Innovative Eyewear Inc

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

September 30, 2026 and 2025 (Unaudited)

NOTE 1 –GENERAL INFORMATION

Company Description

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. 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 Lucyd, Eddie Bauer® Powered by Lucyd, and Reebok® Powered by Lucyd 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 3% of our issued and outstanding shares of common stock as of September 30, 2026.

Basis of Presentation

The accompanying condensed balance sheet as of December 31, 2025 (which has been derived from audited financial statements) and the unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. These unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 25, 2026.

In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the periods presented have been included. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for future periods or the full year.

Reclassifications

Certain prior period amounts have been reclassified to conform to current period presentation – specifically,$20,423 of nonemployee stock-based payment expense for the nine months ended September 30, 2025 has been reclassified to a separate line on the condensed statement of cash flows, rather than aggregated with stock-based compensation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, particularly given the significant uncertainties associated with the current state of international trade and the overall economic environment.

Segment Reporting

The Company has a single reportable segment, which generates revenue from the sales of smartglasses, and related accessories and apps. The Company derives revenue primarily in North America and manages its business activities on a single-segment basis. The accounting policies of our single reportable segment are the same as those for the Company as a whole.

The Company’s chief operating decision maker, as such term is defined under GAAP, is our Chief Executive Officer. The chief operating decision maker assesses performance for the single reportable segment and decides how to allocate resources based on net income that also is reported on the income statement as total net loss. The measure of segment assets is reported on the balance sheet as total assets. The Company does not have intra-entity sales or transfers.

NOTE 2 –LIQUIDITY

The Company’s business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn, or otherwise, changes in regulations or restrictions in imports, competition, or changes in consumer taste. These adverse conditions could affect the Company’s financial condition and the results of its operations.

The Company meets its day-to-day working capital requirements using monies raised through sales of eyewear and issuances of equity. During the nine months ended September 30, 2026, the Company raised approximately $1.5 million of aggregate gross proceeds through at-the-market offerings of common stock and approximately $3.0 million of aggregate gross proceeds through a warrant inducement transaction (see Note 11 for details). The Company has also entered into agreements with related parties, under which the Company may make borrowings of up to $1.25 million (see Note 8 and Note 13 for details); as of September 30, 2026, 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. However, the Company may raise additional funds if management believes it would be beneficial to do so.

NOTE 3 –REVENUE AND ACCOUNTS RECEIVABLE

Revenue

Our revenue is primarily generated from the sales of prescription and non-prescription optical glasses and sunglasses, and shipping charges which are charged to the customer associated with these purchases. We sell products through our retail store resellers, distributors, on our own website Lucyd.co, and on Amazon.com. We also generate revenue from the sale of subscriptions to the “Pro” version of our Lucyd app, which provides unlimited ChatGPT interactions and priority tech support for a monthly or annual fee.

The following table presents disaggregated revenue for the three and nine months ended September 30, 2026 and 2025:

For all of our product sales, at the time of sale, we establish a reserve for returns, based on historical experience and expected future returns as well as review of individual returns received in the month following the balance sheet date; such reserve is recorded as a reduction of sales. The Company recorded an allowance for sales returns of $31,154 and $14,669 as of September 30, 2026 and December 31, 2025, respectively.

In instances where the collectability of contractual consideration is not probable at the time of sale, the revenue is deferred on our balance sheet as a contract liability, and the associated cost of goods sold is deferred on our balance sheet as a contract asset; subsequently, we recognize such revenue and cost of goods sold as payments are received. With respect to such instances, during the three and nine months ended September 30, 2025, we recognized $7,500 and $22,500 of revenue, respectively, that was included in the contract liability balance of $47,950 as of January 1, 2025. There was no comparable balance of such deferred revenue as of December 31, 2025 or September 30, 2026, and no such revenue recognized or deferred during the three and nine months ended September 30, 2026.

