What changed in this filing

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Item 1. Financial Statements

2026-08-12 compared with 2026-05-13 · 234 added, 80 removed, 487 unchanged (39% of the section changed)

2 unchanged sentences

(In thousands, except share and per share amounts)

March 31, 2026

June 30, 2026

December 31, 2025

29 unchanged sentences

Preferred stock, 1,000,000 shares authorized, with par value of $ 0.001 ;

no shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively.

no shares issued and outstanding at June 30, 2026 and December 31, 2025, 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 March 31, 2026 and December 31, 2025, respectively.

16,782,922 and 16,782,922 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively.

Additional paid-in capital

11 unchanged sentences

(In thousands, except per share amounts)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

$ 441 $ 404 $ 1,033 $ 901

Non-recurring engineering

36 195 58 211

Total revenues

477 599 1,091 1,112

Cost of revenues:

1 unchanged sentence

Total cost of revenues

468 593 1,078 1,097

Operating expenses:

Research and development

1,004 1,074 1,909 2,049

Sales and marketing

739 596 1,347 1,238

General and administrative

1,046 1,033 2,214 1,885

Total operating expenses

2,789 2,703 5,470 5,172

Operating loss

( 2,321 ) ( 2,110 ) ( 4,392 ) ( 4,075 )

Other income, net

183 126 392 281

Loss before provision for income taxes

( 2,138 ) ( 1,984 ) ( 4,000 ) ( 3,794 )

Provision for (benefit from) income taxes

Loss from continuing operations

( 2,139 ) ( 1,984 ) ( 4,002 ) ( 3,784 )

Income from discontinued operations

28 116 28 183

$ ( 2,111 ) $ ( 1,868 ) $ ( 3,974 ) $ ( 3,601 )

Income (loss) per common share:

Basic and diluted loss per share from continuing operations

$ ( 0.13 ) $ ( 0.12 ) $ ( 0.24 ) $ ( 0.23 )

Basic and diluted income per share from discontinued operations

- 0.01 - 0.01

Basic and diluted net loss per share⁽ᵃ⁾

$ ( 0.13 ) $ ( 0.11 ) $ ( 0.24 ) $ ( 0.21 )

Basic and diluted – weighted average number of common shares outstanding

16,783 16,783 16,783 16,783

May not sum due to rounding.

2 unchanged sentences

(In thousands)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

$ ( 2,111 ) $ ( 1,868 ) $ ( 3,974 ) $ ( 3,601 )

Other comprehensive income (loss):

Foreign currency translation adjustments

24 ( 55 ) 45 ( 189 )

Total other comprehensive income (loss)

24 ( 55 ) 45 ( 189 )

Comprehensive loss

$ ( 2,087 ) $ ( 1,923 ) $ ( 3,929 ) $ ( 3,790 )

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

1 unchanged sentence

(In thousands)

For the three months ended March 31, 2026 and 2025

For the three and six months ended June 30, 2026 and 2025

Common Stock Shares Issued

5 unchanged sentences

Balances, December 31, 2025

16,783 $ 17 $ 240,955 $ ( 696 ) $ ( 215,587 ) $ 24,689

Foreign currency translation adjustment

- - - 21 - 21

- - - - ( 1,863 ) ( 1,863 )

Balances, March 31, 2026

16,783 $ 17 $ 240,955 $ ( 675 ) $ ( 217,450 ) $ 22,847

Foreign currency translation adjustment

- - - 24 - 24

- - - - ( 2,111 ) ( 2,111 )

Balances, June 30, 2026

16,783 $ 17 $ 240,955 $ ( 651 ) $ ( 219,561 ) $ 20,760

Common Stock Shares Issued

5 unchanged sentences

Balances, December 31, 2024

16,783 $ 17 $ 240,955 $ ( 450 ) $ ( 224,080 ) $ 16,442

Foreign currency translation adjustment

- - - ( 134 ) - ( 134 )

- - - - ( 1,733 ) ( 1,733 )

