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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2025

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

For the transition period from ________ to ________

Commission File 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)		(IRS Employer Identification No.)

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

+46 (0) 70 29 58 519

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

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

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”, “non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of November 3, 2025 was 16,782,922.

Table of Contents

NEONODE INC.

Quarterly Report on Form 10-Q

For the Fiscal Quarter Ended September 30, 2025

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION		1

Item 1	Financial Statements (Unaudited)	1

	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	1

	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024	2

	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2025 and 2024	3

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2025 and 2024	4

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3	Quantitative and Qualitative Disclosures about Market Risk	24

Item 4	Controls and Procedures	24

PART II OTHER INFORMATION		25

Item 1	Legal Proceedings	25

Item 1A	Risk Factors	25

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3	Defaults Upon Senior Securities	25

Item 4	Mine Safety Disclosures	25

Item 5	Other Information	25

Item 6	Exhibits	25

SIGNATURES		26

EXHIBITS

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

NEONODE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share and per share amounts)

	September 30, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	11,585		$	16,427
Accounts receivable and unbilled revenues, net		649			732
Contract asset		-			51
Prepaid expenses and other current assets		529			475
Receivable from patent assignment		19,389			-
Current assets of discontinued operations		41			-
Total current assets		32,193			17,685

Non-current assets:
Property and equipment, net		160			62
Operating lease right-of-use assets, net		466			634
Total non-current assets		626			696
Total assets	$	32,819		$	18,381

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	525		$	229
Accrued payroll and employee benefits		909			760
Accrued expenses		248			404
Accrued broker fee from patent assignment		3,878			-
Contract liabilities		62			-
Current portion of finance lease obligations		12			2
Current portion of operating lease obligations		295			225
Total current liabilities		5,929			1,620

Non-current liabilities:
Finance lease obligations, net of current portion		18			-
Operating lease obligations, net of current portion		69			319
Total non-current liabilities		87			319
Total liabilities		6,016			1,939

Commitments and contingencies (Note 4)

Stockholders’ equity:
Preferred stock, 1,000,000 shares authorized, with par value of $0.001; no shares issued and outstanding at September 30, 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 September 30, 2025 and December 31, 2024, respectively.		17			17
Additional paid-in capital		240,955			240,955
Accumulated other comprehensive loss		(672	)		(450	)
Accumulated deficit		(213,497	)		(224,080	)
Total stockholders’ equity		26,803			16,442
Total liabilities and stockholders’ equity	$	32,819		$	18,381

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

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NEONODE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)

	Three months ended						Nine months ended
	September 30,						September 30,
	2025			2024			2025			2024
Revenues:
License fees	$	406		$	731		$	1,307		$	2,118
Non-recurring engineering		24			107			235			335
Total revenues		430			838			1,542			2,453

Cost of revenues:
Non-recurring engineering		9			23			24			64
Total cost of revenues		9			23			24			64
Gross margin		421			815			1,518			2,389

Operating expenses:
Research and development		794			822			2,843			2,692
Sales and marketing		466			484			1,704			1,844
General and administrative		862			734			2,747			2,696
Total operating expenses		2,122			2,040			7,294			7,232

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

Operating income (loss)		13,810			(1,225	)		9,735			(4,843	)
Other income, net		124			171			405			455
Income (loss) before provision for income taxes		13,934			(1,054	)		10,140			(4,388	)
Provision for income taxes		-			(11	)		(10	)		10
Income (loss) from continuing operations		13,934			(1,043	)		10,150			(4,398	)
Income (loss) from discontinued operations		250			(44	)		433			(468	)
Net income (loss)	$	14,184		$	(1,087	)	$	10,583		$	(4,866	)

Income (loss) per common share:
Basic and diluted income (loss) per share from continuing operations	$	0.83		$	(0.07	)	$	0.60		$	(0.28	)
Basic and diluted income (loss) per share from discontinued operations		0.01			-			0.03			(0.03	)
Basic and diluted net income (loss) per share⁽ᵃ⁾	$	0.85		$	(0.07	)	$	0.63		$	(0.31	)
Basic and diluted – weighted average number of common shares outstanding		16,783			15,980			16,783			15,568

(a)

May not sum due to rounding.