The balance of revenue for orders received but not yet fulfilled that has been deferred on our balance sheet as a contract liabilitywas $96,261 and $55,383 as of September 30, 2026 and December 31, 2025, respectively. During the nine months ended September 30, 2026, we recognized $55,383 of revenue related to these instances, all of which was included in the contract liability balance of $55,383 as of January 1, 2026.

The balance of unearned revenue related to app subscriptions that has been deferred on our balance sheet as a contract liability was $5,064 and $4,506 as of September 30, 2026 and December 31, 2025, respectively. During the nine months ended September 30, 2026 and 2025, we recognized $4,075 and $2,263 of revenue, respectively, that was included in the contract liability balance of $4,506 as of January 1, 2026 and $2,401 as of January 1, 2025, respectively.

The balance of unearned revenue related to extended product service warranties purchased by customers that have been deferred on our balance sheet as a contract liability was $23,147 as of September 30, 2026, of which $16,124 was classified as current and $7,023 was classified as non-current.

Accounts Receivable

Accounts receivable are uncollateralized obligations due from customers under normal trade terms. For direct-to-consumer sales, payment is required before product is shipped. For wholesale orders, we offer “net 30” payment terms on wholesale orders of $1,500 or more in accordance with industry standards. The Company, by policy, routinely assesses the financial strength of its customers.

Accounts receivable are reported at the amount billed to the customer, net of an allowance for credit losses. The allowance for credit losses is determined based upon a variety of judgments and factors. Factors considered in determining the allowance include historical collection, write-off experience, and management’s assessment of collectibility from customers, including current conditions, reasonable forecasts, and expectations of future collectability and collection efforts. Management continuously assesses the collectability of receivables and adjusts estimates based on actual experience and future expectations. Receivable balances are written-off against the allowance when such balances are deemed to be uncollectable.

A roll forward of the allowance for credit losses for the nine months ended September 30, 2026 and 2025 is as follows:

NOTE 4 –INVENTORY

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 as of both at September 30, 2026 and December 31, 2025 was $72,864 of electronic components purchased from a third-party supplier for use by our manufacturer in their future production of our eyewear.

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 $357,286 and $59,000 as of September 30, 2026 and December 31, 2025, respectively.

Our non-product inventory consists of virtual try-on kiosks, modular display systems, and interactive LCD fixtures that have not yet been deployed at retailers, as well as certain accessories that are intended to be used as promotional items, rather than sold in the normal course of business. These items are presented in the condensed balance sheet within other current assets as of September 30, 2026, and the balance of such non-product inventory was $78,577 as of September 30, 2026.

NOTE 5 –INVESTMENTS

All highly liquid investments with original maturities of three months or less, including money market funds, certificates of deposit, and U.S. Treasury bills purchased three months or less from maturity, are considered cash equivalents.

As of January 1, 2025, the Company held investments in U.S. Treasury bills, which were purchased in September 2024 and matured in March 2025. These investments were classified as “held-to-maturity” and were recorded at amortized cost. Upon maturity of these investments, the Company recognized income of $104,816 for the nine months ended September 30, 2025.

In April 2025, the Company purchased an investment in U.S. Treasury bills for $1,274,320, which subsequently matured in October 2025. The Company recognized $13,424 and $24,367 of interest income, respectively, related to these investments for the three and nine months ended September 30, 2025.

There were no amounts classified as “held-to-maturity” investments as of December 31, 2025.

In January 2026, the Company purchased investments in U.S. Treasury bills, which matured in April 2026. These investments were classified as “held-to-maturity” and were recorded at amortized cost. The Company recognized income related to these investments of $11,534 for the nine months ended September 30, 2026.

In April 2026, the Company purchased investments in U.S. Treasury bills, which will mature in October 2026. During the three and nine months ended September 30, 2026, the Company recognized $11,897 and $22,501 of interest income, respectively, related to these investments. These investments were classified as “held-to-maturity” and were recorded at amortized cost of $1,299,871 in the accompanying condensed balance sheet. The aggregate fair value of these investments as of September 30, 2026 was as follows:

NOTE 6 –TANGIBLE AND INTANGIBLE ASSETS

Depreciation expense for the three months ended September 30, 2026 and 2025 was $4,783 and $14,922, respectively.

