NEONODE : IS READY FOR BUSINESS WITH AIRBAR™

STOCKHOLM, Sweden - August 26, 2016 - Neonode Inc. (NASDAQ: NEON), the Optical Interactive Sensing Technology Company, has reached a major milestone in its go to market strategy for its revolutionary AirBar device. AirBar pre-order customers are being notified by email that they can convert their pre-orders for the 15.6 inch AirBar to firm orders.

Over 20,000 AirBar preorders have been placed through our official AirBar website (www.air.bar), from customers in 40 different countries throughout the world, demonstrating mass appeal and demand for a unique one of a kind touch and gesture enabling device. Of these preorders, Neonode will fulfill the USA and European orders as the first stage, followed by Asia, and then the rest of the world.

The earliest pre-orders will be converted first and the conversion process will continue until the pre-order backlog is cleared. To finalize the purchase of an AirBar device, a customer will provide payment by credit card along with final delivery instructions. The customer's AirBar device will be shipped within two weeks after the payment has been processed.

Neonode's global distribution and sales channel market strategy is moving forward as planned. Neonode's global distribution partner, Ingram Micro, is ready to accept retailer orders. Through Ingram Micro, AirBar will be available at Amazon.com, BestBuy.com, Walmart.com, CDW.com and more starting mid-October 2016.

'We have reached a very important milestone in our AirBar devices business. AirBar is ready and we are excited that we can finally share this great product with the world. We have established global distribution with the leading global technology distributor and have the world's top retailers gearing up to sell our products,' said Remo Behdasht, SVP AirBar Devices at Neonode Inc. 'In the coming months you will begin seeing and hearing a great deal about AirBar as we start our global marketing and sales campaign.'

About Neonode

Neonode Inc. (NASDAQ: NEON) develops and licenses optical interactive sensing technologies. Neonode's patented optical interactive sensing technology is developed for a wide range of devices like automotive systems, printers, PC devices, monitors, mobile phones, tablets and e-readers. NEONODE and the NEONODE logo are trademarks of Neonode Inc. registered in the United States and other countries. AIRBAR is a trademark of Neonode Inc. All other trademarks are the property of their respective owners.

For more information please visitwww.neonode.com.

About Ingram Micro

Ingram Micro helps businesses Realize the Promise of Technology™. It delivers a full spectrum of global technology and supply chain services to businesses around the world. Deep expertise in technology solutions, mobility, cloud, and supply chain solutions enables its business partners to operate efficiently and successfully in the markets they serve. Unrivaled agility, deep market insights and the trust and dependability that come from decades of proven relationships, set Ingram Micro apart and ahead. More at www.ingrammicro.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements relating to expectations, future performance or future events, and product cost, performance, and functionality matters. These statements are based on current assumptions, expectations and information available to Neonode management and involve a number of known and unknown risks, uncertainties and other factors that may cause Neonode's actual results, levels of activity, performance or achievements to be materially different from any expressed or implied by these forward-looking statements.

These risks, uncertainties, and factors are discussed under 'Risk Factors' and elsewhere in Neonode's public filings with the U.S. Securities and Exchange Commission from time to time, including Neonode's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You are advised to carefully consider these various risks, uncertainties and other factors. Although Neonode management believes that the forward-looking statements contained in this press release are reasonable, it can give no assurance that its expectations will be fulfilled. Forward-looking statements are made as of today's date, and Neonode undertakes no duty to update or revise them.

© Copyright Neonode Inc. 2001 - 2016. All rights reserved.

For more information:

AirBar Sales Contact:

hello@air.bar

AirBar Press Contact:

Oscar Ritzén Praglowski

Email: oscar.praglowski@neonode.com

Investor relations contact:

David Brunton

E-mail: david.brunton@neonode.com