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Item 1. Financial Statements

2025-05-13 compared with 2024-11-12 · 352 added, 618 removed, 291 unchanged (77% of the section changed)

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CONDENSED BALANCE SHEETS

September 30, 2024 (Unaudited) and December 31, 2023

March 31, 2025 (Unaudited) and December 31, 2024

Current Assets

Cash and cash equivalents

Investments in debt securities (U.S.

Treasury bills)

Accounts receivable, net

Prepaid expenses

Inventory prepayment

Inventory prepayments

Due from Tekcapital and Affiliates

2 unchanged sentences

Non-Current Assets

Patent costs, net

Capitalized software costs

Intangible assets, net

Property and equipment, net

4 unchanged sentences

Deferred revenue

Due to Tekcapital and Affiliates

Total Current Liabilities

4 unchanged sentences

Stockholders’ Equity

Common stock (par value $ 0.00001 , 50,000,000 shares authorized, and 2,420,934 and 747,416 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively) (1)

Common stock (par value $ 0.00001 , 50,000,000 shares authorized, and 2,452,627 and 2,452,632 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)

Additional paid-in capital

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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Retroactively adjusted the values of Common stock and Additional paid-in capital as well as the number of shares issued and outstanding in order to give effect to the Company’s 1-for-20 reverse stock split.

See Note 2 and Note 9.

See accompanying Notes to the Condensed Financial Statements.

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CONDENSED STATEMENTS OF OPERATIONS

For the three and nine months ended September 30, 2024 and 2023

Three Months Ended

September 30,

Nine Months Ended

September 30,

For the three months ended March 31, 2025 and 2024

Revenues, net

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Total Operating Expenses

Interest Expense

Total Other Income (Expense), net

Other Income (Expense), net

Weighted average number of shares outstanding (1)

Loss per share, basic and diluted (1)

Retroactively adjusted shares outstanding and per share information to give effect to the Company’s 1-for-20 reverse stock split.

See Note 2 and Note 9.

Amounts presented for 2024, including the weighted average number of shares outstanding presented and the resulting loss per share, have been retroactively adjusted in order to give effect to the Company’s July 18, 2024 1-for-20 reverse stock split.

See accompanying Notes to the Condensed Financial Statements.

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CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three and nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

Stockholders’

Balances as of January 1, 2025

Issuance of shares to third party service provider

Issuance of shares related to vesting of restricted share units

Cancellation of shares by stockholder

Stock-based compensation

Balances as of March 31, 2025

At-the-Market Offerings

First Registered Direct Offering

Second Registered Direct Offering

Issuance of shares to brand ambassador

Issuance of shares related to vesting of restricted share units

Stock-based compensation

Balances as of June 30, 2024

At-the-Market Offerings

Exercises of warrants related to inducement agreements

Exercises of warrants

Stock-based compensation

Balances as of September 30, 2024

Balances as of January 1, 2024

Exercises of warrants by stockholders

Issuance of shares to third party service provider

Issuance of shares related to vesting of restricted share units

Stock-based compensation

Balances as of March 31, 2024

Exercises of stock options

Exercises of warrants by stockholders

Exercises of warrants related to private placement transaction

Second public offering

Stock-based compensation

Balances as of June 30, 2023

Stock-based compensation

Balances as of September 30, 2023

See Note 2 and Note 9.

Amounts presented for 2024, including the number of shares issued and outstanding and the dollar values of Common stock and Additional paid-in capital, have been retroactively adjusted in order to give effect to the Company's July 18, 2024 1-for-20 reverse stock split.

See accompanying Notes to the Condensed Financial Statements.

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CONDENSED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

Operating Activities

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

Non-cash interest expense

Stock-based compensation expense

Stock-based compensation and nonemployee stock-based payment expense

Expenses paid by Tekcapital and Affiliates

(Recovery of) provision for doubtful accounts

Write-off of previously-capitalized software costs

Provision for (recovery of) doubtful accounts

Realized gain on debt securities (U.S.

Treasury bills)

Changes in operating assets and liabilities:

2 unchanged sentences

Prepaid expenses

Inventory prepayments

Contract assets and liabilities

1 unchanged sentence

Investing Activities

Purchases of debt securities (U.S.

Proceeds from redemption of debt securities (U.S.

Treasury bills)

4 unchanged sentences

Financing Activities

Proceeds from offerings of common stock and warrants

Proceeds from at-the-market offerings of common stock

Proceeds from exercises of warrants

Proceeds from exercise of stock options

Repayment of related party convertible debt

Repayment of amounts due to Tekcapital and Affiliates

Net cash flows from financing activities

Net Change In Cash

Cash at Beginning of Period

Cash at End of Period

Net Change In Cash and cash equivalents

Cash and cash equivalents at Beginning of Period

Cash and cash equivalents at End of Period

Significant Non-Cash Transactions

Expenses paid for by Tekcapital and Affiliates, reported as increase in Due to/from Tekcapital and Affiliates and related party convertible debt

Expenses paid for by Tekcapital and Affiliates, reported as increase in Due to/from Tekcapital and Affiliates

Issuance of shares for prepayment to third party service provider

Issuance of shares for prepayment to brand ambassador

See accompanying Notes to the Condensed Financial Statements.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

September 30, 2024 and 2023 (Unaudited)

March 31, 2025 and 2024 (Unaudited)

NOTE 1 – GENERAL INFORMATION

Innovative Eyewear, Inc.

(the “Company,” “us,” “we,” or “our”) is a corporation organized under the laws of the State of Florida that develops and sells cutting-edge eyeglasses and sunglasses, which are designed to allow our customers to remain connected to their digital lives, while also offering prescription eyewear and sun protection.

The Company was founded by Lucyd Ltd., a portfolio company of Tekcapital Plc through Tekcapital Europe, Ltd.

(collectively, together with Lucyd Ltd., “Tekcapital and Affiliates”), which owned approximately 10.8% of our issued and outstanding shares of common stock as of September 30, 2024.

Innovative Eyewear has licensed the exclusive rights to the Lucyd ® brand from Lucyd Ltd., which includes the exclusive use of all of Lucyd’s intellectual property, including our main product, Lucyd Lyte ® glasses.

(the “Company,”

“us,” “we,” or “our”) is a corporation organized under the laws of the State of Florida that develops

and sells cutting-edge smart eyewear – including prescription eyeglasses, ready-to-wear sunglasses, safety glasses, and sport glasses

– which are designed to allow our customers to remain connected to their digital lives.

The Company was founded by Lucyd Ltd.,

a portfolio company of Tekcapital Plc through Tekcapital Europe, Ltd.

(collectively, together with Lucyd Ltd., “Tekcapital and

Affiliates”), which owned approximately 11% of our issued and outstanding shares of common stock as of March 31, 2025.

Eyewear has licensed the exclusive rights to the Lucyd ® brand from Lucyd Ltd., which includes the exclusive use of all

of Lucyd’s intellectual property, including our core product line, Lucyd Lyte ® , and has also licensed the right to sell branded

smart eyewear under the Nautica ® , Eddie Bauer ® , and Reebok ® brands.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the periods presented have been included.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for future periods or the full year.

Certain prior period amounts have been reclassified to conform to current period presentation;

approximately $22,000 of capitalized costs related to the Company’s website previously reported within Capitalized software costs are now reported within Property and equipment, net.

Change in Capital Structure

As described more fully in Note 9, effective July 18, 2024, the Company effected a 1-for-20 reverse stock split for all of its issued and outstanding common stock.

All share and per share related amounts presented in these financial statements and accompanying notes, including but not limited to shares issued and outstanding, dollar amounts of common stock and additional paid-in capital, earnings/(loss) per share, and warrants and options, have been retroactively adjusted for all periods presented in order to reflect this change in capital structure.

There were no changes to the total number of authorized common shares or par value per common share as a result of this change.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for future periods or the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates, particularly given the significant uncertainties associated with the current geopolitical and economic environment.

Actual results could differ from those estimates, particularly given the significant uncertainties associated with the current state of international trade and the overall economic environment.

Cash Equivalents

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Treasury bills purchased three months or less from maturity, are considered cash equivalents.

As of September 30, 2024, the Company held investments in U.S.

Treasury bills, which mature in March 2025.

These investments are classified as “held-to-maturity” and are recorded at amortized cost of $ 4,895,184 in the accompanying condensed balance sheet.

The aggregate fair value of these investments, based on quoted prices (unadjusted) in active markets for identical assets, is $4,901,300 as of September 30, 2024, which includes an unrealized gain of $ 6,116 .

As of December 31, 2024, the Company held investments in U.S.

Treasury bills, which were purchased in September 2024 and matured in March 2025.

These investments were classified as “held-to-maturity” and, as of December 31, 2024, were recorded at amortized cost of $ 4,895,184 in the accompanying condensed balance sheet.

The aggregate fair value of these investments as of December 31, 2024, based on quoted prices (unadjusted) in active markets for identical assets, was $ 4,957,750 , which included an unrealized gain of $ 62,566 .

Upon maturity of these investments, the Company recognized a realized gain $ 104,816 for the three months ended March 31, 2025.

Receivables and Credit Policy

Trade receivables from customers are uncollateralized customer obligations due under normal trade terms.

Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoice.

The Company, by policy, routinely assesses the financial strength of its customers.

We generally offer “net 30” payment terms on wholesale orders of $1,500 or more, subject to the wholesale customer’s completion of a credit check application and credit card authorization form.

Accounts receivable are uncollateralized obligations due from customers under normal trade terms.

For direct-to-consumer sales, payment is required before product is shipped.

Accounts receivable are reported at the amount billed to the customer, net of an allowance for doubtful accounts.

The allowance for doubtful accounts is determined based upon a variety of judgments and factors.

For wholesale orders, we offer “net 30” payment terms on wholesale orders of $1,500 or more in accordance with industry standards.

The Company, by policy, routinely assesses the financial strength of its customers.

Accounts receivable are reported at the amount billed to the customer, net of an allowance for credit losses.

The allowance for credit losses is determined based upon a variety of judgments and factors.

Factors considered in determining the allowance include historical collection, write-off experience, and management’s assessment of collectibility from customers, including current conditions, reasonable forecasts, and expectations of future collectibility and collection efforts.

Management continuously assesses the collectibility of receivables and adjusts estimates based on actual experience and future expectations based on economic indicators.

Management continuously assesses the collectibility of receivables and adjusts estimates based on actual experience and future expectations.

Receivable balances are written-off against the allowance when such balances are deemed to be uncollectible.

A roll forward of the allowance for doubtful accounts for the nine months ended September 30, 2024 and 2023 is as follows:

The Company recognized bad debt expense (recovery) of $ 880 and $ ( 4,891 ) for the three months ended March 31, 2025 and 2024, respectively.

A roll forward of the allowance for credit losses for the three months ended March 31, 2025 and 2024 is as follows:

Schedule of allowance for doubtful accounts

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Bad debt expense (recovery)

Write-offs (1)

Balance at September 30

During the nine months ended September 30, 2023, the Company entered into a settlement agreement with a former wholesale customer.

As a result of this settlement, $47,646 of accounts receivable were written-off as uncollectible, while the $45,000 collected under the settlement agreement was reflected as a gain within general and administrative expenses in the condensed statement of operations.

The Company’s inventory includes purchased eyewear and is stated at the lower of cost or net realizable value, with cost determined on a specific identification method of inventory costing which attaches the actual cost to an identifiable unit of product.

Balance at March 31

Our inventory predominantly consists of purchased eyewear and related accessories, and is stated at the lower of cost or net realizable value, with cost determined on a specific identification method of inventory costing which attaches the actual cost to an identifiable unit of product.

Also included within inventory at March 31, 2025 was $ 82,454 of electronic components purchased from a third-party supplier for use by our manufacturer in their future production of our eyewear;

there were no such comparable amounts in inventory at December 31, 2024.

Provisions for excess, obsolete, or slow-moving inventory are recorded after periodic evaluation of historical sales, current economic trends, forecasted sales, estimated product life cycles, and estimated inventory levels.

Such provisions were $ 0 and $ 31,637 as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024 and December 31, 2023, the Company recorded an inventory prepayment in the amount of $ 139,065 and $ 323,520 , respectively, related to down payments for eyewear purchased from the manufacturer, prior to shipment of the product that occurred after the respective balance sheet dates.

Such provisions were $ 0 as of both March 31, 2025 and December 31, 2024.

Intangible Assets

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The Company reviews its intangible assets for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Capitalized Software

The Company had previously incurred costs related to development of the Vyrb software application, and had previously capitalized approximately $88,000 of these costs related to coding, development, and testing (subsequent to establishing technical feasibility of the app), as it was the Company’s intention to market and sell this software externally.

Although we launched Vyrb as an open beta version in 2021, and continued to add new features to Vyrb throughout 2022 and 2023, we had not officially launched the Vyrb app.

During 2024, management decided to shift our primary software development focus to the Lucyd app, which was launched in April 2023 as a free application that enables the user to converse with the extremely popular ChatGPT AI language model on our glasses.

Certain elements and features developed for the Vyrb app may potentially be incorporated into future releases of the Lucyd app.

Based on this decision, during the nine months ended September 30, 2024, we expensed the previously-capitalized Vyrb software development costs totalling approximately $ 88,000 to research and development expense.

