[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Neonode Inc.'s unaudited condensed consolidated financial statements and accompanying notes for the specified interim periods [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $13,238 | $16,427 | | Total current assets | $14,405 | $17,685 | | Total assets | $15,058 | $18,381 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $2,215 | $1,620 | | Total liabilities | $2,406 | $1,939 | | Total stockholders' equity | $12,652 | $16,442 | | Total liabilities and stockholders' equity | $15,058 | $18,381 | - Total assets **decreased by $3.323 million (18.08%)** from **$18.381 million** at December 31, 2024, to **$15.058 million** at June 30, 2025[10](index=10&type=chunk) - Cash and cash equivalents **decreased by $3.189 million (19.41%)** during the same period[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) | (In thousands, except per share amounts) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $599 | $801 | $1,112 | $1,615 | | Gross margin | $593 | $777 | $1,097 | $1,574 | | Operating loss | $(2,110) | $(1,789) | $(4,075) | $(3,675) | | Net loss | $(1,868) | $(1,695) | $(3,601) | $(3,779) | | Basic and diluted loss per share | $(0.11) | $(0.11) | $(0.21) | $(0.25) | - Total revenues **decreased by 25.2%** for the three months ended June 30, 2025, and by **31.1%** for the six months ended June 30, 2025, compared to the same periods in 2024[12](index=12&type=chunk) - Net loss **increased** for the three-month period from **$(1.695) million to $(1.868) million** but **decreased** for the six-month period from **$(3.779) million to $(3.601) million** year-over-year[12](index=12&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | (In thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(1,868) | $(1,695) | $(3,601) | $(3,779) | | Foreign currency translation adjustments | $(55) | $(32) | $(189) | $(66) | | Comprehensive loss | $(1,923) | $(1,727) | $(3,790) | $(3,845) | - Comprehensive loss **increased** for the three months ended June 30, 2025, to **$(1.923) million** from **$(1.727) million** in 2024, primarily due to higher net loss and foreign currency translation adjustments[15](index=15&type=chunk) - For the six months, comprehensive loss slightly **decreased** to **$(3.790) million** from **$(3.845) million**, despite increased foreign currency translation losses[15](index=15&type=chunk) [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) | (In thousands) | Balances, December 31, 2024 | Balances, June 30, 2025 | | :--------------- | :-------------------------- | :---------------------- | | Common Stock Amount | $17 | $17 | | Additional Paid-in Capital | $240,955 | $240,955 | | Accumulated Other Comprehensive Loss | $(450) | $(639) | | Accumulated Deficit | $(224,080) | $(227,681) | | Total Stockholders' Equity | $16,442 | $12,652 | - Total stockholders' equity **decreased by $3.79 million** from **$16.442 million** at December 31, 2024, to **$12.652 million** at June 30, 2025, primarily driven by net losses and foreign currency translation adjustments[18](index=18&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (In thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(3,110) | $(3,135) | | Net cash provided by (used in) investing activities | $(15) | $153 | | Net cash used in financing activities | $(5) | $(13) | | Net change in cash and cash equivalents | $(3,189) | $(3,048) | | Cash and cash equivalents at end of period | $13,238 | $13,107 | - Net cash used in operating activities remained stable at approximately **$3.1 million** for both six-month periods[21](index=21&type=chunk) - Investing activities shifted from providing **$0.153 million** cash in 2024 to using **$0.015 million** in 2025[21](index=21&type=chunk) - Overall, cash and cash equivalents **decreased by $3.189 million** in the first six months of 2025, ending at **$13.238 million**[21](index=21&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - The company adopted ASU 2023-07, Segment Reporting, retrospectively in the interim period ended March 31, 2025, enhancing disclosures about significant segment expenses[24](index=24&type=chunk) - Neonode incurred net losses of approximately **$1.9 million** and **$3.6 million** for the three and six months ended June 30, 2025, respectively[28](index=28&type=chunk) - The company had an accumulated deficit of approximately **$227.7 million** as of June 30, 2025, but management believes sufficient cash exists for the next year on a going concern basis[29](index=29&type=chunk) Customer Concentration (Percentage of Net Revenues) | Customer Category | 3 months ended June 30, 2025 | 6 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Commercial Vehicle OEM | 34.1% | 21.3% | 24.8% | 13.8% | | Seiko Epson | 23.8% | 30.8% | 25.3% | 22.5% | | Hewlett-Packard Company | 19.1% | 19.3% | 16.8% | 23.9% | | Alps Alpine | 17.5% | 22.3% | 23.2% | 23.0% | - The company phased out its TSM product business, terminating production at Pronode Technologies AB facilities during Q4 2023 and Q1 2024, reclassifying this business as discontinued operations[38](index=38&type=chunk)[39](index=39&type=chunk) Income (Loss) from Discontinued Operations (in thousands) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $45 | $623 | $112 | $823 | | Gross (loss) margin | $9 | $162 | $76 | $(18) | | Operating income (loss) | $116 | $(18) | $183 | $(386) | | Income (loss) from discontinued operations | $116 | $(18) | $183 | $(386) | - Neonode operates as a single operating segment, with the CEO reviewing consolidated financial information to assess performance and allocate resources[53](index=53&type=chunk) Net Revenues by Country (in thousands) | Country | Three months ended June 30, 2025 (Amount) | Three months ended June 30, 2025 (Percentage) | Six