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

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NEONODE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(In thousands)

	Three months ended						Nine months ended
	September 30,						September 30,
	2025			2024			2025			2024
Net income (loss)	$	14,184		$	(1,087	)	$	10,583		$	(4,866	)

Other comprehensive loss:
Foreign currency translation adjustments		(33	)		(30	)		(222	)		(96	)
Total other comprehensive loss		(33	)		(30	)		(222	)		(96	)
Comprehensive income (loss)	$	14,151		$	(1,117	)	$	10,361		$	(4,962	)

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

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NEONODE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)

For the three and nine months ended September 30, 2025 and 2024

	Common Stock Shares Issued		Common Stock Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balances, December 31, 2024		16,783	$	17	$	240,955	$	(450	)	$	(224,080	)	$	16,442
Foreign currency translation adjustment		-		-		-		(134	)		-			(134	)
Net loss		-		-		-		-			(1,733	)		(1,733	)
Balances, March 31, 2025		16,783	$	17	$	240,955	$	(584	)	$	(225,813	)	$	14,575
Foreign currency translation adjustment		-		-		-		(55	)		-			(55	)
Net loss		-		-		-		-			(1,868	)		(1,868	)
Balances, June 30, 2025		16,783	$	17	$	240,955	$	(639	)	$	(227,681	)	$	12,652
Foreign currency translation adjustment		-		-		-		(33	)		-			(33	)
Net income		-		-		-					14,184			14,184
Balances, September 30, 2025		16,783	$	17	$	240,955	$	(672	)	$	(213,497	)	$	26,803

	Common Stock Shares Issued		Common Stock Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balances, December 31, 2023		15,359	$	15	$	235,158	$	(396	)	$	(217,614	)	$	17,163
Stock-based compensation		-		-		2		-			-			2
Foreign currency translation adjustment		-		-		-		(34	)		-			(34	)
Net loss		-		-		-		-			(2,084	)		(2,084	)
Balances, March 31, 2024		15,359	$	15	$	235,160	$	(430	)	$	(219,698	)	$	15,047
Stock-based compensation		-		-		1		-			-			1
Foreign currency translation adjustment		-		-		-		(32	)		-			(32	)
Net loss		-		-		-		-			(1,695	)		(1,695	)
Balances, June 30, 2024		15,359	$	15	$	235,161	$	(462	)	$	(221,393	)	$	13,321
Stock-based compensation		-		-		-		-			-			-
Issuance of shares for cash, net of offering costs		1,424		2		5,794		-			-			5,796
Foreign currency translation adjustment		-		-		-		(30	)		-			(30	)
Net loss		-		-		-		-			(1,087	)		(1,087	)
Balances, September 30, 2024		16,783	$	17	$	240,955	$	(492	)	$	(222,480	)	$	18,000

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

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NEONODE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

	Nine months ended
	September 30,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	10,583		$	(4,866	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		-			3
Gain from patent assignment		(19,389	)		-
Loss on disposal of assets		2			18
Depreciation and amortization		37			49
Amortization of operating lease right-of-use assets		261			52
Inventory impairment loss		-			287
Recoveries of bad debt		(138	)		-
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenues, net		232			(105	)
Inventory		-			132
Prepaid expenses and other current assets		9			153
Accounts payable, accrued payroll and employee benefits, and accrued expenses		84			(115	)
Accrued broker fee from patent assignment		3,878			-
Contract liabilities		62			15
Operating lease obligations		(258	)		(52	)
Net cash used in operating activities		(4,637	)		(4,429	)

Cash flows from investing activities:
Purchase of property and equipment		(90	)		(37	)
Proceeds from sale of property and equipment		-			190
Net cash provided by (used in) investing activities		(90	)		153

Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs		-			5,796
Principal payments on finance lease obligations		(8	)		(15	)
Net cash used in financing activities		(8	)		5,781

Effect of exchange rate changes on cash and cash equivalents		(107	)		(61	)

Net change in cash and cash equivalents		(4,842	)		1,444
Cash and cash equivalents at beginning of period		16,427			16,155
Cash and cash equivalents at end of period	$	11,585		$	17,599


Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	(10	)	$	10
Cash paid for interest	$	-		$	1

Supplemental disclosure of non-cash investing and financial activities:
Property and equipment obtained in exchange for finance lease obligations	$	34		$	-
Receivable from patent assignment	$	19,389		$	-

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

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NEONODE INC.

Notes to the Condensed Consolidated Financial Statements (Unaudited)

1. Organization and Summary of Significant Accounting Policies

Basis of Presentation and Preparation

The condensed 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. The condensed consolidated financial statements have been prepared by us, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally contained in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Recently Issued Accounting Pronouncement Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. The ASU also clarifies that entities with a single reportable segment are subject to both new and existing reporting requirements under Topic 280. We adopted ASU 2023-07 in the interim period ended March 31, 2025 using a retrospective method to all periods presented. See Note 6 Segment Information for further details.