Property and Equipment

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Repair and maintenance costs are expensed as incurred.

The Company accounts for income taxes under an asset and liability approach that recognizes deferred tax assets and liabilities based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

The Company follows a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return.

Any interest and penalties accrued related to uncertain tax positions are recorded in tax expense.

The Company accounts for income taxes under an asset and liability approach that recognizes deferred tax assets and liabilities based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse (i.e., when taxes are actually paid or recovered).

The Company periodically assesses the realizability of its net deferred tax assets.

If, after considering all relevant positive and negative evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized, the Company will reduce the net deferred tax assets by a valuation allowance.

The realization of net deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of net operating loss carryforwards.

A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized.

A review of all relevant available positive and negative evidence is considered, including the Company’s current and past performance, the market environment in which the Company operates, length of carryback and carryforward periods, and existing contracts that will result in future profits.

Stock-Based Compensation

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For stock option awards, the Black-Scholes-Merton option pricing model is used to estimate the fair value of share-based awards.

The Black-Scholes-Merton option pricing model incorporates various and highly subjective assumptions, including expected term and share price volatility.

The expected term of the stock options is estimated based on the simplified method as allowed by Staff Accounting Bulletin No.

The share price volatility is estimated using historical stock prices based upon the expected term of the options granted, using stock prices of comparably profiled public companies.

The risk-free interest rate assumption is determined using the rates for U.S.

Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

For awards of restricted stock units and shares of common stock, the fair value of the award is based on the quoted market price of our common shares on the NASDAQ stock exchange.

Revenue Recognition

Our revenue is primarily generated from the sales of prescription and non-prescription optical glasses, sunglasses, and shipping charges, which are charged to the customer, associated with these purchases.

Our revenue is primarily generated from the sales of prescription and non-prescription optical glasses and sunglasses, and shipping charges which are charged to the customer associated with these purchases.

We sell products through our retail store resellers, distributors, on our own website Lucyd.co, and on Amazon.com.

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subsequently, we recognize such revenue and cost of goods sold as payments are received.

During the nine months ended September 30, 2024 and 2023, we recognized $ 22,500 of revenue for each period, that was included in the contract liability balances as of January 1, 2024 and 2023, respectively.

All revenue, including sales processed online and through our retail store resellers and distributors, is reported net of sales taxes collected from customers on behalf of taxing authorities, returns, and discounts.

During the three months ended March 31, 2025 and 2024, we recognized $ 7,500 of revenue for each period, that was included in the contract liability balances as of January 1, 2025 and 2024, respectively.

All revenue, including sales processed online and through our retail store resellers and distributors, is reported net of discounts, returns, and sales taxes collected from customers on behalf of taxing authorities.

Amounts billed to a customer for shipping and handling are reported as revenues;

costs incurred for shipping and handling are included in cost of goods sold at the time the related revenue is recognized.

For sales generated through our e-commerce channels, we identify the contract with a customer upon online purchase of our eyewear and transaction price at the manufacturer suggested retail price (“MSRP”) for non-prescription, polarized sunglass and blue light blocking glasses across all of our online channels.

Our e-commerce revenue is recognized upon meeting of the performance obligation when the eyewear is shipped to end customers.

consumers enjoy free USPS first class postage on orders over $149, with faster delivery options available for extra cost, for sales processed through our website.

Our e-commerce revenue is recognized upon meeting of the performance obligation when the eyewear is shipped to the end customer.

For sales processed through our website, U.S.

consumers enjoy free USPS first class postage on orders over $149, with faster delivery options available for extra cost.

For Amazon sales, shipping is free for U.S.

consumers while international customers pay shipping charges on top of MSRP.

Any costs associated with fees charged by the online platforms (Shopify for Lucyd.co website and Amazon) are not recharged to customers and are recorded as a component of cost of goods sold as incurred.

The Company charges applicable state sales taxes in addition to the MSRP for both online channels and all other marketplaces on which the company sells products.

Any costs associated with fees charged by the online platforms (i.e., Amazon.com, or Shopify for sales through our Lucyd.co website) are not recharged to customers and are recorded as a component of cost of goods sold as incurred.

The Company charges applicable state sales taxes in addition to the MSRP for both online channels and all other marketplaces on which we sell products.

For sales to our retail store partners, we identify the contract with a customer upon receipt of an order of our eyewear through our Shopify wholesale portal or direct purchase order.

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For those customers that purchase such access on a month-to-month basis, we recognize revenue in the month in which the purchase of such access is made.

For those customers which purchase an annual subscription, we recognize revenue on a straight-line basis over the subscription period, using a mid-month convention.

The balance of unearned revenue related to app subscriptions that has been deferred on our balance sheet as a contract liability was $ 2,513 as of September 30, 2024.

For those customers that purchase an annual subscription, we recognize revenue on a straight-line basis over the subscription period, using a mid-month convention.

The balance of unearned revenue related to app subscriptions that has been deferred on our balance sheet as a contract liability was $ 2,811 and $ 2,401 as of March 31, 2025 and December 31, 2024, respectively.

During the three months ended March 31, 2025, we recognized $ 1,030 of revenue that was included in the contract liability balance as of January 1, 2025.

We allow our customers to return our physical products, subject to our refund policy, which allows any customer to return our physical products for any reason and receive a full refund for frames (prescription lenses excluded) within the first 7 days for sales made through our website (Lucyd.co), 30 days for sales made through Amazon, and 30 days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible for returns).

As of January 2024, we updated our return policy to prohibit discretionary returns of prescription lenses, and also instituted a standard $ 15 restocking fee for standard frame returns, which is deducted from applicable refunds to cover shipping and restocking costs.

For all of our product sales, at the time of sale, we establish a reserve for returns, based on historical experience and expected future returns, which is recorded as a reduction of sales.

Additionally, we review all individual returns received in the month following the balance sheet date pertaining to orders processed prior to the balance sheet date in order to determine whether an allowance for sales returns is necessary.

The Company recorded an allowance for sales returns of $ 5,302 and $ 40,933 as September 30, 2024 and December 31, 2023, respectively.

We charge a standard $ 15 restocking fee for standard frame returns, which is deducted from applicable refunds to cover shipping and restocking costs, and our return policy prohibits discretionary returns of glasses with prescription lenses.

For all of our product sales, at the time of sale, we establish a reserve for returns, based on historical experience and expected future returns as well as review of individual returns received in the month following the balance sheet date;

such reserve is recorded as a reduction of sales.

The Company recorded an allowance for sales returns of $ 5,746 and $ 15,746 as March 31, 2025 and December 31, 2024, respectively.

Segment Reporting

The Company has a single reportable segment, which generates revenue from the sales of smartglasses, and related accessories and apps.

The Company derives revenue primarily in North America and manages its business activities on a consolidated basis.

The accounting policies of our single reportable segment are the same as those for the Company as a whole.

The Company’s chief operating decision maker, as such term is defined under GAAP, is our Chief Executive Officer.

The chief operating decision maker assesses performance for the single reportable segment and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The Company does not have intra-entity sales or transfers.

NOTE 3 – GOING CONCERN

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The Company meets its day-to-day working capital requirements using monies raised through sales of eyewear and issuances of equity.

During the nine months ended September 30, 2024, the Company raised approximately $10.4 million of net cash proceeds through the issuance of equity via a combination of at-the-market offerings, registered direct offerings, and warrant exercises (see Note 9 for details).

On April 14, 2025, the Company closed on a warrant inducement transaction for gross proceeds of approximately $ 1.8 million (see Note 10 for details).

The Company has also entered into an agreement with a related party, under which the Company may borrow up to $ 1.25 million (see Note 6 for details);

as of September 30, 2024, the Company has not borrowed any amounts under this agreement.

as of March 31, 2025, the Company has not borrowed any amounts under this agreement.

The Company’s forecasts and projections indicate that the Company expects to have sufficient liquidity to fund operations through at least the next 12 months.

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This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods.

The Company has no t recorded an income tax provision or benefit for the three and nine months ended September 30, 2024 and 2023 as it maintains a full valuation allowance against its net deferred tax assets.

The Company has no t recorded an income tax provision or benefit for the three months ended March 31, 2025 and 2024 as it maintains a full valuation allowance against its net deferred tax assets.

NOTE 5 – TANGIBLE AND INTANGIBLE ASSETS

Schedule of property, plant and equipment

September 30,

Property & Equipment

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Property and equipment, net

Depreciation expense for the three months ended September 30, 2024 and 2023 was $ 23,956 and $ 17,017 , respectively.

Depreciation expense for the nine months ended September 30, 2024 and 2023 was $ 83,907 and $ 45,996 , respectively.

Depreciation expense for the three months ended March 31, 2025 and 2024 was $ 21,202 and $ 21,659 , respectively.

Schedule of intangible assets

September 30,

Finite-lived intangible assets

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Intangible assets, net

Amortization expense for the three months ended September 30, 2024 and 2023 was $ 9,902 and $ 2,214 , respectively.

Amortization expense for the nine months ended September 30, 2024 and 2023 was $ 25,199 and $ 20,030 , respectively.

Amortization expense for the three months ended March 31, 2025 and 2024 was $ 12,672 and $ 7,814 , respectively.

NOTE 6 – RELATED PARTY TRANSACTIONS AND AGREEMENTS

Convertible Note and Due to Tekcapital and Affiliates

Through December 1, 2023, the Company had the availability of, but not the contractual right to, intercompany financing from Tekcapital and Affiliates in the form of either cash advances or borrowings under a convertible note.

The convertible notes balances were $ 61,356 at January 1, 2023.

In January 2023, the Company borrowed an additional $ 48,143 under such convertible notes, and subsequently repaid the outstanding balances of the convertible notes in full in February 2023.

No further amounts were borrowed under these convertible notes for the remainder of 2023, and the convertible notes matured on December 1, 2023 with no amounts outstanding.

New Lucyd Ltd.

Financing Agreement

On March 1, 2024, the Company entered into an agreement with Lucyd Ltd.

pursuant to which the Company can receive up to $ 1,250,000 either (a) in services provided by Lucyd Ltd.

to the Company or (b) in cash upon request of funds by the Company.

Once funds or services are received by the Company, it will issue a convertible note to Lucyd Ltd.

that will bear interest at 10 % per annum and include the option to convert the note into shares of the Company’s common stock upon certain conversion events.

Upon issuance, the convertible note will have a maturity date of September 1, 2025 , at which time all outstanding principal and accrued interest, if any, will be payable in full in cash or in the Company’s common stock.

The Company will be able to prepay the convertible notes at any time with the written consent of Lucyd Ltd.

The Company has not borrowed any amounts under this agreement.

Loan to Tekcapital Europe, Ltd.

On January 11, 2024, the Company entered into an intercompany loan agreement (as lender) with Tekcapital Europe, Ltd.

(as borrower) and Tekcapital Plc, the parent of Tekcapital Europe, Ltd.

Pursuant to this agreement, the Company loaned 600,000 British pounds sterling (equivalent to approximately $ 768,000 ) to Tekcapital Europe, Ltd.

The loan bore simple interest at a rate of 10 % per annum and was required to be repaid on or before April 11, 2024 .

Tekcapital Plc executed the agreement as guarantor for Tekcapital Europe, Ltd.

on the full amount of the loan.

Tekcapital Europe, Ltd.

subsequently repaid all of the outstanding balance of the loan (including principal and accrued interest) during the nine months ended September 30, 2024, and no amounts remain outstanding or payable to us under this agreement .

Management Service Agreement

The Company has entered into a management services agreement with Tekcapital Europe, Ltd., for which the Company is billed at $35,000 quarterly.

The Company has entered into a management services agreement with Tekcapital Europe, Ltd., for which the Company is billed $ 35,000 quarterly.

While the agreement does not stipulate a specific maturity date, it can be terminated with 30 calendar days written notice by any party.

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Advice, assistance, and consultation services to support the Company or in relation to any other related matter.

During the three months ended September 30, 2024 and 2023, the Company incurred $ 35,000 in each respective period under the management services agreement.

During the nine months ended September 30, 2024 and 2023, the Company incurred $ 105,000 in each respective period under the management services agreement.

During the three months ended March 31, 2025 and 2024, the Company incurred $35,000 in each respective period under the management services agreement.

Rent of Office Space

Under an agreement between the Company and Tekcapital, Tekcapital bills the Company for an allocation of rent paid by Tekcapital on the Company’s behalf.

The Company recognized $ 22,904 and $ 22,992 of expense related to this month-to-month arrangement for the three months ended September 30, 2024 and 2023, respectively, and recognized $ 69,409 and $ 68,752 of expense related to this month-to-month arrangement for the nine months ended September 30, 2024 and 2023, respectively.

The Company recognized $ 39,653 and $ 23,231 of expense related to this month-to-month arrangement for the three months ended March 31, 2025 and 2024, respectively.

Loan to Tekcapital Europe, Ltd.

On January 11, 2024, the Company entered into an intercompany loan agreement (as lender) with Tekcapital Europe, Ltd.

(as borrower) and Tekcapital Plc, the parent of Tekcapital Europe, Ltd.

Pursuant to this agreement, the Company loaned 600,000 British pounds sterling (equivalent to approximately $ 768,000 ) to Tekcapital Europe, Ltd.