Depreciation expense for the nine months ended September 30, 2026 and 2025 was $24,767 and $53,292, respectively.

Amortization expense for the three months ended September 30, 2026 and 2025 was $17,302 and $13,552, respectively.

Amortization expense for the nine months ended September 30, 2026 and 2025 was $55,688 and $48,931, respectively.

NOTE 7 –INCOME TAXES

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 hasnot recorded an income tax provision or benefit for the three and nine months ended September 30, 2026 and 2025 as it maintains a full valuation allowance against its net deferred tax assets.

NOTE 8 –RELATED PARTY TRANSACTIONS AND AGREEMENTS

Management Service Agreement

The Company is party to a management services agreement with Tekcapital Europe, Ltd. (an affiliate of Lucyd Ltd., whose Chief Executive Officer is the father of our Chief Executive Officer), which was originally entered into in 2020 and subsequently amended in 2022. While the agreement does not stipulate a specific maturity date, it can be terminated with 30 calendar days written notice by any party.

Under this agreement, the related party provides the following services to us, for which we are billed $35,000 per quarter:

During the three months ended September 30, 2026 and 2025, the Company incurred $35,000 in each respective period under the management services agreement. During the nine months ended September 30, 2026 and 2025, the Company incurred $105,000 in each respective period under the management services agreement.

Rent of Office Space

Since 2022, under an agreement between the Company and Tekcapital Europe, Ltd, Tekcapital bills the Company for an allocation of rent paid by Tekcapital on the Company’s behalf. The underlying lease between Tekcapital and its landlord has an end date of January 31, 2027. The Company recognized $26,282 and $38,730 of expense related to this month-to-month arrangement for the three months ended September 30, 2026 and 2025, respectively. The Company recognized $80,115 and $108,383 of expense related to this month-to-month arrangement for the nine months ended September 30, 2026 and 2025, respectively.

April 2025 Loan to Tekcapital Europe, Ltd.

On April 23, 2025, the Company entered into an intercompany loan agreement (as lender) with Tekcapital Europe, Ltd. (as borrower) and Tekcapital Plc, the parent of Tekcapital Europe, Ltd. Pursuant to this agreement, the Company agreed to make a loan facility available to Tekcapital Europe, Ltd. for up to a maximum of $500,000. Tekcapital Europe, Ltd. could receive advances under this facility upon request through October 23, 2025; any amounts advanced to Tekcapital Europe, Ltd. bore simple interest at a rate of 10% per annum, and were required to be repaid on or before July 23, 2026. Tekcapital Plc executed the agreement as guarantor for Tekcapital Europe, Ltd. on the full amount of the loan. In May 2025, Tekcapital Europe, Ltd. borrowed $250,000 under this agreement; subsequently in June 2025, Tekcapital Europe, Ltd. repaid such borrowing in full along with $2,503 of interest. As of September 30, 2025, no amounts remained outstanding or payable to us under this agreement.

December 2025 Loan to Tekcapital Europe, Ltd.

On December 19, 2025, the Company entered into an intercompany loan agreement (as lender) with Tekcapital Europe, Ltd. (as borrower) and Tekcapital Plc, the parent of Tekcapital Europe, Ltd. Pursuant to this agreement, the Company agreed to make a loan facility available to Tekcapital Europe, Ltd. for up to a maximum of $300,000. Tekcapital Europe, Ltd. was able to receive advances under this facility upon request through January 19, 2026; any amounts advanced to Tekcapital Europe, Ltd. bore simple interest at a rate of 12% per annum, and were required to be repaid on or before March 19, 2026. Tekcapital Plc executed the agreement as guarantor for Tekcapital Europe, Ltd. on the full amount of the loan. On December 23, 2025, Tekcapital Europe, Ltd. borrowed $300,000 under this agreement; the $300,000 outstanding principal balance of this loan, plus accrued interest receivable of $789, was included within Due from Tekcapital and Affiliates in the accompanying condensed balance sheet as of December 31, 2025.

