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Item 1. Financial Statements

2025-08-14 compared with 2025-05-13 · 468 added, 251 removed, 392 unchanged (65% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

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

June 30, 2025 (Unaudited) and December 31, 2024

Current Assets

17 unchanged sentences

Non-Current Liabilities

Long-term payment plan with vendor

Deferred revenue

2 unchanged sentences

Stockholders’ Equity

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)

Common stock (par value $ 0.00001 , 50,000,000 shares authorized:

4,574,602 shares issued and outstanding and 254,282 shares held in abeyance as of June 30, 2025, and 2,452,632 shares issued and outstanding as of December 31, 2024)

Additional paid-in capital

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CONDENSED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2025 and 2024

For the three and six months ended June 30, 2025 and 2024

Three Months Ended

Six Months Ended

Revenues, net

Cost of Goods Sold

Gross (Deficit) Profit

Operating Expenses:

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Loss per share, basic and diluted

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.

1 unchanged sentence

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2025 and 2024

For the three and six months ended June 30, 2025 and 2024

Stockholders’

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Balances as of March 31, 2025

April 2025 Warrant Inducement Transaction

June 2025 Warrant Inducement Transaction (1)

Other exercises of warrants in ordinary course

Issuance of shares to brand ambassador

Issuance of shares related to vesting of restricted share units

Stock-based compensation

Balances as of June 30, 2025

Balances as of January 1, 2024

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Balances as of March 31, 2024

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.

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

Represents the aggregate consideration for 746,782 shares of common stock, of which 492,500 have been issued and 254,282 shares are being held in abeyance.

See Note 9 for additional details.

See accompanying Notes to the Condensed Financial Statements.

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CONDENSED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2025 and 2024

For the six months ended June 30, 2025 and 2024

Operating Activities

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

Non-cash interest income on debt securities (U.S.

Treasury bills)

Realized gain on debt securities (U.S.

Treasury bills)

Stock-based compensation and nonemployee stock-based payment expense

1 unchanged sentence

Provision for (recovery of) doubtful accounts

Realized gain on debt securities (U.S.

Treasury bills)

Write-off of previously-capitalized software costs

Changes in operating assets and liabilities:

6 unchanged sentences

Investing Activities

Purchases of debt securities (U.S.

Treasury bills)

Proceeds from redemption of debt securities (U.S.

5 unchanged sentences

Financing Activities

Proceeds from first registered direct offering

Proceeds from second registered direct offering

Proceeds from at-the-market offerings of common stock

Proceeds from exercises of warrants

Proceeds from sale of common stock withheld from employees to cover withholding taxes on vested restricted share units

Incurrence of obligation under long-term payment plan with vendor

Payments made under long-term payment plan with vendor

Repayment of amounts due to Tekcapital and Affiliates

6 unchanged sentences

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.

1 unchanged sentence

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

March 31, 2025 and 2024 (Unaudited)

June 30, 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 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.

(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 6% of our issued and outstanding shares of common stock as of June 30, 2025.

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 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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Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows.

These unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on March 24, 2025.

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

The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for future periods or the full year.

Use of Estimates

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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

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 .

Upon maturity of these investments, the Company recognized a realized gain $ 104,816 for the six months ended June 30, 2025.

As of June 30, 2025, the Company held investments in U.S.

Treasury bills, which were purchased in April 2025 and mature in October 2025.

These investments are classified as “held-to-maturity” and, as of June 30, 2025, are recorded at amortized cost of $ 1,285,263 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 $ 1,284,894 as of June 30, 2025.

Accounts Receivable

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

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

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:

A roll forward of the allowance for credit losses for the six months ended June 30, 2025 and 2024 is as follows:

Schedule of allowance for doubtful accounts

1 unchanged sentence

Bad debt expense (recovery)

Balance at March 31

Balance at June 30

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;

Also included within inventory at June 30, 2025 was $ 30,360 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 as of both March 31, 2025 and December 31, 2024.

Intangible Assets

Intangible assets relate to patent costs received in conjunction with the initial capitalization of the Company and internally developed utility and design patents.

The Company amortizes these assets over the estimated useful life of the patents.

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

Property and Equipment

Property and equipment assets are depreciated using the straight-line method over their estimated useful lives or lease terms if shorter.

For income tax purposes, accelerated depreciation methods are generally used.

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 (i.e., when taxes are actually paid or recovered).

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

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

The Company recognizes compensation expense for stock-based awards to employees and directors and others based on the grant date fair value of such awards.

Forfeitures are accounted for as a reduction of compensation expense in the period when such forfeitures occur.

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

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.

Such provisions were $ 0 as of both June 30, 2025 and December 31, 2024.

During the three and six months ended June 30,

2025, the Company recorded $ 112,372 and $ 244,695 , respectively, to cost of goods sold for inventory adjustments related to shrinkage

and obsolescence.

Revenue Recognition

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

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.

During the three months ended June 30, 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.

During the six months ended June 30, 2025 and 2024, we recognized $ 15,000 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.

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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.

The balance of unearned revenue related to app subscriptions that has been deferred on our balance sheet as a contract liability was $ 3,029 and $ 2,401 as of June 30, 2025 and December 31, 2024, respectively.

During the three and six months ended June 30, 2025, we recognized $ 908 and $ 1,938 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).