The loan bore simple interest at a rate of 10 % per annum and was required to be repaid on or before April 11, 2024 .

Tekcapital Plc executed the agreement as guarantor for Tekcapital Europe, Ltd.

on the full amount of the loan.

Tekcapital Europe, Ltd.

subsequently repaid all of the outstanding balance of the loan (including principal and accrued interest), and as of December 31, 2024, no amounts remained outstanding or payable to us under this agreement.

Financing Agreement

On March 1, 2024, the Company entered into an agreement with Lucyd Ltd.

pursuant to which the Company can receive up to $ 1,250,000 either (a) in services provided by Lucyd Ltd.

to the Company or (b) in cash upon request of funds by the Company.

Once funds or services are received by the Company, it will issue a convertible note to Lucyd Ltd.

that will bear interest at 10 % per annum and include the option to convert the note into shares of the Company’s common stock upon certain defined events.

The Company will be able to prepay the convertible notes at any time with the written consent of Lucyd Ltd.

On March 1, 2025, the Company and Lucyd Ltd.

entered into an amendment of this agreement, such that upon issuance, the convertible note will have a maturity date of September 1, 2026.

There were no other changes to the terms and provisions of the agreement.

The Company has not borrowed any amounts under this agreement.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

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however, we may from time to time become a party to various legal proceedings arising in the ordinary course of business.

On January 3, 2024, we settled and resolved certain matters with a third party, including a complaint that had been brought before the International Trade Commission and an investigation instituted by the International Trade Commission in 2023, and entered into a multi-year non-exclusive license agreement with the third party covering multiple smart eyewear patents (as described more fully below).

License Agreements

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These agreements require us to pay royalties based on a percentage of net retail and wholesale sales during the period of the license, and also require guaranteed minimum royalty payments.

The agreements have base terms of 10 years but are cancellable at the option of the Company during the fifth year.

The aggregate future minimum payments due under these license agreements are as follows:

Schedule of future minimum payments due

Remainder of 2024

Thereafter (through 2033)

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The Company fully prepaid this license for the term of the agreement and does not have any obligation for future payments under this agreement.

The Company recognized $ 133,336 and $ 61,160 of expense related to all license agreements for the three months ended March 31, 2025 and 2024, respectively.

Our executive offices are located at 11900 Biscayne Blvd., Suite 630 Miami, Florida 33181.

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Stock Options

Summary information regarding the number of options, exercise price, and remaining contractual life as of and during the nine months ended September 30, 2024 (as retroactively adjusted for the reverse stock split described in Note 9) is as follows:

Summary information regarding stock options as of and during the three months ended March 31, 2025 is as follows:

Schedule of number of share options and the weighted average exercise price outstanding

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Forfeited / Expired

As at September 30, 2024

Exercisable as at September 30, 2024

During the three and nine months ended September 30, 2024, we recognized $ 100,000 and $ 495,309 of expense, respectively, related to stock options.

As of September 30, 2024, the aggregate intrinsic value for all options outstanding as well as all options exercisable was zero 0 , and unrecognized stock option expense of approximately $ 193,000 remains to be recognized over the next 1.10 years.

On January 11, 2024, we granted options to purchase an aggregate of 500 shares of common stock at $ 8.402 per share to an employee, of which 1/5 vested immediately, and 1/5 were to vest on each six-month anniversary of the grant date.

The options were to expire on January 11, 2029.

However, the employee later separated from the Company, and these options were all forfeited or expired as of September 30, 2024.

As at March 31, 2025

Exercisable as at March 31, 2025

During the three months ended March 31,

2025, we recognized $ 36,646

of expense related to stock options.

As of March 31, 2025, the aggregate intrinsic value for all options outstanding as well as all

options exercisable was zero 0 , and unrecognized stock option expense of approximately $ 97,000 remains to be recognized over the next

Restricted Stock Units

During the three and nine months ended September 30, 2024, we recognized $ 5,075 and $ 15,225 of expense, respectively, related to restricted stock units awarded in 2023;

as of September 30, 2024, unrecognized restricted stock unit expense of $ 3,383 remains to be recognized between October 1, 2024 and November 30, 2024.

On March 28, 2024, we entered into an agreement for a third party to provide us with financial advisory and investment banking services, for a minimum term of six months.

As consideration for the services provided to the Company, we issued to the counterparty 15,000 shares of our common stock.

The total value of consideration transferred, measured using the fair value of our common stock at the date of issuance, was $ 81,900 .

During the three and nine months ended September 30, 2024, we recognized $ 40,950 and $ 81,900 , respectively, of expense related to this arrangement.

On April 1, 2024, we entered into a brand

ambassador agreement with an individual for a two-year term.

As compensation for the first year of the agreement, we issued the

individual 4,500

shares of our common stock.

The value of the consideration transferred, measured using the fair value of our common stock at the

date of issuance, was $ 21,690 .

During the three and nine months ended September 30, 2024, we recognized $ 5,423

and $ 10,845 ,

respectively, of expense related to this arrangement, and will recognize the remaining expense for these shares awarded of $ 10,845

on a straight-line basis from October 1, 2024 through March 31, 2025.

NOTE 9 – STOCKHOLDERS’ EQUITY

Change in Capital Structure – Reverse Stock Split

At our annual meeting of shareholders on July 8, 2024, the Company’s shareholders approved an amendment to the Company’s articles of incorporation to effect a reverse stock split of our issued and outstanding common stock at a ratio between 1-for-14 and 1-for-24.

Subsequently, the board of directors authorized a reverse stock split in a ratio of 1-for-20 shares, and we filed with the Florida Secretary of State a certificate of amendment to our articles of incorporation.

Effective July 18, 2024, each 20 shares of the Company’s issued and outstanding common stock were combined into one share of common stock, except to the extent that the reverse stock split would have resulted in any of the Company’s stockholders owning a fractional share, in which case such fractional share was rounded up to the next highest whole share.

Additionally, pursuant to their terms, the shares of common stock underlying the Company’s outstanding stock options and warrants were similarly adjusted along with corresponding adjustments to their exercise prices.

All share and per share amounts presented in these financial statements and accompanying notes, included but not limited to shares issued and outstanding, earnings/(loss) per share, and warrants and options, as well as the dollar amounts of common stock and additional paid-in capital, have been retroactively adjusted for all periods presented in order to reflect this change in capital structure.

There was no change to the total number of authorized common shares of 50,000,000 , and there was no change in the par value per common share of $ 0.00001 .

At-the-Market Offerings

On April 15, 2024, the Company entered into an at-the-market offering agreement with H.C.

Wainwright & Co., LLC, as sales agent (“HCW”), relating to the sale of common stock.

From April 15, 2024 through April 28, 2024, the Company sold 2,828 shares of common stock and received approximately $ 13,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 12,000 .

Following the first registered direct offering described below, from May 2, 2024 through May 24, 2024, the Company sold 34,900 shares of common stock and received approximately $ 536,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 518,000 .

Following the second registered direct offering described below, from June 13, 2024 through June 30, 2024, the Company sold 246,743 shares of common stock and received approximately $ 1,918,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 1,845,000 .

From July 12, 2024 through August 30, 2024, the Company sold 273,517 shares of common stock and received approximately $ 1,446,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 1,399,000 .

The Company also paid $ 50,000 of legal fees to HCW during the nine months ended September 30, 2024;

this payment has been reflected in the unaudited condensed financial statements as a reduction to additional paid in capital, as it represents a related cost of the at-the-market equity offering transactions.

First Registered Direct Offering

On May 1, 2024, the Company closed on a registered direct offering of 210,043 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 210,043 shares of common stock at an exercise price of $ 4.88 per share, for a combined purchase price per share and warrant of $ 4.88 .

In exchange, the Company received approximately $1.0 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 15,754 shares of common stock at an exercise price of $ 6.10 per share.

The net proceeds received by the Company from this transaction amounted to approximately $ 837,000 .

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Approximately $ 100,000 of the net proceeds received from this registered direct offering were used to pay a former agent for their waiver of a contractual right of first refusal;

such payment has been reflected in the unaudited condensed financial statements as a reduction to additional paid in capital, as it represents a related cost of the equity transaction.

Second Registered Direct Offering

On May 29, 2024, the Company closed on a registered direct offering of 263,159 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 263,159 shares of common stock at an exercise price of $ 9.50 per share, for a combined purchase price per share and warrant of $ 9.50 .

In exchange, the Company received approximately $2.5 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 19,737 shares of common stock at an exercise price of $ 11.876 per share.

The net proceeds received by the Company from this transaction amounted to approximately $ 2.1 million.

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Warrant Exercises

During September 2024, the Company entered into multiple warrant inducement transactions with certain holders of its existing warrants.

The Company intends to use the net proceeds from these transactions for working capital and general corporate purposes.

On September 3, 2024, the

Company entered into inducement letter agreements with certain holders of existing warrants (originally issued on June 26, 2023) to

purchase an aggregate of 126,699

shares of common stock.

The warrant holders exercised for cash the existing warrants at a reduced exercise price of $ 5.00

per share, resulting in gross proceeds to the Company of approximately $ 633,000 ;

in addition to the shares of common stock issued as a result of the warrant exercise, the warrant holders also received new

unregistered Series A and Series B warrants (the relevant details of which are outlined in the table below).

This transaction closed

on September 4, 2024, and the net proceeds received by the Company amounted to approximately $ 489,000 .

On September 18, 2024, the

Company entered into inducement letter agreements with certain holders of existing warrants (originally issued on May 1, 2024 in

connection with the First Registered Direct Offering described above) to purchase an aggregate of 148,567

shares of common stock.

The warrant holders exercised for cash the existing warrants at an adjusted exercise price of $ 5.13

per share, resulting in gross proceeds to the Company of approximately $ 762,000 ;

in addition to the shares of common stock issued as a result of the warrant exercise, the warrant holders also received new

unregistered Series C and Series D warrants (the relevant details of which are outlined in the table below).

This transaction closed

on September 19, 2024, and the net proceeds received by the Company amounted to approximately $ 672,000 .

On September 22, 2024, the

Company entered into inducement letter agreements with certain holders of existing warrants (originally issued on May 29, 2024 in

connection with the Second Registered Direct Offering described above) to purchase an aggregate of 263,160

shares of common stock.

The warrant holders exercised for cash the existing warrants at an adjusted exercise price of $ 9.875

per share, resulting in gross proceeds to the Company of approximately $ 2.6

in addition to the shares of common stock issued as a result of the warrant exercise, the warrant holders also received new

unregistered Series E and Series F warrants (the relevant details of which are outlined in the table below).

This transaction closed

on September 24, 2024, and the net proceeds received by the Company amounted to approximately $ 2.3

In connection with each of the aforementioned warrant inducement transactions, the Company issued placement agent warrants to HCW, the relevant details of which are outlined in the table below.

On September 23, 2024, one of the holders of the Series A and Series B warrants exercised an aggregate of 40,000 warrants on a cashless basis and received 20,482 shares of common stock.

In addition, on September 24, 2024, one of the holders of the warrants issued in connection with the First Registered Direct Offering elected to exercise their warrants to purchase an aggregate of 61,475 shares of common stock.

The Company received approximately $300,000 of gross proceeds from this exercise.

As of September 30, 2024, the Company’s remaining outstanding warrants were as follows:

Schedule of stockholders' equity note, warrants or rights

Exercise Price

Issuance Date

Expiration Date

Listed (IPO) Warrants

Common (SPO) Warrants

Private Warrants

Series A Warrants

Series B Warrants

Series C Warrants

Series D Warrants

Series E Warrants

Series F Warrants

Underwriter / Placement Agent Warrants

On September 25, 2024, our board of directors approved the adoption of a limited duration stockholder rights plan (the “Rights Plan”), and declared a dividend to stockholders of record at the close of business on September 25, 2024 of one common stock purchase right (a “Right”) for each outstanding share of our common stock.

Each Right entitles the holder to purchase from the Company six shares of our common stock at an exercise price of $ 6.21 per share.

The Rights are evidenced by and trade with the certificates for the shares of our common stock outstanding as of September 25, 2024, and will accompany any new shares of our common stock that are issued after that date.

Under the Rights Plan, the Rights generally will become exercisable only if a person or group acquires beneficial ownership of 20% or more of our common stock in a transaction not approved by our board of directors.

In that situation, each holder of a Right (other than the acquiring person or group, whose rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Plan, a number of shares of our common stock having a market value of twice such price.

The Rights expire at or prior to the earlier of (i) September 25, 2025, (ii) the redemption or exchange of the Rights in accordance with the terms of the Rights Plan, (iii) the closing of certain merger or other acquisition transactions involving the Company, and (iv) the date of the Company’s next meeting of its stockholders.

The Rights Plan is not intended to prevent a takeover of the Company and should not interfere with any merger or other business combination approved by our board of directors.

However, the Rights Plan may cause substantial dilution to a person or group that acquires beneficial ownership of twenty percent (20%) or more of our outstanding common stock.

Other Matters

During the nine months ended September 30, 2024, the Company made a release payment of $ 325,000 to a shareholder counterparty for the waiver of certain of that counterparty’s pre-existing contractual rights related to the Company’s equity offerings described above.

This payment is reflected within General and administrative expenses in the unaudited condensed statements of operations.