On February 24, 2026, Tekcapital Europe, Ltd. repaid in full all of the outstanding balance of the loan that the Company had made to Tekcapital on December 19, 2025. The total amount paid to the Company was $306,115, of which $300,000 represented the principal amount and $6,115 represented accrued interest. No amounts remain outstanding or payable to us under this agreement.

2026 Loan to Tekcapital Europe, Ltd.

On July 21, 2026, the Company entered into a new intercompany loan agreement (as lender) with Tekcapital Europe, Ltd. (as borrower) and Tekcapital Plc, the parent of Tekcapital Europe, Ltd. Pursuant to this agreement, the Company agreed to make a loan facility available to Tekcapital Europe, Ltd. for up to a maximum of $300,000. Tekcapital Europe, Ltd. was able to receive advances under this facility upon request through September 21, 2026; any amounts advanced to Tekcapital Europe, Ltd. bear simple interest at a rate of 12% per annum, and are required to be repaid on or before October 21, 2026. Tekcapital Plc executed the agreement as guarantor for Tekcapital Europe, Ltd. on the full amount of the loan.

On July 23, 2026, Tekcapital Europe, Ltd. borrowed $250,000 under this agreement, and on September 15, 2026, Tekcapital Europe, Ltd. borrowed an additional $50,000 under this agreement. The $300,000 total outstanding principal balance of this loan, plus accrued interest receivable of $5,962, was included within Due from Tekcapital and Affiliates in the accompanying condensed balance sheet as of September 30, 2026.

The Company recognized interest income on loans to Tekcapital Europe, Ltd. of $5,962 and $11,288 for the three and nine months ended September 30, 2026, respectively. The Company recognizedno such interest income for the three and nine months ended September 30, 2025.

Lucyd Ltd. Financing Agreement

On March 1, 2024, the Company entered into an agreement with Lucyd Ltd. pursuant to which the Company could receive up to $1,250,000 either (a) in services provided by Lucyd Ltd. to the Company or (b) in cash upon request of funds by the Company. Once funds or services are received by the Company, it will issue a convertible note to Lucyd Ltd. that will bear interest at 10% per annum and include the option to convert the note into shares of the Company’s common stock upon certain defined events. Upon issuance, the convertible note would have had a maturity date of September 1, 2025 (subsequently amended, as described below), at which time all outstanding principal and accrued interest, if any, would be payable in full in cash or in the Company’s common stock. The Company would be able to prepay the convertible notes at any time with the written consent of Lucyd Ltd.

On March 1, 2025, the Company and Lucyd Ltd. entered into an amendment of this agreement, such that upon issuance, the convertible note would have a maturity date of September 1, 2026. There were no other changes to the terms and provisions of the agreement.

On March 11, 2026, the Company and Lucyd Ltd. entered into a further amendment of this agreement, such that upon issuance, the convertible note will have a maturity date of September 1, 2027. There were no other changes to the terms and provisions of the agreement.

The Company has not borrowed any amounts under this agreement with Lucyd Ltd.

NOTE 9 –COMMITMENTS AND CONTINGENCIES

License Agreements

In 2022 and 2023, we entered into various multi-year license agreements which grant us the right to sell certain branded smart eyewear, including the Nautica, Eddie Bauer, and Reebok brands worldwide. These agreements require us to pay royalties based on a percentage of net retail and wholesale sales during the period of the license, and also require guaranteed minimum royalty payments. The agreements have base terms of 10 years but are cancellable at the option of the Company during the fifth year (i.e., 2027 and 2028).

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

If the Company were to exercise its cancellation rights during the fifth year of each agreement, the aggregate future minimum payments due under these license agreements would be reduced to $3,428,000.

The Company recognized $208,500 and $124,273 of expense related to all license agreements for the three months ended September 30, 2026 and 2025, respectively. The Company recognized $643,539 and $404,243 of expense related to all license agreements for the nine months ended September 30, 2026 and 2025, respectively.