Recently Issued Accounting Pronouncements Pending Adoption

In December 2023, the 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. We are currently evaluating the impact ASU 2023-09 will have 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.

In July 2025, the FASB issued ASU 2025‑05, Financial Instruments—Credit Losses (Topic 32): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient to measure credit losses on current accounts receivable and current contracts assets. The practical expedient allows companies to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when measuring credit losses. This standard is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those fiscal years, with early adoption permitted, and should be applied on a prospective basis. We are currently evaluating the impact of adopting ASU 2025-05.

Foreign Currency Translation and Transaction Gains and Losses

The functional currency of our foreign subsidiaries is the applicable local currency, the Swedish Krona, the Japanese Yen, the South Korean Won and the Taiwan Dollar. The translation from Swedish Krona, Japanese Yen, South Korean Won and Taiwan Dollar to U.S. Dollars is performed for balance sheet accounts using current exchange rates in effect at the condensed consolidated 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 losses were $(33,000) and $(222,000) and $(30,000) and $(96,000) during the three and nine months ended September 30, 2025 and 2024, respectively. Gains resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $(13,000)and $67,000 and $(3,000) and $(1,000) during the three and nine months ended September 30, 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 $14.2 million and $10.6 million and net loss of $1.1 million and $4.9 million for the three and nine months ended September 30, 2025 and 2024, respectively and had an accumulated deficit of approximately $213.5 million and $224.1 million as of September 30, 2025 and December 31, 2024, respectively. In addition, operating activities used cash of approximately $4.6 million and $4.4 million for the nine months ended September 30, 2025 and 2024, respectively.

The condensed consolidated financial statements included in this report 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 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 condensed consolidated financial statements were issued.

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Concentration of Credit and Business Risks

Our customers are located in the United States, Europe and Asia.

As of September 30, 2025, three of our customers represented approximately 83.8% 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 10.0% or more of our net revenues during the three months ended September 30, 2025 are as follows:

	●	Seiko Epson – 46.3%

	●	Hewlett-Packard – 21.5%

	●	Alps Alpine – 15.0%

Customers who accounted for 10.0% or more of our net revenues during the nine months ended September 30, 2025 are as follows:

	●	Seiko Epson – 35.1%

	●	Alps Alpine – 20.2%

	●	Hewlett-Packard – 19.9%

	●	Commercial Vehicle OEM – 17.8%

Customers who accounted for 10.0% or more of our net revenues during the three months ended September 30, 2024 are as follows:

	●	Seiko Epson – 30.6%

	●	Nexty Electronics – 17.9%

	●	Alps Alpine – 15.3%

	●	Hewlett-Packard – 14.6%

	●	Commercial Vehicle OEM – 12.35%

Customers who accounted for 10.0% or more of our net revenues during the nine months ended September 30, 2024 are as follows:

	●	Seiko Epson – 25.2%

	●	Hewlett-Packard – 20.7%

	●	Alps Alpine – 20.4%

	●	Commercial Vehicle OEM – 13.4%

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Revenues

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

	Three months ended September 30,
	2025					2024
	Amount		Percentage			Amount		Percentage
North America:
Net revenues from IT & Industrial	$	101		100.0	%	$	163		100.0	%
	$	101		100.0	%	$	163		100.0	%

Asia Pacific:
Net revenues from Automotive	$	65		23.2	%	$	143		25.9	%
Net revenues from IT & Industrial		215		76.8	%		409		74.1	%
	$	280		100.0	%	$	552		100.0	%

Europe, Middle East and Africa:
Net revenues from Automotive	$	49		100.0	%	$	123		100.0	%
	$	49		100.0	%	$	123		100.0	%

	Nine months ended September 30,
	2025					2024
	Amount		Percentage			Amount		Percentage
North America:
Net revenues from IT & Industrial	$	329		100.0	%	$	589		100.0	%
	$	329		100.0	%	$	589		100.0	%

Asia Pacific:
Net revenues from Automotive	$	313		34.6	%	$	597		41.7	%
Net revenues from IT & Industrial		591		65.4	%		834		58.3	%
	$	904		100.0	%	$	1,431		100.0	%

Europe, Middle East and Africa:
Net revenues from Automotive	$	309		100.0	%	$	433		100.0	%
	$	309		100.0	%	$	433		100.0	%

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Contract Liabilities

The following table presents our deferred revenues by source (in thousands):

	September 30, 2025		December 31, 2024
Deferred revenues license fees	$	25	$	-
Deferred revenues non-recurring engineering		37		-
	$	62	$	-

During the three and nine months ended September 30, 2025 and 2024, the Company recognized revenues of approximately $38,000 and $0 and $25,000 and $2,000 respectively, related to contract liabilities outstanding at the beginning of the period.

