrowing rates, and identifying reassessment events, such as modifications; the valuation allowance related to our deferred tax assets; and the fair value of options issued for stock-based compensation. Actual results could differ from these estimates and judgments.

Recently Issued Accounting Pronouncement Adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which updates several disclosures regarding the accounting for income taxes. ASU 2023-09 is effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted. We have adopted ASU 2023-09 for the fiscal year ended December 31, 2025, using a prospective approach. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. The adoption did not have a material impact on our consolidated financial statements. See Note 11 Income Taxes in the accompanying notes to the consolidated financial statements for further detail.

Recently Issued Accounting Pronouncements Pending Adoption

In December 2025, the FASB issued ASU 2025-12, Codification Improvements ("ASU 2025-12"). ASU 2025-12 makes incremental improvements to the Accounting Standards Codification and U.S. GAAP. This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual periods. Early adoption is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). The amendments clarify and reorganize existing interim reporting guidance, including the scope of Topic 270 and interim disclosure requirements, and introduce a disclosure principle requiring entities to disclose material events or changes occurring since the most recent annual reporting period. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which aims to modernize financial reporting by updating how entities recognize and disclose costs incurred for software developed for internal use. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"), which amends ASC 326-20 to provide a practical expedient for all entities when estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years, with early adoption permitted, and should be applied on a prospective basis. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2024-03.

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 and the South Korean Won. The translation from Swedish Krona, Japanese Yen or South Korean Won 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 $(246,000) and $(54,000) during the years ended December 31, 2025 and 2024, respectively. Gains or (losses) resulting from foreign currency transactions are included in general and administrative expenses in the accompanying consolidated statements of operations and were $67,000 and $(1,000) during the years ended December 31, 2025 and 2024, respectively.

Liquidity

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net income for combined continuing and discontinued operations of approximately $8.5 million for the year ended December 31, 2025 and net loss of approximately $6.5 million for the year ended December 31, 2024, and had an accumulated deficit of approximately $215.6 million and $224.1 million as of December 31, 2025 and 2024, respectively. In addition, operating activities used cash of approximately $10.3 million and $5.6 million for the years ended December 31, 2025 and 2024, respectively.

The consolidated financial statements have been prepared on a going concern basis, which contemplates continuity of operations and the realization of assets and the repayment of liabilities in the ordinary course of business.

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Management has prepared an operating plan and believes that the Company has sufficient cash to meet its obligations as they come due for a year from the date the consolidated financial statements were issued.

Accounts Receivable and Credit Losses

Accounts receivable is stated at net realizable value. We estimate and record a provision for expected credit losses related to our financial instruments, including our trade receivables. We consider historical collection rates, the current financial status of our customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses.

Further, we consider macroeconomic factors and the status of the technology industry to estimate if there are current expected credit losses within our trade receivables based on the trends and our expectation of the future status of such economic and industry-specific factors. Also, specific allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have a higher probability of default.

The accounts receivable balance on our consolidated balance sheet as of December 31, 2025 was $0.4 million, and did not include any allowances. The accounts receivable balance on our consolidated balance sheet as of December 31, 2024 was $0.7 million, and did not include any allowances.

Concentration of Credit and Business Risks

Our customers are primarily located in North America, Europe and Asia.

As of December 31, 2025, four of our customers represented approximately 95.4% of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2024, four of our customers represented approximately 80.9% of our consolidated accounts receivable and unbilled revenues.

Customers who accounted for 10% or more of our revenues during the year ended December 31, 2025 are as follows.

●	Seiko Epson – 34.3%

●	Alps Alpine – 19.4%

●	Hewlett-Packard – 19.0%

●	Commercial Vehicle OEM – 14.6%

Customers who accounted for 10% or more of our revenues during the year ended December 31, 2024 are as follows.

●	Seiko Epson – 27.3%

●	Alps Alpine – 20.7%

●	Hewlett-Packard – 20.4%

●	Commercial Vehicle OEM – 11.8%

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Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is recognized on a straight-line basis.