Balances, March 31, 2025

16,783 $ 17 $ 240,955 $ ( 584 ) $ ( 225,813 ) $ 14,575

Foreign currency translation adjustment

- - - ( 55 ) - ( 55 )

- - - - ( 1,868 ) ( 1,868 )

Balances, June 30, 2025

16,783 $ 17 $ 240,955 $ ( 639 ) $ ( 227,681 ) $ 12,652

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

1 unchanged sentence

(In thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

$ ( 3,974 ) $ ( 3,601 )

Adjustments to reconcile net loss to net cash used in operating activities:

Recoveries of bad debt

Depreciation and amortization

6 unchanged sentences

Operating lease obligations

( 162 ) ( 167 )

Net cash used in operating activities

( 4,002 ) ( 3,110 )

Cash flows from investing activities:

Purchase of property and equipment

( 14 ) ( 15 )

Net cash used in investing activities

( 14 ) ( 15 )

Cash flows from financing activities:

2 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

( 16 ) ( 59 )

Net change in cash and cash equivalents

( 4,038 ) ( 3,189 )

Cash and cash equivalents at beginning of period

25,358 16,427

Cash and cash equivalents at end of period

$ 21,320 $ 13,238

Supplemental disclosure of cash flow information:

2 unchanged sentences

Property and equipment obtained in exchange for finance lease obligations

Right-of-use asset obtained in exchange for lease obligations

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

42 unchanged sentences

Gains or (losses) resulting from translation are included as a separate component of accumulated other comprehensive loss.

Foreign currency translation gain (loss) was $ 21,000 and $( 134,000 ) during the three months ended March 31, 2026 and 2025 , respectively.

Income (loss) resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $( 1,000 ) and $ 80,000 during the three months ended March 31, 2026 and 2025 , respectively.

Foreign currency translation gain (loss) was $ 24,000 and $ 45,000 and $( 55,000 ) and $( 189,000 ) during the three and six months ended June 30, 2026 and 2025 , respectively.

Loss resulting from foreign currency transactions are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and were $( 2,000 ) and $( 3,000 ) and $( 12,000 ) and $ 68,000 during the three and six months ended June 30, 2026 and 2025 , respectively.

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 $ 1.9 million and net loss of $ 1.7 million for the three months ended March 31, 2026 and 2025 , respectively and had an accumulated deficit of approximately $ 217.5 million and $ 215.6 million as of March 31, 2026 and December 31, 2025 , respectively.

In addition, operating activities used cash of approximately $ 2.1 million and $ 1.4 million for the three months ended March 31, 2026 and 2025 , respectively.

The Company incurred net loss for combined continuing and discontinued operations of approximately $ 2.1 million and $ 4.0 million and $ 1.9 million and $ 3.6 million for the three and six months ended June 30, 2026 and 2025 , respectively and had an accumulated deficit of approximately $ 219.6 million and $ 215.6 million as of June 30, 2026 and December 31, 2025 , respectively.

In addition, operating activities used cash of approximately $ 4.0 million and $ 3.1 million for the six months ended June 30, 2026 and 2025 , 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.

2 unchanged sentences

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

As of March 31, 2026 , four of our customers represented approximately 89.3 % of our consolidated accounts receivable and unbilled revenues.

As of June 30, 2026 , four of our customers represented approximately 95.7 % of our consolidated accounts receivable and unbilled revenues.

As of December 31, 2025 , four of our customers represented approximately 95.4 % 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 March 31, 2026 are as follows:

Customers who accounted for 10.0% or more of our net revenues during the three months ended June 30, 2026 are as follows:

Seiko Epson – 34.0 %

NEXTY Electronics Corporation – 23.7 %

Commercial Vehicle OEM – 31.2 %

Hewlett-Packard – 18.6 %

Customers who accounted for 10.0% or more of our net revenues during the three months ended March 31, 2025 are as follows:

● Alps Alpine – 12.4 %

Customers who accounted for 10.0% or more of our net revenues during the six months ended June 30, 2026 are as follows:

