NEON 10-K & 10-Q changes, risk factors and insider trading

We have experienced substantial net losses in each fiscal period since our inception.inception, except for fiscal year 2025, in which we recorded a gain related to a patent assignment. These net losses have resulted from a lack of substantial revenues and the significant costs incurred in the development and commercial acceptance of our technologies. Our ability to continue as a going concern is dependent on our ability to implement our business plan. If our operations do not become cash flow positive, we may be forced to seek sources of capital to continue operations. No assurances can be given that we will be successful in obtaining such additional financing on reasonable terms, or at all. If adequate funds are not available when needed on acceptable terms, or at all, we may be unable to adequately fund our business plan, which could have a negative effect on our business, results of operations, and financial condition.

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

Our license licensing revenues for the year ended December 31, 20242025 were earned from eight OEM, ODM and Tier 1 customers. We generated NRE revenues from fourtwo customers for the year ended December 31, 2024.2025. During the year ended December 31, 2024,2025, four customers represented approximately 80.2% 95.4% of our consolidated net revenues. Our customer concentration may change significantly from period-to-period depending on a customer’s product cycle and changes in our industry. The loss of a major customer, a reduction in net revenues of a major customer for any reason, or a failure of a major customer to fulfill its financial or other obligations due to us could have a material adverse effect on our business, financial condition, and future revenue stream. The new business strategy with 100% focus on technology and software licensing, licensing that we launched in December 2023,2023 is likely to trigger changes in our customer composition and an overall reduction of the number of customers we have active engagements with.

We have historically generated revenue through technology licensing agreements with companies that design, manufacture, and sell their own products incorporating our touch technology. The majority of our license fees earned in 20242025 and 20232024 were from customer shipments of printer products and automotive infotainment systems. We continue to rely on licensing revenuerevenues from current and new customers whose products are still in the development cycle. If our customers are not able to design, manufacture and sell their products, or are delayed in producing and selling their products, our revenues, profitability, and liquidity, as well as our brand image, may be adversely affected.

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

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

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

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

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

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

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

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

Neonode provides advanced optical sensing solutions for touch, contactless touch, and gesture sensing. We also provide 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 contactless touch, touch, and gesture sensing products and solutions using our zForce technology platform and 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 differentother markets, and we plan to expand our solutions into new markets andin segmentsthe including, but not limited to, office equipment, automotive, industrial automation, medical, military and avionics.future.

The following table provides our consolidated results for(in thethousands, continuingexcept operationspercentages):

Total net revenues were $3.1$2.1 million and $3.8$3.1 million for the years ended December 31, 20242025 and 2023,2024, respectively. The decrease in total net revenues by 18.8%33.7% for the year ended December 31, 20242025 as compared to 20232024 was caused by lower revenues from both license revenues offset by higher revenues fromand non-recurring engineering.

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

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

Revenues from license fees were $2.7$1.8 million and $3.8$2.7 million for the years ended December 31, 20242025 and 2023,2024, respectively. The decreaseddecrease of 29.3% 32.2% in 20242025 as compared to 20232024 werewas mainly due to lower demand for our legacy customers products within printer and passenger car touch applications offset by revenues from new licensing customers.

Revenues from non-recurring engineering revenues were $0.2 million and $0.4 million and $26,000 for the years ended December 31, 20242025 and 2023.2024. Our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our zForce and MultiSensing technology platforms. The increasedecrease of 1,519.2%43.0% in 20242025 compared to 2023 2024 was mainly attributable to the DMS project with the commercial vehicle OEM customer that was announced at the endresult of 2023decreased anddelivery the newin agreement with NEXTY Electronics for an evolution of our licensable Touch Sensor Module (“TSM”) technology.projects.

Our gross margin was 96.3%98.7% in 20242025 compared to 99.7%96.3% in 2023.2024. The decreaseincrease in 20242025 compared to 20232024 were due to moredecrease in NRE projects.revenues.

R&D expenses for 20242025 and 20232024 were $3.4$3.8 million and $3.8$3.4 million, respectively. R&D expenses primarily consist of personnel-related costs in addition to external consultancy costs, such as testing, certifying and measurements, along with costs related to developing and building new product prototypes. The decreaseincrease of 10.1%9.7% in 20242025 compared to 20232024 was primarily related to lowerunfavorable payrollexchange rate development and related costs.lower NRE revenues causing less costs to be allocated to cost of sales.