Research and Development

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

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 December 31, 2025 and 2024. 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 (benefit) 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 to accounting for uncertainty in income taxes, which prescribes a model for the recognition, measurement and presentation of uncertainty in income taxes. As a result, we did not recognize a liability for unrecognized tax benefits. As of December 31, 2025 and 2024, we had no unrecognized tax benefits.

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Fair Value of Financial Instruments

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

Accounting guidance defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements.

The three levels of the fair value hierarchy are described as follows:

Level 1: Applies to assets or liabilities for which there are observable quoted prices in active markets for identical assets and liabilities.

Level 2: Applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are directly or indirectly observable.

Level 3: Applies to assets or liabilities for which inputs are unobservable, and those inputs that are significant to the measurement of the fair value of the assets or liabilities.

There were no assets or liabilities recorded at fair value on a recurring basis for the years ended December 31, 2025 and 2024.

Revenue

We earn revenues from licensing of our intellectual property, licensing of our software and by performing engineering services. The timing of revenue recognition and the amount of revenue actually recognized in each case depends upon a variety of factors, including the specific terms of each arrangement and the nature of our performance obligations.

License Fees

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

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

We also earn license fee revenue by providing our customers with development licenses for our software tools related to the MultiSensing platform. We recognize revenue ratably over the contract term beginning on the commencement date of each contract, which is the date we make the software available to our customers. Our development license contracts with customers typically include a fixed amount of consideration and are generally non-cancellable and without any refund-type provisions. We typically invoice our customers annually in advance for our development licenses upon execution of the initial contract or subsequent renewal.

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Non-Recurring Engineering

For technology license that require modification or customization of the underlying technology to adapt the technology to customer use, we determine whether the technology license and required engineering consulting services represent separate performance obligations. We perform our analysis on a contract-by-contract basis. If there are separate performance obligations, we determine the standalone selling price (“SSP”) of each separate performance obligation to properly recognize revenue as each performance obligation is satisfied. We provide engineering consulting services to our customers under a signed Statement of Work (“SOW”). Deliverables and payment terms are specified in each SOW. We charge an hourly rate or a fixed fee for engineering services. We recognize revenues for hourly rate services as engineering services specified in contracts are completed and accepted by our customers. Revenues for fixed price services are generally recognized over time applying input methods to estimate progress to completion. We believe that recognizing non-recurring engineering services revenues as progress towards completion of engineering services and customer acceptance of those services occurs best reflects the economics of those transactions, because engineering services as tracked in our systems correspond directly with the value to our customers of our performance completed to date. Hours performed for each engineering project are tracked and reflect progress made on each project and are charged at a consistent hourly rate. Any upfront payments we receive for future non-recurring engineering services are recorded as unearned revenue until that revenue is earned.

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

The following tables present the net revenues distribution by geographical area and market (in thousands, except percentages):

	Years ended December 31,
	2025					2024
	Amount		Percentage			Amount		Percentage
North America:
Net revenues from IT & Industrial	$	425		100.0	%	$	763		100.0	%
	$	425		100.0	%	$	763		100.0	%

Asia Pacific:
Net revenues from Automotive	$	394		30.4	%	$	732		39.4	%
Net revenues from IT & Industrial		900		69.6	%		1,127		60.6	%
	$	1,294		100.0	%	$	1,859		100.0	%

Europe, Middle East and Africa:
Net revenues from Automotive	$	343		100.0	%	$	486		100.0	%
	$	343		100.0	%	$	486		100.0	%

Contract Balances

Timing of revenue recognition may differ from the timing of invoice and receipt of consideration. We record a receivable or unbilled revenue when we have an unconditional right to receive consideration from customers. Contract assets represent revenue recognized for performance to date when the right to consideration is conditional on something other than the passage of time. We record contract liabilities when we receive prepayments or upfront payments ahead of performance.