Gain from Patent Assignment and Broker Fee from Patent Assignment

In May 2019, the Company assigned a portfolio of patents to an unrelated third party. In exchange for assigning the patents, the Company was granted a limited non-exclusive, perpetual, royalty-free license to use the patents and is entitled to share in proceeds from the assignee’s monetization efforts related to the patents. The Company accounts for the patent assignment as a transfer of nonfinancial assets in accordance with Subtopic 610-20, Other Income--Gains and Losses from the Derecognition of Nonfinancial Assets, which refers to a number of principles of Topic 606 including those related to determining whether a contract exists, identifying distinct promises, determining when control is transferred and determining the transaction price including constraining estimates of variable consideration.

During the third quarter of 2025, the Company determined that approximately $19.4 million of the transaction price from the patent assignment was no longer constrained and recorded a receivable and gain on patent assignment for that amount. In addition, during the third quarter of 2025, the Company recorded a broker fee liability and expense of $3.9 million related to the patent assignment gain.

Income Taxes

We recognize deferred tax liabilities and assets for the expected future tax consequences of items that have been included in the condensed 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 September 30, 2025 and December 31, 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 for income taxes represents the net change in deferred tax amounts, plus income taxes paid or payable for the current period.

We follow U.S. GAAP related accounting for uncertainty in income taxes, which provisions include a two-step approach to recognizing, de-recognizing and measuring uncertainty in income taxes. As a result, we did not recognize a liability for unrecognized tax benefits. As of September 30, 2025 and December 31, 2024, we had no unrecognized tax benefits.

On July 4, 2025, new U.S tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or the "OBBBA") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The enactment of the OBBBA does not have a material impact on our results from operations for the current year nor do we expect the OBBBA to have a material impact on our results from operations in future years.

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 condensed consolidated financial statements for all periods presented.

Assets and Liabilities of Discontinued Operations

Assets and liabilities of discontinued operations are presented separately in the condensed consolidated balance sheets for all periods presented. On September 30, 2025 and December 31, 2024, these balances consisted of assets and liabilities of the Company’s Products business.

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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 condensed consolidated balance sheets (in thousands):

	September 30, 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	$	-

Income (Loss) from Discontinued Operations

Discontinued operations for the three and nine months ended September 30, 2025 and 2024, respectively, consists of results from the Company’s products business.

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

	Three months ended						Nine months ended
	September 30,						September 30,
	2025			2024			2025			2024
Revenues:
Products	$	226		$	85		$	338		$	908
Total revenues		226			85			338			908

Cost of revenues:
Products		12			(19	)		48			822
Total cost of revenues		12			(19	)		48			822
Gross margin		214			104			290			86

Operating expenses:
Sales and marketing		(36	)		-			(143	)		-
General and administrative		-			148			-			573
Total operating expenses		(36	)		148			(143	)		573

Operating income (loss)		250			(44	)		433			(487	)
Other income (expense), net		-			-			-			19
Loss before provision for income taxes		250			(44	)		433			(468	)
Net income (loss)	$	250		$	(44	)	$	433		$	(468	)

Cash Flows Information

The following table presents cash flow information for discontinued operations (in thousands):

	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Depreciation and amortization	$	-	$	1	$	-	$	19
Amortization of operating lease ROU assets		-		18		-		52
Inventory impairment loss		-		287		-		287
Purchase of property and equipment		-		-		-		(37	)
Proceeds from sale of property and equipment		-		-		-		190

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3. Stockholders’ Equity

At-the-Market Facility

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 (the “Securities Act”). 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.

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.

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.

4. 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.

5. Net Income (Loss) per Share

Basic net income (loss) per share of common stock for the three and nine months ended September 30, 2025 and 2024 was computed by dividing the net income (loss) attributable to common stockholders of the Company for the relevant period by the weighted average number of shares of common stock outstanding. Diluted income (loss) per share of common stock is computed by dividing net income (loss) attributable to common stockholders of the Company for the relevant period by the weighted average number of shares of common stock and common stock equivalents outstanding excluding potential common stock equivalents that are anti-dilutive.

The Company had no potential common stock equivalents for the three and nine months ended September 30, 2025 and 2024, respectively.