During the three months ended March 31, 2025, we recognized $ 140,930 of expense related to restricted stock units that were awarded to the Company’s officers, management, and non-management employees in the fourth quarter of 2024.

As of March 31, 2025, unrecognized restricted stock unit expense of approximately $ 1,284,000 remains to be recognized over of the next 2.30 years.

During the three months ended March 31, 2024, we recognized $ 5,075 of expense related to restricted stock units that were awarded to an influencer in 2023.

As of March 31, 2025, no expense remains to be recognized related to this award.

On April 1, 2024, we entered into a brand ambassador agreement with an individual for a two-year term.

As compensation for the first year of the agreement, we issued the individual 4,500 shares of our common stock.

The value of the consideration transferred, measured using the fair value of our common stock at the date of issuance, was $ 21,690 .

During the three months ended March 31, 2025 and 2024, we recognized $ 5,423 and $ 5,422 , respectively, of expense related to this arrangement.

NOTE 9 – EARNINGS PER SHARE

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Due to the net losses for all periods presented in the unaudited condensed statements of operations, all shares underlying the common stock options, common stock warrants, and related party convertible debt were excluded from the earnings per share calculation due to their anti-dilutive effect.

The calculation of net earnings/(loss) per share (as retroactively adjusted for the reverse stock split described in Note 9) is as follows:

The calculation of net earnings/(loss) per share is as follows:

Schedule of calculation of net earnings per common share - basic and diluted

three months ended

nine months ended

September 30,

Basic and diluted:

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NOTE 10 – SUBSEQUENT EVENTS

In October 2024, the Company issued an aggregate

shares of common stock to certain holders of the Company’s Series A and Series B Warrants who had elected to exercise such warrants;

the Company received approximately

of gross proceeds from these exercises.

Share Issuance to Brand Ambassador

Effective April 1, 2025, pursuant to the terms of the brand ambassador agreement described in Note 8, the Company issued an individual 11,539 shares of our common stock as compensation for the second year of the agreement.

The value of the consideration transferred, measured using the fair value of our common stock at the date of issuance, was $ 30,000 , which will be recognized as expense on a straight-line basis through March 31, 2026.

April 2025 Warrant Inducement Transaction

On April 11, 2025, the Company entered into inducement letter agreements with certain holders of certain of its existing warrants to purchase an aggregate of 595,188 shares of the Company’s common stock, of which warrants to purchase 121,500 shares were originally issued to the holders on September 4, 2024 with an original exercise price of $ 5.00 per share, and warrants to purchase 473,688 shares were originally issued to the holders on September 24, 2024 with an original exercise price of $ 9.50 per share.

Pursuant to the inducement letter agreements, the holders agreed to exercise the existing warrants for cash at a reduced exercise price of $ 2.60 per share in consideration of the Company’s agreement to issue new unregistered Series G warrants to purchase up to an aggregate of 218,646 shares of common stock and new unregistered Series H warrants to purchase up to an aggregate of 1,724,814 shares of common stock, each at a purchase price of $ 0.125 per warrant.

The Series G Warrants have an exercise price of $2.60 per share, are exercisable immediately upon issuance, and have a term of exercise equal to five and one-half years following the effective date of the Resale Registration Statement (as defined in the applicable agreements ).

The Series H Warrants have an exercise price of $2.60 per share, are exercisable immediately upon issuance, and have a term of exercise equal to eighteen months following the effective date of the Resale Registration Statement.

This transaction closed on April 14, 2025, and the gross proceeds to the Company were approximately $ 1.8 million prior to deducting placement agent fees and offering expenses.

The Company intends to use the net proceeds from this transaction for working capital and general corporate purposes.

Wainwright & Co., LLC (“HCW”) acted as the exclusive placement agent for the offering.

As compensation for such placement agent services, the Company agreed to pay HCW an aggregate cash fee equal to 7.5% of the gross proceeds received by the Company from this transaction, plus a management fee equal to 1.0% of the gross proceeds received by the Company, accountable expenses of $ 50,000 , non-accountable expenses of $ 25,000 , and $ 15,950 for clearing expenses.

The Company also agreed to issue to HCW or its designees warrants to purchase up to 44,639 shares of common stock (“PA Warrants”).

The PA Warrants are immediately exercisable, have a term of five and one-half years following the effective date of the Resale Registration Statement, and have an exercise price of $3.25 per share.

New Loan Facility to Tekcapital Europe, Ltd.

On April 23, 2025, the Company entered into an intercompany loan agreement (as lender) with Tekcapital Europe, Ltd.

(as borrower) and Tekcapital Plc, the parent of Tekcapital Europe, Ltd.

(as guarantor).

Pursuant to this agreement, the Company agreed to make a loan facility available to Tekcapital Europe, Ltd.

for up to a maximum of $500,000.

Tekcapital Europe, Ltd.

may receive advances under this facility upon request through October 23, 2025.

Any amounts advanced to Tekcapital Europe, Ltd.

will bear simple interest at a rate of 10% per annum, and are required to be repaid on or before July 23, 2026.

Tekcapital Europe, Ltd.

has not borrowed any amounts under this agreement.

International Trade and Tariffs

Beginning in April of 2025, the U.S.

government has announced new or increased tariffs on goods imported from various countries to the U.S., and countries subject to such tariffs have imposed or may in the future impose retaliatory tariffs and other trade measures.

We are actively monitoring the ongoing tariff developments and continue to evaluate the potential impacts to our business, cost structure, supply chain, and the broader economic environment.

We are also considering and assessing our ability to potentially offset all or a portion of cost increases through pricing actions and/or cost savings efforts.

While these recent developments have not had a material impact on our financial condition or results of operations to date, due to their evolving nature, we cannot predict with certainty the ultimate impacts they may have on our business and results in the future, but those impacts could be material.

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

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Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report.

Executive Summary and Outlook

Management views the Company as being in a favorable position, and well-equipped for the go-to-market opportunities ahead.

Revenues for the three months ended March 31, 2025 improved 19% as compared to the comparable period in 2024, while gross margins improved from 2% in the first quarter of 2024 to 49% for the first quarter of 2025.

Total operating and other expenses have remained relatively consistent between these periods.

These results reflect a tightening business operation that is finding its footing in an emerging sector, and prioritizing efficiency and operational sustainability.

Over the past several months, we have brought three strong new product lines to market – including Lucyd Armor smart safety glasses, Reebok ® Powered by Lucyd sport smart sunglasses, and Lucyd Lyte 2025 Edition smartglasees.

Greater than expected demand for the unique Lucyd Armor product has led the Company to develop alternate variants for that line, in order to address a wider range of safety glass users.

Additionally, we believe that the success of the Lucyd Armor product line to date indicates that that delivering smart eyewear for specific user niches can be a significant differentiator.

With our experience developing dozens of SKUs (stock-keeping units) of smart eyewear, we are well positioned to address specific user needs in the sport, safety, and general optical categories, while our competitors may only have the resources to focus on a single category.

Although our business will be significantly impacted by recently-announced tariffs on goods imported from various countries to the U.S., due to the U.S.

tariff exception for certain electronics imported from China our business will be significantly less impacted by recent developments in tariffs and international trade than our traditional eyewear competitors.

Nonetheless, we have worked to diversify our supply chain and focus more on international expansion.

We have procured new global logistics partners in Hong Kong near our suppliers’ factories and in Europe, in order to facilitate global expansion to channels where U.S.

duties do not apply.

General Product and Corporate Overview

Our mission is to Upgrade Your Eyewear ® .

We develop and sell cutting-edge smart eyeglasses and sunglasses, which are designed to allow our customers to remain connected to their digital lives, while also offering vision correction and protection.

We develop and sell cutting-edge smart eyewear that is designed to allow our customers to remain connected to their digital lives.

Our smart eyewear is a fusion of headphones with glasses, bringing vision correction and protection together with digital connectivity and clear audio, while also offering a safer solution for listening to music outdoors (as compared to in-ear headphones).

The convenience of having a Bluetooth headset and comfortable glasses in one, especially for those who are already accustomed to all-day eyewear use, offers a lifestyle upgrade at a price most consumers can afford.

Our flagship product, Lucyd Lyte ® , enables the wearer to listen to music, take and make calls, and use voice assistants and ChatGPT to perform many common smartphone tasks hands-free.

Notably, by the end of the first quarter of 2025 the Company anticipates completing its mission to introduce a smart upgrade for all four of the major types of eyewear:

Our smart eyewear products enable the wearer to listen to music, take and make calls, and use voice assistants and ChatGPT to perform many common smartphone tasks hands-free.

Since the official launch of our first commercial product, our goal has been to create smart eyewear for all-day wear that looks like and is priced similarly to designer eyewear, but is also lightweight and comfortable, and enables the wearer to remain connected to their digital lives.

Through our various product offerings as described below, we have created a smart upgrade for all four of the major types of eyewear:

prescription eyeglasses, ready-to-wear sunglasses, safety glasses, and sport glasses.

We believe this will expand our customer base significantly by having a large eyeglass and sunglass offering that better aligns with the needs of optical retailers.

To date, most Lucyd products have been designed for sunglass use, but starting in 2024 we have begun to offer alternative lens options such as blue light and transitional lenses on our stock frames, allowing for more customization without increasing unit price.

Additionally, the Lucyd Armor and Reebok ® Powered by Lucyd frames will align with the style and performance needs of safety and sport eyewear users respectively, for which we have not previously had a suitable product offering.

The Company believes its diversification into safety and sport smartglasses (Lucyd Armor and Reebok ® ), for which high-quality competing products are scarce, will buttress our position in the emerging smart eyewear market by offering a unique value proposition to customers.

Since these products are very competitively priced against their traditional counterparts, we believe in their potential to enhance the Company’s revenues and open new retail partnerships with businesses outside of the optical market.

Products and History

In January 2020, we introduced our first beta product and began market testing.

In January 2021, we officially launched our first commercial product, Lucyd Lyte.

This initial product offering embodied our goal of creating smart eyewear for all-day wear that looks like and is priced similarly to designer eyewear, but is also lightweight and comfortable, and enables the wearer to remain connected to their digital lives.

The product was initially launched with six styles, and in September 2021, an additional six styles were added, including the Company’s first titanium-front smart eyewear.

A final four styles were added to this collection in 2022, including the Company’s first matte finish and tortoise style models, along with improvements to hinge design.

In the first quarter of 2022 we introduced a virtual try-on kiosk for select retail stores.

This device introduces our products to prospective retail customers and enables them to digitally try-on our line of smart glasses in a touch-free manner.

In the fourth quarter of 2022, we completed development of core audio eyewear product improvements, such as upgrading all frames to quadraphonic sound, which was subsequently rolled out across all of our new eyewear models.

In February 2023, we launched version 2.0 of our Lucyd Lyte eyewear with 15 different styles, incorporating several key breakthroughs for the smart eyewear product category – including a four-speaker audio array, 12-hour music playback and call time, and improved styling as well as technical upgrades.

In October 2023, we launched six new styles of smart eyewear, branded as Lyte XL, bringing even more advancements – including patent-pending flexible hinges for a more comfortable fit and a wider range of suitable head sizes, significant improvements to speaker and microphone quality, thinner and more ergonomic temples, and post-consumer recycled packaging.

Also during 2023, we completed upgrades to our accessory products, including the charging dock and virtual try-on kiosk.

The patent-pending Lucyd charging dock was upgraded to version 2.0 edition, featuring auto-adjusting connectors to fit any size of smart eyewear we produce, a new charging status LED, and USB data capability, enabling it to be used as a USB hub for computers in addition to a charging hub.

The Lucyd virtual try-on kiosk was replaced with a fully modular display system, with eight available components for stores to mix and match to suit their display needs.

The display can be deployed as a countertop display or freestanding, making it suitable for almost any retail environment.

Our core product line, Lucyd Lyte ® (which includes the Lyte XL units), was first introduced in 2021 and continues to grow and expand with the ongoing addition of new styles and multiple technological upgrades and advancements.

The Company is continuously iterating and improving its frame lineup, offering a mixture of “Lucyd icons” (styles that have consistently performed well since the introduction of Lucyd Lyte) and new styles seasonally to align with market trends and evolving consumer demand.

We currently offer 9 different models under the Lucyd Lyte collection.

In January 2024, we launched the Nautica ® Powered by Lucyd smart eyewear collection in eight different styles, along with various branded accessories including a power brick, cleaning cloth, and a slipcase adorned with the iconic Nautica sail logo.

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In October 2024, we launched the Lucyd Armor line, an ANSI-certified smart safety glass designed for all-day wear.

This new line provides all the powerful features of Lucyd eyewear in a stylish safety wrap.

With the addition of the Lucyd Armor line, our current product offering consists of 34 different models, which offers a similar amount of style variety as many traditional eyewear collections.

This product line provides all the powerful features of Lucyd eyewear in a stylish safety wrap.

Lucyd Armor smart safety glasses have been certified to meet safety standards in the U.S., Canada, United Kingdom, and European Union.

In April 2025, we launched the Reebok ® Powered by Lucyd sport smart sunglasses collection in eight different styles.

This collection features custom high-fidelity speakers, powerful amplifiers, and equalizers specifically tuned for outdoor activities and sports environments.