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The following table presents our accounts receivable, net, contract assets, and contract liabilities (in thousands):

	December 31,
	2025		2024		2023
Accounts receivable and unbilled revenues, net	$	391	$	732	$	652
Contract assets		-		51		-
Contract liabilities (deferred revenues)		37		-		2

Payment terms and conditions vary by the type of contract; however, payments generally occur 30-60 days after invoicing for license fees. Where revenue recognition timing differs from invoice timing, we have determined that our contracts do not include a significant financing component. Applying the practical expedient in Topic 606, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. Our intent is to provide our customers with consistent invoicing terms for the convenience of our customers, not to provide financing to our customers.

Contract Liabilities

Contract liabilities (deferred revenues) consist primarily of prepayments for license fees, and other services that we have been paid in advance. We earn the revenue when we transfer control of the service. Deferred revenues may also include upfront payments for consulting services to be performed in the future, such as non-recurring engineering services.

The following table presents our deferred revenues by source:

	December 31,
	2025		2024		2023
Deferred revenues license fees	$	-	$	-	$	2
Deferred revenues non-recurring engineering		37		-		-
	$	37	$	-	$	2

Deferred revenues were $37,000 as of December 31, 2025. The Company recognized revenues of approximately zero and $2,000, for the years ended December 31, 2025 and 2024, respectively, related to contract liabilities outstanding at the beginning of the year.

Costs to Obtain Contracts

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

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

2.	Discontinued Operations

During the fourth quarter of 2023 the Company decided to phase out the product business and as a consequence terminate production at the Pronode Technologies AB facilities in Kungsbacka, Sweden. Subsequently, we commenced the phase out of our TSM product business during the first quarter of 2024 through licensing of the TSM technology to strategic partners or outsourcing. In May 2024, we stopped producing TSMs and started to shut down the factory. The facility lease terminated as of September 30, 2024 and was not renewed.

The Company concluded that the termination of TSM manufacturing met the criteria for discontinued operations. As a result, this business has been reclassified to discontinued operations in these consolidated financial statements for all periods presented.

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Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations are presented separately in the consolidated balance sheets for all periods presented. On December 31, 2025 and December 31, 2024, these balances consisted of assets and liabilities of the Company’s Products business.

The following table presents a reconciliation of the carrying amounts of the major classes of these assets and liabilities to the assets and liabilities of discontinued operations as presented on the Company’s consolidated balance sheets (in thousands):

	December 31, 2025		December 31, 2024
ASSETS OF DISCONTINUED OPERATIONS
Current assets of discontinued operations:
Accounts receivable and unbilled revenues, net	$	41	$	-
Total current assets of discontinued operations		41		-
Total assets of discontinued operations	$	41	$	-

Loss from Discontinued Operations

Discontinued operations for the years ended December 31, 2025 and 2024, respectively, consist of results from the Company’s products business.

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The following table provides details about the major classes of line items constituting “Income (loss) from discontinued operations” as presented on the Company’s consolidated statements of operations (in thousands):

	Years ended December 31,
	2025			2024
Revenues:
Products	$	361		$	1,171
Total revenues		361			1,171

Cost of revenues:
Products		48			989
Total cost of revenues		48			989
Gross margin		313			182

Operating expenses:
Sales and marketing		(143	)		165
General and administrative		-			590
Total operating expenses		(143	)		755

Operating income (loss)		456			(573	)
Other income (expense), net		-			(18	)
Loss before provision for income taxes		456			(591	)
Income (loss) from discontinued operations	$	456		$	(591	)

Cash Flows Information

The following table presents cash flow information for discontinued operations:

	Years ended December 31,
	2025		2024
Depreciation and amortization	$	-	$	19
Amortization of operating lease ROU assets		-		52
Inventory impairment loss		-		357
Bad debt expense		-		172
Proceeds from sale of property and equipment		-		190

3.	Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

	Years ended December 31,
	2025		2024
Prepaid insurance	$	89	$	93
Prepaid rent		7		-
VAT receivable		218		172
Other		181		210
Prepaid expenses and other current assets	$	495	$	475

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4.	Property and Equipment

Property and equipment, net consist of the following (in thousands):

	Years ended December 31,
	2025			2024
Computers, software, furniture and fixtures	$	286		$	277
Equipment and vehicles		129			21
Less accumulated depreciation and amortization		(270	)		(236	)
Property and equipment, net	$	145		$	62

Depreciation and amortization expense was $50,000 and $39,000 for the years ended December 31, 2025 and 2024, respectively.