Seiko Epson – 31.7 %

Commercial Vehicle OEM – 18.8 %

Hewlett-Packard – 18.4 %

Alps Alpine – 14.7 %

NEXTY Electronics – 14.0 %

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

Commercial Vehicle OEM – 34.1 %

Seiko Epson – 23.8 %

Hewlett-Packard – 19.1 %

Alps Alpine – 17.5 %

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

Seiko Epson – 30.8 %

Alps Alpine – 22.3 %

Commercial Vehicle OEM – 21.3 %

Hewlett-Packard – 19.3 %

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

Three months ended March 31,

Three months ended June 30,

North America:

12 unchanged sentences

$ 154 100.0 % $ 217 100.0 %

Six months ended June 30,

North America:

Net revenues from IT & Industrial

$ 212 100.0 % $ 228 100.0 %

Asia Pacific:

Net revenues from Automotive

$ 160 24.2 % $ 248 39.7 %

Net revenues from IT & Industrial

501 75.8 % 376 60.3 %

$ 661 100.0 % $ 624 100.0 %

Europe, Middle East and Africa:

Net revenues from Automotive

$ 218 100.0 % $ 260 100.0 %

Contract Balances

3 unchanged sentences

We record contract liabilities when we receive prepayments or upfront payments ahead of performance.

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

March 31, 2026

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

June 30, 2026

December 31, 2025

11 unchanged sentences

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

March 31, 2026

June 30, 2026

December 31, 2025

1 unchanged sentence

Deferred revenues non-recurring engineering

During the three months ended March 31, 2026 and 2025 , the Company recognized revenues of approximately $ 9,000 and zero respectively, related to contract liabilities outstanding at the beginning of the period.

During the three and six months ended June 30, 2026 and 2025 , the Company recognized revenues of approximately $ 43,000 and $ 27,000 and $ 25,000 and zero respectively, related to contract liabilities outstanding at the beginning of the period.

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.

3 unchanged sentences

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 March 31, 2026 and December 31, 2025 .

Based on the uncertainty of future pre-tax income, we fully reserved our net deferred tax assets as of June 30, 2026 and December 31, 2025 .

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.

3 unchanged sentences

As a result, we did not recognize a liability for unrecognized tax benefits.

As of March 31, 2026 and December 31, 2025 , we had no unrecognized tax benefits.

As of June 30, 2026 and December 31, 2025 , 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.

11 unchanged sentences

Assets and liabilities of discontinued operations are presented separately in the condensed consolidated balance sheets for all periods presented.

On March 31, 2026 and December 31, 2025 , these balances consisted of assets and liabilities of the Company’s Products business.

On June 30, 2026 and December 31, 2025 , these balances consisted of assets and liabilities of the Company’s Products business.

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

March 31, 2026

June 30, 2026

December 31, 2025

5 unchanged sentences

Income (Loss) from Discontinued Operations

Discontinued operations for the three months ended March 31, 2026 and 2025 , respectively, consists of results from the Company’s products business.

Discontinued operations for the three and six months ended June 30, 2026 and 2025 , 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 March 31,

Three months ended June 30,

Six months ended June 30,

$ 28 $ 45 $ 28 $ 112

Total revenues

Operating income (loss)

Loss before provision for income taxes

Cost of revenues:

Total cost of revenues

Operating expenses:

Sales and marketing

- ( 107 ) - ( 107 )

Total operating expenses

- ( 107 ) - ( 107 )

Operating income

28 116 28 183

Income before provision for income taxes

28 116 28 183

$ 28 $ 116 $ 28 $ 183

Cash Flows Information

There were no amounts recorded for depreciation, amortization, capital expenditures or significant operating and investing noncash items of discontinued operations for the three months ended March 31, 2026 and 2025 , respectively.

There were no amounts recorded for depreciation, amortization, capital expenditures or significant operating and investing noncash items of discontinued operations for the three and six months ended June 30, 2026 and 2025 , respectively.

Stockholders ’ Equity

10 unchanged sentences

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.

Net Loss per Share

Basic net loss per share of common stock for the three months ended March 31, 2026 and 2025 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.