	Three months ended					Nine months ended
	September 30,					September 30,
(in thousands, except per share amounts)	2025		2024			2025		2024
BASIC AND DILUTED
Weighted average number of common shares outstanding		16,783		15,980			16,783		15,568
Income (loss) from continuing operations	$	13,934	$	(1,043	)	$	10,150	$	(4,398	)
Income (loss) from discontinued operations		250		(44	)		433		(468	)
Net income (loss)	$	14,184	$	(1,087	)	$	10,583	$	(4,866	)

Income (loss) per share from continuing operations - basic and diluted	$	0.83	$	(0.07	)	$	0.60	$	(0.28	)
Income (loss) per share from discontinued operations - basic and diluted		0.01		-			0.03		(0.03	)
Net income (loss) per share - basic and diluted(a)	$	0.85	$	(0.07	)	$	0.63	$	(0.31	)

(a)

May not sum due to rounding.

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6. 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):

	Three months ended					Nine months ended
	September 30,					September 30,
	2025		2024			2025			2024
Revenues	$	430	$	838		$	1,542		$	2,453

Costs and expenses^(a):
Cost of revenues		10		23			24			64
Product R&D		47		78			132			146
General and administrative, including rent		302		152			848			875
Payroll and related		1,257		1,508			4,877			4,898
Professional fees and IP		414		236			1,073			969
Marketing and travel		97		57			351			374
Total costs and expenses		2,127		2,054			7,305			7,326
Other segment items^(b)		15,507		11			15,498			31
Other income, net		124		151			405			454
Income (loss) before provision for income taxes		13,934		(1,054	)		10,140			(4,388	)
Provision for income taxes		-		(11	)		(10	)		10
Income (loss) from continuing operations	$	13,934	$	(1,043	)	$	10,150		$	(4,398	)

(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):

	September 30, 2025		December 31, 2024
United States	$	75	$	-
Sweden		551		696
Total	$	626	$	696

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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):

	Three months ended September 30,
	2025						2024
	Amount			Percentage			Amount		Percentage
Japan	$	277			64.4	%	$	534		63.7	%
Sweden		38			8.8	%		105		12.5	%
Germany		11			2.6	%		18		2.1	%
China		4			0.9	%		3		0.4	%
South Korea		-			-	%		14		1.7	%
Other		(1	)		(0.2	)%		-		-	%
	$	329			76.5	%	$	674		80.4	%
United States		101			23.5	%		164		19.6	%
Total	$	430			100.0	%	$	838		100.0	%

	Nine months ended September 30,
	2025					2024
	Amount		Percentage			Amount		Percentage
Japan	$	889		57.7	%	$	1,324		53.9	%
Sweden		275		17.8	%		328		13.4	%
Germany		34		2.2	%		105		4.3	%
China		14		0.9	%		10		0.4	%
South Korea		1		0.1	%		96		3.9	%
	$	1,213		78.7	%	$	1,863		75.9	%
United States		329		21.3	%		590		24.1	%
Total	$	1,542		100.0	%	$	2,453		100.0	%

7. Subsequent Events

No subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the notes thereto other than as discussed elsewhere in the accompanying notes.

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

Forward Looking Statements

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.

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report and consolidated financial statements for the year ended December 31, 2024 included in our most recent Annual Report on Form 10-K. All information in the following discussion and analysis present the results of continuing operations and exclude amounts related to discontinued operations for all periods presented unless otherwise stated.

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

Overview

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 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.

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Licensing

We license our MultiSensing and zForce technology to Original Equipment Manufacturers (“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 September 30, 2025, we had 37 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. Ten 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 2025 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.

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.

Global Conflicts

The ongoing war in Ukraine has impacted the global economy as the United States, the UK, the EU, and other countries have imposed broad export controls and financial and economic sanctions against Russia (a large exporter of commodities), Belarus, and specific areas of Ukraine, and may continue to impose additional sanctions or other measures. Russia may impose its own counteractive measures. We do not procure materials directly from Ukraine or Russia, but the war in Ukraine may further exacerbate ongoing supply chain disruptions that are occurring across the globe. While the precise effects on global economies from the war in Ukraine and related sanctions remain uncertain, there has been significant volatility in the financial markets, fluctuations in currency exchange rates, and an increase in energy and commodity prices globally. Should the wars continue or escalate, there may be various economic and security consequences including, but not limited to, additional supply shortages of different kinds; further increases in prices of commodities; significant disruptions in logistics infrastructure and telecommunications services; and risks relating to the unavailability of information technology systems and infrastructure. The resulting impacts on the global economy, financial markets, inflation, interest rates, and unemployment, among others, could adversely impact economic and financial conditions.