Long-Term Payment Plan for Information Technology System and Services

The Company entered into a long-term payment plan agreement with Oracle for the payment of costs related to the implementation of the Company’s new ERP system (which went live in April 2025) and related cloud services. Under this agreement, the Company is obligated to make payments of $4,035 per month through July 2027. As of September 30, 2026, the Company’s remaining obligation under this arrangement was $40,353, which is included within Accounts payable and accrued expenses in the accompanying condensed balance sheet.

Leases

Our executive offices are located at 11900 Biscayne Blvd., Suite 630, Miami, Florida 33181. Our executive offices are provided to us by a related party (see Note 8). We consider our current office space adequate for our current operations.

Other Commitments

See related party management services agreement discussed in Note 8.

Legal Matters

We are not currently the subject of any material pending legal proceedings; however, we may from time to time become a party to various legal proceedings arising in the ordinary course of business.

International Trade and Tariffs

Beginning in April 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 developments negatively impacted our results of operations during the year ended December 31, 2025. Management has taken various actions to mitigate the negative impacts of tariffs on our financial results; these actions have been largely successful thus far. However, the current international geopolitical climate related to tariffs is fluid and continues to evolve, and we cannot provide any assurance that actions that have been taken by management or that may be taken by management in the future will be successful in future periods. As such, we cannot predict with certainty the ultimate impacts that international trade and tariff developments may have on our business and financial results in the future, but those impacts could be material.

In February 2026, the U.S. Supreme Court issued a ruling invalidating some of the tariffs imposed by the U.S. government. During the three and nine months ended September 30, 2026, the Company received refunds related to certain tariffs previously paid by the Company totaling $124,854; such amounts were recognized as a reduction to cost of goods sold in the Company’s condensed financial statements.

The Company may be eligible to file additional claims for tariff refunds in the future; however, there is significant uncertainty as to the timing and amount that will ultimately be received from such claims. Accordingly, no amounts related to such claims for potential future refunds have been recognized in the Company’s condensed financial statements for the three and nine months ended September 30, 2026.

NOTE 10 –STOCK-BASED COMPENSATION

Stock Options

Summary information regarding stock options as of and during the nine months ended September 30, 2026 is as follows:

During the three months ended September 30, 2026 and 2025, we recognized $0 and $31,815 of expense, respectively, related to stock options. During the nine months ended September 30, 2026 and 2025, we recognized $3,356 and $100,272 of expense, respectively, related to stock options. As of September 30, 2026, the aggregate intrinsic value for all options outstanding as well as all options exercisable was zero, and remaining unrecognized stock option expense was zero.

Restricted Stock Units

Summary information regarding restricted stock units as of and during the nine months ended September 30, 2026 is as follows:

During the three months ended September 30, 2026 and 2025, we recognized $198,325 and $137,489 of expense, respectively, related to restricted stock units. During the nine months ended September 30, 2026 and 2025, we recognized $594,286 and $411,321 of expense, respectively, related to restricted stock units. As of September 30, 2026, unrecognized restricted stock unit expense of approximately $890,000 remains to be recognized over the next 1.33 years.

Stock Grants

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 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 was recognized as expense on a straight-line basis from April 1, 2025 through March 31, 2026. We recognized $7,500 of expense for the nine months ended September 30, 2026, relative to this stock grant.

Effective May 6, 2026, we issued to a nonemployee individual 2,000 shares of our common stock. The value of the consideration transferred, measured using the fair value of our common stock at the date of issuance, was $2,040, and was fully recognized as an expense during the nine months ended September 30, 2026.

NOTE 11 –STOCKHOLDERS’ EQUITY

At-the-Market Offerings

The Company entered into an at-the-market offering agreement with H.C. Wainwright & Co., LLC, as sales agent, relating to the sale of common stock. In January 2026, the Company sold 820,800 shares of common stock and received approximately $1,458,000 of gross proceeds before deducting sales agent commissions and offering expenses. The net proceeds received by the Company from these transactions amounted to approximately $1,411,000, and will be used for working capital and general corporate purposes.