2 unchanged sentences

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.

The Company recorded an allowance for sales returns of $ 6,047 and $ 15,746 as June 30, 2025 and December 31, 2024, respectively.

Segment Reporting

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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.

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

During the three months ended June 30, 2025, the Company entered into warrant inducement transactions for gross proceeds of approximately $ 4.0 million, and also received gross proceeds of approximately $ 2.6 million from unsolicited warrant exercises (see Note 9 for details).

The Company has also entered into agreements with related parties, under which the Company may make net borrowings of up to $0.75 million (see Note 6 for details);

as of June 30, 2025, the Company has not borrowed any amounts under such agreements.

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.

3 unchanged sentences

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 months ended March 31, 2025 and 2024 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 and six months ended June 30, 2025 and 2024 as it maintains a full valuation allowance against its net deferred tax assets.

NOTE 5 – TANGIBLE AND INTANGIBLE ASSETS

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Property and equipment, net

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

Depreciation expense for the three months ended June 30, 2025 and 2024 was $ 17,168 and $ 38,292 , respectively.

Depreciation expense for the six months ended June 30, 2025 and 2024 was $ 38,370 and $ 59,951 , respectively.

Schedule of intangible assets

2 unchanged sentences

Intangible assets, net

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

Amortization expense for the three months ended June 30, 2025 and 2024 was $ 22,707 and $ 7,843 , respectively.

Amortization expense for the six months ended June 30, 2024 and 2024 was $ 35,379 and $ 15,297 , respectively.

NOTE 6 – RELATED PARTY TRANSACTIONS AND AGREEMENTS

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

During the three months ended June 30, 2025 and 2024, the Company incurred $ 35,000 in each respective period under the management services agreement.

During the six months ended June 30, 2025 and 2024, the Company incurred $ 70,000 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 $ 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.

The Company recognized $ 30,000 and $ 23,274 of expense related to this month-to-month arrangement for the three months ended June 30, 2025 and 2024, respectively, and recognized $ 69,653 and $ 46,505 of expense related to this month-to- month arrangement for the six months ended June 30, 2025 and 2024, respectively.

Loan to Tekcapital Europe, Ltd.

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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.

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.

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

on the full amount of the loan.

In May 2025, Tekcapital Europe, Ltd.

borrowed $ 250,000 under this agreement;

subsequently in June 2025, Tekcapital Europe, Ltd.

repaid such borrowing in full along with $ 2,503 of interest.

As of June 30, 2025, there was no balance outstanding under this agreement.

Financing Agreement

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NOTE 7 – COMMITMENTS AND CONTINGENCIES

Legal Matters

We are not currently the subject of any material pending legal proceedings;

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

License Agreements

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Schedule of future minimum payments due

Remainder of 2025

Thereafter (through 2033)

2 unchanged sentences

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.

The Company recognized $ 146,634 and $ 61,160 of expense related to all license agreements for the three months ended June 30, 2025 and 2024, respectively, and recognized $ 279,970 and $ 122,321 of expense for the six months ended June 30, 2025 and 2024, respectively.

Payment Plan for Information Technology System and Services

has entered into a long-term payment plan agreement with Oracle for the payment of costs related to the implementation of the Company's

new ERP system (which went live in April 2025) and related cloud services.

Under this agreement, the Company is obligated to make payments

of $4,035 per month through July 1, 2027.

As of June 30, 2025, the Company's remaining obligation under this arrangement was $ 100,882 ,

of which $ 48,424 is included within Accounts payable and accrued expenses in the accompanying condensed balance sheet, and $ 52,428 is

reflected within Non-Current Liabilities in the accompanying condensed balance sheet.

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

3 unchanged sentences

See related party management services agreement discussed in Note 6.

Legal Matters

We are not currently the subject of any material pending legal proceedings;

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

International Trade and Tariffs

Beginning in April of 2025, the U.S.

government 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.

These recent developments have negatively impacted our results of operations.

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.

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

We have taken actions and developed contingency plans to mitigate the negative impacts of tariffs on our results, but cannot provide any assurance that such actions and strategies will be successful.

NOTE 8 – STOCK-BASED COMPENSATION

Stock Options

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

Summary information regarding stock options as of and during the six months ended June 30, 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 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

As at June 30, 2025

Exercisable as at June 30, 2025

During the three and six months ended June

30, 2025, we recognized expense related to stock options of $ 31,811

and $ 68,457 ,

respectively.

As of June 30, 2025, the aggregate intrinsic value for all options outstanding as well as all options exercisable was

and unrecognized stock option expense of approximately $ 65,000 remains to be recognized over the next 0.51 years.

Effective April 1, 2024, pursuant to the terms of a brand ambassador agreement, we issued to an individual 4,500 shares of our common stock as compensation for the first 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 $ 21,690 , which was recognized as expense on a straight-line basis from April 1, 2024 through March 31, 2025.

We recognized $ 5,423 of expense for the three and six months ended June 30, 2024, $ 0 for the three months ended June 30, 2025, and $ 5,423 for the six months ended June 30, 2025, relative to this stock grant.

Effective April 1, 2025, pursuant to the terms of a brand ambassador agreement, we issued to the same individual 11,539 shares of our common stock as compensation for the second year of the agreement.