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Results of Operations

A summary of our financial results is as follows (in thousands, except percentages):

	Three months ended
	September 30,						Variance in
	2025			2024			Dollars			Percent
Revenues:
License fees	$	406		$	731		$	(325	)		(44.5	)%
Percentage of revenue		94.4	%		87.2	%
Non-recurring engineering		24			107			(83	)		(77.6	)%
Percentage of revenue		5.6	%		12.8	%
Total revenues	$	430		$	838		$	(408	)		(48.7	)%

Cost of revenues:
Non-recurring engineering		9			23			(14	)		(60.9	)%
Percentage of revenue		2.1	%		2.7	%
Total cost of revenues	$	9		$	23		$	(14	)		(60.9	)%
Gross margin	$	421		$	815		$	(394	)		(48.3	)%

Operating expenses:
Research and development	$	794		$	822		$	(28	)		(3.4	)%
Percentage of revenue		184.7	%		98.1	%
Sales and marketing		466			484			(18	)		(3.7	)%
Percentage of revenue		108.4	%		57.8	%
General and administrative		862			734			128			17.4	%
Percentage of revenue		200.5	%		87.6	%
Total operating expenses	$	2,122		$	2,040		$	82			4.0	%
Percentage of revenue		493.5	%		243.4	%

Gain from patent assignment	$	19,389		$	-		$	19,389			-	%
Percentage of revenue		4,509.1	%		-	%
Broker fee from patent assignment		(3,878	)		-			(3,878	)		-	%
Percentage of revenue		(901.9	)%		-	%

Operating income (loss)	$	13,810		$	(1,225	)	$	15,035			(1,227.3	)%
Percentage of revenue		3,211.6	%		(146.2	)%
Other income, net		124			171			(47	)		(27.5	)%
Percentage of revenue		28.8	%		20.4	%
Provision for income taxes		-			(11	)		11			(100.0	)%
Percentage of revenue		-	%		(1.3	)%
Income (loss) from continuing operations	$	13,934		$	(1,043	)	$	14,977			(1,436.0	)%
Percentage of revenue		3,240.5	%		(124.5	)%
Basic and diluted income (loss) per share from continuing operations	$	0.83		$	(0.07	)	$	0.90			(1,285.7	)%

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	Nine months ended
	September 30,						Variance in
	2025			2024			Dollars			Percent
Revenues:
License fees	$	1,307		$	2,118		$	(811	)		(38.3	)%
Percentage of revenue		84.8	%		86.3	%
Non-recurring engineering		235			335			(100	)		(29.9	)%
Percentage of revenue		15.2	%		13.7	%
Total revenues	$	1,542		$	2,453		$	(911	)		(37.1	)%

Cost of revenues:
Non-recurring engineering		24			64			(40	)		(62.5	)%
Percentage of revenue		1.6	%		2.6	%
Total cost of revenues	$	24		$	64		$	(40	)		(62.5	)%
Gross margin	$	1,518		$	2,389		$	(871	)		(36.5	)%

Operating expenses:
Research and development	$	2,843		$	2,692		$	151			5.6	%
Percentage of revenue		184.4	%		109.7	%
Sales and marketing		1,704			1,844			(140	)		(7.6	)%
Percentage of revenue		110.5	%		75.2	%
General and administrative		2,747			2,696			51			1.9	%
Percentage of revenue		178.1	%		109.9	%
Total operating expenses	$	7,294		$	7,232		$	62			0.9	%
Percentage of revenue		473.0	%		294.8	%

Gain from patent assignment	$	19,389		$	-		$	19,389			-	%
Percentage of revenue		1,257.4	%		-	%
Broker fee from patent assignment		(3,878	)		-			(3,878	)		-	%
Percentage of revenue		(251.5	)%		-	%

Operating income (loss)	$	9,735		$	(4,843	)	$	14,578			(301.0	)%
Percentage of revenue		631.3	%		(197.4	)%
Other income, net		405			455			(50	)		(11.0	)%
Percentage of revenue		26.3	%		18.5	%
Provision for income taxes		(10	)		10			(20	)		(200.0	)%
Percentage of revenue		(0.6	)%		0.4	%
Income (loss) from continuing operations	$	10,150		$	(4,398	)	$	14,548			(330.8	)%
Percentage of revenue		658.2	%		(179.3	)%
Basic and diluted income (loss) per share from continuing operations	$	0.60		$	(0.28	)	$	0.88			(314.3	)%

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Revenues

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

Total revenues were $0.4 million and $1.5 million for the three and nine months ended September 30, 2025, respectively, compared to $0.8 million and $2.5 million for the same periods in 2024, respectively. The decrease in total revenues of 48.7% for the three months ended September 30, 2025, as compared to the same period in 2024, is explained by lower license fees and non-recurring revenues. The decrease in total revenues of 37.1% for the nine months ended September 30, 2025, as compared to the same period in 2024, is explained by lower license fees and non-recurring revenues.

