Neonode Inc.

Previous wording

This Quarterly Report on Form 10-Q (this “Quarterly 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 Quarterly 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 the discussion under “Risk Factors” and elsewhere in this Quarterly Report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 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 Quarterly 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.

Current wording

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 Quarterly 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 the discussion under “Risk Factors” and elsewhere in this Quarterly Report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 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 Quarterly 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.

Previous wording

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

Current wording

All of our sales for the three and six months ended June 30, 2025 and 2024 were to customers located in the United States, Europe and Asia.

Previous wording

Total revenues were $0.5 million for the three months ended March 31 2025, compared to $0.8 million for the same period in 2024. The decrease in total revenues of 37.0% for the three months ended March 31, 2025, as compared to the same period in 2024, is explained by lower license fees and non-recurring revenues.

Current wording

Total revenues were $0.6 million and $1.1 million for the three and six months ended June 30 2025, respectively, compared to $0.8 million and $1.6 million for the same periods in 2024, respectively. The decrease in total revenues of 25.2% for the three months ended June 30, 2025, as compared to the same period in 2024, is explained by lower license fees. The decrease in total revenues of 31.1% for the six months ended June 30, 2025, as compared to the same period in 2024, is explained by lower license fees and non-recurring revenues.

Previous wording

Revenues from license fees were $0.5 million for the three months ended March 31, 2025, compared to $0.8 million for the three months ended March 31, 2024. The decrease of 35.7% for the three months ended March 31, 2025, as compared to the same period in 2024, was mainly due to lower demand for our legacy customers products within printer and passenger car touch applications.

Current wording

Revenues from license fees were $0.4 million and $0.9 million for the three and six months ended June 30, 2025, respectively, compared to $0.6 million and $1.4 million for the same periods in 2024, respectively. The decrease of 34.2% for the three months ended June 30, 2025, as compared to the same period in 2024, was mainly due to lower demand for our legacy customers’ products within printer and passenger car touch applications. The decrease of 35.0% for the six months ended June 30, 2025, as compared to the same period in 2024, was mainly due to lower demand for our legacy customers’ products within printer and passenger car touch applications.

Previous wording

Revenues from non-recurring engineering were $16,000 for the three months ended March 31, 2025, compared to $41,000 for the three months ended March 31, 2024. Most of 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 61.0% for the three months ended March 31, 2025, as compared to the same period in 2024 was the result of fewer projects.

Current wording

Revenues from non-recurring engineering were $0.2 million and $0.2 million for the three and six months ended June 30, 2025, respectively, compared to $0.2 million and $0.2 million for the same periods in 2024, respectively. Most of our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our zForce and MultiSensing technology platforms. The increase of 4.3% for the three months ended June 30, 2025, as compared to the same period in 2024, was the result of delivery in the Commercial OEM DMS project. The decrease of 7.5% for the six months ended June 30, 2025, as compared to the same period in 2024, was the result of fewer projects.

Previous wording

Research and development (“R&D”) expenses were $1.0 million for the three months ended March 31, 2025, compared to $0.9 million for the three months ended March 31, 2024. The increase of 8.9% for the three months ended March 31, 2025 compared to the same period in 2024 was primarily related to higher payroll and related costs.

Current wording

Research and development (“R&D”) expenses were $1.1 million and $2.0 million for the three and six months ended June 30, 2025, respectively, compared to $1.0 million and $1.9 million for the same periods in 2024, respectively. The increase of 10.2% for the three months ended June 30, 2025 compared to the same period in 2024 was primarily related to higher payroll and related costs. The increase of 9.6% for the six months ended June 30, 2025 compared to the same period in 2024 was primarily related to higher payroll and related costs.

Previous wording

Sales and marketing expenses were $0.6 million for the three months ended March 31, 2025, compared to $0.8 million for the three months ended March 31, 2024. The decrease of 21.3% for the three months ended March 31, 2025 compared to the same period in 2024 was primarily related to lower payroll and related costs.

Current wording

Sales and marketing expenses were $0.6 million and $1.2 million for the three and six months ended June 30, 2025, respectively, compared to $0.5 million and $1.4 million for the same periods in 2024, respectively. The increase of 9.6% for the three months ended June 30, 2025 compared to the same period in 2024 was primarily related to higher payroll and related costs. The decrease of 9.0% for the six months ended June 30, 2025 compared to the same period in 2024 was primarily related to lower payroll and related costs and lower spend in marketing.

Previous wording

General and administrative expenses were $0.9 million for the three months ended March 31, 2025, compared to $1.0 million for the three months ended March 31, 2024. The decrease of 12.3% for the three months ended March 31, 2025, compared to the same period in 2024 was primarily related to lower payroll and related costs.

Current wording

General and administrative expenses were $1.0 million and $1.9 million for the three and six months ended June 30, 2025, respectively, compared to $1.0 million and $2.0 million for the same periods in 2024, respectively. The decrease of 1.3% for the three months ended June 30, 2025, compared to the same period in 2024, was primarily related to lower professional fees offset by higher payroll and related costs. The decrease of 6.6% for the six months ended June 30, 2025, compared to the same period in 2024, was primarily related to lower overall costs.

Previous wording

Other income was $0.2 million for the three months ended March 31, 2025, compared to $0.2 million for the three months ended March 31, 2024. The other income for the period was mainly related to interest income earned.