Warrants

On July 8, 2026, the Company entered into an inducement letter agreement with a holder of certain of its existing Series G and Series I warrants to purchase an aggregate of 2,200,544 shares of the Company’s common stock, which were originally issued to the holder on April 14, 2025 and June 24, 2025, each having an original exercise price of $2.60 per share.

Pursuant to the inducement letter agreement, the holder agreed to exercise its existing Series G and Series I warrants for cash at a reduced exercise price of $1.35 per share in consideration of the Company’s agreement to issue new unregistered Series J warrants to purchase up to an aggregate of 6,601,632 shares of common stock. The Series J Warrants have an exercise price of $1.10 per share, are exercisable immediately upon issuance, and have a term of exercise equal to 24 months following the effective date of the Resale Registration Statement (as defined in the applicable agreement), which was subsequently filed by the Company and became effective August 7, 2026.

This transaction closed on July 9, 2026, and the gross proceeds to the Company were approximately $2,971,000 of gross proceeds prior to deducting placement agent fees and offering expenses. The net proceeds received by the Company from this transaction amounted to approximately $2,562,000, which the Company intends to use for working capital and general corporate purposes

Also, during the nine months ended September 30, 2026, the following warrants expired unexercised:

NOTE 12 –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 and common stock warrants were excluded from the earnings per share calculation due to their anti-dilutive effect.

The calculation of net earnings/(loss) per share for the three and nine months ended September 30, 2026 and 2025 is as follows:

NOTE 13 –SUBSEQUENT EVENTS

International Trade and Tariffs

In October 2026, the Company filed additional claims for tariff refunds; however, significant uncertainty remains as to the timing and amount that will ultimately be received from such claims. Accordingly, no amounts related to such claims for potential future refunds have been recognized in the Company’s condensed financial statements for the three and nine months ended September 30, 2026.

2026 Loan to Tekcapital Europe, Ltd.

In October 2026, Tekcapital Europe, Ltd. repaid in full all of the outstanding balance of the loan that the Company had made to Tekcapital. The total amount paid to the Company on or before October 21, 2026 was $307,270, of which $300,000 represented the principal amount and $7,270 represented accrued interest. No amounts remain outstanding or payable to us under this agreement.

Extension of Lucyd Ltd. Financing Agreement

On October 23, 2026, the Company and Lucyd Ltd. entered into an amendment of the financing agreement originally entered into on March 1, 2024 and previously amended on March 1, 2025 and March 11, 2026 (see Note 8 for details), such that upon issuance, the convertible note will have a maturity date of April 30, 2028. The amendment also gives the Company an irrevocable right to draw down up to $1,250,000, funded within ten business days of each request, and limits conversions to 19.99% of the Company’s common stock outstanding on the date of the amendment, and the holding of Lucyd Ltd. and its affiliates to 19.99%, in each case unless stockholder approval is obtained. The principal amount, the 10% interest rate, and the conversion events are unchanged, and no fee is payable. The Company has not borrowed any amounts under this agreement

Nasdaq Minimum Bid Price Notification

On October 9, 2026, the Company received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market stating that the Company is not in compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price of its common stock had been below $1.00 per share for 30 consecutive business days. The Company has been provided 180 calendar days, or until April 7, 2027, to regain compliance. At the Company’s annual meeting of stockholders scheduled for November 16, 2026, stockholders will vote on a proposal to authorize the Board of Directors to effect a reverse stock split of the Company’s common stock at a ratio of between 1-for-2 and 1-for-12. See Part II, Item 1A of this Form 10-Q for further information.

Restricted Stock Unit Awards

On October 29, 2026, the Company awarded an aggregate of 430,000 restricted stock units to its employees (360,000 units to the Company’s officers and management, and 70,000 units to non-management employees). Each of these awards shall vest in eight (8) equal installments on April 2 and August 19 of each year, commencing April 2, 2027 and ending August 19, 2030.

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