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Neonode Teams with Backyard Babies to Release a Limited Edition of the Neonode N2 Touch Screen Phone

STOCKHOLM, Sweden-(Business Wire)-September 26, 2008 - Neonode (NASDAQ: NEON), the Swedish mobile communication company that develops touch screen technologies and designs mobile handsets, today announced the release of a Backyard Babies Limited Edition Neonode N2 multimedia touch screen phone. The Backyard Babies Limited Edition Neonode N2 phone consists of the new and self named hit album, “Backyard Babies,” and other special features. The Special Edition is available through the Company’s web shop, http://www.neonodewebshop.com/, for as low as $353, €250 or £200 depending on choice of currency.

The notorious Swedish rock band released its latest album, “Backyard Babies,” on August 13, 2008 and it went straight to the top of the Swedish charts. Backyard Babies over their 20 year history has become one of Sweden’s best known rock bands and has released 6 albums, won a Grammy and also reached the rest of the world by their tattooed crusade.

In a joint effort, Neonode and Backyard Babies are now offering the unique multimedia touch screen phone, the Neonode N2, in a special Backyard Babies Limited Edition through the Company’s web shop http://www.neonodewebshop.com/.

The Neonode N2 limited edition consists of the complete new critically acclaimed hit album “Backyard Babies,” a music video, bonus track and numerous ringtones and Backyard Babies themes.

“The Neonode N2 is a real odd bird compared to its competitors, but that´s just what we like. The N2 has a cool design and an alternative feel. We especially like the rugged black surface and that it has the form factor of an actual dog tag,” Dregen, Backyard Babies’ lead guitarist says.

For more details about the Neonode N2 – Backyard Babies Limited Edition, please visit www.neonodewebshop.com.

About Neonode Inc.

Neonode Inc specializes in optical finger based touch screen technology. Neonode’s mission is to enhance user experience related to any consumer or industrial device that can benefit from a finger based touch screen solution. Neonode Inc. is a publicly traded company (NASDAQ: NEON) with offices in Stockholm, Sweden and San Ramon, USA. For more information, visit www.neonode.com.

About the Backyard Babies Tour

The Backyard Babies are currently on tour and will be visiting; UK, Germany, Sweden, Norway, Italy, Spain, Japan, Finland, Austria, Switzerland, Russia, Holland, France, Portugal, Hungary, Czech Republic, Slovakia, Serbia, Slovenia and Croatia the following months. For more information about the tour, please visit http://www.backyardbabies.com/

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.

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