5.	Accrued Expenses

Accrued expenses consist of the following (in thousands):

	Years ended December 31,
	2025		2024
Accrued audit fees	$	6	$	74
Accrued other compensations		205		107
Accrued bonus costs		136		172
Accrued consulting fees and other		112		51
Total accrued expenses	$	459	$	404

6.	Stockholders’ Equity

Preferred Stock

As of December 31, 2025 and 2024, our Restated Certificate of Incorporation, as amended, authorized us to issue up to 1,000,000 shares of preferred stock, par value $0.001 per share.

There were no transactions in our preferred stock during the years ended December 31, 2025 and 2024. No shares of preferred stock were issued and outstanding as of December 31, 2025 and 2024.

Common Stock

As of December 31, 2025 and 2024, our Restated Certificate of Incorporation, as amended, authorized us to issue up to 25,000,000 shares of common stock, par value $0.001 per share.

During the year ended December 31, 2025, we sold no shares under the Ladenburg ATM Facility. During the year ended December 31, 2024, we sold an aggregate of 1,423,441 shares of our common stock under the Ladenburg ATM Facility with aggregate net proceeds to us of $5.8 million, after payment of commissions to Ladenburg and other expenses of $0.2 million.

7.	Stock-Based Compensation

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

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Stock Options and Long-Term Incentive Plan

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

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

As of December 31, 2025 and 2024 no awards were outstanding under either of the plans.

There has been no activity under the stock option plans during the years ended December 31, 2025 and 2024.

Stock options granted under the 2006, 2015 and 2020 Plans are exercisable over a maximum term of 10 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.

8.	Commitments and Contingencies

Legal

The Company is subject to legal proceedings and claims that may arise in the ordinary course of business. The Company is not aware of any pending or threatened litigation matters at this time that would have a material impact on the operations of the Company.

9.	Leases

The Company has leases mainly consisting of the corporate office. The lease had an original lease term of two years and is extended on a yearly basis unless written notice is provided nine months prior to the expiration date. Future renewal options that are not likely to be executed as of the consolidated balance sheet date are excluded from right-of-use assets and related lease liabilities. The lease is automatically renewed at a cost increase of 2% on an annual basis, unless we provide written notice nine months prior to the respective expiration dates.

Operating lease right of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company has entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on the Company's Consolidated Balance Sheets. All operating lease expense is recognized on a straight-line basis over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. For finance leases, the implicit rate is used, since it is readily available.

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

	Years ended December 31,
	2025		2024
Finance lease cost:
Amortization of leased assets	$	19	$	6
Interest on leased liabilities		1		1
Operating lease cost		400		31
Short-term lease cost		83		418
Total lease cost	$	503	$	456

The Company made cash payments regarding operating leases of $385,000 and $27,000 for the years ended December 31, 2025 and 2024, respectively. The Company made cash payments regarding finance leases of $25,000 and $18,000 for the years ended December 31, 2025 and 2024, respectively.