Sales and marketing expenses for 2025 and 2024 were $2.3 million and $2.5$2.3 million, respectively. Sales and marketing expenses in 20242025 decreased 5.2%2.3% compared to 20232024, despite unfavorable exchange rate development, primarily due to lower costcosts for personnelmarketing and relatedlower costslegal offset by higher cost for marketing. There is no non-cash stock-based compensation included in sales and marketing expenses for the year ended December 31, 2024 compared to $8,000 for the year ended December 31, 2023.fees.

General and administrative (“G&A”) expenses for 20242025 and 20232024 were $3.8$4.1 million and $3.3$3.8 million, respectively. The increase of 15.3%9.5% fromcompared 2023to 2024 was primarily due to higherunfavorable forexchange costrate payrolldevelopment and related costs andhigher professional fees. There is approximately $3,000 ofno non-cash stock-based compensation included in G&A expenses for the year ended December 31, 20242025 compared to $50,000$3,000 for the year ended December 31, 2023.2024.

Other income for the year ended December 31, 20242025 was $0.7 million compared to $0.7 million for the year ended December 31, 2023.2024. The other income for 20242025 and 20232024 was mainly related to interest income earned.

As a result of the factors discussed above, we recorded a net income of $8.0 million for the year ended December 31, 2025, compared to a net loss of $5.9 million for the year ended December 31, 2024, compared to a net loss of $5.1 million for the year ended December 31, 2023.2024.

Net cash used in operating activities for combined continuing and discontinued operations for the year ended December 31, 20242025 was $5.6 million and was primarily the result of a net loss of $6.4 million and approximately $0.5 million in non-cash operating expenses, comprised of stock-based compensation expense, inventory impairment loss, depreciation and amortization and amortization of operating lease right-of-use assets, and changes in operating assets and liabilities of $0.3 million. Net cash used in operating activities for the year ended December 31, 2023 was $6.3$10.3 million and was primarily the result of a net lossincome of $10.1$8.5 million and approximately $3.8$19.2 million in non-cashadjustments to reconcile net loss to net cash used in operating expenses, activities, comprised of stock-basedrecoveries compensationof expense,bad inventorydebt, impairmentgain loss,from patent assignment, loss on disposal of assets, depreciation and amortization and amortization of operating lease right-of-use assets, and changes in operating assets and liabilities of $25,000.$444,000. Net cash used in operating activities for the year ended December 31, 2024 was $5.6 million and was primarily the result of a net loss of $6.5 million and approximately $687,000 in non-cash operating expenses, comprised of stock-based compensation expense, bad debt expense, loss on disposal of assets, depreciation and amortization, amortization of operating lease right-of-use assets, and inventory impairment loss and changes in operating assets and liabilities of $187,000.

Accounts receivable and unbilled revenues for combined continuing and discontinued operations decreased by approximately $134,000$300,000 as of December 31, 20242025 compared to December 31, 2023,2024, due to lower revenues. Prepaid expenses and other current assets for combined continuing and discontinued operations increased by approximately $20,000, mainly due to increased tax receivables. Accounts payable, accrued payroll and employee benefits, and accrued expenses for combined continuing and discontinued operations increased approximately $395,000 as of December 31, 2025 compared to December 31, 2024.

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net losses income for combined continuing and discontinued operations of approximately $6.5 million and $10.1$8.5 million for the yearsyear ended December 31, 2024 2025 and 2023,net respectively,loss of $6.5 million for the year ended December 31, 2024, and had an accumulated deficit of approximately $224.1$215.6 million and $217.6$224.1 million as of December 31, 2024 2025 and 2023,2024, respectively. In addition, operating activities used cash of approximately $5.6$10.3 million and $6.3$5.6 million for the years ended December 31, 20242025 and 2023,2024, respectively.

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

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 NovemberJanuary 2026.2027. It is extended on a yearly basis unless written notice is provided nine months prior to the expiration date.

In 2022, 2025, we entered into a lease for soundproofa officeVolkswagen pods.ID Buzz to be used as a demo car for our technology. Under the terms of the agreement, the lease will be renewed within onetwo year years of the original three-year lease term. In accordance with relevant accounting guidance the lease is classified as a finance lease. The lease payments and depreciation periods began in MayMarch 20222025 when the equipment went into service. The implicit interest rate of the lease is currently approximately 3.0%3.47% per annum.

As reflected in publicly available court filings, on June 8, 2020, Neonode Smartphone LLC, an unrelated third party that is a subsidiary of Aequitas (“Aequitas Sub”),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.