The value of this consideration transferred, measured using the fair value of our common stock at the date of issuance, was $ 30,000 , which is being recognized as expense on a straight-line basis from April 1, 2025 through March 31, 2026.

We recognized $ 7,500 of expense for the three and six months ended June 30, 2025 relative to this stock grant.

Restricted Stock Units

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.

During the three and six months ended June 30, 2025, we recognized $ 132,903 and $ 273,832 of expense, respectively, 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 June 30, 2025, unrecognized restricted stock unit expense of approximately $ 1,124,000 remains to be recognized over of the next 2.07 years.

During the three and six months ended June 30, 2024, we recognized $ 5,075 and $ 10,150 of expense, respectively, related to restricted stock units that were awarded to an influencer in 2023.

As of December 31, 2024, no expense remained to be recognized related to this award.

NOTE 9 – STOCKHOLDERS’ EQUITY

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 (as described below).

The net proceeds received by the Company from this transaction amounted to approximately $1.5 million, which the Company intends to use 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 paid 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.

The Company also issued to HCW or its designees warrants to purchase up to 44,639 shares of common stock.

These placement agent 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.

The Resale Registration Statement was subsequently filed with the SEC on Form S-1 on May 9, 2025, and became effective on May 19, 2025.

June 2025 Warrant Inducement Transaction

On June 20, 2025, the Company entered into inducement letter agreements with certain holders of certain of its existing warrants to purchase an aggregate of 746,782 shares of the Company’s common stock, which were originally issued to the holders on April 14, 2025, having an original exercise price of $ 2.60 per share.

As of June 30, 2025, 254,282 of these shares were held in abeyance and not considered outstanding;

in compliance with a beneficial ownership limitation provision, such shares will be held in abeyance until the Company receives notice from the investor that the remaining shares may be issued.

Pursuant to the inducement letter agreements, the holders agreed to exercise the existing warrants for cash at an exercise price of $2.60 per share in consideration of the Company’s agreement to issue new unregistered Series I warrants to purchase up to an aggregate 2,240,346 shares of common stock, each at a purchase price of $0.125 per warrant.

The Series I warrants have an exercise price of $ 2.60 per share, are exercisable immediately upon issuance, and have a term of exercise equal to eighteen (18) months following the effective date of the Resale Registration Statement (as defined in the applicable agreements).

This transaction closed on June 24, 2025, and the gross proceeds to the Company were approximately $ 2.2 million prior to deducting placement agent fees and offering expenses (as described below).

The net proceeds received by the Company from this transaction amounted to approximately $1.9 million, which the Company intends to use for working capital and general corporate purposes.

HCW acted as the exclusive placement agent for the offering.

The Company also issued to HCW or its designees warrants to purchase up to 56,009 shares of common stock.

These placement agent warrants are immediately exercisable, will expire on June 20, 2030, and have an exercise price of $ 3.25 per share.

The Resale Registration Statement was subsequently filed with the SEC on Form S-1 on July 18, 2025, and became effective on July 28, 2025.

Other Warrant Activity

During the three months ended June 30, 2025, certain holders of the Company’s Series G and Series H warrants exercised such warrants to purchase an aggregate of 986,532 shares of the Company’s common stock at an exercise of $ 2.60 per share, resulting in gross cash proceeds to the Company of approximately $ 2.6 million.

In connection with the above, and pursuant to the terms of an engagement agreement between the Company and HCW originally dated April 2, 2024, and subsequently amended on September 22, 2024 and March 21, 2025, the Company paid HCW aggregate cash fees of approximately $ 0.3 million, and also issued to HCW or its designees various placement agent warrants to purchase up to 80,139 shares of common stock, with exercise prices ranging from $ 3.25 to $ 6.25 .

NOTE 10 – 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 254,282 shares held in abeyance as of June 30, 2025 from the June 24, 2025 warrant inducement transaction (see Note 9) were included in the computation of basic and diluted net loss per share for the three and six months ended June 30, 2025, since no additional consideration is due upon issuance of the shares.

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

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three months ended

six months ended

Basic and diluted:

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NOTE 11 – SUBSEQUENT EVENTS

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

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.

Tax Law Changes

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into U.S.

The OBBBA includes significant tax provisions, such as the permanent extension of certain expiring provisions of the 2017 Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions.

The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

We are currently assessing the impact of the OBBBA on our consolidated financial statements.

Intellectual Property Assignment Agreement

The Company previously entered into certain exclusive

License Agreements dated April 1, 2020 and September 15, 2021, having Addenda dated October 5, 2021 and December 7, 2021 (herein the

“Licenses”) with Lucyd Ltd., a subsidiary of one of the Company’s largest stockholders.

On August 12, 2025,

executed an Intellectual Property Assignment Agreement to confirm that all registered intellectual property rights under

the Licenses, to the extent they have not previously been assigned to the Company in previously executed assignments, are irrevocably

assigned to the Company, and that all unregistered intellectual property rights and other assets that were licensed exclusively to the

Company under the Licenses are also irrevocably assigned to the Company.

As such, the Company has acquired full ownership of all

registered and unregistered intellectual property and assets that were previously exclusively licensed to the Company from Lucyd Ltd.,

and the Licenses are no longer necessary, thus Lucyd Ltd.

and the Company mutually agreed to terminate the Licenses.