months ended June 30, 2025 (Amount) | Six months ended June 30, 2025 (Percentage) | | :------ | :---------------------------------------- | :-------------------------------------------- | :-------------------------------------- | :-------------------------------------------- | | Japan | $262 | 43.7% | $612 | 55.0% | | Sweden | $204 | 34.1% | $237 | 21.3% | | United States | $115 | 19.2% | $228 | 20.5% | | Total | $599 | 100.0% | $1,112 | 100.0% | - New U.S. tax legislation (OBBB Act) was signed into law on July 4, 2025, with the company evaluating its impact but not expecting a material effect[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Neonode's financial condition and results of operations, analyzing revenues, expenses, net loss, liquidity, and capital resources - Neonode provides advanced optical sensing solutions using zForce and MultiSensing technologies for various markets including office equipment, automotive, and industrial automation[62](index=62&type=chunk) - As of June 30, 2025, Neonode had **37 valid technology license agreements** with global OEMs, ODMs, and automotive Tier 1 suppliers, with **ten customers** currently shipping products embedding their technology[63](index=63&type=chunk)[64](index=64&type=chunk) - Ongoing global conflicts have created economic uncertainty, impacting supply chains, financial markets, and currency exchange rates, which could adversely affect Neonode's financial conditions[67](index=67&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Key Financial Results (Continuing Operations, in thousands) | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Variance (Dollars) | Variance (Percent) | | :--------------- | :------------------------------- | :------------------------------- | :----------------- | :----------------- | | Total Revenue | $599 | $801 | $(202) | (25.2)% | | Total gross margin | $593 | $777 | $(184) | (23.7)% | | Total operating expenses | $2,703 | $2,566 | $137 | 5.3% | | Operating loss | $(2,110) | $(1,789) | $(321) | 17.9% | | Loss from continuing operations | $(1,984) | $(1,677) | $(307) | 18.3% | Key Financial Results (Continuing Operations, in thousands) | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Variance (Dollars) | Variance (Percent) | | :--------------- | :----------------------------- | :----------------------------- | :----------------- | :----------------- | | Total Revenue | $1,112 | $1,615 | $(503) | (31.1)% | | Total gross margin | $1,097 | $1,574 | $(477) | (30.3)% | | Total operating expenses | $5,172 | $5,249 | $(77) | (1.5)% | | Operating loss | $(4,075) | $(3,675) | $(400) | 10.9% | | Loss from continuing operations | $(3,784) | $(3,393) | $(391) | 11.5% | [Revenues](index=23&type=section&id=Revenues) - Total revenues **decreased by 25.2% to $0.6 million** for the three months and **31.1% to $1.1 million** for the six months ended June 30, 2025, primarily due to lower license fees[72](index=72&type=chunk) [License Fees](index=23&type=section&id=License%20Fees) - License fees **decreased by 34.2% to $0.4 million** for the three months and **35.0% to $0.9 million** for the six months ended June 30, 2025, mainly due to lower demand for legacy customers' products[73](index=73&type=chunk) [Non-recurring Engineering](index=23&type=section&id=Non-recurring%20Engineering) - Non-recurring engineering (NRE) revenues **increased by 4.3% to $0.2 million** for the three months ended June 30, 2025, due to a Commercial OEM DMS project delivery[74](index=74&type=chunk) - NRE revenues **decreased by 7.5%** for the six months ended June 30, 2025, due to fewer projects[74](index=74&type=chunk) Net Revenues by Market and Revenue Stream (in thousands) | (in thousands) | Three months ended June 30, 2025 (Amount) | Three months ended June 30, 2025 (Percentage) | Six months ended June 30, 2025 (Amount) | Six months ended June 30, 2025 (Percentage) | | :--------------- | :---------------------------------------- | :-------------------------------------------- | :-------------------------------------- | :-------------------------------------------- | | **Automotive** | | | | | | License fees | $143 | 44.3% | $321 | 63.1% | | Non-recurring engineering | $180 | 55.7% | $188 | 36.9% | | Total Automotive | $323 | 100.0% | $509 | 100.0% | | **IT & Industrial** | | | | | | License fees | $261 | 94.6% | $580 | 96.2% | | Non-recurring engineering | $15 | 5.4% | $23 | 3.8% | | Total IT & Industrial | $276 | 100.0% | $603 | 100.0% | [Gross Margin](index=24&type=section&id=Gross%20Margin) - Gross margin **improved to 99.0%** for the three months and **98.7%** for the six months ended June 30, 2025, compared to 97.0% and 97.5% for the same periods in 2024, respectively[76](index=76&type=chunk) [Research and Development](index=24&type=section&id=Research%20and%20Development) - R&D expenses **increased by 10.2% to $1.1 million** for the three months and **9.6% to $2.0 million** for the six months ended June 30, 2025, primarily due to higher payroll and related costs[77](index=77&type=chunk) [Sales and Marketing](index=24&type=section&id=Sales%20and%20Marketing) - Sales and marketing expenses **increased by 9.6% to $0.6 million** for the three months ended June 30, 2025, due to higher payroll[79](index=79&type=chunk) - Sales and marketing expenses **decreased by 9.0% to $1.2 million** for the six months, driven by lower payroll and marketing spend[79](index=79&type=chunk) [General and Administrative](index=24&type=section&id=General%20and%20Administrative) - General and administrative expenses **decreased by 1.3% to $1.0 million** for the three months and **6.6% to $1.9 million** for the six months ended June 30, 2025, due to lower professional fees and overall costs, respectively[81](index=81&type=chunk) [Other Income](index=24&type=section&id=Other%20Income) - Other