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Item 1. Financial Statements

2025-11-13 compared with 2025-08-14 · 365 added, 286 removed, 574 unchanged (53% of the section changed)

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CONDENSED BALANCE SHEETS

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

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

Current Assets

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Stockholders’ Equity

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)

Common stock (par value $ 0.00001 ,

shares authorized:

and 2,452,632 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively)

Additional paid-in capital

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CONDENSED STATEMENTS OF OPERATIONS

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

For the three and nine months ended September 30, 2025 and 2024

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Revenues, net

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CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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

For the three and nine months ended September 30, 2025 and 2024

Stockholders’

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April 2025 Warrant Inducement Transaction

June 2025 Warrant Inducement Transaction (1)

2025 Warrant Inducement Transaction

Other exercises of warrants in ordinary course

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Balances as of June 30, 2025

At-the-Market Offerings

Issuance of shares related to vesting of restricted share units

Additional costs related to Warrant Inducement Transactions

Stock-based compensation

( 1,836,267 )

Balances as of September 30, 2025

$ ( 30,456,994 )

Balances as of January 1, 2024

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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.

At-the-Market Offerings

Exercises of warrants related to inducement agreements

Exercises of warrants

Stock-based compensation

( 1,720,677 )

Balances as of September 30, 2024

$ ( 22,609,802 )

See accompanying Notes to the Condensed Financial Statements.

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CONDENSED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2025 and 2024

For the nine months ended September 30, 2025 and 2024

Operating Activities

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Financing Activities

Proceeds from first registered direct offering

Proceeds from second registered direct offering

Proceeds from offerings of common stock and warrants

Proceeds from at-the-market offerings of common stock

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Significant Non-Cash Transactions

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

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

Issuance of shares for prepayment to third party service provider

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

June 30, 2025 and 2024 (Unaudited)

September 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 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.

(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.

We sell smart eyewear under our own Lucyd

brand, which includes the Lucyd Lyte ® and Lucyd Armor product lines, as well as cobranded smart eyewear under the Nautica ® Powered

by Luycd , Eddie Bauer ® Powered by Luycd , and Reebok ® Powered by Luycd product lines.

The Company was originally 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 5% of our issued and outstanding shares of common stock as of September 30, 2025.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the periods presented

have been included.

The results of operations for the three and nine months ended September 30, 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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Treasury bills, which were purchased in September 2024 and matured in March

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 .

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.

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 .

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

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

Treasury bills, which were purchased in April 2025 and subsequently matured

in October 2025.

These investments were classified as “held-to-maturity” and, as of September 30, 2025, were recorded at amortized

cost of $ 1,298,687 in the accompanying condensed balance sheet.

The aggregate fair value of these investments, based on quoted prices (unadjusted) in active

markets for identical assets, was $ 1,298,830 as of September 30, 2025.

Accounts Receivable

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

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

A roll forward of the allowance for credit losses

for the nine months ended September 30, 2025 and 2024 is as follows:

Schedule of allowance for doubtful accounts

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Bad debt expense (recovery)

Balance at June 30

Balance at September 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 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;

Also included within inventory at September 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 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.

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 September 30, 2025 and December 31, 2024.

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 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.

During the three months ended September 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 nine months ended September 30, 2025 and 2024, we recognized $ 22,500 of revenue for each period, that was included in the contract liability balances as of January 1, 2025 and 2024, respectively.

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

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

For sales of subscriptions to the “Pro” version of our Lucyd app, we identify the individual contracts with customers through detailed transaction reports from the Apple App Store or Google Play Store, with each individual transaction representing a separate contract.

Revenue is recognized upon meeting the performance obligation, which is the right and availability of each customer to access the “Pro” features of the Lucyd app.

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

For those customers 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 $ 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.

For sales of subscriptions to the “Pro” version of our Lucyd app, we identify the individual contracts with customers through

detailed transaction reports from the Apple App Store or Google Play Store, with each individual transaction representing a separate contract.

Revenue is recognized upon meeting the performance obligation, which is the right and availability of each customer to access the “Pro”

features of the Lucyd app.