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

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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.

We achieved strong top-line growth in the second quarter of 2025;

revenues for the three months ended June 30, 2025 increased by 88% as compared to the comparable period in 2024, and revenues for the six months ended June 30, 2025 increased by 49% as compared to the comparable period in 2024.

This significant growth in revenues reflects growing consumer demand for our products, especially our Lucyd Armor smart safety glasses line.

Priced at $129 retail and $65 wholesale, the Lucyd Armor product has emerged as the Company’s first highly successful SKU (stock-keeping unit), meeting user needs in new ways at a universally-acceptable price point.

The success of the Lucyd Armor product is denoted by the Company’s most widely-viewed piece of content ever, a “viral” influencer video on Instagram which was viewed over 16,000,000 times in the month of July 2025.

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

The successful launch of Reebok ® Powered by Lucyd contributed to the growth in our sales volumes in the second quarter of 2025, and has accelerated retailer interest in our products – demonstrated by the early placements of the Reebok frames into Reebok.com, Kits.com (one of the largest eyewear e-commerce retailers worldwide), and in the TM:RW department store in Times Square of New York City.

Our gross profit margin for the second quarter of 2025 was -2%, compared to 18% in the three months ended June 30, 2024.

This decrease of approximately 20 percentage points was primarily attributable to significantly higher custom duties and tariffs imposed on goods imported into the U.S.

We have taken various actions during the second quarter to mitigate the impacts of these tariffs going forward, and have put additional contingency plans in place that we can employ if the international trade and tariff situation materially changes.

The Company is aggressively responding to tariff challenges with a multi-pronged approach, as described in further detail under “International Trade and Tariffs” below.

Other operating expenses increased modestly by 6% in the second quarter of 2025 as compared to the comparable period in 2024, largely driven by advertising costs and other selling-related fees linked to our higher sales volumes.

Despite this, the Company maintains its belief that it can scale revenues faster than overhead, as many of our general, administrative, and overhead type expenses are fixed or semi-fixed in nature.

Finally, 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 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.

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

General Product and Corporate Overview

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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.

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).

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

Our current product portfolio consists of 30 different models across the traditional, sport, and safety categories.

Most styles are available with 100+ different lens and prescription options, resulting in thousands of sellable variations of products currently available.

With Lucyd Lyte and our Nautica ® and Eddie Bauer ® lines (traditional), Reebok ® (sport), and Lucyd Armor (safety), we believe we are the first smart-eyewear company with products concurrently in traditional, sport, and safety eyewear.

Our brand partnerships enable us to offer a more diversified product portfolio and help us reach distinct consumer segments and demographics (for example, Nautica ® skews more fashion-forward than Lucyd Lyte, Eddie Bauer ® reaches an older demographic, and Reebok ® attracts younger, more active customers).

Software and Apps

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.

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

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

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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 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, and touch control customizations.

In May 2025, we announced additional updates to the Lucyd app, including new voice prompts and further enhancements for the app’s Walkie feature.

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.

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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.

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

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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.

During the first half 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 individuals brings 15 years of experience in optical sales, and has joined to support our expansion into key optical accounts and regional chains.

The other individual 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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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.

For example, our new Reebok styles carry a 4.5/5 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.

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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”):

These tariffs had a negative impact on our results of operations (more specifically, our gross profit margins) for the three and six months ended June 30, 2025.

During the second quarter of 2025, we took actions to mitigate the negative impacts of the tariffs, including diversifying our logistics network and modifying our product fulfilment and replenishment model.

More specifically, our multi-pronged approach to respond to tariff challenges includes the following:

We opened three new fulfillment centers (in Europe, Canada, and the Shenzhen special economic zone of China) to improve the fluidity of our international factory direct business (which is not subject to U.S.

tariffs), and are working to rapidly expand this business unit with regional resellers.

We are working to expand our lowest cost product line (Lucyd Armor) and are developing a new discounted optical line (for launch in the first half of 2026) to remain extremely competitive with traditional eyewear and other smart eyewear.

We have conducted a thorough investigation of alternatives to Chinese manufacturing in the event that tariffs make manufacturing there untenable.

Although this has not yet come to pass, the Company is prepared to shift manufacturing to Taiwan and/or Vietnam if necessary, and has developed contingency plans to do so.

We instituted a minor price increase of $15 to most custom lens orders to help mitigate new tariff expenses.

This modest increase is easily absorbed by customers and our lens pricing remains highly competitive with brick-and-mortar opticians.

While our actions taken to date are expected to result in improvements in gross profit margins in subsequent quarters, the current international geopolitical climate related to tariffs is fluid and continues to evolve.

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

We have developed contingency sourcing options in Southeast Asia should the U.S.-China tariff conditions materially change.

Due to the evolving nature of the situation related to tariffs, 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.

Results of Operations - Quarterly

The following table summarizes our results of operations for the three months ended June 30, 2025 (the “current quarter”) and the three months ended June 30, 2024 (the “prior year quarter”):

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Cost of Goods Sold

Gross (Deficit) Profit

Operating Expenses:

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Other Income (Expense), net

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.

Our revenues for the three months ended June 30, 2025 were $579,230, representing an increase of 88% as compared to revenues of $308,682 during the three months ended June 30, 2024.