Meanwhile, inThe June 2021, Google LLC (“Google”) filed a separate petition with the PTAB seeking inter partes review of certain challenged claims in U.S. Patent No. 8,095,879, assigned proceeding number IPR2021-01041. As reflected in publicly available records, the PTAB granted the petition in January 2022 The PTAB found in favor of Aequitas Sub and against Apple and Samsung in December 2022 in connection with the inter partes review proceedings, ruling that none of the challenged claims were unpatentable. The PTAB similarly held in favor of Aequitas Sub and against Google in January 2023. Apple and Samsung appealed to the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”) in February 2023 (assigned docket number 23-1464, and Google filed its appeal in the Federal Circuit in March 2023 (assigned docket number 23-1638. On July 18, 2024, the Federal Circuit affirmed the PTAB’s rulings, found in favor of Aequitas Sub and against Google and Apple/Samsung, and held that none of the challenged claims in U.S. Patent No. 8,095,879 are unpatentable.

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

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 95100 million devices that use our patented technology.

As of MarchJune 31,30, 2026, we had 36 valid technology license agreements with global OEMs, Original Design Manufacturers (“ODMs”) and automotive Tier 1 suppliers.

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. In addition, the war with Iran has led to recent increases in the fuel prices. We do not procure materials directly from UkraineUkraine, Russia or Russia,Iran, but the war in Ukraine and the war with Iran may further exacerbate ongoing supply chain disruptions that are occurring across the globe.globe, and the increases in inflation could impact the overall demand for our technology and services, our costs for labor, equipment and products, shipping, fuel, warehousing and other operational overhead and the margins we will be able to realize on our technology and services, all of which could have an adverse impact on our business, financial position, results of operations and cash flows. While the precise effects on global economies from the war in UkraineUkraine, the war with Iran 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.

All of our sales for the three and six months ended MarchJune 31,30, 2026 and 2025 were to customers located in the United States, Europe and Asia.

Total revenues were $0.5 million and $1.1 million for the three and six months ended June 30, 2026, respectively compared to $0.6 million and $1.1 million for the same periods in 2025, respectively. The decrease in total revenues of 20.4% for the three months ended MarchJune 31, 2026, compared to $0.5 million for the same period in 2025. The increase in total revenues of 19.7% for the three months ended March 31,30, 2026, as compared to the same period in 2025, is mainly explained by lower NRE offset by higher license fees. The decrease in total revenues of 1.9% for the six months ended June 30, 2026, as compared to the same period in 2025, is mainly explained by lower NRE offset by higher license fees.

Revenues from license fees were $0.6$0.4 million and $1.0 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $0.5$0.4 million and $0.9 million for the same periods in 2025.2025, respectively. The increase of 19.1%9.2% for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, was mainly due to new license agreements, including significant growth in MultiSensing license revenue, which increased more than fivefold. The increase of 14.7% for the six months ended June 30, 2026, as compared to the same period in 2025, was mainly due to new license agreements.

Revenues from non-recurring engineering were $22,000$36,000 and $58,000 for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $16,000$195,000 and $211,000 for the same periods in 2025.2025, respectively. Most of our non-recurring engineering revenues are related to application development and proof-of-concept projects related to our technology platforms. The increasedecrease of 37.5%81.5% for the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, was the result of increaseddecreased delivery in projects. The decrease of 72.5% for the six months ended June 30, 2026, as compared to the same period in 2025, was the result of decreased delivery in projects.

Our gross margin was 99.3%98.1% and 98.8% for the three and six months ended MarchJune 31,30, 2026, respectively, compared to 98.2%99.0% and 98.7% for the same periods in 2025.2025, respectively.

Research and development (“R&D”) expenses were $0.9$1.0 million and $1.9 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $1.0$1.1 million and $2.0 million for the same periods in 2025.2025, respectively. The decrease of 7.2%6.5% for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 was primarily related to lower costpayroll and related costs. The decrease of 6.8% for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily related to lower payroll and related costs.

Sales and marketing expenses were $0.6$0.7 million and $1.3 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $0.6 million and $1.2 million for the same periods in 2025.2025, respectively. The decreaseincrease of 5.3%24.0% for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 was primarily related to lowerhigher payroll and related costs and higher advertising and travel expenses. The increase of 8.8% for the six months ended June 30, 2026, as compared to the same period in 2025, was primarily related to higher payroll and related costs.

General and administrative expenses were $1.2$1.0 million and $2.2 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $0.9$1.0 million and $1.9 million for the same period in 2025.2025, respectively. The increase of 37.1%17.5% for the threesix months ended MarchJune 31,30, 2026, compared to the same period in 2025, was primarily related to higher professional fees due to tax analysis of the net income for 2025, higher payroll and related costs and the currency exchange effect.

Other income was $0.2 million and $0.4 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $0.2$0.1 million and $0.3 million for the same periods in 2025, respectively. The other income for the period was mainly related to interest income earned.