For those customers that purchase such access on a month-to-month basis, we recognize revenue in the month

in which the purchase of such access is made.

For those customers 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 $ 3,592 and $ 2,401 as of September 30, 2025 and December 31, 2024, respectively.

During the three and nine months ended September 30, 2025, we recognized $ 325 and $ 2,263 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).

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such reserve is recorded as a reduction of sales.

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

The Company recorded an allowance for sales returns of $ 11,228 and $ 15,746 as September 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.

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.

the nine months ended September 30, 2025, the Company raised approximately $ 7.3 million of aggregate gross proceeds through a combination of warrant inducement transactions, other warrant exercises, and at-the-market

offerings of common stock (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 September 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

However, the Company may raise additional funds if management believes it would be beneficial to do so.

NOTE 4 – INCOME TAX PROVISION / BENEFIT

At the end of each interim reporting period, the Company estimates its effective tax rate expected to be applied for the full year.

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

The Company has no t recorded an income tax provision or benefit for the three and six months ended June 30, 2025 and 2024 as it maintains a full valuation allowance against its net deferred tax assets.

At the end of each interim reporting period,

the Company estimates its effective tax rate expected to be applied for the full year.

This estimate is used to determine the income

tax provision or benefit on a year-to-date basis and may change in subsequent interim periods.

The Company has no t recorded an income

tax provision or benefit for the three and nine months ended September 30, 2025 and 2024 as it maintains a full valuation allowance against

its net deferred tax assets.

NOTE 5 – TANGIBLE AND INTANGIBLE ASSETS

Schedule of property, plant and equipment

September 30,

Property & Equipment

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Property and equipment, net

Depreciation expense for the three months ended 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.

Depreciation expense for the three months ended September 30, 2025 and 2024 was $ 14,922 and $ 23,956 , respectively.

Depreciation expense for the nine months ended September 30, 2025 and 2024 was $ 53,292 and $ 83,907 , respectively.

Schedule of intangible assets

September 30,

Finite-lived intangible assets

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Intangible assets, net

Amortization expense for the three months ended 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.

Amortization expense for the three months ended September 30, 2025 and 2024 was $ 13,552 and $ 9,902 , respectively.

Amortization expense for the nine months ended September 30, 2025 and 2024 was $ 48,931 and $ 25,199 , 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 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.

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

During the nine months ended September 30, 2025 and 2024, the Company

incurred $ 105,000 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 $ 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.

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.

recognized $ 38,730

of expense related to this month-to-month arrangement for the three months ended September 30, 2025 and 2024, respectively, and

recognized $ 108,383

of expense related to this month-to-month arrangement for the nine months ended September 30, 2025 and 2024, respectively.

Loan to Tekcapital Europe, Ltd.

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

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

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

Financing Agreement

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

The Company recognized $ 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.

Additionally, the Company had 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 “LL Licenses”) with Lucyd Ltd;

such licenses were royalty-free, fully paid up, perpetual licenses.

August 12, 2025, Lucyd Ltd.

executed an intellectual property assignment agreement to confirm that all registered intellectual

property rights under the LL Licenses, to the extent they had not previously been assigned to the Company in previously executed assignments,

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

exclusively to the Company under the LL Licenses were 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 LL Licenses are no longer necessary, thus Lucyd Ltd.

and the Company mutually agreed to terminate the LL Licenses.

The Company recognized $ 124,273 and $ 51,160 of expense related to all license agreements for the three months ended September 30, 2025 and 2024, respectively, and recognized $ 404,243 and $ 173,481 of expense for the nine months ended September 30, 2025 and 2024, respectively.

Payment Plan for Information Technology System and Services

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of $4,035 per month through July 2027.

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

As of September 30, 2025, the Company's remaining obligation under this arrangement was $ 88,776 ,

of which $ 48,424 is included within Accounts payable and accrued expenses in the accompanying condensed balance sheet, and $ 40,352 is

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Stock Options

Summary information regarding stock options as of and during the six months ended June 30, 2025 is as follows:

Summary information regarding stock options as of and during the nine months ended September 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 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

As at September 30, 2025

Exercisable as at September 30, 2025

During the three and nine months ended

September 30, 2025, we recognized expense related to stock options of $ 31,815

and $ 100,272 ,

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.