We plan to launch the Reebok ® Powered by Lucyd premium optical collection in the fourth quarter of 2025.

Our current product offering consists of 30 different models, which offers a similar amount of style variety as many traditional eyewear collections.

All styles are available with 100+ different lens types, resulting in thousands of variations of products currently available.

The Company currently has over 100 licensed patents and applications.

We plan to launch the Reebok ® Powered by Lucyd sport smart glasses collection in the first quarter of 2025, followed by a Reebok ® Optical Smart Eyewear collection in mid-2025.

Since the initial launch of Lucyd Lyte, we have witnessed growing interest and demand from customers throughout the United States and have sold thousands of our smart glasses.

Over the past few years, numerous optical stores in the United States and Canada have onboarded our products, and we continue to pursue expansion with various large eyewear chains and other large retailers regarding our frames.

We believe smart eyewear is a product category whose time has come, and we believe we are well positioned to capitalize on and help develop this exciting new sector – where eyewear meets electronics in a user-friendly, mass market format, priced similarly to designer eyewear.

We believe our brand partnerships play a significant role in our revenue growth by offering a more diversified product line that speaks to consumers from different demographics (for example, Nautica ® generally appeals to a more fashion-forward customer than Lucyd Lyte, while Eddie Bauer ® generally appeals to an older demographic than our other lines, and Reebok ® generally appeals to a younger, more active and athletic demographic than our other lines).

Software and Apps

In April 2023, we introduced a major software upgrade for our glasses with the launch of the Lucyd app for iOS and Android.

This free application enables the user to converse with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful AI assistants in a hands-free ergonomic interface.

The app deploys a powerful and unique Siri integration with the Open AI API for ChatGPT, developed internally by the Company.

The Lucyd app, available for iOS and Android, is a free application that enables the user to converse with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful AI assistants in a hands-free ergonomic interface.

First launched in 2023, the app deploys a powerful and unique Siri integration with the Open AI API for ChatGPT, developed internally by the Company.

The Company has filed a patent application related to this software.

In the second quarter of 2024, we added a “Pro” version of the app, which provides unlimited ChatGPT interactions and priority tech support for a modest monthly or annual fee.

In 2024, we added a “Pro” version of the app, which provides unlimited ChatGPT interactions and priority tech support for a modest monthly or annual fee.

This is a new revenue stream for our business, and represents our first diversification in product revenue from frames and lenses.

In July 2024, we launched a new feature called “Walkie” for the Lucyd app, which enables thousands of users to join each other on walkie-talkie style communication channels.

This feature was designed with the upcoming smart safety glass product in mind, to enable coworking teams to communicate freely on smart eyewear.

We plan to launch more new features for the Lucyd app in the future, such as an audio equalizer enabling the user to optimize sound output for different types of content such as calls and podcasts, a “Find My Glasses” feature, and touch control customizations.

We also launched a new feature called “Walkie” for the Lucyd app in 2024, which enables thousands of users to join each other on walkie-talkie style communication channels.

This feature was designed with our Lucyd Armor safety glass product in mind, to enable coworking teams to communicate freely on smart eyewear.

In February 2025, we updated the Lucyd app’s Walkie feature, enabling premium subscribers access to secure and private walkie channels, providing businesses and organizations with a powerful tool to communicate confidentially and seamlessly through Lucyd smart eyewear.

We believe these developments make our Lucyd eyewear perhaps the smartest smartglasses available today, and represent a significant marketing opportunity for our core smartglass products.

A large part of our strategy is not just to

provide a leading smart eyewear platform, but to build a highly functional mobile software and interactive retail fixture ecosystem

to support user adoption and “stickiness” with our products.

While the Lucyd app provides additional value to end users

after purchase, we also wanted to make the purchase process itself more engaging and tech-forward.

To this end, we have also

developed all-new interactive LCD retail fixtures, featuring a new proprietary kiosk app that we have just recently developed

These new displays offer a complete Lucyd experience, including virtual try-on, social media content, detailed product

info and videos, and seamless music demos.

The new display systems, installed with the Lucyd shopping app, are expected to provide

an immersive onboarding experience for prospective customers in retail stores carrying our frames, and we have started deployment of

these new display systems to customers as of October 2024.

The Lucyd app delivers an updated user experience over time without requiring costly hardware changes.

Additionally, the overall flexibility of Bluetooth connectivity and ability to connect to a variety of voice assistants, including device-native assistants and ChatGPT, make our glasses a “device- and AI- agnostic” peripheral suitable for use with almost any desktop or mobile computing platform.

This aspect of our products makes them a highly compatible interface accessory and distinguishes them from accessories designed to enhance a specific platform, such as Apple AirPods for iOS or gaming headsets for desktop computers.

A large part of our strategy is not just to provide

a leading smart eyewear platform, but to build a highly functional mobile software and interactive retail fixture ecosystem to support

user adoption and “stickiness” with our products.

We have engineered and provided a variety of virtual try-on kiosks, modular

display systems, and interactive LCD fixtures to fit any retail environment.

These devices introduce our products to prospective retail

customers and enable them to digitally try-on our line of smart glasses in a touch-free manner.

Many of our retail fixtures allow for

customization to suit our retail store partners’ needs, and the most recently developed fixtures feature a proprietary kiosk app

we recently developed in-house.

Our latest, most advanced displays, which we plan to begin deploying in stores later this year, will offer

a complete Lucyd experience, including virtual try-on, social media content, detailed product info and videos, and seamless music demos

– which overall will provide an immersive onboarding experience for prospective customers in retail stores carrying our frames.

Key Factors Affecting Performance

Expansion of retail points of purchase

In addition to sustained growth of our e-commerce business, we believe our future revenues are correlated positively with our placement of Lucyd glasses in optical stores, as well as sporting goods stores and other specialty stores.

To support this growth, we have partnered with Windsor Eyes as our premier distributor for the optical market.

Windsor Eyes brings decades of experience in the eyewear industry and a team of experienced, professional eyewear sales reps.

In July 2024, they have just started to market our frames, and have already introduced our frames into three new eyewear retailers.

We currently offer an expansive line of 34 different styles and several accessories (including our co-branded product offerings with Nautica and Eddie Bauer), and are in the process of expanding our product offerings to include co-branded eyewear with other well-known brands like Reebok.

In total, the Company expects to offer 38 total smart eyewear models by the end of 2024.

In addition to sustained growth of our e-commerce business, our future revenues are correlated positively with our placement of Lucyd glasses in optical stores, as well as sporting goods stores and other specialty stores.

To address this, we have assembled a team with decades of experience in the eyewear industry and are offering a strong co-op marketing program and reordering incentives program.

We currently offer an expansive line of 30 different models of glasses and several accessories, including cobranded eyewear with well-known brands like Nautica, Reebok, and Eddie Bauer.

In total, the Company expects to offer over 40 total smart eyewear SKUs across these brands and Lucyd by the end of 2025.

During the first quarter of 2025, in order to support the launch and expansion of our Reebok ® Powered by Lucyd and Lucyd Armor lines, we expanded our sales team with the addition of two new sales directors.

One of these directors brings 15 years of experience in optical sales, and has joined to support our expansion into key optical accounts and regional chains.

The other director has a multi-decade career in hardware and power tool sales, and has joined to support our pursuit of brick-and-mortar and e-commerce placements for the Lucyd Armor line.

Retail store client retention and re-orders

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To support our sales to retail stores directly, we offer a strong co-op marketing program that includes free and paid store display materials.

Additionally, we consistently incorporate retail partner feedback directly into our frames to better serve our end users.

As part of this strategy, we have launched a new modular display system with engaging video screens and audio testing capabilities for our resellers to help educate their in-store customers about Lucyd Lyte and enable customers to try them on.

These display systems enable customers to engage in music demos on a physical unit, explore social and tutorial content, and virtually try on all available units, an experience offered by no other smartglass display on the market today.

This proprietary display system is central to our efforts to introduce traditional retail customers to Lucyd eyewear, and we are planning further enhancements to our merchandising displays to enable more immersive experiences.

As of September 30, 2024, 73 digital display systems have been deployed to retailers.

In October 2024, we began shipping and deploying to customers enhanced countertop and freestanding displays with large, interactive screens

and engaging social media content.

Additionally, we consistently incorporate retail partner feedback directly into our frames to better serve our end users.

Investing in business growth

We believe that people care about what they wear on their faces, and because we understand that customers have diverse preferences about the shape, size, and design of their eyewear, we aim to continuously invest in the design and development of new models in an effort to provide the consumer with a wide selection of styles, colors, and finishes.

We have two continuous trajectories of general product improvement:

(i) engineering, where we seek to improve the sound quality, temple thinness, and battery life of our frames;

and (ii) digital, where we are adding new features via the Lucyd app and improved component programming.

We view these continually ongoing R&D investments as essential to maintaining our competitive edge.

We are offering a strong co-op marketing program with retail stores, and intend to expand our sales, marketing, and brand ambassador teams to broaden our brand awareness and online presence.

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Store Count (B2B)

We believe that one of the key indicators for our business is the number of retail stores onboarded to sell Lucyd Lyte.

We started onboarding our first retail stores in June 2021.

Currently, we have over 350 retail stores selling Lucyd Lyte primarily in the United States and Canada.

We believe that one of the key indicators for our business is the number of retail stores onboarded to sell our products.

We started onboarding our first retail stores in June 2021, and since then have continue to grow through the current year.

Currently, we have over 540 retail stores selling our smart eyeglasses, primarily in the United States and Canada, across over 300 wholesale accounts.

Based on the existing demand for our products, current distribution, and recently consummated supply agreements, we anticipate that our products will be available in a significant number of new third-party retail locations in 2025.

Customer Ratings (B2C)

The Lucyd Lyte version 2.0 product is receiving higher ratings online compared to our previous products, indicating that customers are appreciative of improvements in product design, functionality, and build quality.

Our newest Amazon launch of the Eddie Bauer ® Powered by Lucyd smart eyewear carries a 4.8/5 rating.

The Company’s latest products are receiving higher ratings online compared to our previous products, indicating that customers are appreciative of improvements in product design, functionality, and build quality.

For example, our new Lucyd Armor product has a 4/5 rating on Amazon.

This is a strong signal of positive feedback on our products that indicates our ability to grow and scale with America’s largest online retailer and other platforms.

Number of online orders (B2C)

For our e-commerce business, we track the number of online orders as an indicator of the success of our online marketing efforts.

As of September 30, 2024, we had over 20,000 cumulative total orders from customers online since inception.

We believe that the addition of new styles, as well as further investment in brand awareness, product ambassadors, and influencer campaigns, will enable continued growth of online orders in the foreseeable future.

We allocate a sizeable portion of our advertising expenditures towards influencer marketing programs.

Components of Results of Operations

Our revenue is primarily generated from the sales of prescription and non-prescription optical glasses and sunglasses, and shipping charges associated with these purchases, which are charged to the customer.

We sell products through our retail store resellers, distributors, on our own website Lucyd.co, and on Amazon.com.

We have also recently started to generate revenue from the sale of subscriptions to the “Pro” version of our Lucyd app, which provides unlimited ChatGPT interactions and priority tech support for a modest monthly or annual fee.

Our flagship Lucyd Lyte XL brand frames are priced at $179 on acetate models and $199 on titanium models for non-prescription glasses across all of our online channels.

Our co-branded Nautica ® Powered by Lucyd and Eddie Bauer ® Powered by Lucyd frames are priced at $199 – $219 and $249 – $299, respectively.

When adding a prescription lens upgrade to our glasses on the Lucyd.co website, the price can increase from between $40 for a basic clear prescription lens, all the way up to $449 for our proprietary Blueshift transitional blue light lenses in a progressive high index (ultra-thin) format.

Glasses with prescription lenses are provided by the Company through our website Lucyd.co, while our sales through Amazon and to our retail partners only include non-prescription glasses (with rare exceptions, such as a reseller ordering a customized unit for display purposes).

Lens customizations remain an important product differentiator and upselling opportunity.

Lucyd.co consumers enjoy free USPS first class postage on orders over $149, with faster delivery options available for extra cost, for sales processed through our website.

For Amazon sales, shipping is free for U.S.

consumers while international customers pay shipping charges.

Any costs associated with fees charged by the online platforms (Shopify for our Lucyd.co website and Amazon.com) are not recharged to customers.

We charge applicable state sales taxes for online channels and all other marketplaces on which sell.

Our wholesale pricing for eyewear sold to retail store partners and distributors includes volume discounts, due to the nature of large quantity orders.

The pricing does not include shipping.

Due to the nature of wholesale retail orders, no marketplace fees are applicable, only credit card processing fees.

Cost of Goods Sold

Cost of goods sold includes the costs incurred to acquire materials, assemble, and sell our finished products.

For retail sales placed through one of our e-commerce channels, these costs include (i) product costs stated at the lesser of cost and net realizable value and inclusive of inventory reserves, (ii) freight, import, and inspection costs, (iii) optical laboratory costs for prescription glasses, (iv) merchant fees, (v) fees paid to third-party e-commerce platforms, and (vi) cost of shipping the product to the consumer.

For wholesale sales, these costs include (i) product costs stated at the lesser of cost and net realizable value and inclusive of inventory reserves, (ii) freight, import, and inspection costs, and (iii) credit card fees.