This increase is primarily attributable to significant volume increases, partially offset by the impacts of higher discounts on products sold.

The significant volume increases are largely driven by our recent new product launches (including the Lucyd Armor product line which launched in October 2024, and the cobranded Reebok ® Powered by Lucyd collection which launched in April 2025).

The Lucyd Armor product line has emerged as the Company’s first highly successful SKU, and represented nearly half of our total units sold during the current quarter.

At the same time, the recently launched Reebok ® Powered by Lucyd frames are being extremely well-received by customers, with strong ratings on Lucyd.co and Amazon indicating satisfaction.

The new Reebok product notably has our best audio quality to-date by a wide margin, thanks to the results of the new audio engineering team.

Our continued investments in marketing and advertising initiatives, as well as increased public interest and growth in smartglasses and the wearable products category overall, also helped drive growth in consumer demand for our products and ultimately contributed to this increase in number of units sold.

The higher discounts in the current quarter were driven by planned promotions due to the fact that we have found that the second quarter of the calendar year is typically a slower season for glasses, as many customers like to upgrade their eyewear at the beginning of the year, beginning of the school year, or during the holiday season.

In order to address this seasonal pattern and increase sales during this timeframe, our 2025 promotional calendar concentrated a number of attractive offers in the second quarter of the year, such as “holiday shop” discounts for the start of summer, whereby customers receive an automatic discount based on their cart size.

This has proven to be an effective promotion.

For the three months ended June 30, 2025, approximately 56% of sales were processed on our online store (Lucyd.co), 41% on Amazon.com, and 2% through reseller partners, with 1% of our net revenues generated from Lucyd “Pro” app subscriptions.

The decline in the proportional share of reseller sales versus the prior year quarter reflects the combination of (i) the uncertainty of the current economic environment in light of the current tariff and international trade situation and (ii) an intentional shift by the Company away from small optical accounts and the timing of purchase orders from prospective big-box and home-improvement retailers currently under evaluation.

For the three months ended June 30, 2025, we generated an aggregate of $423,185 of revenue from sales of non-prescription smartglasses and accessories, $152,827 from sales of smartglasses with prescription lenses, and $3,218 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 $152,827 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.

For the three months ended June 30, 2024, approximately 59% of sales were processed on our online store (Lucyd.co), 25% on Amazon.com, and 16% through reseller partners.

For the three months ended June 30, 2024, we generated $227,545 of revenue from sales of non-prescription smartglasses and accessories, and $81,137 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 $81,137 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.

Overall, 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.

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 recent launch of Reebok ® Powered by Lucyd smartglasses for the sport/active lifestyle segment, we believe we are very well positioned to generate significant revenue growth in the latter half of 2025.

In order to support the launch and expansion of our Reebok ® Powered by Lucyd and Lucyd Armor lines, we recently expanded our sales team with the addition of individuals 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 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:

Our total cost of goods sold increased to $591,895 for the three months ended June 30, 2025, as compared to $253,506 for the prior year quarter.

This year-over-year increase of 133% was primarily driven by a combination of volume increases, and significantly higher custom duties, tariffs, and importation (freight-in) costs, partially offset by lower product sourcing costs for both frames and prescription lenses.

Incremental custom duties and tariff costs accounted for the vast majority of the year-over-year increase in cost of goods sold, as a result of the new or increased tariffs imposed on goods imported from various countries to the U.S., and our first large-scale U.S.

import of Lucyd smart eyewear in the current quarter.

We also incurred significantly higher shipping costs during the current quarter to import large quantities of product using faster shipping methods, in order to move those goods into the U.S.

before increased tariff rates went into effect.

Subsequent to the initial shipments, we took actions to mitigate the impact of these tariffs;

by leveraging fast-track activation of bonded third-party logistics facilities in Shenzhen, Montreal, and Rotterdam, and by switching to a just-in-time U.S.

inventory replenishment model, we reduced our current quarter-to-date dutiable volume by approximately 70 % after the initial shipments.

As a result, by the end of the quarter, we had reduced our tariff expense to a run rate of less than $15,000 per month, which is expected to restore gross profit margins to a level consistent with our pre-tariff business plan.

Management continues to monitor trade policy and has contingency sourcing options in Southeast Asia should the U.S.-China tariff conditions materially change.

The decrease in unit sourcing costs for 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:

improvements in product price/mix – i.e., a significant portion of the units sold in the current quarter were from our newer product lines, which have a lower manufacturing cost than our other product lines (as they are designed differently and have fewer components).

The decrease in lens fulfilment costs per unit was attributable to actions taken by management in 2024 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;

Cost of goods sold for the three months ended June 30, 2025 included but was not limited to the cost of frames (inclusive of the cost of tariffs, importation costs, and other inventory adjustments) of $494,236;

the cost of prescription lenses incurred with our third-party vendor of $71,097;

and commissions, affiliate referral fees, and e-commerce platform fees of $28,209.

Cost of goods sold for the three months ended June 30, 2024 included but was not limited to the cost of frames (inclusive of inventory adjustments) of $146,033;

the cost of prescription lenses incurred with our third-party vendor of $54,714;

and commissions, affiliate referral fees, and e-commerce platform fees of $27,205.

Gross (Deficit) Profit

We had a gross deficit for the current quarter of $(12,665), as compared to a gross profit of $55,176 for the prior year quarter.