income remained stable at approximately **$0.1 million** for the three months and **$0.3 million** for the six months ended June 30, 2025, primarily from interest income[82](index=82&type=chunk) [Income Taxes](index=24&type=section&id=Income%20Taxes) - The effective tax rate was **zero** for the three months and **0.3%** for the six months ended June 30, 2025, influenced by global intangible low-taxed income and changes in valuation allowance[83](index=83&type=chunk) [Net Loss](index=24&type=section&id=Net%20Loss) - Loss from continuing operations **increased to $1.9 million** for the three months and **$3.7 million** for the six months ended June 30, 2025, compared to **$1.7 million** and **$3.4 million** for the same periods in 2024, respectively[84](index=84&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents were **$13.2 million** as of June 30, 2025, down from **$16.4 million** at December 31, 2024[85](index=85&type=chunk) - Working capital was **$12.1 million**, down from **$16.1 million**[86](index=86&type=chunk) - Net cash used in operating activities for combined continuing and discontinued operations was **$3.1 million** for both six-month periods ended June 30, 2025 and 2024[87](index=87&type=chunk) - The company incurred net losses of approximately **$1.9 million** and **$3.6 million** for the three and six months ended June 30, 2025, respectively, and had an accumulated deficit of approximately **$227.7 million** as of June 30, 2025[90](index=90&type=chunk) - Management believes current cash and planned expenditures are sufficient for the next twelve months, but future operations may require additional capital through equity investments or debt arrangements[92](index=92&type=chunk)[93](index=93&type=chunk) - Neonode entered into a Ladenburg ATM Facility on June 4, 2024, to sell up to **$10 million** of common stock, but no shares were sold under this facility during the three and six months ended June 30, 2025 and 2024[102](index=102&type=chunk)[105](index=105&type=chunk) - Aequitas Sub, to whom Neonode assigned a patent portfolio, reached a settlement in principle with Samsung regarding U.S. Patent No. 8,095,879, leading to a stay of deadlines until August 20, 2025[110](index=110&type=chunk) - The case against Apple remains stayed[111](index=111&type=chunk) - U.S. Patent No. 8,812,993, also assigned to Aequitas, was invalidated by the PTAB in June 2022, and this decision was affirmed by the Federal Circuit on June 11, 2024[112](index=112&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section confirms no applicable quantitative or qualitative disclosures regarding market risk for the company [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective as of June 30, 2025, due to material weaknesses in IT general controls and income tax calculations - Disclosure controls and procedures were deemed **ineffective** as of June 30, 2025, due to material weaknesses in internal control over financial reporting[114](index=114&type=chunk) - Identified material weaknesses include a lack of IT general controls to prevent management override and insufficient controls for income tax calculations and related disclosures[115](index=115&type=chunk)[116](index=116&type=chunk) - Remediation efforts, including implementing user-specific permission sets and monitoring changelogs, are underway but not yet tested for effectiveness[115](index=115&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) Neonode Inc. is not a party to any pending legal proceedings that would materially impact its operations - The company is not a party to any pending legal proceedings[120](index=120&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024, are reported - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024[121](index=121&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds are reported for the period - No unregistered sales of equity securities and use of proceeds to report[122](index=122&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities are reported - Not applicable, no defaults upon senior securities[123](index=123&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company - Not applicable, no mine safety disclosures[124](index=124&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No other information is reported - No other information to report[125](index=125&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL data Key Exhibits Filed | Exhibit | Description | | :-------- | :---------- | | 3.1 | Restated Certificate of Incorporation of Neonode Inc. | | 3.2 | Amended and Restated Bylaws | | 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 | | 101.INS | Inline XBRL Instance Document. | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

[Executive Summary of Financial Results](index=1&type=section&id=I.%20Executive%20Summary%20of%20Financial%20Results) Neonode experienced revenue declines and increased losses from continuing operations in Q2 and H1 2025, alongside a decrease in cash and working capital [Financial Summary for Three Months Ended June 30, 2025](index=1&type=section&id=A.%20Financial%20Summary%20for%20Three%20Months%20Ended%20June%2030,%202025) Neonode reported a 25.2% revenue decline to $0.6 million for Q2 2025, with operating expenses up 5.3% and loss from continuing operations increasing to $2.0 million ($0.12 per share) Q2 2025 Financial Highlights (Continuing Operations) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Revenues | $0.6M | $0.8M | -25.2% | | Operating Expenses | $2.7M | $2.566M | +5.3% | | Loss from Continuing Operations | $2.0M | $1.7M | +17.6% | | Loss per Share (Continuing Ops) | $0.12 | $0.11 | +9.1% | | Cash used by Operations | $1.7M | $1.2M | +41.7% | | Cash & Accounts Receivable (as of June 30, 2025) | $13.6M | $17.2M (Dec 31, 2024) | -20.9% | - Revenues from continuing operations decreased by **25.2%** to **$0.6 million** compared to the prior year[4](index=4&type=chunk) - Loss from continuing operations increased to **$2.0 million**, or **$0.12 per share**, compared to $1.7 million, or $0.11 per share, in the prior year[4](index=4&type=chunk) [Financial Summary for Six Months Ended June 30, 2025](index=1&type=section&id=B.