Our effective tax rate was zero and (0.1)% for the three and six months ended MarchJune 31,30, 2026, respectively, compared to 0.6%zero and 0.3% for the same periods in 2025, respectively. The tax rate is due to global intangible low-taxed income and change in valuation allowance.

As a result of the factors discussed above, we recorded a loss from continuing operations of $1.9$2.1 million and $4.0 million for the three and six months ended MarchJune 31,30, 2026, respectively, and a$2.0 lossmillion ofand $1.8$3.8 million for the same periods in 2025.2025, respectively.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $23.2$21.3 million, as compared to $25.4 million as of December 31, 2025. 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 $22.3$20.3 million as of MarchJune 31,30, 2026, compared to $24.1 million as of December 31, 2025.

Net cash used in investing activities for combined continuing and discontinued operations for the threesix months ended MarchJune 31,30, 2026, was approximately $13,000$14,000 and was primarily the result of purchase of property and equipment. Net cash used in investing activities for combined continuing and discontinued operations for the threesix months ended MarchJune 31,30, 2025, was approximately $40,000$15,000 and was primarily the result of purchase of property and equipment.

Net cash used in financing activities for combined continuing and discontinued operations for the threesix months ended MarchJune 31,30, 2026, was approximately $3,000$6,000 and was primarily the result of principal payments on finance leases. Net cash used in financing activities for combined continuing and discontinued operations for the threesix months ended MarchJune 31,30, 2025, was approximately $2,000$5,000 and was primarily the result of principal payments on finance leases.

We have incurred significant operating losses and negative cash flows from operations since our inception. The Company incurred net loss for combined continuing and discontinued operations of approximately $1.9$2.1 million and $4.0 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to a loss of $1.7$1.9 million and $3.6 million for the same periodperiods in 2025, respectively, and had an accumulated deficit of approximately $217.5$219.6 million and $215.6 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

On December 1, 2020, Neonode Technologies AB entered into a lease for 6,684 square feet of office space located at Karlavägen 100, Stockholm, Sweden. The lease agreement has been extended and is valid through January 2030, with premises adjusted from 6,684 square feet to 6,254 square feet. It is extended on a yearly basis unless written notice is provided nine months prior to the expiration date. Fixed lease payments are expected to be in the range of $280,000 and $310,000 annually until expiration.

For total rent expense for combined continuing and discontinued operations, we recorded $126,000$123,000 and $249,000 for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $104,000$115,000 and $219,000 for the same periodperiods in 2025.2025, respectively.

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 MarchJune 31,30, 2026, we had made no payments to TI under the NN1002 Agreement.

During the threesix months ended MarchJune 31,30, 2026 and 2025, no shares were sold under the Ladenburg ATM Facility.

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 23-1638.23-1638). On July 18, 2024, the Federal Circuit affirmed the PTAB’s rulings, found in favor of Aequitas Sub and against Google and Apple/Samsung, and held that none of the challenged claims in U.S. Patent No. 8,095,879 are unpatentable.

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

The case against Apple remains pending in the United States District Court for the Northern District of California (docket number 21-cv-8872). On November 13, 2024, the Court granted the parties’ motion to continue the stay pending resolution of the Samsung case pending in the Western District of Texas (case number 20-cv-00507-ADA) by settlement or final judgment. On September 15, 2025 the Court lifted the stay upon stipulation of the parties. On October 27, 2025, the parties submitted a stipulated scheduling order for the remainder of the case. On December 15, 2025, the Court entered a modified order for scheduling. Among other dates, the Court ordered (i) a close of fact discovery on July 31, 2026, (ii) mediation by December 8, 2026, and (iii) trial by February 22, 2027. The Court also ordered claim construction briefing beginning March 27, 2026 and concluding April 17, 2026. Further, on February 10, 2026, the case was referred to private alternative dispute resolution to be completed by December 8, 2026. On April 2, 2026, Apple moved for summary judgment of invalidity for lack of written description. TheOn June 8, 2026, the Court granted Apple’s motion has been fully briefed and is scheduled for oralsummary argument on May 7, 2026. Additionally, as of April 17, 2026, claim construction briefing was completed,judgment, and on AprilJune 15, 2026 the clerk entered judgment dismissing the case. On July 1, 2026, AppleNeonode alsoSmartphone movedLLC appealed to servethe amendedFederal invalidityCircuit contentions(assigned baseddocket onnumber new26-2007). informationNeonode andSmartphone caseLLC’s developments.opening appellate brief is due in early September 2026, absent any extension.