Our gross profit margin was -2% in the current quarter and 18% in the prior year quarter, representing a decrease of approximately 20 percentage points from the prior year period.

This decrease in profitability was predominantly attributable to the aforementioned impact of tariffs and importation costs, and to a lesser extent was also driven by the aforementioned higher discounts stemming from planned promotions during the current quarter.

Such impacts were partially offset by the product sourcing cost improvements described above.

As previously discussed, management took decisive actions during the current quarter regarding diversification of our supply chain and logistics network to significantly reduce our dutiable volume and monthly tariff expenses.

These actions are expected to result in improvements in gross profit margins in subsequent quarters as compared with the current quarter.

Management continues to monitor trade policy and has contingency sourcing options in Southeast Asia should the U.S.-China tariff conditions materially change.

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

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.

The optical retail market is highly fragmented and influenced by vision insurance reimbursement, which historically supports higher retailer gross margins on conventional frames.

Smart eyewear carries a higher component and service cost structure, which can result in lower retailer margins at consumer price points we believe are required to broaden adoption.

Large national retailers are only just now recognizing smart eyewear as proven category and are starting to move in the direction of selling more smart eyewear.

As a result, we are now prioritizing larger retailers whose economics are more aligned with consumer electronics and safety categories, including home-improvement and big-box stores.

In the near term, we expect e-commerce channels (Lucyd.co and Amazon) to remain a larger proportional share of our revenue while we build additional sell-through evidence, secure retailer-specific merchandising, and obtain additional certifications.

As national retail programs are finalized and set in stores, we expect wholesale contribution to increase over time.

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 launches of new product lines in the latter 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 6% to $2,158,407 for the three months ended June 30, 2025, as compared to $2,029,534 for the three months ended June 30, 2024.

This increase was primarily due to the following:

General and administrative expenses

Our general and administrative expenses increased by $15,566 or approximately 1% to $1,310,865 for the three months ended June 30, 2025, as compared to $1,295,299 for the prior year quarter.

This slight increase was mainly attributable to a combination of multiple factors, including (i) higher compensation and benefit costs (approximately $192,000), (ii) an increase in legal costs of approximately $74,000, (iii) higher payments due under our multi-year license agreements, which increased our licensing expense by approximately $85,000, and (iv) higher IT and software costs (approximately $82,000).

These higher costs were largely offset by (i) the fact that in the prior year quarter we made a one-time 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, (ii) reductions in investor relations costs of approximately $51,000, and (iii) reductions in other corporate costs.

Non-cash expenses – including depreciation, amortization, and stock-based compensation – comprised approximately 6% and 11% of our total general and administrative expenses in the current quarter and prior year quarter, respectively.

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, professional services, etc.);

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

One key 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 $101,885 or approximately 23% to $544,318 for the three months ended June 30, 2025 from $442,433 for the three months ended June 30, 2024.

This increase was mainly due to a combination of (i) higher platform / selling fees, as a result of higher sales volumes, and (ii) higher advertising costs, largely related to the launch of our new Reebok ® Powered by Lucyd product line during the current quarter.

In the near to medium term, we expect that our sales and marketing expenses will scale up as our revenue grows.

From a long-term perspective, we anticipate that 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 does not require the platform / selling fees associated with e-commerce sales, and as a result typically carries a lower sales and 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 $11,422 or approximately 4% to $268,224 for the three months ended June 30, 2025, as compared to $256,802 for the three months ended June 30, 2024, 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 June 30, 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 was $64,978 in the current quarter and $25,959 in the prior year quarter.

These amounts were primarily comprised of dividends from our investments in money market funds.

The increase in other income (expense), net from the prior year quarter to the current quarter was primarily attributable to higher average investment balances in the current quarter.

Results of Operations – Year to Date

The following table summarizes our results of operations for the six months ended June 30, 2025 (the “current six months”) and the six months ended June 30, 2024 (the “prior year six months”):

Six months ended

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), net

Interest Expense

Total Other Income (Expense), net

Our revenues for the six months ended June 30, 2025 were $1,033,731, representing an increase of 49% as compared to revenues of $692,153 during the six months ended June 30, 2024.

This increase is primarily attributable to significant volume increases, as well as improved pricing 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, the Lucyd Armor product line which launched in October 2024, and the cobranded Reebok ® Powered by Lucyd collection which launched in April 2025).

Demand for the unique Lucyd Armor product line has been greater than expected since launch, and Lucyd Armor has emerged as the Company’s first highly successful SKU.

The recent Reebok ® launch importantly brings an entirely new customer and sales category to the Company – athletics and sporting goods – which we believe should grow faster and in a more centralized fashion than the optical business.

The aforementioned improvements in pricing are primarily attributable to adjustments to our product pricing and Manufacturer’s Suggested Retail Price implemented in 2024, which were aimed at enhancing profitability and attracting distributors to manage our wholesale channel.

We believe there is growing customer recognition of the quality and value proposition of our recent new product launches, which 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 six months.

For the six months ended June 30, 2025, approximately 55% of sales were processed on our online store (Lucyd.co), 40% on Amazon.com, and 4% through reseller partners, with 1% of our net revenues generated from Lucyd “Pro” app subscriptions.