%20Financial%20Summary%20for%20Six%20Months%20Ended%20June%2030,%202025) H1 2025 revenues from continuing operations decreased 31.1% to $1.1 million, with operating expenses down 1.5% and loss widening to $3.8 million ($0.23 per share) H1 2025 Financial Highlights (Continuing Operations) | Metric | H1 2025 | H1 2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Revenues | $1.1M | $1.615M | -31.1% | | Operating Expenses | $5.2M | $5.249M | -1.5% | | Loss from Continuing Operations | $3.8M | $3.4M | +11.8% | | Loss per Share (Continuing Ops) | $0.23 | $0.22 | +4.5% | | Cash used by Operations | $3.1M | $3.1M | 0% | - Revenues from continuing operations for the six months decreased by **31.1%** to **$1.1 million** compared to the same period in the prior year[4](index=4&type=chunk) - Loss from continuing operations for the six months was **$3.8 million**, or **$0.23 per share**, compared to $3.4 million, or $0.22 per share, for the same period in the prior year[4](index=4&type=chunk) [CEO's Commentary and Business Outlook](index=2&type=section&id=II.%20CEO's%20Commentary%20and%20Business%20Outlook) The CEO addresses declining legacy business revenues, emphasizing strategic focus on MultiSensing® and zForce® technology platforms for future growth and new market opportunities [Overview of Q2 Performance and Challenges](index=2&type=section&id=A.%20Overview%20of%20Q2%20Performance%20and%20Challenges) The CEO noted continued revenue decline from legacy business in printer and automotive infotainment, a trend expected until new customer projects reach production - The second quarter saw a decline in revenues from the legacy business due to negative trends in the printer and automotive infotainment markets[5](index=5&type=chunk) - These challenges are expected to remain until new customers move from the deployment phase to the production phase[5](index=5&type=chunk) [Strategic Focus and Technology Advancement](index=2&type=section&id=B.%20Strategic%20Focus%20and%20Technology%20Advancement) Neonode expands business and advances MultiSensing® and zForce® platforms, investing in data-driven HMI solutions, strategic automotive partnerships, and new verticals to drive future growth - Neonode is actively working to expand business opportunities and advance the product roadmap across its MultiSensing® and zForce® core technology platforms[5](index=5&type=chunk) - For MultiSensing, the company continues to build on and invest in being the first mover in fully synthetic, data-driven HMI solutions, building strategic partnerships in the automotive sector, and exploring new verticals[6](index=6&type=chunk) - With the zForce platform, Neonode continues to serve its existing customer base while focusing on new project deliveries[6](index=6&type=chunk) [Detailed Financial Overview for Q2 2025](index=2&type=section&id=III.%20Detailed%20Financial%20Overview%20for%20Q2%202025) This section provides a detailed analysis of Neonode's Q2 2025 financial performance, covering revenue, operating expenses, profitability, cash position, and working capital [Revenue Analysis](index=2&type=section&id=A.%20Revenue%20Analysis) Q2 2025 total revenues from continuing operations decreased 25.2% to $0.6 million, driven by a 34.2% fall in license revenues, partially offset by a 4.3% increase in NRE revenues Q2 2025 Revenue Breakdown (Continuing Operations) | Revenue Type | Q2 2025 | Q2 2024 | Change (%) | | :------------------------ | :-------- | :-------- | :--------- | | Total Revenues | $0.6M | $0.8M | -25.2% | | License Revenues | $0.4M | $0.614M | -34.2% | | Non-recurring Engineering | $0.2M | $0.187M | +4.3% | - The decrease in license revenues was mainly due to lower demand for legacy customers' products within printer and passenger car touch applications[7](index=7&type=chunk) - Revenues from new licensing customers partially offset the decline in license revenues[7](index=7&type=chunk) [Operating Expenses and Profitability](index=2&type=section&id=B.%20Operating%20Expenses%20and%20Profitability) Q2 2025 operating expenses from continuing operations rose 5.3% to $2.7 million, resulting in a $2.0 million loss ($0.12 per share) and increased cash used by operations Q2 2025 Operating Expenses and Loss (Continuing Operations) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------------- | :-------- | :-------- | :--------- | | Operating Expenses | $2.7M | $2.566M | +5.3% | | Loss from Continuing Operations | $2.0M | $1.7M | +17.6% | | Loss per Share (Continuing Ops) | $0.12 | $0.11 | +9.1% | - Cash used by operations increased to **$1.7 million** in the second quarter of 2025 compared to $1.2 million for the same period in 2024[9](index=9&type=chunk) - The increase in cash used by operations was primarily due to a lower net loss and fewer component purchases following the phaseout of TSM manufacturing[9](index=9&type=chunk) [Cash Position and Working Capital](index=2&type=section&id=C.%20Cash%20Position%20and%20Working%20Capital) Cash and accounts receivable decreased to $13.6 million by June 30, 2025, with working capital also declining, though the company deems its liquidity sufficient for strategy execution Cash and Working Capital (Continuing Operations) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------- | :-------------- | :------------- | :------- | | Cash and Accounts Receivable | $13.6M | $17.2M | -$3.6M | | Working Capital | $12.1M | $16.1M | -$4.0M | - The company's financial position and liquidity provide stability and enable it to execute its strategy to secure more licensing opportunities[10](index=10&type=chunk) [Company Information and Legal Disclosures](index=3&type=section&id=IV.