As of September 30, 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 $ 33,000

remains to be recognized over the next 0.27

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

and $ 10,845 of expense for the three and nine months ended September 30, 2024, respectively, $ 0

for the three months ended September 30, 2025, and $ 5,423

for the nine months ended September 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

and $ 15,000 of expense for the three and nine months ended September 30, 2025, respectively, relative to this stock grant.

Restricted Stock Units

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.

During the three and nine months ended September 30, 2025, we recognized $ 137,489 and $ 411,321 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 September 30, 2025, unrecognized restricted stock unit expense of approximately $ 986,000 remains to be recognized over of the next 1.81 years.

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

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

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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.

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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.

From May 30, 2025 through June 20, 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 .

At-the-Market

has entered into an at-the-market offering agreement with HCW (as sales agent) relating to the sale of common stock.

From August 15,

2025 through September 30, 2025, the Company sold 341,403 shares of common stock and received approximately $ 716,000 of gross proceeds

before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted

to approximately $ 692,000 , and will be used for working capital and general corporate purposes.

NOTE 10 – EARNINGS PER SHARE

The Company calculates earnings/(loss) per share data by calculating the quotient of earnings/(loss) divided by the weighted average number of common shares outstanding during the respective period.

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.

calculates earnings/(loss) per share data by calculating the quotient of earnings/(loss) divided by the weighted average number of common

shares outstanding during the respective period.

Due to the net losses for all periods presented in the unaudited condensed statements

of operations, all shares underlying the common stock options, common stock warrants, and related party convertible debt were excluded

from the earnings per share calculation due to their anti-dilutive effect.

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

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three months ended

six months ended

nine months ended

September 30,

Basic and diluted:

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NOTE 11 – SUBSEQUENT EVENTS

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.

Legal Settlement

On November 11, 2025, the Company entered

into a settlement and release agreement with a shareholder related to certain legal matters.

Pursuant to the terms of such

agreement, the Company will receive $ 570,000

from such shareholder.

At-the-Market

1, 2025 through October 15, 2025, the Company sold 144,496 shares of common stock and received approximately $ 291,000 of gross proceeds

before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted

to approximately $ 281,000 , and will be used for working capital and general corporate purposes.

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

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Executive Summary and Outlook

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.

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

revenues for the three months ended September 30, 2025 increased by 163% as compared to the comparable period in 2024, and revenues for the nine months ended September 30, 2025 increased by 80% as compared to the comparable period in 2024.

This significant growth in revenues reflects continued expansion of consumer demand for our products, especially our Lucyd Armor smart safety glasses line and the Reebok ® Powered by Lucyd sport smartglasses line.

Demand for our core Lucyd Lyte smartglasses also remains strong.

Our gross profit margin for the third quarter of 2025 was 37%, compared to 23% in the three months ended September 30, 2024.

This increase of approximately 14 percentage points was primarily attributable to by lower product sourcing costs for both frames and prescription lenses as we continue to scale and develop our business.

With respect to tariffs, the actions taken by management during the second quarter of 2025 to mitigate the impacts of tariffs have been largely successful thus far, and restored our third quarter 2025 gross profit margins to a level mostly consistent with our pre-tariff business plan.

However, we continue to monitor trade policy and build contingency sourcing options in Southeast Asia, should the U.S.‑China tariff conditions materially change.

Other operating expenses increased by 19% in the third quarter of 2025 as compared to the comparable period in 2024, largely driven by increased sales and marketing expenses, which we believe are necessary to drive our continued growth and expansion.

Higher licensing expenses related to our cobranded product lines also contributed to the increase in our operating costs.

Going into the fourth quarter, we believe we are well positioned to capitalize on the continued success and momentum of the Lucyd Armor smartglasses line for the safety/industrial segment (which represents a growing market in which we currently have little or no direct competition) and the recently launched Reebok ® Powered by Lucyd smartglasses line for the sport/active lifestyle segment, and ultimately generate significant revenue growth in the fourth quarter of 2025.