When consumers place their orders directly on our website, we save approximately 12% - 15% on marketplace fees compared with orders placed through third-party platforms like Amazon and eBay.

We expect our cost of goods sold to fluctuate as a percentage of net revenue primarily due to product mix, customer preferences and resulting demand, customer shipping costs, and management of our inventory and merchandise mix.

Over time, we expect our total cost of goods sold on a per unit basis to decrease as a result of an increase in scale.

Increase in scale is achieved as a result of increase in volumes from both business to consumer and business to business (retail store) orders.

We continue to expand our products with line extensions and new models and broaden our presence in retail stores carrying our products.

Gross Profit and Gross Margin

Gross profit is net revenue less cost of goods sold.

Gross margin is gross profit expressed as a percentage of net revenue.

Our gross margin may fluctuate in the future based on a number of factors, including the cost at which we can obtain, transport, and assemble our inventory, the rate at our vendor network expands, and how effective we can be at controlling costs in any given period.

Over time, we anticipate that our cost of goods sold, on a per unit basis, will decrease with scale, and this will likely have a positive impact on our gross margins.

Operating Expenses

Our operating expenses consist primarily of:

general and administrative expenses that primarily include payroll and consulting expenses, IT & software, legal, and other administrative expenses;

sales and marketing expenses including cost of online advertising, marketing agency fees, influencers, trade shows, and other initiatives;

related party management fees for a range of back-office services provided by Tekcapital;

research and development expenses related to (i) development of new styles and features of our smart eyewear, (ii) development and improvement of our e-commerce website, and (iii) development of software and apps for wearables.

Interest and Other Income, Net

Interest and other income, net, primarily includes interest, dividends, and investment returns from our investments in money market funds and U.S.

Treasury bills, as well as interest income and expense related to loans with related parties.

Results of Operations – Quarterly

The following table summarizes our results of operations for the three months ended September 30, 2024 (the “current quarter”) and the three months ended September 30, 2023 (the “prior year quarter”):

International Trade and Tariffs

Beginning in April of 2025, the U.S.

We are actively monitoring the ongoing tariff developments and continue to evaluate the potential impacts to our business, cost structure, supply chain, and the broader economic environment.

We are also considering and assessing our ability to potentially offset all or a portion of cost increases through pricing actions and/or cost savings efforts.

Smart eyewear products that enter the U.S.

from China (where our products are manufactured) currently have a total effective duty of approximately 27.5%.

Results of Operations

The following table summarizes our results of operations for the three months ended March 31, 2025 (the “current quarter”) and the three months ended March 31, 2024 (the “prior year quarter”):

Three months ended

September 30,

Three months ended

September 30,

Revenues, net

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Total Operating Expenses

Other Income (Expense)

Interest Expense

Total Other Income (Expense), net

revenues for the three months ended September 30, 2024 were $253,599, representing an increase of 14% as compared to revenues of $221,875

during the three months ended September 30, 2023.

This increase

is primarily attributable to strategic reductions in price discounts and adjustments to our pricing and Manufacturer’s Suggested

Retail Price, aimed at enhancing profitability and attracting distributors to manage our wholesale channel.

While the total number of

units sold remained relatively stable compared to the prior year quarter, the higher average order value and focused efforts in specific

channels contributed to the overall revenue growth.

We believe these strategies reflect customers’ recognition of the quality and

value proposition of our recent new product launches and support our long-term growth objectives.

Additionally, we believe consumer awareness

of smart eyewear is increasing, thanks in part to aggressive marketing from our main competitor, and the overall concept of our product

is becoming less of a novelty and more of an accepted mobile computing platform.

Revenue generated through the e-commerce channel increased significantly from the prior year quarter, with net sales through our Lucyd.co website growing by 46%.

Wholesale revenue decreased approximately 11% from the prior year quarter, largely driven by a change in our focus from small, independent retailers to major national retailers, the latter of which have slower product approval and purchasing cycles.

However, we believe that focusing on introducing our product in major national retailers will have a significant positive impact on the Company’s revenues in the next 3 to 18 months.

For the three months ended September 30, 2024, approximately 54% of sales were processed on our online store (Lucyd.co), 22% on Amazon.com, and 23% through reseller partners, with 1% of our net revenues generated from Lucyd “Pro” app subscriptions.

This sales channel mix positively impacted our revenue for the current quarter as compared with the prior year quarter, due to the fact we charge an additional $35 to $275 for our prescription lenses available only on Lucyd.co.

For the three months ended September 30, 2024, we generated an aggregate of $187,568 of revenue from sales of non-prescription frames and accessories, $63,459 from sales of frames with prescription lenses, and $2,572 of revenue from app subscriptions.

All of the $56,194 in sales generated on Amazon.com during the current quarter were for non-prescription frames and accessories, as we only offer prescription lenses through our website.

Of the $137,135 in online sales generated through Lucyd.co, $63,459 was related to frames with prescription lenses and $73,676 was related to glasses with non-prescription lenses.

E-commerce sales remain to be the most material portion of our sales to date;

however, out of all of our sales channels, we believe that the wholesale optical channel represents the most promising opportunity for future growth.

We anticipate that as smart eyewear becomes more normalized for prescription wear, major national eye care providers will begin to onboard smart eyewear products, and we believe we are the value leader in that sector.

For the three months ended September 30, 2023, approximately 42% of sales were processed on our online store (Lucyd.co), 29% on Amazon.com, and 29% with reseller partners.

For the three months ended September 30, 2023, we generated $187,086 of revenue from sales of non-prescription frames and accessories, and $34,789 from sales of frames with prescription lenses.

All of the $63,027 in sales generated on Amazon.com during the 2023 period were for non-prescription frames and accessories, as we only offer prescription lenses through our website.

Of the $93,704 in online sales generated through Lucyd.co, $34,789 was related to frames with prescription lenses and $58,915 was related to glasses with non-prescription lenses.

Cost of Goods Sold

Our total cost of goods sold increased to $194,255 for the three months ended September 30, 2024, as compared to $141,531 for the prior year quarter.

This year-over-year increase of 37% was driven by a combination of factors, including:

(i.) higher cost of frames, largely attributable to the new Eddie Bauer® Powered by Lucyd collection, due to the increased number of components, deluxe finishes, and materials associated with that product line, (ii.) higher shipping and logistics costs, and (iii.) the impact of certain period costs and other one-off items, most notably including approximately $44,000 of credits related to custom duties and taxes included in the prior year quarter amounts which did not recur in the current quarter.

These increased costs were partially offset by significant decreases in lens fulfilment costs, which decreased by approximately 50% from the prior year quarter.

This is primarily attributable to actions taken by management in the current year to better manage these costs, including (i.) the launch of the new Lucyd Shift and Lucyd Blueshift transitional lenses in place of branded third-party transitional lenses, offering similar functionality for a lower cost of goods, while also enabling a slightly lower cost to the customer, and (ii.) the engagement of a new lower-cost lens supplier based in Miami, Florida.

Cost of goods sold for the three months ended September 30, 2024 included the cost of frames of $107,469;

cost of prescription lenses incurred with third-party vendors of $38,247;

commissions, affiliate referral fees, and e-commerce platform fees of $24,413;

and shipping and logistics costs of $22,512.

Out of our total cost of goods sold for the current quarter of $194,255, $38,247 related to orders with prescription lenses, while $156,008 pertained to non-prescription orders.

We anticipate that our cost of goods sold will improve in future periods as new products – i.e., Lucyd Armor and Reebok® Powered by Lucyd – sourced from a new supplier are launched in the fourth quarter of 2024 and first quarter of 2025, respectively, as the frames for these product lines are designed differently from our other products and accordingly have fewer components, thus reducing their price.

We estimate that the unit cost of these new product lines will be at least 30% lower than our Lucyd Lyte models.

Cost of goods sold for the three months ended September 30, 2023 included the cost of frames of $79,410;

cost of prescription lenses incurred with third-party vendors of $76,346;

period costs (credits) of approximately $(44,000) related to custom duties and taxes;

and other items including affiliate referral fees, e-commerce platform fees, commissions, and custom duties and importation fees for a total of $22,312.

Out of our total cost of goods sold for the three months ended September 30, 2023 of $141,531, $76,346 related to orders with prescription lenses, while $65,185 pertained to non-prescription orders.

We anticipate further growth in revenues in the fourth quarter of 2024, largely in part to the launch of our the new Lucyd Armor product line, along with corresponding growth in total cost of goods sold.

As we continue to refine our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles.

Additionally, our new lower-cost supplier has indicated significant price breaks of up to 50% are possible as we increase unit volume, demonstrating the profit potential for Lucyd Armor and Reebok sunglasses.

Our gross profit for the current quarter was $59,344, as compared to $80,344 for the prior year quarter.

Our gross margin was 23% in the current quarter and 36% in the prior year quarter, representing a decline of approximately 13 percentage points from the prior year period.

This decrease in gross profit and gross margin was primarily the result of higher cost of goods sold as a result of the factors described above, as well as the impact of period costs (credits) as described above.

That said, the current quarter gross margin of 23% represents an improvement from our gross margin of 2% in the quarter ended March 31, 2024 and 18% in the quarter ended June 30, 2024.

This indicates a positive trend, and we expect our gross margin to continue to improve given the ongoing impact of lower lens fulfilment costs coupled with the anticipated lower unit costs associated with the Lucyd Armor product line launching the fourth quarter of 2024 and the Reebok® Powered by Lucyd product line launching in the first quarter of 2025.

We believe that in the long term, the majority of our business will ultimately come from frame sales to distributors and eyewear retailers.

We anticipate that the upcoming launches of new product lines in the fourth quarter of 2024 and first half of 2025 will help us progress towards our long-term goal of shifting our sales mix more towards the wholesale channel, which should bring consistent, large-scale orders with minimal marketing costs.

Operating Expenses

Our operating expenses increased by 9% to $1,821,407 for the three months ended September 30, 2024, as compared to $1,677,140 for the three months ended September 30, 2023.

This increase was primarily due to the following:

General and administrative expenses

Our general and administrative expenses increased

by $206,435 or 23% to $1,121,972 for the three months ended September 30, 2024, as compared to $915,537 for the prior year quarter.

increase was primarily attributable to an increase in legal costs of approximately $168,000, largely as a result of various shareholder

and equity-related matters during the current quarter.

The Company maintains a lean staff salaried at market rates, and a significant portion of our general and administrative expenses consist of corporate overhead type costs which are fixed or semi-fixed in nature (e.g., rent, compliance, legal and professional services, etc.);

as such, our general and administrative expenses are not expected to scale up significantly as our revenue increases over time.

Sales and marketing expenses

Our sales and marketing expenses were $533,066 for the three months ended September 30, 2024 and $533,902 for the three months ended September 30, 2023, or essentially flat year-over-year.

Compared to the prior year quarter, we spent more on events and trade shows, and less on influencers and paid ads, in the current quarter;

this reflects short-term tactical shifts in our marketing approach to react to current trends and opportunities as they arise, and make smart investments in advertising and marketing spending that we believe will maximize our impact and provide for future growth.

From a long-term perspective, while we expect that our total sales and marketing expenses will scale up to some degree as our revenue increases, we anticipate that such increases in sales and marketing expenses will be mitigated somewhat by our planned focus on growing the wholesale optical channel, which, due to the nature of that channel, inherently does not require costly marketing campaigns to acquire each customer and as a result typically carries a lower marketing cost per unit sold.

Additionally, we generally expect that a retailer who is successful with our products will reorder in large quantities, also without significant marketing expenditure.

Research and development costs

Our research and development costs decreased by 32% to $131,369 for the three months ended September 30, 2024, as compared to $192,701 for the three months ended September 30, 2023, primarily due to product development cycle timing.

Related party management fee

Our related party management fee was $35,000 for each of the three-month periods ended September 30, 2024 and 2023, based on the terms of the management services agreement between us and Tekcapital.

Other Income (Expense), net

Total other income (expense), net in the three months ended September 30, 2024 was $41,386.

This amount was primarily comprised of dividends from our investments in money market funds, partially offset by other unrelated expenses.

Total other income (expense), net in the three months ended September 30, 2023 was $45,691.

This amount was primarily comprised of interest, dividends, and investment returns from our investments in money market funds and U.S.

Treasury bills.

Results of Operations – Year to Date

The following table summarizes our results of operations for the nine months ended September 30, 2024 (the “current nine months”) and the nine months ended September 30, 2023 (the “prior year nine months”):

Nine months ended

September 30,

Nine months ended

September 30,

Revenues, net

Cost of Goods Sold

Operating Expenses:

General and administrative

Sales and marketing

Research and development

Related party management fee

Total Operating Expenses

Other Income (Expense)

Interest Expense

Total Other Income (Expense), net

Our revenues for the nine months ended September 30, 2024 were $945,752, representing an increase of 76% as compared to revenues of $536,725 during the nine months ended September 30, 2023.

The increase in revenue was primarily attributable to significant growth in the e-commerce channel, with net sales through our Lucyd.co website and Amazon.com increasing by approximately 190% and 45%, respectively, from the prior year nine months, while wholesale revenues declined by approximately 33%.