License Fees

Revenues from license fees were $0.4 million and $1.3 million for the three and nine months ended September 30, 2025, respectively, compared to $0.7 million and $2.1 million for the same periods in 2024, respectively. The decrease of 44.5% for the three months ended September 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 38.3% for the nine months ended September 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.

Non-recurring Engineering

Revenues from non-recurring engineering were $24,000 and $235,000 for the three and nine months ended September 30, 2025, respectively, compared to $107,000 and $335,000 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 technology platforms. The decrease of 77.6% for the three months ended September 30, 2025, as compared to the same period in 2024, was the result of decreased delivery in projects. The decrease of 29.9% for the nine months ended September 30, 2025, as compared to the same period in 2024, was the result of fewer projects.

The following tables presents the net revenues by market and revenue stream (in thousands):

	Three months ended September 30,
	2025					2024
	Amount		Percentage			Amount		Percentage
Automotive:
License fees	$	101		89.4	%	$	185		69.8	%
Non-recurring engineering		12		10.6	%		80		30.2	%
	$	113		100.0	%	$	265		100.0	%

IT & Industrial:
License fees	$	305		96.2	%	$	546		95.3	%
Non-recurring engineering		12		3.8	%		27		4.7	%
	$	317		100.0	%	$	573		100.0	%

	Nine months ended September 30,
	2025					2024
	Amount		Percentage			Amount		Percentage
Automotive:
License fees	$	422		67.8	%	$	777		75.4	%
Non-recurring engineering		200		32.2	%		253		24.6	%
	$	622		100.0	%	$	1,030		100.0	%

IT & Industrial:
License fees	$	885		96.2	%	$	1,341		94.2	%
Non-recurring engineering		35		3.8	%		82		5.8	%
	$	920		100.0	%	$	1,423		100.0	%

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Gross Margin

Our gross margin was 97.9% and 98.4% for the three and nine months ended September 30, 2025, respectively, compared to 97.3% and 97.4% for the same periods in 2024, respectively.

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

Research and development (“R&D”) expenses were $0.8 million and $2.8 million for the three and nine months ended September 30, 2025, respectively, compared to $0.8 million and $2.7 million for the same periods in 2024, respectively. The decrease of 3.4% for the three months ended September 30, 2025 compared to the same period in 2024 was primarily related to lower cost for development of prototypes. The increase of 5.6% for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily related to higher payroll and related costs.

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.

Sales and Marketing

Sales and marketing expenses were $0.5 million and $1.7 million for the three and nine months ended September 30, 2025, respectively, compared to $0.5 million and $1.8 million for the same periods in 2024, respectively. The decrease of 3.7% for the three months ended September 30, 2025 compared to the same period in 2024 was primarily related to lower professional fees offset by higher spend in marketing. The decrease of 7.6% for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily related to lower payroll and related costs, lower professional fees and lower spend in marketing.

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

General and Administrative

General and administrative expenses were $0.9 million and $2.8 million for the three and nine months ended September 30, 2025, respectively, compared to $0.7 million and $2.7 million for the same periods in 2024, respectively. The increase of 17.4% for the three months ended September 30, 2025, compared to the same period in 2024, was primarily related to higher professional fees offset by lower payroll and related costs. The increase of 1.9% for the nine months ended September 30, 2025, compared to the same period in 2024, was primarily related to higher professional fees.

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 three and nine months ended September 30, 2025. The Company recognized a brokerage fee from the patent assignment of $3.8 million for the three and nine months ended September 30, 2025. The amount represents the final outcome from the process 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. The cash transactions occurred in October 2025.

Other Income

Other income was $0.1 million and $0.4 million for the three and nine months ended September 30, 2025, respectively, compared to $0.2 million and $0.5 million for the same periods in 2024, respectively. The other income for the period was mainly related to interest income earned.

Income Taxes

Our effective tax rate was nil and (0.1)% for the three and nine months ended September 30, 2025, respectively, compared to 1.0% and (0.2)% for the same periods in 2024, respectively. The tax rate is due to global intangible low-taxed income and change in valuation allowance.