Net Loss per Share, Loss per Share from Continuing Operations and Income per Share from Discontinued Operations

Basic net loss per share of common stock for the three and six months ended June 30, 2026 and 2025 was computed by dividing the net loss attributable to common stockholders of the Company for the relevant period by the weighted average number of shares of common stock outstanding.

Basic loss per share of common stock from continuing operations for the three and six months ended June 30, 2026 and 2025 was computed by dividing the loss from continuing operations attributable to common stockholders of the Company for the relevant period by the weighted average number of shares of common stock outstanding.

Basic income per share of common stock from discontinued operations for the three and six months ended June 30, 2026 and 2025 was computed by dividing the income from discontinued operations attributable to common stockholders of the Company for the relevant period by the weighted average number of shares of common stock outstanding.

Diluted loss per share of common stock is computed by dividing net 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 months ended March 31, 2026 and 2025 , respectively.

Three months ended March 31,

Diluted loss per share of common stock from continuing operations is computed by dividing loss from continuing operations 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.

Diluted income per share of common stock from discontinued operations is computed by dividing income from continuing operations 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 six months ended June 30, 2026 and 2025 , respectively.

Three months ended June 30,

Six months ended June 30,

(in thousands, except per share amounts)

6 unchanged sentences

28 116 28 183

$ ( 2,111 ) $ ( 1,868 ) $ ( 3,974 ) $ ( 3,601 )

Loss per share from continuing operations - basic and diluted

1 unchanged sentence

Income per share from discontinued operations - basic and diluted

- 0.01 - 0.01

Net loss per share - basic and diluted (a)

7 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

$ 477 $ 599 $ 1,091 $ 1,112

Costs and expenses (a) :

1 unchanged sentence

General and administrative, including rent

362 350 682 546

Payroll and related

1,878 1,917 3,530 3,620

Professional fees and IP

307 290 841 659

Marketing and travel

159 94 257 254

Total costs and expenses

2,790 2,700 5,463 5,178

Other segment items (b)

( 8 ) ( 9 ) ( 20 ) ( 9 )

Other income, net

183 126 392 281

Loss before provision for income taxes

4 unchanged sentences

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

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

Other segment items primarily include depreciation and amortization and payroll and related - re-allocated to cost of revenues.

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

United States

$ 1,258 $ 600

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 March 31,

Three months ended June 30,

$ 229 48.0 % $ 262 43.6 %

7 unchanged sentences

$ 477 100.0 % $ 599 100.0 %

Six months ended June 30,

$ 659 60.4 % $ 612 55.0 %

206 18.9 % 237 21.3 %

13 1.2 % 23 2.1 %

1 0.1 % 10 0.9 %

- - % 1 0.1 %

$ 879 80.6 % $ 884 79.5 %

United States

212 19.4 % 228 20.5 %

$ 1,091 100.0 % $ 1,112 100.0 %

Subsequent Events

On April 22, 2026, Neonode Technologies AB extended the lease agreement of the office space located at Karlavägen 100, Stockholm, Sweden and adjusted the square feet from 6,684 square feet to 6,254 square feet.

The lease agreement is valid through January 2030 and 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.

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

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

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

20 unchanged sentences

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.

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.

We license our MultiSensing and zForce technology to Original Equipment Manufacturers (“OEMs”) and Tier 1 suppliers who embed our technology into products that they develop, manufacture and sell.

Since 2010, our licensing customers have sold over 100 million devices that use our patented technology.

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

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

Our licensing customer base is primarily in the automotive and printer segments.

9 unchanged sentences

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.

In addition, the war with Iran has led to recent increases in the fuel prices.

We do not procure materials directly from Ukraine, Russia or Iran, but the war in Ukraine and the war with Iran may further exacerbate ongoing supply chain disruptions that are occurring across the 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 Ukraine, 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;

5 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Percentage of revenue

24 unchanged sentences

Basic and diluted loss per share from continuing operations

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

Total revenues were $0.6 million for the three months ended March 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, 2026, as compared to the same period in 2025, is mainly explained by higher license fees.