The following table shows right-of-use assets and lease liabilities (in thousands):

	December 31,
	2025		2024
Right-of-use assets:
Operating leases	$	455	$	634
Finance leases		54		21
Total right-of-use assets	$	509	$	655

Lease liabilities:
Current portion of operating lease obligations	$	344	$	225
Operating lease obligations, net of current portion		-		319
Current portion of finance lease obligations		12		2
Finance lease obligations, net of current portion		15		-
Total lease liabilities	$	371	$	546

Lease liability maturities are as follows (in thousands):

	Operating Leases			Finance Leases			Total
2026	$	354		$	13		$	367
2027		-			13			13
2028		-			2			2
Total	$	354		$	28		$	382
Less: Imputed interest		(10	)		(1	)		(11	)
Total lease liabilities	$	344		$	27		$	371

Lease liabilities, current	$	344		$	12		$	356
Lease liabilities, non-current		-			15			15
Total lease liabilities	$	344		$	27		$	371

The weighted-average remaining lease term related to the Company’s operating lease liabilities as of December 31, 2025 and December 31, 2024 was 1.0 years and 1.9 years, respectively. The discount rate related to the Company’s operating lease liabilities as of December 31, 2025 and December 31, 2024 was 5.0% for each of the years.

The weighted-average remaining lease term related to the Company’s finance lease liabilities as of December 31, 2025 and December 31, 2024 was 2.2 years and 0.2 years, respectively. The discount rate related to the Company’s operating lease liabilities as of December 31, 2025 and December 31, 2024 was 3.5% and 3.0%, respectively.

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10.

Segment Information

The Company operates as one operating segment. Our chief operating decision maker ("CODM") is our Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated operating loss and net loss to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the allocation of budget between cost of revenues, research and development, sales and marketing, and general and administrative expenses.

The following table presents key financial information with respect to the Company’s single operating segment (in thousands):

	Years ended December 31,
	2025			2024
Revenues	$	2,062		$	3,108

Costs and expenses^(a):
Cost of revenues		26			116
Product R&D		195			151
General and administrative, including rent		1,138			1,297
Payroll and related		6,736			6,332
Professional fees and IP		1,651			1,351
Marketing and travel		429			483
Total costs and expenses		10,175			9,730
Other segment items^(b)		15,484			75
Other income, net		657			687
Income (loss) before provision (benefit) for income taxes		8,028			(5,860	)
Provision (benefit) for income taxes		(9	)		15
Income (loss) from continuing operations	$	8,037		$	(5,875	)

(a)

The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision-maker.

(b)

Other segment items primarily include net proceeds from patent settlement, depreciation and amortization, payroll and related - re-allocated to cost of revenues, and stock options expense.

The following table presents the long-lived assets property and equipment and right-of-use assets by geographic area (in thousands):

	December 31,
	2025		2024
United States	$	72	$	-
Sweden		528		696
Total	$	600	$	696

We report revenues from external customers based on the country where the customer is located. The following table presents net revenues by country (in thousands, except percentages):

	Years ended December 31,
	2025					2024
	Amount		Percentage			Amount		Percentage
Japan	$	1,276		62.0	%	$	1,731		55.8	%
Sweden		300		14.5	%		365		11.7	%
Germany		42		2.0	%		116		3.7	%
China		16		0.8	%		97		3.1	%
South Korea		1		-	%		31		1.0	%
Other		2		0.1	%		5		0.2	%
	$	1,637		79.4	%	$	2,345		75.5	%
United States		425		20.6	%		763		24.5	%
Total	$	2,062		100.0	%	$	3,108		100.0	%

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11.

Income Taxes

Income (loss) from continuing operations before provision (benefit) for income taxes was distributed geographically as follows (in thousands):

	Years ended December 31,
	2025			2024
Domestic	$	8,263		$	(5,888	)
Foreign		(235	)		28
Total	$	8,028		$	(5,860	)

The provision (benefit) for income taxes from continuing operations is as follows (in thousands):

	Years ended December 31,
	2025			2024
Current
Federal	$	-		$	-
State		-			-
Foreign		(9	)		15
Total current expense (benefit)		(9	)		15

Deferred
Federal		2,393			(784	)
State		-			99
Foreign		(623	)		23
Change in valuation allowance		(1,770	)		662
Total deferred expense		-			-