Net Income (Loss)

As a result of the factors discussed above, we recorded an income from continuing operations of $14.2 million and $10.6 million for the three and nine months ended September 30, 2025, respectively, and a loss of $1.1 million and $4.9 million for the same periods in 2024, respectively.

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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 September 30, 2025, we had cash and cash equivalents of $11.6 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.

Working capital (current assets less current liabilities) was $26.2 million as of September 30, 2025, compared to $16.1 million as of December 31, 2024.

Net cash used in operating activities for combined continuing and discontinued operations for the nine months ended September 30, 2025, was $4.6 million and was primarily the result of a net loss of $10.6 million and approximately $(19.2) 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 $4.0 million. Net cash used in operating activities for combined continuing and discontinued operations for the nine months ended September 30, 2024, was $4.4 million and was primarily the result of a net loss of $4.9 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 $28,000.

Net cash used in investing activities for the nine months ended September 30, 2025, was approximately $90,000 and was primarily the result of purchase of property and equipment. Net cash provided by investing activities for the nine months ended September 30, 2024, was approximately $153,000 and was primarily proceeds from sale of property and equipment offset by purchase of property and equipment.

Net cash used in financing activities for the nine months ended September 30, 2025, was approximately $8,000 and was primarily the result of principal payments on finance leases. Net cash provided by financing activities for the nine months ended September 30, 2024, was approximately $5.8 million and was primarily the result of proceeds from the issuance of common stock, net of offering costs.

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 $14.2 million and $10.6 million for the three and nine months ended September 30, 2025, respectively, compared to a loss of $1.1 million and $4.9 million for the same periods in 2024, respectively, and had an accumulated deficit of approximately $213.5 million and $224.1 million as of September 30, 2025 and December 31, 2024, respectively. In addition, operating activities used cash of approximately $4.6 million and $4.4 million for the nine months ended September 30, 2025 and 2024, respectively.

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The condensed 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 condensed consolidated financial statements were issued.

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

Contractual Obligations 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 condensed 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 November 2026. It is extended on a yearly basis unless written notice is provided nine months prior to the expiration date.

For total rent expense for combined continuing and discontinued operations, we recorded $117,000 and $336,000 for the three and nine months ended September 30, 2025, respectively, compared to $127,000 and $376,000 for the same periods in 2024.

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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 ASIC, which is used in our licensed technology. 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 million ASICs sold. As of September 30, 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. 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.

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.

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 three and nine months ended September 30, 2025, no shares were sold under the Ladenburg ATM Facility. During the three and nine months ended September 30, 2024, we sold an aggregate of 1,423,441 shares of our common stock, respectively, 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.

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.

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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.

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. 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. Among other dates, the parties proposed (i) a close of fact discovery on August 28, 2025, (ii) mediation by January 19, 2027, and (iii) trial by April 5, 2027. The Court has yet to order the scheduling order.

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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 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision of and with the participation of our management, including our Chief Executive Officer and 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 September 30, 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 September 30, 2025 due to the material weaknesses in internal control over financial reporting that are described in our Annual Report on Form 10-K for the year ended December 31, 2024.

We identified a material weakness 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 related to a lack of information technology general controls to prevent the risk of management override. Specifically, 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. The Company has implemented user specific permission sets in the identified systems to facilitate proper segregation of duties. The Company also implemented a separate control to monitor changelogs and approvals in the ERP system. These controls have not yet been tested to verify that they are operating effectively in remediation of the material weakness.

We identified another material weakness in the design and operation of our internal controls over financial reporting in the “Control Activities” component of the COSO framework related to a lack of sufficient controls to prevent the risk of material misstatements in the income tax calculations and related disclosures. The Company is planning to implement extended controls of the income tax calculations.

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 changes described to internal control 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 quarter ended September 30, 2025 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. 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 1A. Risk Factors

Except as described herein, there have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit #		Description
3.1		Restated Certificate of Incorporation of Neonode Inc., dated November 7, 2018 (incorporated by reference to Exhibit 3.14 of the registrant’s quarterly report on Form 10-Q (File No. 001-35526) filed on November 8, 2018)
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the registrant’s current report on Form 8-K (File No. 001-35526) filed on March 10, 2023)
4.1		Description of registrant’s Common Stock (incorporated by reference to Exhibit 4.1 to the registrant’s Form S-3 (No. 333-255964), filed on May 10, 2021)
31.1*		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
31.2*		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
32**		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith

**	Furnished herewith

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SIGNATURES

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

	NEONODE INC.

Date: November 6, 2025	By:	/s/ Fredrik Nihlén
		Fredrik Nihlén
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Neonode Inc. 10-Q