UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-41392

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files.) Yes ☒   No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

Securities registered pursuant to Section 12(b) of the Act:

As of August 7, 2025, there were 4,574,602 shares of the registrant’s common stock issued and outstanding (excluding 254,282 shares held in abeyance).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The discussions in this Quarterly Report on Form 10-Q contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. These forward-looking statements include, but are not limited to, our strategy, competition, future operations and production capacity, our supply chain and logistics, future financial position, future revenues, projected costs, profitability, expected cost reductions, capital adequacy, expectations regarding demand and acceptance for our technologies, growth opportunities and trends in the market in which we operate, prospects and plans, and objectives of management. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2024, and in our other filings with the Securities and Exchange Commission. We do not assume any obligation to update any forward-looking statements except as required by law.

Innovative Eyewear, Inc.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

INNOVATIVE EYEWEAR, INC.

CONDENSED BALANCE SHEETS

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

See accompanying Notes to the Condensed Financial Statements.

INNOVATIVE EYEWEAR, INC.

CONDENSED STATEMENTS OF OPERATIONS

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

(Unaudited)

See accompanying Notes to the Condensed Financial Statements.

INNOVATIVE EYEWEAR, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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

(Unaudited)

See accompanying Notes to the Condensed Financial Statements.

INNOVATIVE EYEWEAR, INC.

CONDENSED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2025 and 2024

(Unaudited)

See accompanying Notes to the Condensed Financial Statements.

INNOVATIVE EYEWEAR, INC.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

June 30, 2025 and 2024 (Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report.

Overview

Executive Summary and Outlook

General Product and Corporate Overview

Our mission is to Upgrade Your Eyewear^®. We develop and sell cutting-edge smart eyewear that is designed to allow our customers to remain connected to their digital lives. Our smart eyewear is a fusion of headphones with glasses, bringing vision correction and protection together with digital connectivity and clear audio, while also offering a safer solution for listening to music outdoors (as compared to in-ear headphones). The convenience of having a Bluetooth headset and comfortable glasses in one, especially for those who are already accustomed to all-day eyewear use, offers a lifestyle upgrade at a price most consumers can afford.

Our smart eyewear products enable the wearer to listen to music, take and make calls, and use voice assistants and ChatGPT to perform many common smartphone tasks hands-free. Since the official launch of our first commercial product, our goal has been to create smart eyewear for all-day wear that looks like and is priced similarly to designer eyewear, but is also lightweight and comfortable, and enables the wearer to remain connected to their digital lives. Through our various product offerings as described below, we have created a smart upgrade for all four of the major types of eyewear: prescription eyeglasses, ready-to-wear sunglasses, safety glasses, and sport glasses.

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 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.

In 2024, we added a “Pro” version of the app, which provides unlimited ChatGPT interactions and priority tech support for a modest monthly or annual fee. This is a new revenue stream for our business, and represents our first diversification in product revenue from frames and lenses. We also launched a new feature called “Walkie” for the Lucyd app in 2024, which enables thousands of users to join each other on walkie-talkie style communication channels. This feature was designed with our Lucyd Armor safety glass product in mind, to enable coworking teams to communicate freely on smart eyewear.

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

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. The Lucyd app delivers an updated user experience over time without requiring costly hardware changes. Additionally, the overall flexibility of Bluetooth connectivity and ability to connect to a variety of voice assistants, including device-native assistants and ChatGPT, make our glasses a “device- and AI- agnostic” peripheral suitable for use with almost any desktop or mobile computing platform. This aspect of our products makes them a highly compatible interface accessory and distinguishes them from accessories designed to enhance a specific platform, such as Apple AirPods for iOS or gaming headsets for desktop computers.

A large part of our strategy is not just to provide a leading smart eyewear platform, but to build a highly functional mobile software and interactive retail fixture ecosystem to support user adoption and “stickiness” with our products. We have engineered and provided a variety of virtual try-on kiosks, modular display systems, and interactive LCD fixtures to fit any retail environment. These devices introduce our products to prospective retail customers and enable them to digitally try-on our line of smart glasses in a touch-free manner. Many of our retail fixtures allow for customization to suit our retail store partners’ needs, and the most recently developed fixtures feature a proprietary kiosk app we recently developed in-house. Our latest, most advanced displays, which we plan to begin deploying in stores later this year, will offer a complete Lucyd experience, including virtual try-on, social media content, detailed product info and videos, and seamless music demos – which overall will provide an immersive onboarding experience for prospective customers in retail stores carrying our frames.