Overall, our revenue growth is mainly driven by our new product launches over the past year (including the Lyte XL collection in the fourth quarter of 2023 and the co-branded Nautica® Powered by Lucyd and Eddie Bauer® Powered by Lucyd collections in the current year period).

We believe our brand partnerships play a significant role in our revenue growth by offering a more diversified product line that speaks to consumers from different demographics (for example, Nautica® generally appeals to a more fashion-forward customer than Lucyd Lyte, and Eddie Bauer® generally appeals to an older demographic than our other lines).

Also contributing to our growth in revenues are our continued investments in marketing and advertising initiatives, as well as increased public interest and growth in smart glasses and the wearable products category.

The decline in wholesale revenues was largely driven by a change in our focus during the current year from small, independent retailers to major national retailers, the latter of which have slower product approval and purchasing cycles.

However, we believe that focusing on introducing our product in major national retailers will have a significant positive impact on the Company’s revenues in the next 3 to 18 months.

For the nine months ended September 30, 2024, approximately 61% of sales were processed on our online store (Lucyd.co), 26% on Amazon.com, and 13% with reseller partners.

This sales channel mix positively impacted our revenue for the current nine months as compared with the prior year nine months, due to the fact we charge an additional $35 to $275 for our prescription lenses available only on Lucyd.co.

For the nine months ended September 30, 2024, we generated an aggregate of $687,855 of revenue from sales of non-prescription frames and accessories, $255,325 from sales of frames with prescription lenses, and $2,572 of revenue from app subscriptions.

All of the $246,455 in sales generated on Amazon.com during the current nine months were for non-prescription frames and accessories, as we only offer prescription lenses through our website.

Of the $575,577 in online sales generated through Lucyd.co, $255,325 was related to frames with prescription lenses and $320,252 was related to glasses with non-prescription lenses.

E-commerce sales remain to be the most material portion of our sales to date;

however, out of all of our sales channels, we believe that the wholesale optical channel represents the most promising opportunity for future growth.

For the nine months ended September 30, 2023, approximately 37% of sales were processed on our online store (Lucyd.co), 32% on Amazon, and 31% with reseller partners.

For the nine months ended September 30, 2023, we generated $454,233 of revenue from sales of non-prescription frames and accessories, and $82,492 from sales of frames with prescription lenses.

All of the $170,284 in sales generated on Amazon.com during the period were for non-prescription frames and accessories as we only offer prescription lenses through our website.

Of the $193,591 in online sales generated through Lucyd.co, $82,492 was related to frames with prescription lenses and $111,099 was related to glasses with non-prescription lenses.

Our revenues for the three months ended March 31, 2025 were $454,501, representing an increase of 19% as compared to revenues of $383,471 during the three months ended March 31, 2024.

This increase is primarily attributable to overall volume increases, as well as improved pricing and lower discounts on products sold.

The year-over-year volume increases are largely reflective of new product launches over the past year (including the cobranded Nautica ® Powered by Lucyd and Eddie Bauer ® Powered by Lucyd collections which were launched in January 2024 and April 2024, respectively, and the Lucyd Armor product line which was launched in October 2024).

Our continued investments in marketing and advertising initiatives, as well as increased public interest and growth in smart glasses and the wearable products category, also contributed to this volume growth.

aforementioned improvements in pricing are primarily attributable to adjustments to our product pricing and Manufacturer’s Suggested

Retail Price implemented in the prior year, which were aimed at enhancing profitability and attracting distributors to manage our wholesale

Additionally, we have made strategic reductions in price discounts as appropriate.

We believe these strategies reflect customers’

growing recognition of the quality and value proposition of our recent new product launches and support our long-term growth objectives.

These factors, plus various promotional efforts outside of traditional pay-per-click e-commerce ads, resulted in increased AOV (average

order value) compared to the prior year quarter.

For the three months ended March 31, 2025, approximately 40% of sales were processed on our online store (Lucyd.co), 52% on Amazon.com, and 7% through reseller partners, with 1% of our net revenues generated from Lucyd “Pro” app subscriptions.

For the three months ended March 31, 2025, we generated an aggregate of $291,065 of revenue from sales of non-prescription smartglasses and accessories, $160,605 from sales of smartglasses with prescription lenses, and $2,831 of revenue from app subscriptions.

All of the sales generated on Amazon.com were for non-prescription smartglasses and accessories (as we only offer prescription lenses through our website), while $160,605 of the online sales generated through Lucyd.co was related to smartglasses with prescription lenses.

For the three months ended March 31, 2024, approximately 67% of sales were processed on our online store (Lucyd.co), 29% on Amazon.com, and 4% through reseller partners.

For the three months ended March 31, 2024, we generated $272,742 of revenue from sales of non-prescription smartglasses and accessories, and $110,729 from sales of smartglasses with prescription lenses.

All of the sales generated on Amazon.com were for non-prescription smartglasses and accessories (as we only offer prescription lenses through our website), while $110,729 of the online sales generated through Lucyd.co was related to smartglasses with prescription lenses.

e-commerce sales remain to be the most material portion of our sales since inception;

however, out of all of our sales channels, we believe

that the wholesale optical channel represents the most promising opportunity for future growth in the long-term.

To date, we believe

e-commerce has been best suited to sell smart eyewear because of the enhanced product exposure opportunity compared to product on a shelf

in a physical store – as online, prospective customers are able to learn more about products, conduct virtual try-ons, and comparison

shop across the web with ease.

However, we anticipate that as smart eyewear becomes a more normalized product category and becomes more

common for prescription wear, major national eye care providers will begin to onboard smart eyewear products, and we believe we are the

value leader in that sector.

We have already started to see major retailers begin to offer smart eyewear in-store.

With the success of

the recently-launched Lucyd Armor smartglasses for the safety/industrial segment, which represents a growing market in which we currently

have little or no direct competition, and the anticipated success of the recent launch of Reebok ® Powered by

Lucyd smartglasses for the sport/active lifestyle segment, for which we believe we will have a distinct advantage, as most sport

smartglasses are very low quality Aliexpress products, we believe we are very well positioned to generate significant revenue growth

In order to support the launch and expansion of our Reebok ® Powered by Lucyd and Lucyd Armor

lines, we have recently expanded our sales team with the addition of two new sales directors, who have significant experience in optical

sales and hardware sales.

In addition, and in light of the current tariff situation, we also plan to focus more on international expansion

during the current year.

Cost of Goods Sold

Our total cost of goods sold increased to $824,281 for the nine months ended September 30, 2024, as compared to $475,906 for the prior year nine months.

This year-over-year increase of 73% was comparable to our year-over-year increase in net revenue of 76%, and was primarily driven by higher sales volumes and gross sales during the current nine months as compared with the prior year comparable period.

Cost of frames increased by approximately 90% from the prior year nine months, primarily related to the increase in sales volumes and also partially attributable to higher cost of goods sold associated with the new Eddie Bauer® Powered by Lucyd collection, due to the increased number of components, deluxe finishes, and materials for that product line.

Cost of lenses increased by approximately 49% from the prior year nine months, mainly driven by sales channel mix, as a higher relative proportion of our sales in the current nine months were through our online store (Lucyd.co), and the cost of prescription lenses attributable to this channel increased our cost of goods sold while not impacting cost of goods sold for sales realized through Amazon or retail store partners.

These cost increases were partially offset by actions taken by management in the current year to better manage these costs, including (i.) the launch of the new Lucyd Shift and Lucyd Blueshift transitional lenses in place of branded third-party transitional lenses, offering similar functionality for a lower cost of goods, while also enabling a slightly lower cost to the customer, and (ii.) the engagement of a new lower-cost lens supplier based in Miami, Florida.

Cost of goods sold for the nine months ended September 30, 2024 notably included, but was not limited to, the cost of frames of $434,876;

cost of prescription lenses incurred with third-party vendors of $196,030;

Our total cost of goods sold decreased to $233,968 for the three months ended March 31, 2025, as compared to $376,520 for the prior year quarter.

This year-over-year decrease of 38% was primarily driven by lower cost of frames and lower prescription lens fulfilment cost.

The decrease in the cost of frames as compared to the prior year quarter was primarily attributable to the combination of:

realization of greater economies of scale – i.e., smart eyewear is a highly specialized product that is expensive to manufacture in smaller quantities, but over time as our manufacturing order volumes have grown, our cost per unit has decreased;

improvements in product price/mix – i.e., a significant portion of the units sold in the current quarter were from our Lucyd Armor line, which have a lower manufacturing cost than our other product lines (as they are designed differently and have fewer components), whereas no Lucyd Armor units were sold in prior year quarter (as the product had not yet launched).

The decrease in lens fulfilment costs was attributable to actions taken by management in the prior year to better manage these costs, including:

the launch of Lucyd Shift and Lucyd Blueshift transitional lenses in place of branded third-party transitional lenses, offering similar functionality for a lower cost of goods, while also enabling a slightly lower cost to the customer;

the engagement of a new lower-cost lens supplier based in Miami, Florida.

Cost of goods sold for the three months ended March 31, 2025 included but was not limited to the cost of frames of $72,701;

cost of prescription lenses incurred with our third-party vendor of $68,051;

commissions, affiliate referral fees, and e-commerce platform fees of $30,291;

shipping and logistics costs of $38,909;

and product certification costs of $29,100.

Out of our total cost of goods sold for the current nine months of $824,281, $196,030 related to orders with prescription lenses, while $628,251 pertained to non-prescription orders.

We estimate that the unit cost of these new product lines will be at least 30% lower than our Lucyd Lyte models.

Cost of goods sold for the nine months ended September 30, 2023 notably included, but was not limited to, the cost of frames of $215,713;

cost of prescription lenses incurred with third-party vendors of $131,561;

and quality assurance costs related to our products sold of $4,002.

Out of $233,968 of our total cost of goods sold for the current quarter, $68,051 related to orders with prescription lenses, while $165,917 pertained to non-prescription orders.

Cost of goods sold for the three months ended March 31, 2024 included but was not limited to the cost of frames of $184,978;

cost of prescription lenses incurred with our third-party vendor of $103,069;

commissions, affiliate referral fees, and e-commerce platform fees of $42,826;

shipping and logistics costs of $15,914;

and quality assurance costs related to our products sold of $4,238.

Out of our total cost of goods sold for the prior year nine months of $475,906, $131,561 related to orders with prescription lenses, while $344,345 pertained to non-prescription orders.

As we continue to refine our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles.

Our gross profit for the current nine months was $121,471, as compared to $60,819 for the prior year nine months.

Our gross margin was 13% in the current nine months and 11% in the prior year nine months, representing an improvement of approximately 2 percentage points from the prior year period.

This 100% improvement in gross profit (in absolute dollar terms) and the slight improvement in gross margins is the net result of the various factors discussed in detail above.

We continue to work with all of suppliers and vendors to reduce our unit costs.

Our gross margins during the current year period are increasing and trending in a positive direction, and we expect our gross margin to continue to improve given the ongoing impact of lower lens fulfilment costs that have started to be realized in the current quarter, coupled with the anticipated lower unit costs associated with the Lucyd Armor product line launching the fourth quarter of 2024 and the Reebok® Powered by Lucyd product line launching in the first quarter of 2025.

Out of $376,520 of our total cost of goods sold for the current quarter, $103,069 related to orders with prescription lenses, while $273,451 pertained to non-prescription orders.

Our gross profit for the current quarter was $220,533,

as compared to $6,951 for the prior year quarter.

Our gross profit margin was 49% in the current quarter and 2% in the prior year quarter,

representing an increase of approximately 47 percentage points from the prior year period.

This significant improvement in profitability

was the primarily attributable to lower cost of goods sold as a result of the cost improvements described above, as well as the increase

in revenues as described above.

This strong margin improvement from the prior year quarter reflects a number of measures taken by the

Company to reduce our costs per sale and increase AOV, including changing lens suppliers, launching our own transitional lenses in place

of branded third-party transitional lenses, obtaining price reductions from our frame suppliers as we have scaled up our production quantities,

and engaging in a variety of promotional efforts outside of traditional pay-per-click e-commerce ads.

In the near to medium term, we anticipate further growth in revenues in future quarters, largely in part due to the launch of our new Reebok ® Powered by Lucyd product line in the second quarter of 2025, and the introduction of further variants of the popular Lucyd Armor product, along with corresponding growth in total cost of goods sold.

While the current tariff situation is expected to result in an increase in our costs, we also believe the current tariff situation is bringing smart eyewear to price parity with traditional designer eyewear (as the combined duty on many conventional eyewear lines imported from China – which makes approximately 90% of the world’s eyewear – is currently 155%, compared with a total effective duty rate of 27.5% for smart eyewear products imported from China), which may result in increased consumer interest in smart eyewear and increased sales of our products.

We are also continually refining our product mix with sales data, and anticipate further reducing our unit costs by focusing only on the highest volume, market-tested styles.

We believe that in the long term, the majority of our business will ultimately come from frame sales to distributors and eyewear retailers.

Additionally, we anticipate that the upcoming launches of new product lines in the fourth quarter of 2024 and first half of 2025 will help us progress towards our long-term goal of shifting our sales mix more towards the wholesale channel, which carries higher margins for us.

We anticipate that the launches of new product lines in 2025 will help us progress towards our long-term goal of shifting our sales mix more towards the wholesale channel, which should bring consistent, large-scale orders with minimal marketing costs.