%20Company%20Information%20and%20Legal%20Disclosures) This section provides essential company contact information, an overview of Neonode's business, and a safe harbor statement regarding forward-looking statements and associated risks [Contact Information](index=3&type=section&id=A.%20Contact%20Information) Contact details for Neonode's President & CEO Daniel Alexus and CFO Fredrik Nihlén are provided for inquiries - Contact information for President and CEO Daniel Alexus and Chief Financial Officer Fredrik Nihlén is provided[11](index=11&type=chunk) [About Neonode](index=3&type=section&id=B.%20About%20Neonode) Neonode Inc. (NASDAQ:NEON), a publicly traded company founded in 2001, specializes in advanced optical sensing solutions for various applications, holding over 100 patents globally - Neonode Inc. (NASDAQ:NEON) is a publicly traded company, headquartered in Stockholm, Sweden, established in 2001[11](index=11&type=chunk) - The Company provides advanced optical sensing solutions for contactless touch, touch, gesture control, and in-cabin monitoring[11](index=11&type=chunk) - Neonode's technology is deployed in more than **90 million products**, and the Company holds more than **100 patents** worldwide, serving Fortune 500 companies[11](index=11&type=chunk) [Safe Harbor Statement](index=3&type=section&id=C.%20Safe%20Harbor%20Statement) This press release includes forward-looking statements on growth and performance, subject to risks like customer reliance and product development cycles, with no duty to update - The press release contains forward-looking statements relating to expectations for growth and future performance[13](index=13&type=chunk) - These statements are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different[13](index=13&type=chunk) - Risks include reliance on customers' ability to design, manufacture, and sell products with Neonode's technology, the length of customer product development cycles, and dependence on suppliers[14](index=14&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=V.%20Consolidated%20Financial%20Statements) This section presents Neonode's consolidated balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows for the reported periods [Consolidated Balance Sheets](index=4&type=section&id=A.%20Consolidated%20Balance%20Sheets) Total assets decreased to $15.058 million by June 30, 2025, driven by lower cash, while total liabilities increased and stockholders' equity declined to $12.652 million Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------- | :-------------- | :------------- | :------- | | Total Assets | $15,058 | $18,381 | -$3,323 | | Cash and cash equivalents | $13,238 | $16,427 | -$3,189 | | Total Liabilities | $2,406 | $1,939 | +$467 | | Total Stockholders' Equity | $12,652 | $16,442 | -$3,790 | - Current assets decreased from **$17,685 thousand** at December 31, 2024, to **$14,405 thousand** at June 30, 2025[16](index=16&type=chunk) - Current liabilities increased from **$1,620 thousand** at December 31, 2024, to **$2,215 thousand** at June 30, 2025[16](index=16&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=B.%20Consolidated%20Statements%20of%20Operations) Q2 2025 total revenues were $0.599 million, with operating loss widening to $(2.110) million and net loss at $(1.868) million; H1 revenues were $1.112 million with a net loss of $(3.601) million Consolidated Statements of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------------- | :-------- | :-------- | :-------- | :-------- | | Total Revenues | $599 | $801 | $1,112 | $1,615 | | Gross Margin | $593 | $777 | $1,097 | $1,574 | | Total Operating Expenses | $2,703 | $2,566 | $5,172 | $5,249 | | Operating Loss | $(2,110) | $(1,789) | $(4,075) | $(3,675) | | Loss from Continuing Operations | $(1,984) | $(1,677) | $(3,784) | $(3,393) | | Net Loss | $(1,868) | $(1,695) | $(3,601) | $(3,779) | | Basic & Diluted Loss per Share (Continuing Ops) | $(0.12) | $(0.11) | $(0.23) | $(0.22) | | Basic & Diluted Loss per Share | $(0.11) | $(0.11) | $(0.21) | $(0.25) | - Research and development expenses increased to **$1,074 thousand** in Q2 2025 from $975 thousand in Q2 2024[18](index=18&type=chunk) - Sales and marketing expenses increased to **$596 thousand** in Q2 2025 from $544 thousand in Q2 2024[18](index=18&type=chunk) [Consolidated Statements of Comprehensive Loss](index=6&type=section&id=C.%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Q2 2025 comprehensive loss was $(1.923) million, while H1 comprehensive loss was $(3.790) million, with foreign currency translation adjustments impacting both periods Consolidated Statements of Comprehensive Loss Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | | Net Loss | $(1,868) | $(1,695) | $(3,601) | $(3,779) | | Foreign currency translation adjustments | $(55) | $(32) | $(189) | $(66) | | Comprehensive Loss | $(1,923) | $(1,727) | $(3,790) | $(3,845) | - Foreign currency translation adjustments resulted in an other comprehensive loss of **$(55) thousand** for Q2 2025 and **$(189) thousand** for H1 2025[20](index=20&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=D.