Total provision (benefit) for income taxes	$	(9	)	$	15

Pursuant to the disclosure requirements of ASU 2023-09, the differences between our effective income tax rate from continuing operations and the U.S. federal statutory income tax rate for the year ended December 31, 2025, are as follows (in thousands, except percentages):

	Year ended December 31,
	2025
	Dollars			Percent
US federal statutory tax rate	$	1,686			21.0	%
State & local income taxes, net of federal effect^(a)		-			-	%
Foreign tax effects
Sweden
Return to provision adjustment		(572	)		(7.1	)%
Changes in valuation allowance		529			6.6	%
Other		6			0.1	%
Other Jurisdictions		(17	)		(0.2	)%
Changes in tax laws or rates in current period		-			-	%
Cross border tax laws
Global Intangible Low-Taxed Income		640			8.0	%
Tax credits		-			-	%
Changes in valuation allowance		(2,298	)		(28.6	)%
Nontaxable or nondeductible items		17			0.2	%
Changes in unrecognized tax benefits		-			-	%
Effective tax rate	$	(9	)		(0.1	)%

(a)

The state that makes up the majority of the state & local income taxes category is California.

The differences between our effective income tax rate and the U.S. federal statutory income tax rate for continuing operations for the year ended December 31, 2024, are as follows:

	Year ended December 31,
	2024
Amounts at statutory tax rates		21.0	%
Foreign losses taxed at different rates		(2.0	)%
Stock-based compensation		-	%
GILTI inclusion		(8.0	)%
Other		-	%
Total		11.0	%
Valuation allowance		(11.0	)%
Effective tax rate		-	%

Significant components of the deferred tax asset balances are as follows (in thousands):

	Years ended December 31,
	2025			2024
Deferred tax assets:
Accruals	$	-		$	-
Net operating losses		20,274			22,124
Gross deferred tax assets		20,274			22,124
Valuation allowance		(20,244	)		(22,108	)
Total deferred tax assets		30			16
Deferred tax liabilities:
Basis difference in fixed assets		(15	)		-
Accruals		(15	)		(16	)
Net deferred tax assets	$	-		$	-

Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31,2025 is as follows (in thousands):

	Year ended December 31,
	2025
Federal	$	-
State		-
Foreign
Germany		(10	)
Other		1
Cash paid (received) for income taxes, net of refunds received	$	(9	)

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Valuation allowances are recorded to offset certain deferred tax assets due to management’s uncertainty of realizing the benefits of these items. Management applies a full valuation allowance for the accumulated losses of Neonode Inc., and its subsidiaries, since it is not determinable using the “more likely than not” criteria that there will be any future benefit of our deferred tax assets. This is mainly due to our history of operating losses. As of December 31, 2025, we had federal, state and foreign net operating losses of $73.2 million, $18.7 million and $17.5 million, respectively. Of the total federal loss carryforward, approximately $47.0 million will begin to expire in 2031 and the remainder do not expire. The California loss carryforward will begin to expire in 2030. The foreign loss carryforward, which is generated in Sweden, does not expire.

Utilization of the net operating loss and tax credit carryforwards is subject to an annual limitation due to the ownership percentage change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. The annual limitation may result in the expiration of the net operating losses and tax credit carryforwards before utilization.

We follow the provisions of accounting guidance which includes a two-step approach to recognizing, derecognizing and measuring uncertain tax positions. There were no unrecognized tax benefits for the years ended December 31, 2025 and 2024.

We follow the policy to classify accrued interest and penalties as part of the accrued tax liability in the provision for income taxes. For the years ended December 31, 2025 and 2024 we did not recognize any interest or penalties related to unrecognized tax benefits.

As of December 31, 2025, we had no uncertain tax positions that would be reduced as a result of a lapse of the applicable statute of limitations.

We file income tax returns in the U.S. federal jurisdiction, California, Sweden, and Japan. The 2008 through 2024 tax years are open and may be subject to potential examination in one or more jurisdictions. We are not currently under any federal, state or foreign income tax examinations.

12.