Revenues from license fees were $0.6 million for the three months ended March 31, 2026, compared to $0.5 million for the same periods in 2025.

The increase of 19.1% for the three months ended March 31, 2026, as compared to the same period in 2025, was mainly due to new license agreements.

Six months ended June 30,

Percentage of revenue

Non-recurring engineering

Revenues from non-recurring engineering were $22,000 for the three months ended March 31, 2026, compared to $16,000 for the same periods in 2025.

Percentage of revenue

Total revenues

Cost of revenues:

Non-recurring engineering

Percentage of revenue

Total cost of revenues

Operating expenses:

Research and development

Percentage of revenue

Sales and marketing

Percentage of revenue

General and administrative

Percentage of revenue

Total operating expenses

Percentage of revenue

Operating loss

Percentage of revenue

Other income, net

Percentage of revenue

Provision for income taxes

Percentage of revenue

Loss from continuing operations

Percentage of revenue

Basic and diluted loss per share from continuing operations

All of our sales for the three and six months ended June 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 June 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 $0.4 million and $1.0 million for the three and six months ended June 30, 2026, respectively, compared to $0.4 million and $0.9 million for the same periods in 2025, respectively.

The increase of 9.2% for the three months ended June 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.

Non-recurring Engineering

Revenues from non-recurring engineering were $36,000 and $58,000 for the three and six months ended June 30, 2026, respectively, compared to $195,000 and $211,000 for the same periods in 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 increase of 37.5% for the three months ended March 31, 2026, as compared to the same period in 2025, was the result of increased delivery in projects.

The decrease of 81.5% for the three months ended June 30, 2026, as compared to the same period in 2025, was the result of decreased 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.

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

Three months ended March 31,

Three months ended June 30,

Non-recurring engineering

1 unchanged sentence

Non-recurring engineering

Our gross margin was 99.3% for the three months ended March 31, 2026, compared to 98.2% for the same periods in 2025.

Six months ended June 30,

Non-recurring engineering

IT & Industrial:

Non-recurring engineering

Our gross margin was 98.1% and 98.8% for the three and six months ended June 30, 2026, respectively, compared to 99.0% and 98.7% for the same periods in 2025, 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 $0.9 million for the three months ended March 31, 2026, compared to $1.0 million for the same periods in 2025.

The decrease of 7.2% for the three months ended March 31, 2026 compared to the same period in 2025 was primarily related to lower cost for payroll and related costs.

Research and development (“R&D”) expenses were $1.0 million and $1.9 million for the three and six months ended June 30, 2026, respectively, compared to $1.1 million and $2.0 million for the same periods in 2025, respectively.

The decrease of 6.5% for the three months ended June 30, 2026 compared to the same period in 2025 was primarily related to lower payroll 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.

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 $0.6 million for the three months ended March 31, 2026, compared to $0.6 million for the same periods in 2025.

The decrease of 5.3% for the three months ended March 31, 2026 compared to the same period in 2025 was primarily related to lower advertising and travel expenses.

Sales and marketing expenses were $0.7 million and $1.3 million for the three and six months ended June 30, 2026, respectively, compared to $0.6 million and $1.2 million for the same periods in 2025, respectively.

The increase of 24.0% for the three months ended June 30, 2026 compared to the same period in 2025 was primarily related to higher 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.

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 $1.2 million for the three months ended March 31, 2026, compared to $0.9 million for the same period in 2025.

The increase of 37.1% for the three months ended March 31, 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 for the three months ended March 31, 2026, compared to $0.2 million for the same periods in 2025, respectively.

General and administrative expenses were $1.0 million and $2.2 million for the three and six months ended June 30, 2026, respectively, compared to $1.0 million and $1.9 million for the same period in 2025, respectively.

The increase of 17.5% for the six months ended June 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 June 30, 2026, respectively, compared to $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 (0.1)% for the three months ended March 31, 2026, compared to 0.6% for the same periods in 2025, respectively.

Our effective tax rate was zero and (0.1)% for the three and six months ended June 30, 2026, respectively, compared to 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 million for the three months ended March 31, 2026, and a loss of $1.8 million for the same periods in 2025.