%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to $12.652 million by June 30, 2025, primarily due to net losses and foreign currency translation adjustments Consolidated Stockholders' Equity Highlights (in thousands) | Metric | Dec 31, 2024 | June 30, 2025 | Change | | :-------------------------- | :------------- | :-------------- | :------- | | Total Stockholders' Equity | $16,442 | $12,652 | -$3,790 | | Accumulated Deficit | $(224,080) | $(227,681) | -$3,601 | | Accumulated Other Comprehensive Loss | $(450) | $(639) | -$189 | - Net loss for the six months ended June 30, 2025, was **$(3,601) thousand**, contributing to the decrease in equity[22](index=22&type=chunk) - Foreign currency translation adjustments also contributed to the decrease in equity by **$(189) thousand** for the six months ended June 30, 2025[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=E.%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 net cash used in operating activities was $(3.110) million, with a net decrease in cash and cash equivalents of $(3.189) million, ending at $13.238 million Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | H1 2025 | H1 2024 | Change | | :-------------------------------- | :-------- | :-------- | :------- | | Net Cash Used in Operating Activities | $(3,110) | $(3,135) | +$25 | | Net Cash Provided by (Used in) Investing Activities | $(15) | $153 | -$168 | | Net Cash Used in Financing Activities | $(5) | $(13) | +$8 | | Net Change in Cash and Cash Equivalents | $(3,189) | $(3,048) | -$141 | | Cash and Cash Equivalents at End of Period | $13,238 | $13,107 | +$131 | - Adjustments to reconcile net loss to net cash used in operating activities included depreciation and amortization, amortization of operating lease right-of-use assets, and changes in accounts receivable and other operating assets/liabilities[24](index=24&type=chunk) - Cash paid for income taxes was **$10 thousand** in H1 2025, down from $21 thousand in H1 2024[24](index=24&type=chunk)

Core Viewpoint - Neonode Inc. has transitioned from hardware production to a licensing model, focusing on its zForce and MultiSensing technologies to capitalize on optical sensing and gesture recognition markets [1]. Company Overview - Neonode Inc. is a Sweden-based technology company specializing in optical sensing and gesture recognition [1]. - The company has rebranded itself as a licensing shop after discontinuing hardware production [1]. Technology Focus - The primary technologies of Neonode include zForce and MultiSensing, which are central to its new business model [1]. - The shift to licensing aims to leverage its technological innovations in a more scalable manner [1]. Market Position - The company targets small- to mid-cap markets, which are often overlooked by investors, while also occasionally analyzing large-cap companies for broader market insights [1].

Group 1 - Neonode Inc. is reminding stockholders to vote their proxies ahead of the annual meeting scheduled for June 12, 2025, at 3:00 p.m. Central European Time [1] - The Board of Directors of Neonode unanimously recommends that stockholders vote FOR all proposals [1] - It is emphasized that shareholder participation is crucial to ensure a quorum for the meeting to proceed [2] Group 2 - The notice, proxy statement, proxy card, and annual report on Form 10-K are available online for stockholders [2] - A definitive proxy statement was filed with the U.S. Securities and Exchange Commission on April 30, 2025, urging shareholders to read it for important information regarding the proposals [2] - Contact information for the Chief Financial Officer and the President and CEO is provided for further inquiries [3]

Group 1 - Neonode Inc. will be added to the U.S. small-cap Russell 2000 Index effective June 30, 2025, as part of the 2025 Russell indexes reconstitution [1] - Membership in the Russell 2000 Index is based on inclusion in the broader Russell 3000 Index and will last for one year [1] - Neonode's stock will also be included in the relevant growth and value indexes, which are determined by market-capitalization rankings and style attributes [1][3] Group 2 - The inclusion in the Russell 2000 Index is seen as a significant milestone for Neonode, enhancing its visibility within the investor community [2] - The Russell indexes are widely utilized by investment managers and institutional investors, with approximately $10.6 trillion in assets benchmarked against them as of June 2024 [3] - FTSE Russell plans to transition to a semi-annual reconstitution frequency starting in 2026 to ensure the indexes accurately represent the market [4]

Core Viewpoint - Neonode Inc. reported a significant decline in revenues for the quarter ended March 31, 2025, primarily due to reduced demand in its legacy business, particularly in the printer market, while the company is focusing on expanding its business opportunities and product roadmap to drive future growth [3][6]. Financial Summary - Revenues from continuing operations were $0.5 million, a 37.0% decrease compared to the same period in 2024 [6][9]. - License revenues were $0.5 million, reflecting a decrease of 35.7% year-over-year, attributed to lower demand from legacy customers [6]. - Revenues from non-recurring engineering were $16,000, a 61.0% decrease compared to the same period in 2024, mainly due to fewer projects [7]. - Operating expenses from continuing operations were $2.5 million, an 8.0% decrease compared to the same period in 2024 [7][9]. - Loss from continuing operations was $1.8 million, or $0.11 per share, compared to a loss of $1.7 million, or $0.11 per share for the same period in 2024 [8][9]. - Cash used by operations was $1.4 million, down from $1.9 million in the same period in 2024 [8][9]. Financial Position - Cash and accounts receivable totaled $15.7 million as of March 31, 2025, down from $17.2 million as of December 31, 2024 [10]. - Working capital for continuing operations was $14.1 million as of March 31, 2025, compared to $16.1 million as of December 31, 2024 [10]. - The company's financial position and liquidity are described as stable, enabling the execution of strategies to secure more licensing opportunities [10].