Current wording

Other income was $0.1 million and $0.3 million for the three and six months ended June 30, 2025, respectively, compared to $0.1 million and $0.3 million for the same periods in 2024, respectively. The other income for the period was mainly related to interest income earned.

Previous wording

Our effective tax rate was 0.6% for the three months ended March 31, 2025, compared to (0.6)% for the three months ended March 31, 2024. The tax rate is due to global intangible low-taxed income and change in valuation allowance.

Current wording

Our effective tax rate was zero and 0.3% for the three and six months ended June 30, 2025, respectively, compared to (0.7)% and (0.6)% for the same periods in 2024, respectively. The tax rate is due to global intangible low-taxed income and change in valuation allowance.

Previous wording

As a result of the factors discussed above, we recorded a loss from continuing operations of $1.8 million for the three months ended March 31, 2025, and $1.7 million for the same periods in 2024.

Current wording

As a result of the factors discussed above, we recorded a loss from continuing operations of $1.9 million and $3.7 million for the three and six months ended June 30, 2025, respectively, and $1.7 million and $3.4 million for the same periods in 2024, respectively.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $15.0 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 Report.

Current wording

As of June 30, 2025, we had cash and cash equivalents of $13.2 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 Report.

Previous wording

Working capital (current assets less current liabilities) was $14.1 million as of March 31, 2025, compared to $16.1 million as of December 31, 2024.

Current wording

Working capital (current assets less current liabilities) was $12.1 million as of June 30, 2025, compared to $16.1 million as of December 31, 2024.

Previous wording

Net cash used in operating activities for combined continuing and discontinued operations for the three months ended March 31, 2025, was $1.4 million and was primarily the result of a net loss of $1.7 million and approximately $0.1 million in non-cash operating expenses, comprised of depreciation and amortization and amortization of operating lease right-of-use assets and changes in operating assets and liabilities of $0.2 million. Net cash used in operating activities for combined continuing and discontinued operations for the three months ended March 31, 2024, was $1.9 million and was primarily the result of a net loss of $2.1 million and approximately $0.3 million in non-cash operating expenses, comprised of stock-based compensation expense, depreciation and amortization, amortization of operating lease right-of-use assets and inventory impairment loss and changes in operating assets and liabilities of $0.2 million.

Current wording

Net cash used in operating activities for combined continuing and discontinued operations for the six months ended June 30, 2025, was $3.1 million and was primarily the result of a net loss of $3.6 million and approximately $0.1 million in non-cash operating expenses, comprised of depreciation and amortization and amortization of operating lease right-of-use assets and changes in operating assets and liabilities of $0.4 million. Net cash used in operating activities for combined continuing and discontinued operations for the six months ended June 30, 2024, was $3.1 million and was primarily the result of a net loss of $3.8 million and approximately $0.4 million in non-cash operating expenses, comprised of stock-based compensation expense, depreciation and amortization, amortization of operating lease right-of-use assets and inventory impairment loss and changes in operating assets and liabilities of $0.2 million.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025, was approximately $40,000 and was primarily the result of purchase of property and equipment. Net cash used in investing activities for the three months ended March 31, 2024, was zero.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025, was approximately $15,000 and was primarily the result of purchase of property and equipment. Net cash provided by investing activities for the six months ended June 30, 2024, was approximately $153,000 and was primarily proceeds from sale of property and equipment offset by purchase of property and equipment.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025 and 2024, was approximately $2,000 and $9,000, respectively, and was primarily the result of principal payments on finance leases.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025 and 2024, was approximately $5,000 and $13,000, respectively, and was primarily the result of principal payments on finance leases.

Previous wording

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses for combined continuing and discontinued operations of approximately $1.7 million for the three ended March 31, 2025, compared to $1.7 million for the three months ended March 31, 2024, and had an accumulated deficit of approximately $225.8 million and $224.1 million as of March 31, 2025 and December 31, 2024, respectively. In addition, operating activities used cash of approximately $1.4 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses for combined continuing and discontinued operations of approximately $1.9 million and $3.6 million for the three and six months ended June 30, 2025, respectively, compared to $1.7 million and $3.8 million for the same periods in 2024, respectively, and had an accumulated deficit of approximately $227.7 million and $224.1 million as of June 30, 2025 and December 31, 2024, respectively. In addition, operating activities used cash of approximately $3.1 million and $3.1 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

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

Current wording

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

Previous wording

For total rent expense for combined continuing and discontinued operations, we recorded $104,000 for the three months ended March 31, 2025, compared to $126,000 for the three months ended March 31, 2024.

Current wording

For total rent expense for combined continuing and discontinued operations, we recorded $115,000 and $219,000 for the three and six months ended June 30, 2025, respectively, compared to $123,000 and $249,000 for the same periods in 2024.

Previous wording

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.

Current wording

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. On May 29, 2024, we terminated the B. Riley Sales Agreement with B. Riley Securities.

Previous wording

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.

Current wording

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. 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.

Previous wording

During the three months ended March 31, 2025 and 2024, no shares were sold under the Ladenburg ATM Facility.

Current wording

During the three and six months ended June 30, 2025 and 2024, no shares were sold under the Ladenburg ATM Facility.

Previous wording

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. Under the current schedule order, the parties are set to conclude fact discovery on May 23, 2025. Trial is scheduled to begin on October 24, 2025.

Current wording

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.

Previous wording

The case against Apple remains pending in the United States District Court for the Northern District of California. 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.

Current wording

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.