Operating Expenses

Our operating expenses increased by 33% to $5,872,483 for the nine months ended September 30, 2024, as compared to $4,420,853 for the nine months ended September 30, 2023.

Our operating expenses increased by 5% to $2,124,324 for the three months ended March 31, 2025, as compared to $2,021,542 for the three months ended March 31, 2024.

This increase was primarily due to the following:

General and administrative expenses

Our general and administrative expenses increased by 23% to $3,526,217 for the nine months ended September 30, 2024, as compared to $2,877,663 for the prior year nine months.

This increase was largely driven by the combination of (i) a $325,000 release payment made to a shareholder counterparty during the current nine months for the waiver of certain of that counterparty’s pre-existing contractual rights related to the Company’s equity offerings during the second quarter of 2024, (ii) an increase in legal costs of approximately $187,000, largely as a result of various shareholder and equity-related matters during the current year period, (iii) the cost of various licensing agreements we have entered into in order to support our co-branding initiatives and expand our patent portfolio, and (iv) higher investor relations costs.

These increases were partially offset by lower insurance costs.

Our general and administrative expenses declined slightly year-over-year, decreasing by $17,598 or approximately 2% to $1,091,348 for the three months ended March 31, 2025, as compared to $1,108,946 for the prior year quarter.

This slight decrease primarily reflects the net result of decreases in stock-based compensation expense and investor relations costs compared with the prior year period, largely offset by increased expenses incurred under multi-year license agreements.

Non-cash expenses – including depreciation, amortization, and stock-based compensation – comprised approximately 14% and 23% of our total general and administrative expenses in the current quarter and prior year quarter, respectively.

as such, our general and administrative expenses are not expected to scale up significantly as our revenue increases over time.

as such, our general and administrative expenses are generally not expected to scale up significantly as our revenue increases over time.

The one exception to this is the expense related to our multi-year license agreements which grant us the right to sell certain branded smart eyewear;

these agreements require us to pay royalties based on a percentage of net retail and wholesale sales, and also require increasing guaranteed minimum royalty payments over their terms.

Sales and marketing expenses

Our sales and marketing expenses increased by 83% to $1,636,794 for the nine months ended September 30, 2024, as compared to $896,842 for the nine months ended September 30, 2024.

This year-over-year increase is primarily attributable to the combination of the following main drivers:

the restructuring of our e-commerce business during the first half of 2023, during which we temporarily paused and postponed our marketing spending, and management made a tactical decision to preserve a significant portion of our marketing budget for later in the year, in order to better align the timing of marketing spending with major new product launches and thus maximize impact.

In the latter portion of 2023 and continuing through the current nine months, we have significantly increased our advertising and marketing efforts, particularly in the areas of spending on paid ads on websites and social media platforms, in order to drive growth in our revenues and market share.

the fact that the prior year nine months included a reversal of approximately $309,000 of previously-recognized stock-based compensation for certain individuals within the Company’s sales and marketing function whose awards expired without ever having vested, as the related performance conditions (sales quotas) for those awards were not met.

Our sales and marketing expenses increased $126,105 or approximately 19% to $787,400 for the three months ended March 31, 2025 from $661,295 for the three months ended March 31, 2024.

This increase was primarily driven by increased spending on events and trade shows, as we seek to grow and expand our network of potential B2B business partners.

At the same time, we continue to make significant investments in paid ads in order to build brand awareness, attract new customers, and increase our market share.

From a long-term perspective, while we expect that our total sales and marketing expenses will scale up to some degree as our revenue increases, we anticipate that such increases in sales and marketing expenses will be mitigated somewhat by our plan to grow our business in the wholesale optical channel, which, due to the nature of that channel, inherently does not require costly marketing campaigns to acquire each customer and as a result typically carries a lower marketing cost per unit sold.

Additionally, we generally expect that a retailer who is successful with our products will reorder in large quantities, also without significant marketing expenditure.

Research and development costs

Our research and development costs increased by 12% to $604,472 for the nine months ended September 30, 2024, as compared to $541,348 for the nine months ended September 30, 2023.

This increase was primarily attributable to the write-off of approximately $88,000 of previously-capitalized software costs related to the development of the Vyrb app (which was launched as an open beta version in 2021, and has had new features added over time, but had never been officially launched) as a result of management’s decision in 2024 to de-emphasize the Vyrb app in favor of shifting our primary software development focus to the Lucyd app.

Certain elements and features developed for the Vyrb app may potentially be incorporated into future releases of the Lucyd app.

The impact of the aforementioned write-off was partially offset by the impacts of product development cycles and timing of associated research and development spending.

Our research and development costs decreased by $5,725 or approximately 3% to $210,576 for the three months ended March 31, 2025, as compared to $216,301 for the three months ended March 31, 2024, primarily due to product development cycle timing.

Related party management fee

Our related party management fee was $105,000 for each of the nine months ended September 30, 2024 and 2023, based on the terms of the management services agreement between us and Tekcapital.

Our related party management fee was $35,000 for each of the three-month periods ended March 31, 2025 and 2024, based on the terms of the management services agreement between us and Tekcapital.

Other Income (Expense), net

Total other income (expense), net in the nine months ended September 30, 2024 was $110,625.

Total other income (expense), net in the three months ended March 31, 2025 was $125,088.

This amount was primarily comprised of realized gains on U.S.

Treasury bills originally purchased in September 2024 which matured in March 2025, and, to a lesser extent, dividends from our investments in money market funds.

Total other income (expense), net in the three months ended March 31, 2024 was $43,280.

This amount was primarily comprised of dividends from our investments in money market funds, and, to a lesser extent, interest income earned on a short-term loan to a related party.

Total other income (expense), net in the nine months ended September 30, 2023 was $90,317, and was primarily comprised of the combination of (i) approximately $52,000 of interest, dividends, and investment returns from our investments in money market funds and U.S.

Treasury bills;

and (ii) approximately $35,000 of refunds of certain amounts that had been previously charged to the Company from the Parent and Affiliates in prior periods.

Liquidity and Capital Resources

As of September 30, 2024 and December 31, 2023, our cash and cash equivalents were approximately $4.5 million and $4.3 million, respectively.

Our working capital (current assets less current liabilities) was approximately $10.3 million and $5.0 million as of September 30, 2024 and December 31, 2023, respectively.

Nine months ended

September 30,

As of March 31, 2025 and December 31, 2024, our cash and cash equivalents were approximately $5.3 million and $2.6 million, respectively.

As of March 31, 2025 and December 31, 2024, our total overall liquidity (cash and cash equivalents plus investments in short-term U.S.

Treasury bills), which management believes provides a more accurate depiction of the Company’s liquidity and economic position, was approximately $5.3 million and $7.5 million, respectively.

Our working capital (current assets less current liabilities) was approximately $6.9 million and $8.5 million as of March 31, 2025 and December 31, 2024, respectively.

The Company did not have any debt obligations as of March 31, 2025 or December 31, 2024.

Three months ended

Net cash flows from operating activities

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Net Change in Cash

Net cash flows used in operating activities for the nine months ended September 30, 2024 are primarily reflective of our net loss for the period, resulting from our operating costs to support and grow our business, including employee-related costs, sales and marketing, and research and development.

Net cash flows used in investing activities for the nine months ended September 30, 2024 are mainly related to the investment of a portion of the proceeds from our recent equity offerings (as described below) in 6-month U.S.

Treasury bills.

Net cash flows provided by financing activities for the nine months ended September 30, 2024 are mainly driven by proceeds from multiple equity offering transactions as described below.

Net cash flows used in operating activities for the three months ended March 31, 2025 are primarily reflective of our net loss for the period, resulting from our operating costs to support and grow our business, including sales and marketing activities, research and development, and employee-related costs.

Cash flows from operating activities also reflect the impacts of increases in inventory levels in preparation of the April 2025 launch of the Reebok ® Powered by Lucyd sport smartglasses line, annual royalty payments made to licensors for our cobranded products, and the payment of accounts payable and similar operating obligations that were accrued at December 31, 2024.

Net cash flows provided by investing activities for the three months ended March 31, 2025 are primarily attributable to the maturity and redemption of investments in 6-month U.S.

Treasury bills totalling $5.0 million.

Equity Offerings

At-the-Market Offerings

On April 15, 2024, we entered into an at-the-market offering agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC, as sales agent (“HCW”), relating to the sale of common stock.

Under this agreement, during the nine months ended September 30, 2024, we sold a total of 557,988 shares and received approximately $3.9 million of gross proceeds, before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from sales under the ATM Agreement amounted to approximately $3.7 million.

We intend to use the net proceeds from sales under the ATM Agreement primarily for working capital and general corporate purposes.

First Registered Direct Offering

On May 1, 2024, the Company closed on a registered direct offering of 210,043 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 210,043 shares of common stock at an exercise price of $4.88 per share, for a combined purchase price per share and warrant of $4.88.

In exchange, the Company received approximately $1.0 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 15,754 shares of common stock at an exercise price of $6.10 per share.

The net proceeds received by the Company from this transaction amounted to approximately $0.8 million.

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Approximately $0.1 million of the net proceeds received from this registered direct offering were used to pay a former agent for their waiver of a contractual right of first refusal;

such payment has been reflected in the unaudited condensed financial statements as a reduction to additional paid in capital, as it represents a related cost of this equity transaction.

Second Registered Direct Offering

On May 29, 2024, the Company closed on a registered direct offering of 263,159 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 263,159 shares of common stock at an exercise price of $9.50 per share, for a combined purchase price per share and warrant of $9.50.

In exchange, the Company received approximately $2.5 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 19,737 shares of common stock at an exercise price of $11.876 per share.

The net proceeds received by the Company from this transaction amounted to approximately $2.1 million.

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Warrant Exercises

During September 2024, the Company entered into multiple warrant inducement transactions with certain holders of its existing warrants.

Through these transactions, certain holders of various existing warrants to purchase an aggregate of 538,426 shares of common stock agreed to exercise such warrants (at adjusted or reduced exercise prices) in exchange for an aggregate of 538,426 shares of common stock plus new warrants (Series A through Series F warrants, with varying terms and exercise prices) to purchase an aggregate of 1,340,012 shares of common stock.

In exchange, the Company received approximately $4.0 million of gross proceeds, before deducting underwriting discounts and offering expenses.

The total net proceeds received by the Company from these transactions amounted to approximately $3.5 million.

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

On September 23, 2024, one of the holders of the Series A and Series B warrants exercised an aggregate of 40,000 warrants on a cashless basis and received 20,482 shares of common stock.

The Company received approximately $300,000 of gross proceeds from this exercise.

There were no equity offerings during the three months ended March 31, 2025.

On April 11, 2025, the Company entered into inducement letter agreements with certain holders of certain of its existing warrants to purchase an aggregate of 595,188 shares of our common stock, of which warrants to purchase 121,500 shares were originally issued to the holders on September 4, 2024 with an original exercise price of $5.00 per share, and warrants to purchase 473,688 shares were originally issued to the holders on September 24, 2024 with an original exercise price of $9.50 per share.

Pursuant to the inducement letter agreements, the holders agreed to exercise the existing warrants for cash at a reduced exercise price of $2.60 per share in consideration of the Company’s agreement to issue new unregistered Series G warrants to purchase up to an aggregate of 218,646 shares of common stock and new unregistered Series H warrants to purchase up to an aggregate of 1,724,814 shares of common stock, each at a purchase price of $0.125 per warrant.

This transaction closed on April 14, 2025, and the gross proceeds to the Company were approximately $1.8 million prior to deducting placement agent fees and offering expenses.

Wainwright & Co., LLC (“HCW”) acted as the exclusive placement agent for the offering.

As compensation for such placement agent services, we agreed to pay HCW an aggregate cash fee equal to 7.5% of the gross proceeds received from this transaction, plus a management fee equal to 1.0% of the gross proceeds received from this transaction, accountable expenses of $50,000, non-accountable expenses of $25,000, and $15,950 for clearing expenses.

We also agreed to issue to HCW or its designees warrants to purchase up to 44,639 shares of common stock (“PA Warrants”).

The PA Warrants are immediately exercisable, have a term of five and one-half years following the effective date of the Resale Registration Statement, and have an exercise price of $3.25 per share.

We intend to use the net proceeds from this transaction for working capital and general corporate purposes.

Other Factors

We expect that operating losses could continue in the foreseeable future as we continue to invest in the expansion and development of our business.

We believe our existing cash and cash equivalents (including the proceeds from the equity offerings described above), plus the availability to borrow funds via the March 2024 related party agreement with Lucyd Ltd., will be sufficient to fund our operations for at least the next twelve months.

We believe our existing cash and cash equivalents (including the proceeds from the equity offerings described above), plus the availability to borrow funds via the March 2025 amendment to the related party agreement with Lucyd Ltd., will be sufficient to fund our operations for at least the next twelve months.

However, our future capital requirements will depend on many factors, including, but not limited to, growth in the number of retail store customers, licenses, the needs of our e-commerce business and retail distribution network, expansion of our product and software offerings, and the timing of investments in technology and personnel to support the overall growth of our business.

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Off-Balance Sheet Arrangements

As of September 30, 2024, we did not have any off-balance sheet arrangements.

As of March 31, 2025, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Significant Estimates

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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