Financial Performance - Total revenues for Q1 2025 were $513,000, a decrease of 37% compared to $814,000 in Q1 2024[12] - License fees revenue decreased to $497,000 in Q1 2025 from $773,000 in Q1 2024, representing a decline of 36%[12] - Net loss for Q1 2025 was $1,733,000, an improvement from a net loss of $2,084,000 in Q1 2024[12] - Basic and diluted net loss per share improved to $(0.10) in Q1 2025 from $(0.14) in Q1 2024[12] - Net revenues for the three months ended March 31, 2025 were $513, a decrease from $814 in the same period of 2024, representing a decline of approximately 37%[54] - Loss from continuing operations was $1.8 million for the three months ended March 31, 2025, compared to a loss of $1.7 million for the same period in 2024[54] - The company reported a net loss per share of $0.10 for the three months ended March 31, 2025, compared to a net loss per share of $0.14 for the same period in 2024[51] - Total costs and expenses for the three months ended March 31, 2025 were $2.478 million, a decrease from $2.704 million in the same period of 2024[54] Assets and Liabilities - Total current assets decreased to $16,261,000 as of March 31, 2025, down from $17,685,000 as of December 31, 2024[10] - Total liabilities increased to $2,397,000 as of March 31, 2025, compared to $1,939,000 as of December 31, 2024[10] - Cash and cash equivalents at the end of Q1 2025 were $14,991,000, down from $16,427,000 at the end of 2024[20] - Working capital as of March 31, 2025, was $14.1 million, compared to $16.1 million as of December 31, 2024[82] - The accumulated deficit as of March 31, 2025, was approximately $225.8 million, compared to $224.1 million as of December 31, 2024[85] Operating Expenses - Operating expenses for Q1 2025 totaled $2,469,000, a decrease from $2,683,000 in Q1 2024[12] - Research and development expenses increased to $975,000 in Q1 2025 from $895,000 in Q1 2024[12] - Sales and marketing expenses decreased by 21.3% to $642,000 for the three months ended March 31, 2025, compared to $816,000 in the same period in 2024, primarily due to lower payroll costs[75] - General and administrative expenses were $852,000 for the three months ended March 31, 2025, down 12.3% from $972,000 in the same period in 2024, mainly due to reduced payroll costs[77] Revenue Sources - The company recognized revenues of approximately zero and $27,000 related to contract liabilities for the three months ended March 31, 2025 and 2024, respectively[34] - License fees revenue was $497,000 for the three months ended March 31, 2025, down 35.7% from $773,000 in the same period in 2024, primarily due to lower demand in printer and passenger car applications[69] - Non-recurring engineering revenue decreased by 61.0% to $16,000 for the three months ended March 31, 2025, compared to $41,000 for the same period in 2024, attributed to fewer projects[70] Cash Flow - Operating activities used cash of approximately $1.4 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively[28] - Net cash used in operating activities for the three months ended March 31, 2025, was $1.4 million, compared to $1.9 million for the same period in 2024[83] - Net cash used in investing activities for the three months ended March 31, 2025, was approximately $40,000, primarily for the purchase of property and equipment[84] Internal Controls and Risks - The company identified a material weakness in internal controls over financial reporting related to insufficient information technology general controls, specifically regarding the segregation of duties and management override risks[111] - A second material weakness was noted concerning the lack of sufficient controls to prevent material misstatements in income tax calculations, with plans to implement extended controls[112] - Management acknowledged that controls can only provide reasonable assurance of achieving control objectives, emphasizing the importance of cost-benefit evaluations in control design[113] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that materially affected the internal control[114] - The company is not currently involved in any pending legal proceedings, although it may face ordinary course business disputes[116] - There have been no material changes to the risk factors previously disclosed in the Annual Report for the year ended December 31, 2024[117] Future Outlook - The company anticipates continued shipments of products incorporating its technology by current customers and expects to expand its customer base in 2025[63] - The ongoing geopolitical conflicts, including the war in Ukraine, may impact supply chains and economic conditions, potentially affecting the company's operations[66] - The company may require additional capital sources to continue operations and implement its strategy if operations do not become cash flow positive[88]