Key Factors Affecting Performance

Expansion of retail points of purchase

In addition to sustained growth of our e-commerce business, our future revenues are correlated positively with our placement of Lucyd glasses in optical stores, as well as sporting goods stores and other specialty stores. To address this, we have assembled a team with decades of experience in the eyewear industry and are offering a strong co-op marketing program and reordering incentives program. We currently offer an expansive line of 30 different models of glasses and several accessories, including cobranded eyewear with well-known brands like Nautica, Reebok, and Eddie Bauer. In total, the Company expects to offer over 40 total smart eyewear SKUs across these brands and Lucyd by the end of 2025.

During the first 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

Our ability to sustain and increase revenue is correlated positively with our ability to receive re-orders from stores, either directly or through our wholesale distributors. To support our sales to retail stores directly, we offer a strong co-op marketing program that includes free and paid store display materials. As part of this strategy, we have launched a new modular display system with engaging video screens and audio testing capabilities for our resellers to help educate their in-store customers about Lucyd products. These display systems enable customers to engage in music demos on a physical unit, explore social and tutorial content, and virtually try on all available units, an experience offered by no other smartglass display on the market today. This proprietary display system is central to our efforts to introduce traditional retail customers to Lucyd eyewear, and we are planning further enhancements to our merchandising displays to enable more immersive experiences. Additionally, we consistently incorporate retail partner feedback directly into our frames to better serve our end users.

Investing in business growth

We believe that people care about what they wear on their faces, and because we understand that customers have diverse preferences about the shape, size, and design of their eyewear, we aim to continuously invest in the design and development of new models in an effort to provide the consumer with a wide selection of styles, colors, and finishes. We have two continuous trajectories of general product improvement: (i) engineering, where we seek to improve the sound quality, temple thinness, and battery life of our frames; and (ii) digital, where we are adding new features via the Lucyd app and improved component programming. We view these continually ongoing R&D investments as essential to maintaining our competitive edge.

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

Key Performance Indicators

Store Count (B2B)

We believe that one of the key indicators for our business is the number of retail stores onboarded to sell our products. We started onboarding our first retail stores in June 2021, and since then have continue to grow through the current year. Currently, we have over 540 retail stores selling our smart eyeglasses, primarily in the United States and Canada, across over 300 wholesale accounts. Based on the existing demand for our products, current distribution, and recently consummated supply agreements, we anticipate that our products will be available in a significant number of new third-party retail locations in 2025.

Customer Ratings (B2C)

The 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. 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.

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. 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:

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”):

Revenues

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 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.

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.

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.

The decrease in unit sourcing costs for frames as compared to the prior year quarter 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:

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”):

Revenues

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. 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 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. 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 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. 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.

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.

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 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. 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 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:

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; 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; commissions, affiliate referral fees, and e-commerce platform fees of $69,895; shipping and logistics costs of $40,668; and product certification costs of $29,100.

Gross Profit

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.

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 $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 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.

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 $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 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 $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 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 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 $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.

Cash Flow

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. 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.

H.C. 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. 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 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

We expect that operating losses could continue in the foreseeable future as we continue to invest in the expansion and development of our business. We believe our existing cash and cash equivalents (including the proceeds from the equity offerings described above), plus the availability to borrow funds via the March 2025 amendment to the related party agreement with Lucyd Ltd., will be sufficient to fund our operations for at least the next twelve months.

However, our future capital requirements will depend on many factors, including, but not limited to, growth in the number of retail store customers, licenses, the needs of our e-commerce business and retail distribution network, expansion of our product and software offerings, and the timing of investments in technology and personnel to support the overall growth of our business. 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. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. There can be no assurances that we will be able to raise additional capital. In the event that additional financing is required from outside sources, we may not be able to negotiate terms acceptable to us or at all. Geopolitical and macroeconomic factors could cause disruption in the global financial markets, which could reduce our ability to access capital and negatively affect our liquidity in the future. If we are unable to raise additional capital when required, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, financial condition, and cash flows would be adversely affected.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Significant Estimates

There have been no material changes in our critical accounting policies and significant estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 24, 2025.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management including our Chief Executive Officer and our Co-Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13(a)-15(b) of the Exchange Act. Based on such evaluation, our Chief Executive Officer and Co-Chief Financial Officer have concluded that, as a result of material weaknesses in our internal control over financial reporting, our disclosure controls and procedures were not effective as of June 30, 2025.

There was no change in our internal control over financial reporting during the second quarter of fiscal year 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

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.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 24, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the six months ended June 30, 2025, the Company issued certain warrants (i.e., Series G, Series H, and Series I warrants, along with associated placement agent warrants, all as described below). These warrants, and the shares issuable upon the exercise of such warrants, were sold and issued without registration under the Securities Act, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.

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.

H.C. 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. 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 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.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

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, Lucyd Ltd. 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.

After consummation of the assignment, our current U.S. and foreign patent portfolio is as listed below.