As a result of increasing interest in smart eyewear in the traditional optical landscape, we are building new business with white-label and wholesale partners.

In the third quarter, we received wholesale orders from several new clients, including Kits Eyewear, the Optical Resources Group, and I-deal Optics, and prepared several proposals for white-label smart eyewear.

Providing customized or exclusive smart eyewear SKUs to notable distributors and retailers is a promising new channel of business for the Company.

This is because traditional eyewear retailers and manufacturers need a strong smart eyewear “tech stack” to be competitive in this emerging category, which is often too difficult or too costly for them to develop internally.

General Product and Corporate Overview

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

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

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

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

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

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

In November 2025, we launched three new variants of our highly successful Lucyd Armor line, in order to expand the collection to a wider audience and build on the success of the original model with important variations in lens functionality and sizing.

We also launched two additional styles of Reebok ® Powered by Lucyd sport smart sunglasses.

We plan to launch an additional variant of Lucyd Armor in the first quarter of 2026, and launch the Reebok ® Powered by Lucyd premium optical collection in the first half of 2026.

Our current product portfolio consists of 35 different models across the traditional, sport, and safety categories.

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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 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, translation features, and touch control customizations.

Most recently, in September 2025, we announced the addition of a new translation feature to the Lucyd app, which allows for voice-based translation between 17 languages in real time.

We plan to launch more new features for the Lucyd app in the future.

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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We currently offer an expansive line of 35 different models of glasses and several accessories, including cobranded eyewear with well-known brands like Nautica, Reebok, and Eddie Bauer.

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

During the first 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.

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

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

Customer Ratings (B2C)

The 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 Reebok styles carry a 4.5/5 rating on Amazon.

The Company’s latest products are receiving very favorable ratings online, indicating that customers are appreciative of improvements in product design, functionality, and build quality.

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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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.

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.

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

We have taken 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:

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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.

The actions taken by management to date to mitigate the impacts of tariffs have been largely successful thus far, and restored our third quarter 2025 gross profit margins to a level that is mostly consistent with our pre-tariff business plan.

However, 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.

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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”):

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

Three months ended

September 30,

Three months ended

September 30,

Revenues, net

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Other Income (Expense), net

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.

Our revenues for the three months ended September 30, 2025 were $668,128, representing an increase of 163% as compared to revenues of $253,599 during the three months ended September 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 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.

The significant volume increases were largely driven by our Lucyd Armor product line, which first launched in October 2024 and has rapidly emerged as the Company’s first highly successful SKU.

We sold approximately 2,800 units of Lucyd Armor smartglasses in the current quarter, which represented approximately half of our total smartglass units sold.

The strong demand for the unique Lucyd Armor product has led us to develop four alternate variants for this product line, in order to address a wider range of safety glass users;

three new Armor variants launched in November 2025, and the fourth variant is planned to launch in the first quarter of 2025.

The cobranded Reebok ® Powered by Lucyd collection also contributed to the year-over-year volume increases.

Following the collection’s initial launch in the second quarter of 2025, the number of Reebok smartglass units sold in the third quarter of 2025 was roughly double the number sold in the immediately preceding quarter.

The higher discounts in the current quarter primarily reflect our go-to-market strategy for new product lines, which included (i) introductory promotions and bundles for the Reebok ® Powered by Lucyd launch to accelerate awareness and trial, and (ii) targeted clearance of older frame styles as we rationalized the assortment ahead of the November Lucyd Armor line expansion.

For the three months ended September 30, 2025, approximately 56% of sales were processed on our online store (Lucyd.co), 40% on Amazon.com, and 4% through reseller partners.

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, which we believe has led to delays in getting large retailers to commit to placing orders for new products such as ours, 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 September 30, 2025, we generated an aggregate of $499,083 of revenue from sales of non-prescription smartglasses and accessories, $165,832 from sales of smartglasses with prescription lenses, and $3,213 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 online sales generated through Lucyd.co related to smartglasses both with and without prescription lenses.