As a result of the factors discussed above, we recorded a loss from continuing operations of $2.1 million and $4.0 million for the three and six months ended June 30, 2026, respectively, and $2.0 million and $3.8 million for the same periods in 2025, respectively.

Liquidity and Capital Resources

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ability to raise additional capital, if necessary.

As of March 31, 2026, we had cash and cash equivalents of $23.2 million, as compared to $25.4 million as of December 31, 2025.

As of June 30, 2026, we had cash and cash equivalents of $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 million as of March 31, 2026, compared to $24.1 million as of December 31, 2025.

Net cash used in operating activities for combined continuing and discontinued operations for the three months ended March 31, 2026, was $2.1 million and was primarily the result of a net loss of $1.9 million and approximately $0.1 million in non-cash operating expenses, comprised of depreciation and amortization and amortization of operating lease right-of-use assets and changes in operating assets and liabilities of $(0.4) million.

Net cash used in operating activities for combined continuing and discontinued operations for the three months ended March 31, 2025, was $1.4 million and was primarily the result of a net loss of $1.7 million and approximately $91,000 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 $282,000.

Net cash used in investing activities for the three months ended March 31, 2026, was approximately $13,000 and was primarily the result of purchase of property and equipment.

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

Net cash used in financing activities for the three months ended March 31, 2026, was approximately $3,000 and was primarily the result of principal payments on finance leases.

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

Working capital (current assets less current liabilities) was $20.3 million as of June 30, 2026, compared to $24.1 million as of December 31, 2025.

Net cash used in operating activities for combined continuing and discontinued operations for the six months ended June 30, 2026, was $4.0 million and was primarily the result of a net loss of $4.0 million and approximately $0.2 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 $(0.3) million.

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

Net cash used in investing activities for combined continuing and discontinued operations for the six months ended June 30, 2026, was approximately $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 six months ended June 30, 2025, was approximately $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 six months ended June 30, 2026, was approximately $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 six months ended June 30, 2025, was approximately $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 million for the three months ended March 31, 2026, compared to a loss of $1.7 million for the same period in 2025, and had an accumulated deficit of approximately $217.5 million and $215.6 million as of March 31, 2026 and December 31, 2025, respectively.

The Company incurred net loss for combined continuing and discontinued operations of approximately $2.1 million and $4.0 million for the three and six months ended June 30, 2026, respectively, compared to a loss of $1.9 million and $3.6 million for the same periods in 2025, respectively, and had an accumulated deficit of approximately $219.6 million and $215.6 million as of June 30, 2026 and December 31, 2025, respectively.

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.

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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 $126,000 for the three months ended March 31, 2026, compared to $104,000 for the same period in 2025.

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 $123,000 and $249,000 for the three and six months ended June 30, 2026, respectively, compared to $115,000 and $219,000 for the same periods in 2025, respectively.

Non-Recurring Engineering Development Costs

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

As of June 30, 2026, we had made no payments to TI under the NN1002 Agreement.

At-the-Market Offering Program

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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 months ended March 31, 2026 and 2025, no shares were sold under the Ladenburg ATM Facility.

During the six months ended June 30, 2026 and 2025, no shares were sold under the Ladenburg ATM Facility.

Patent Assignment

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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.

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On April 2, 2026, Apple moved for summary judgment of invalidity for lack of written description.

The motion has been fully briefed and is scheduled for oral argument on May 7, 2026.

Additionally, as of April 17, 2026, claim construction briefing was completed, and on April 15, 2026, Apple also moved to serve amended invalidity contentions based on new information and case developments.

On June 8, 2026, the Court granted Apple’s motion for summary judgment, and on June 15, 2026 the clerk entered judgment dismissing the case.

On July 1, 2026, Neonode Smartphone LLC appealed to the Federal Circuit (assigned docket number 26-2007).

Neonode Smartphone LLC’s opening appellate brief is due in early September 2026, absent any extension.

Based on information in public records, in November 2020, Samsung and Apple collectively sought inter partes review of certain claims in U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements