NEONODE INC. & DMC Worldwide LLC JOIN TO CREATE NEONODE USA

Stockholm, Sweden & New York, January 8, 2008 - Neonode (NASDAQ: NEON), the Swedish mobile communication brand that designs and develops intuitive technologies and products, today announced that it has joined with U.S. sales channel development and supply chain company, Distribution Management Consolidators Worldwide LLC (DMC), to form Neonode USA. The new entity will market existing and new innovative products within North America, Latin America and China, and will commercially market the Neonode technology globally.

DMC leverages more than 40 years of experience managing all aspects of a brand development and sales channel program for international manufacturers looking to break into the Chinese, North and Latin American markets. The company works closely with its partners to ensure that products are a cultural fit, seamlessly manages the entire supply chain, and can provide sufficient financing to ensure a rapid market penetration. The whole experience reduces capital expenses and increases the speed to market for new consumer products.

Neonode N2 is a technologically advanced multimedia mobile phone incorporating the proprietary "zForce" optical touch screen technology and the "neno" user interface. When launched by Neonode USA, these proprietary technologies will be marketed exclusively by Neonode USA around the globe to widen the distribution of Neonode's intuitive solutions.

"Neonode USA will leverage the groundbreaking technologies developed by Neonode, while utilizing DMC's marketing and brand building experience, distribution channel relationships and supply chain management expertise. Collectively we expect this partnership will bring Neonode N2, and a number of other Neonode products, to the market efficiently and effectively." said Mikael Hagman, CEO and President of Neonode Inc.

Neonode USA will market existing Neonode products and its intellectual property, and will develop new products that incorporate the power of "zForce" and "neno".

"We have seen the critical acclaim the Neonode N2 has received in Europe, and believe there is a great demand for this multimedia mobile handset in North America, China and Latin America. Neonode has introduced technologies that have the power to change the nature of more than just the mobile phone industry, and can be embedded into a wide-range of desirable consumer products. DMC will fully leverage Neonode's valuable resources in order to maximize the opportunities to market these uniquely intuitive technologies across many product categories and business sectors," said Andrew Lowinger, President and CEO of DMC.

Neonode and Neonode N2 made its United States debut at this year's Consumer Electronics Show (CES) in the Central Hall 9817. Neonode USA's main office will be located in New York.

For more information about Neonode, see www.neonode.com.

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About Neonode
Neonode designs and develops intuitive technologies and products. The company's focus is on solutions that increase the user experience of complex or monotonous devices. With offices in Stockholm, Sweden, San Ramon, USA, Shanghai and Hong Kong, China, Neonode Inc. is a publicly traded company (NASDAQ: NEON) with licenses and products sold worldwide through both direct web sales and local distribution partners. For more information, see www.neonode.com.

About Distribution Management Consolidators LLC
DMC is an integrated sales channel development and supply chain management company that delivers innovative end-to-end business solutions to its clients. Our expertise helps best-in-class and emerging companies become powerful competitors in the global marketplace. DMC provides today's manufacturers with a deeper level of sales channel development and supply chain management. The company's over 40 years of experience in sales, marketing, manufacturing and brand development delivers clients the highest level of immediate access to processes and long standing relationships - yielding increased profitability and decreased risk. www.DMCllc.net

Forward-Looking Statements
This news release contains certain forward-looking statements that involve risks and uncertainties, including statements regarding future products and technology developments. Such statements are only predictions and the company's actual results may differ materially from those anticipated in these forward-looking statements. Factors that may cause such differences include, but are not limited to, the ability of Neonode to develop and sell new products and technologies. These factors and others are more fully discussed in the documents the company files from time to time with the Securities and Exchange Commission, particularly, the company's most recent Form 10-K and Form 10-Q. Neonode and the Neonode logo are registered trademarks of Neonode Inc. All other brand or product names are trademarks or registered.