For the three months ended September 30, 2024, approximately 54% of sales were processed on our online store (Lucyd.co), 22% on Amazon.com, and 23% through reseller partners.

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

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 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.

however, we continue to believe that the wholesale channel is the most scalable and most promising long-term opportunity for future growth.

To date, several factors have constrained wholesale sell-through:

(i) the optical retail ecosystem is fragmented and insurance-driven, which supports higher margins on conventional frames and can compress retailer margins on smart eyewear at mainstream price points;

(ii) smart eyewear requires interactive merchandising and in-store demos to educate consumers, which lengthens onboarding lead times;

and (iii) national retailers typically require category sell-through evidence, certifications, and planogram resets with long decision cycles.

However, large national retailers have recently started to recognize smart eyewear as proven category and are starting to move in the direction of selling more smart eyewear.

Our Lucyd Armor product line has a clear “smart safety glass” use case that aligns with home-improvement, safety distribution, and industrial channels, while our Reebok ® sport product line aligns with electronics and sporting goods merchandising.

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

With our expanded Lucyd Armor variants, the Reebok ® sport collection, and our interactive retail fixtures, we believe we now have the product and merchandising set needed to scale wholesale placements over time.

Therefore, we expect that e-commerce channels (Lucyd.co and Amazon) will remain a larger proportional share of our revenue in the near to medium term, with wholesale contributions increasing over time.

In the long term, we anticipate that wholesale sales will comprise a larger proportional share of our revenue, which should bring consistent, large-scale orders with minimal marketing costs.

With the continued success and momentum of the 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 fourth quarter of 2025.

In order to support the launch and expansion of our Reebok ® Powered by Lucyd and Lucyd Armor lines, we have expanded our sales team with the addition of individuals who have significant experience in optical sales and hardware sales.

In addition, during the current quarter, we have focused more efforts on international expansion, including the development of new partnerships with distributors and retailers in the UK, EU, Canada, and Latin America, as well as securing initial orders from key European markets.

Cost of Goods Sold

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.

Our total cost of goods sold increased to $423,291 for the three months ended September 30, 2025, as compared to $194,255 for the prior year quarter.

This year-over-year increase of 118% was primarily driven by volume increases, partially offset by lower product sourcing costs for both frames and prescription lenses.

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 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 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;

improvements in product price/mix – i.e., the majority 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 primarily attributable to the transition of our lens fulfilment partner during the prior year quarter from the previous supplier, which was more costly, to our current lower-cost lens supplier based in Miami, Florida.

Cost of goods sold for the three months ended September 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 $324,030;

the cost of prescription lenses incurred with our third-party vendor of $45,365;

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;

commissions, affiliate referral fees, and e-commerce platform fees of $30,759;

and shipping and logistics costs of $23,137.

Cost of goods sold for the three months ended September 30, 2024 included but was not limited to the cost of frames (inclusive of inventory adjustments) of $107,469;

the cost of prescription lenses incurred with our third-party vendor of $38,247;

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.

commissions, affiliate referral fees, and e-commerce platform fees of $25,957;

and shipping and logistics costs of $22,512.

We had gross profit for the current quarter of $244,837, as compared to $59,344 for the prior year quarter.

Our gross profit margin was 37% in the current quarter and 23% in the prior year quarter, representing an increase of approximately 14 percentage points from the prior year period.

This increase in profitability was predominantly attributable to the aforementioned product sourcing cost improvements described above.

During the second quarter of 2025, management took decisive actions to respond to and attempt to mitigate the impacts of recently enacted increased tariffs on goods imported from various countries to the U.S., which included diversification of our supply chain and logistics network to significantly reduce our dutiable volume and monthly tariff expenses.

These actions have been largely successful thus far, and restored our third quarter 2025 gross profit margins to a level that is mostly consistent with our pre-tariff business plan.

However, 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 continued momentum of Lucyd Armor and Reebok ® Powered by Lucyd product lines, 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.

Our operating expenses increased by 19% to $2,165,664 for the three months ended September 30, 2025, as compared to $1,821,407 for the three months ended September 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.