For the six months ended June 30, 2025, we generated an aggregate of $714,251 of revenue from sales of non-prescription smartglasses and accessories, $313,432 from sales of smartglasses with prescription lenses, and $6,048 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 $313,432 of the online sales generated through Lucyd.co was related to smartglasses with prescription lenses.

For the six months ended June 30, 2024, approximately 63% of sales were processed on our online store (Lucyd.co), 28% on Amazon.com, and 9% through reseller partners.

For the six months ended June 30, 2024, we generated $500,287 of revenue from sales of non-prescription smartglasses and accessories, and $191,866 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 $191,866 of the online sales generated through Lucyd.co was related to smartglasses with prescription lenses.

Overall, 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.

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

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 $825,863 for the six months ended June 30, 2025, as compared to $630,026 for the prior year six months.

This year-over-year increase of 31% was primarily driven by a combination of volume increases, and significantly higher custom duties, tariffs, and importation (freight-in) costs, partially offset by lower product sourcing costs for both frames and prescription lenses, and also lower product certification costs.

import of Lucyd smart eyewear in the current quarter.

We also incurred significantly higher shipping costs during the current six months to import large quantities of product using faster shipping methods, in order to move those goods into the U.S.

before increased tariff rates went into effect.

Subsequent to the initial shipments, we took actions to mitigate the impact of these tariffs;

by leveraging fast-track activation of bonded third-party logistics facilities in Shenzhen, Montreal, and Rotterdam, and by switching to a just-in-time U.S.

inventory replenishment model, we reduced our current quarter-to-date dutiable volume by approximately 70 % after the initial shipments.

Management continues to monitor trade policy and has contingency sourcing options in Southeast Asia should the U.S.-China tariff conditions materially change.

The decrease in unit sourcing costs for frames as compared to the prior year six months was primarily attributable to the combination of:

The decrease in lens fulfilment costs per unit was attributable to actions taken by management in 2024 to better manage these costs, including:

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

Cost of goods sold for the six months ended June 30, 2025 included but was not limited to the cost of frames (inclusive of the cost of tariffs, importation costs, and other inventory adjustments) of $566,936;

the cost of prescription lenses incurred with our third-party vendor of $139,148;

commissions, affiliate referral fees, and e-commerce platform fees of $59,252;

shipping and logistics costs of $38,909;

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;

and shipping and logistics costs of $42,763.

Cost of goods sold for the six months ended June 30, 2024 included but was not limited to the cost of frames (inclusive of inventory adjustments) of $327,407;

cost of prescription lenses incurred with our third-party vendor of $157,782;

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shipping and logistics costs of $40,668;

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

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.

and product certification costs of $29,100.

Our gross profit for the current six months was $207,868, as compared to $62,127 for the prior year six months.

Our gross profit margin was 20% in the current six months and 9% in the prior year six months, representing an increase of approximately 11 percentage points from the prior year period.

This improvement in profitability was the primarily attributable to measures that we took in 2024 to reduce our costs per sale and increase our average order value, 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.

These improvements were partially offset by the negative impacts of tariffs during the current six months.

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.

The optical retail market is highly fragmented and influenced by vision insurance reimbursement, which historically supports higher retailer gross margins on conventional frames.

Smart eyewear carries a higher component and service cost structure, which can result in lower retailer margins at consumer price points we believe are required to broaden adoption.

Large national retailers are only just now recognizing smart eyewear as proven category and are starting to move in the direction of selling more smart eyewear.

As a result, we are now prioritizing larger retailers whose economics are more aligned with consumer electronics and safety categories, including home-improvement and big-box stores.

As national retail programs are finalized and set in stores, we expect wholesale contribution to increase over time.

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 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 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.

Our operating expenses increased by 6% to $4,282,731 for the six months ended June 30, 2025, as compared to $4,051,076 for the six months ended June 30, 2024.

This increase was primarily due to the following:

General and administrative expenses

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.

Our general and administrative expenses were $2,402,213 for the six months ended June 30, 2025, or essentially flat as compared to $2,404,245 for the prior year six months.

This minimal overall change was mainly attributable to the net result of a combination of multiple factors, including (i) higher compensation and benefit costs (approximately $133,000), (ii) an increase in legal costs of approximately $73,000, (iii) higher payments due under our multi-year license agreements, which increased our licensing expense by approximately $158,000, and (iv) higher IT and software costs (approximately $81,000).

Partially offsetting these higher costs were (i) the fact that in the prior year six months we made a one-time 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, and (ii) reductions in investor relations costs of approximately $131,000.

Non-cash expenses – including depreciation, amortization, and stock-based compensation – comprised approximately 10% and 16% of our total general and administrative expenses in the current six months and prior year six months, respectively.

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;

One key 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 $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.

Our sales and marketing expenses increased $227,990 or approximately 21% to $1,331,718 for the six months ended June 30, 2025 from $1,103,728 for the six months ended June 30, 2024.

This increase was primarily driven by the combination of (i) higher advertising costs, largely related to the launch of our new Reebok ® Powered by Lucyd product line during the current six months, and (ii) increased spending on events and trade shows, as we seek to grow and expand our network of potential B2B business partners.

We continue to make significant investments in paid ads in order to build brand awareness, attract new customers, and increase our market share.