Employee Benefit Plans

We participate in a number of individual defined contribution pension plans for our employees in Sweden. We contribute between 4.5% and 30% of the employee’s annual salary to these pension plans depending on age and salary level. Contributions relating to these defined contribution plans for the years ended December 31, 2025 and 2024 were $533,000 and $542,000, respectively. We match U.S. employee contributions to a 401(K) retirement plan up to a maximum of six percent (6%) of an employee’s annual salary. Contributions relating to the matching 401(K) contributions for the years ended December 31, 2025 and 2024 were $6,000 and $6,000, respectively. In Taiwan, we contribute six percent (6%) of the employee’s annual salary to a pension fund which agrees with Taiwan’s Labor Pension Act. Contributions relating to the Taiwanese pension fund for the years ended December 31, 2025 and 2024 were $3,000 and $3,000, respectively.

13.

Net Loss Per Share

Basic net loss per common share for the years ended December 31, 2025 and 2024 was computed by dividing the net loss attributable to common shareholders of Neonode Inc. for the relevant period by the weighted average number of shares of common stock outstanding during the year. Diluted loss per common share is computed by dividing net loss attributable to common shareholders of Neonode Inc. for the relevant period by the weighted average number of shares of common stock and common stock equivalents outstanding during the year.

The Company had no potential common stock equivalents as of December 31, 2025 or 2024.

	Years ended December 31,
(in thousands, except per share amounts)	2025		2024
BASIC AND DILUTED
Weighted average number of common shares outstanding		16,783		15,873
Income (loss) from continuing operations	$	8,037	$	(5,875	)
Income (loss) from discontinued operations		456		(591	)
Net income (loss)	$	8,493	$	(6,466	)

Income (loss) per share from continuing operations - basic and diluted	$	0.48	$	(0.37	)
Income (loss) per share from discontinued operations - basic and diluted		0.03		(0.04	)
Net income (loss) per share - basic and diluted	$	0.51	$	(0.41	)

14.

Subsequent Events

No subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes thereto.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 our 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 December 31, 2025. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2025 due to material weaknesses in our internal control over financing reporting described below.

Material Weaknesses

We identified material weaknesses in the design and operation of our internal controls over financial reporting in the “Control Activities” component of the Committee of Sponsoring Organizations (COSO) framework:

We did not maintain information technology general controls, including user access, change management, and computer operation controls, to support the effective operation of financially significant systems.

We identified system limitations that do not facilitate proper segregation of duties within multiple systems and a lack of mitigating business process level controls to address the risk of management override of controls over the preparation and review of manual journal entries and in key accounting processes.

There are lack of sufficient controls to prevent the risk of material misstatements in the income tax calculations and related disclosures.

While neither of the deficiencies resulted in any material misstatements of our consolidated interim or annual financial statements, they do represent material weaknesses in our internal control over financial reporting.

Remediation Efforts to Address the Material Weaknesses

We are committed to maintaining a strong internal control environment and will implement corrective actions to support the remediation of the material weaknesses noted above. This includes, but is not limited to, providing training to process and control owners, enhancing relevant policies, procedures, guidelines and documentation templates, implementing new controls and improving documentation supporting existing controls, and enhancing segregation of duties.

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We will not be able to fully remediate these material weaknesses until the applicable controls operate for a sufficient period of time and can be tested and concluded by management to be designed and operating effectively. Our management will continue to monitor the effectiveness of our remediation plans in future periods and will make changes we determine to be appropriate.

In designing and evaluating disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

Except for the identification of the material weaknesses described above, 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 fourth quarter ended December 31, 2025 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

Under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making their assessment, our management used criteria established in the framework on Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon that assessment, our management concluded that our internal control over financial reporting was not effective as of December 31, 2025, due to the material weaknesses described above.

This report does not include an attestation report of our independent registered public accounting firm regarding our internal control over financial reporting in accordance with applicable SEC rules that permit us to provide only management´s report in this report.

ITEM 9B. OTHER INFORMATION

None

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Neonode Inc. 10-K