Our general and administrative expenses increased by $155,336 or approximately 14% to $1,277,308 for the three months ended September 30, 2025, as compared to $1,121,972 for the prior year quarter.

This increase was mainly attributable to the combination of (i) higher compensation (including stock-based compensation) and benefit costs (approximately $150,000) and (ii) higher payments due under our multi-year license agreements, which increased our licensing expense by approximately $73,000, partially offset by reductions in the amounts paid to consultants, contractors, legal counsel, and other professional services providers during the current quarter.

Non-cash expenses – including depreciation, amortization, and stock-based compensation – comprised approximately 6% and 9% of our total general and administrative expenses in the current quarter and prior year quarter, respectively.

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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.

Our sales and marketing expenses increased $190,306 or approximately 36% to $723,372 for the three months ended September 30, 2025 from $533,066 for the three months ended September 30, 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 business partners and retailers.

As an example of this, during our recent appearance at Vision Expo West in September 2025, we secured approximately 40 new optical industry accounts, developed a new partnership to expand distribution into the United Kingdom, and met with enthusiastic new partners with national presences in Canada and Latin America.

In the near to medium term, we expect that our sales and marketing expenses will continue to 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.

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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.

Our research and development costs were $129,984 for the three months ended September 30, 2025, as compared to $131,369 for the three months ended September 30, 2024, representing a year-over-year decrease 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 June 30, 2025 and 2024, based on the terms of the management services agreement between us and Tekcapital.

Our related party management fee was $35,000 for each of the three-month periods ended September 30, 2025 and 2024, based on the terms of the management services agreement between us and Tekcapital.

Other Income (Expense), net

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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

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

Nine months ended

September 30,

Nine months ended

September 30,

Revenues, net

Cost of Goods Sold

Gross (Deficit) Profit

Operating Expenses:

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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.

Our revenues for the nine months ended September 30, 2025 were $1,701,859, representing an increase of 80% as compared to revenues of $945,752 during the nine months ended September 30, 2024.

This increase is primarily attributable to significant volume increases, partially offset by the impacts of higher discounts on products sold and shifts in product price/mix.

Total smartglass units sold more than doubled, from approximately 6,700 units in the prior year nine months to approximately 14,200 units in the current nine months.

These significant volume increases were largely driven by our Lucyd Armor product line, which first launched in October 2024 and has rapidly emerged as the Company’s first highly successful SKU.

We sold over 7,000 units of Lucyd Armor smartglasses in the current nine months, which represented approximately half of our total smartglass units sold.

The strong demand for the unique Lucyd Armor product has led us to develop four alternate variants for this product line, in order to address a wider range of safety glass users;

three new Armor variants launched in November 2025, and the fourth variant is planned to launch in the first quarter of 2025.

The cobranded Reebok ® Powered by Lucyd collection, which launched in April 2025, also contributed to the year-over-year volume increases.

We sold over 1,000 units of Reebok smartglasses during the current nine months.

However, despite the aforementioned volume growth, the shift in our product mix to be more heavily skewed towards (and in fact, predominantly composed of) the Lucyd Armor line, had an unfavorable impact on our revenues, as the Armor line carries a manufacturer suggested retail price (“MSRP”) of $129, which is lower than the MSRP for our other product lines ($149 - $199).

The higher discounts in the current nine months primarily reflect our go-to-market strategy for new product lines, which included (i) introductory promotions and bundles for the Reebok ® Powered by Lucyd launch to accelerate awareness and trial, and (ii) targeted clearance of older frame styles as we rationalized the assortment ahead of the November Lucyd Armor line expansion.

For the nine months ended September 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.

The decline in the proportional share of reseller sales versus the prior year period reflects the combination of (i) the uncertainty of the current economic environment in light of the current tariff and international trade situation which we believe has led to delays in getting large retailers to commit to placing orders for new products such as ours, 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 nine months ended September 30, 2025, we generated an aggregate of $1,213,333 of revenue from sales of non-prescription smartglasses and accessories, $479,264 from sales of smartglasses with prescription lenses, and $9,262 of revenue from app subscriptions.

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

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