In the near to medium term, we expect that our sales and marketing expenses will scale up to some degree as our revenue grows.

From a long-term perspective, we anticipate that 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 does not require the platform fees associated with e-commerce sales, 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 $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.

Our research and development costs were $478,800 for the six months ended June 30, 2025, as compared to $473,103 for the six months ended June 30, 2024, representing a year-over-year increase of approximately 1% or essentially flat compared to the prior year period.

Related party management fee

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.

Our related party management fee was $70,000 for each of the six-month periods ended June 30, 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 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.

Total other income (expense), net was $190,066 for the six months ended June 30, 2025.

This amount was primarily comprised of the combination of (i) realized gains on U.S.

Treasury bills originally purchased in September 2024 which matured in March 2025 and (ii) dividends from our investments in money market funds.

Total other income (expense), net in the six months ended June 30, 2024 was $69,239.

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.

The increase in other income (expense), net from the prior year six months to the current six months was primarily attributable to higher average investment balances in the current year period.

Liquidity and Capital Resources

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.

As of June 30, 2025 and December 31, 2024, our cash and cash equivalents were approximately $7.6 million and $2.6 million, respectively.

As of June 30, 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 $8.9 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

Our working capital (current assets less current liabilities) was approximately $10.7 million and $8.5 million as of June 30, 2025 and December 31, 2024, respectively.

Beginning in April 2025, the U.S.

government 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.

These recent developments have negatively impacted our results

of operations and caused us to have a gross deficit for the quarter ended June 30, 2025.

We have taken actions and developed contingency

plans to mitigate the negative impacts of tariffs on our results, but cannot provide any assurance that such actions and strategies will

be successful.

Given the recent impact on our results of operations caused by the tariffs, we may not have sufficient resources to continue

to fund operations for the next twelve months without additional funding.

However, given our ability to raise funds through our current

at-the-market offering program with H.C.

Wainwright & Co., or other financing options that we believe are in the best interest of,

and on the best terms for, the Company and the availability to borrow funds via our related party agreement with Lucyd Ltd., we believe

we will have sufficient liquidity to fund our operations for at least the next twelve months.

The Company did not have any debt obligations as of June 30, 2025 or December 31, 2024.

Six 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 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

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.

Net cash flows used in operating activities for the six months ended June 30, 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 to support future sales, 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 six months ended June 30, 2025 are primarily attributable to the maturity and redemption of investments in 6-month U.S.

Treasury bills totalling $5.0 million, and the investment in new 6-month U.S.

Treasury bills totalling approximately $(1.3) million.

Net cash flows provided by financing activities for the six months ended June 30, 2025 are primarily attributable to warrant exercises and other equity transactions entered into during the current quarter (as described in more detail below), for which we received aggregate net proceeds of approximately $5.7 million.

Equity Transactions

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.

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.

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 (as described below).

The net proceeds received by the Company from this transaction amounted to approximately $1.5 million, which the Company intends to use 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, 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.

The Company also issued to HCW or its designees warrants to purchase up to 44,639 shares of common stock.

The Resale Registration Statement was subsequently filed with the SEC on Form S-1 on May 9, 2025, and became effective on May 19, 2025.

June 2025 Warrant Inducement Transaction

As of June 30, 2025, 254,282 of these shares were held in abeyance and not considered outstanding;

in compliance with a beneficial ownership limitation provision, such shares will be held in abeyance until the Company receives notice from the investor that the remaining shares may be issued.

The Series I warrants have an exercise price of $2.60 per share, are exercisable immediately upon issuance, and have a term of exercise equal to eighteen (18) months following the effective date of the Resale Registration Statement (as defined in the applicable agreements).

This transaction closed on June 24, 2025, and the gross proceeds to the Company were approximately $2.2 million prior to deducting placement agent fees and offering expenses (as described below).

The net proceeds received by the Company from this transaction amounted to approximately $1.9 million, which the Company intends to use for working capital and general corporate purposes.

HCW acted as the exclusive placement agent for the offering.

The Company also issued to HCW or its designees warrants to purchase up to 56,009 shares of common stock.

These placement agent warrants are immediately exercisable, will expire on June 20, 2030, and have an exercise price of $3.25 per share.

The Resale Registration Statement was subsequently filed with the SEC on Form S-1 on July 18, 2025, and became effective on July 28, 2025.

Other Warrant Activity

During the three months ended June 30, 2025, certain holders of the Company’s Series G and Series H warrants exercised such warrants to purchase an aggregate of 986,532 shares of the Company’s common stock at an exercise of $2.60 per share, resulting in gross cash proceeds to the Company of approximately $2.6 million.

In connection with the above, and pursuant to the terms of an engagement agreement between the Company and HCW originally dated April 2, 2024, and subsequently amended on September 22, 2024 and March 21, 2025, the Company paid HCW aggregate cash fees of approximately $0.3 million, and also issued to HCW or its designees various placement agent warrants to purchase up to 80,139 shares of common stock, with exercise prices ranging from $3.25 to $6.25.

Other Factors

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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.

We expect a modest increase in marketing and retail-support expenses over the next twelve months, with such investments being discretionary and adjustable as needed.

To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing.

6 unchanged sentences

Off-Balance Sheet Arrangements

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

As of June 30, 2025, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Significant Estimates

3 unchanged sentences

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