Financial Performance - Revenues from continuing operations were $0.5 million, a decrease of 37.0% compared to the same period in the prior year[6] - Operating expenses from continuing operations were $2.5 million, a decrease of 8.0% compared to the same period in the prior year[6] - Loss from continuing operations was $1.8 million, or $0.11 per share, compared to a loss of $1.7 million, or $0.11 per share for the same period in the prior year[9] - Net loss for the three months ended March 31, 2025, was $1,733 million, an improvement from a net loss of $2,084 million in the same period of 2024[25] Cash Flow and Liquidity - Cash used by operations was $1.4 million, down from $1.9 million for the same period in the prior year[9] - Net cash used in operating activities decreased to $1,360 million from $1,915 million year-over-year[25] - Cash and cash equivalents at the end of the period were $14,991 million, compared to $14,274 million at the end of the same period in 2024[25] - Cash paid for income taxes remained stable at $10 million for both periods[25] - Cash paid for interest decreased to $0 million from $1 million in the previous year[25] Revenue Breakdown - License revenues were $0.5 million, a decrease of 35.7% compared to the same period in 2024, primarily due to lower demand in the printer and passenger car touch applications[7] - Revenues from non-recurring engineering were $16,000, a 61.0% decrease compared to the same period in 2024[8] Assets and Liabilities - Cash and accounts receivable totaled $15.7 million as of March 31, 2025, compared to $17.2 million as of December 31, 2024[10] - Total assets decreased to $16.972 million as of March 31, 2025, down from $18.381 million as of December 31, 2024[17] - Accounts receivable and unbilled revenues showed a net change of $(5) million, improving from $(170) million year-over-year[25] - Inventory impairment loss was recorded at $0 million for the current period, a significant decrease from $278 million in the previous year[25] Operational Highlights - The company is focusing on expanding business opportunities and advancing its product roadmap across its core technology platforms: MultiSensing® and zForce®[3] - The CEO expressed optimism about the future, particularly regarding the zForce platform's potential in touch displays and rugged applications[4] Other Financial Metrics - Property and equipment obtained in exchange for finance lease obligations amounted to $28 million, compared to $0 million in the same period last year[25] - The effect of exchange rate changes on cash and cash equivalents resulted in a loss of $34 million, contrasting with a gain of $43 million in the previous year[25] - The company made principal payments on finance lease obligations totaling $2 million, down from $9 million in the same period last year[25]

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the strategy of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Neonode (NEON) currently holding a Momentum Style Score of B [2][3] Group 2: Neonode's Performance Metrics - Neonode has a Zacks Rank of 2 (Buy), indicating strong potential for outperformance in the market [3] - Over the past week, NEON shares increased by 21.96%, significantly outperforming the Zacks Computer - Software industry, which rose by 5.93% [5] - In the last quarter, NEON shares rose by 45.96%, and over the past year, they surged by 483.18%, while the S&P 500 experienced declines of -8.61% and modest gains of 9.87% respectively [6] Group 3: Trading Volume and Earnings Outlook - NEON's average 20-day trading volume is 118,814 shares, which is a bullish indicator when combined with rising stock prices [7] - In terms of earnings estimates, NEON's consensus estimate improved from -$0.46 to -$0.32 over the past 60 days, with one upward revision and no downward revisions noted [9] Group 4: Conclusion - Given the strong performance metrics and positive earnings outlook, NEON is positioned as a promising investment opportunity with a Momentum Score of B [11]

Core Viewpoint - The sustainability of a trend is crucial for successful short-term investing, and confirming fundamental factors is essential to maintain momentum in stocks [1][2]. Group 1: Trend Analysis - Timing entries into a trend significantly impacts investment success, as trends can reverse before exiting a trade, leading to potential losses [1][2]. - A predefined "Recent Price Strength" screen helps identify stocks with strong fundamentals that can sustain their upward trends, focusing on those trading in the upper portion of their 52-week high-low range [3]. Group 2: Company Spotlight - Neonode (NEON) - Neonode has shown a solid price increase of 46% over the past 12 weeks, indicating investor confidence in its potential upside [4]. - The stock has experienced a price increase of 57.6% over the last four weeks, confirming that the upward trend is still intact [5]. - Currently, NEON is trading at 83.4% of its 52-week high-low range, suggesting it may be on the verge of a breakout [6]. Group 3: Fundamental Strength - NEON holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for near-term price movements [6]. - The stock has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term performance [7]. - The Zacks Rank system has a strong historical performance, with Rank 1 stocks averaging a +25% annual return since 1988, indicating the effectiveness of this rating system [7]. Group 4: Investment Strategy - In addition to NEON, there are other stocks that meet the criteria of the "Recent Price Strength" screen, providing additional investment opportunities [8]. - The key to successful stock-picking is ensuring that strategies have produced profitable results in the past, which can be backtested using tools like the Zacks Research Wizard [9].