Neonode Inc.

What they do

Neonode licenses its MultiSensing machine perception platform, which uses machine learning to detect and track persons and objects in video streams, and its zForce optical sensing platform for touch, contactless touch and gesture sensing. Customers are OEMs, ODMs and automotive Tier 1 suppliers that embed the technology in their own products; the company earns per-unit license fees and also sells non-recurring engineering (NRE) services. The TSM touch sensor module product business was phased out during 2024 and is reported as discontinued operations, and in September 2025 zForce was moved into maintenance mode.

Revenue drivers

• License revenue — Per-unit royalties from OEMs, ODMs and automotive Tier 1 suppliers; Q2 2026 license revenue was $0.4 million, up 9.2% year over year, and represents the large majority of the $0.5 million quarterly total.
• MultiSensing (machine perception) — Automotive-focused machine perception software; management said MultiSensing license revenue grew more than fivefold in Q2 2026 versus Q2 2025 on an automotive customer's production ramp.
• Non-recurring engineering (NRE) services — Flat-rate or hourly engineering support tied to customer integration projects; Q2 2026 NRE revenue was $36,000, down 81.5% year over year, and the decline drove the overall revenue decrease.
• zForce (maintenance mode) — Legacy touch and gesture sensing licensing to existing customers in office equipment, automotive, industrial automation, medical, military and avionics; no longer sold to new customers.

Recent performance

Q2 2026 revenue from continuing operations was $0.5 million, down 20.4% year over year, as license revenue rose 9.2% to $0.4 million but NRE revenue fell 81.5% to $36,000. Operating expenses from continuing operations were $2.8 million, up 3.2%, mainly on higher advertising and travel, producing a loss from continuing operations of $2.1 million, or $0.13 per share, versus $2.0 million, or $0.12, a year earlier. For the six months ended June 30, 2026, revenue was $1.1 million (down 1.9%) and the loss from continuing operations was $4.0 million, or $0.24 per share. Cash used by operations was $1.9 million in Q2 2026 and $4.0 million for the six months. Cash and accounts receivable totaled $21.7 million at June 30, 2026, down from $25.8 million at December 31, 2025.

Strategy

The company's stated strategy is a transformation toward a more scalable software licensing business centered on MultiSensing for the automotive driver and in-cabin monitoring market. It is no longer selling zForce to new customers and instead supports existing customers while developing machine perception. Management cites continued product development, meeting key performance targets for automotive sensing, and advancing engagements with automotive OEMs, Tier 1 suppliers and strategic partners. Priorities are executing existing customer programs, converting evaluations and partner discussions into commercial agreements, and expanding into selected growth markets. The patent litigation against Apple remains pending, with fact discovery closing July 31, 2026, mediation by December 8, 2026 and trial by February 22, 2027.

Risks

• History of losses — The 10-K states the company has had substantial net losses in each fiscal period since inception except 2025, when net income reflected a patent assignment gain, and that going-concern depends on implementing the business plan.
• Tiny revenue base and declining NRE — Annual revenue fell from $5.8 million in 2021 to $2.1 million in 2025, and Q2 2026 NRE revenue of $36,000 was down 81.5% year over year, leaving results dependent on a small number of licensing customers.
• Concentrated licensing customer base — As of December 31, 2025 only nine licensing customers were shipping products embedding the company's technology, and the customer base is primarily automotive and printer segments.
• Listing-rule failure — An 8-K filed August 7, 2026 disclosed a delisting notice or listing-rule failure, an event the supplied excerpts do not quantify or explain.

Outlook

Management said its priorities are to execute on existing customer programs, convert ongoing evaluations and partner engagements into commercial agreements, and expand in selected growth markets. It cited the automotive customer production ramp-up and MultiSensing license growth, along with a strong balance sheet and liquidity position, as support for continued expansion of the licensing business. Cash and accounts receivable of $21.7 million at June 30, 2026, and working capital for continuing operations of $20.3 million, compare with $25.8 million and $24.1 million at December 31, 2025.