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What changed in Innovative Eyewear Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Innovative Eyewear Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+385 added−383 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-24)

Top changes in Innovative Eyewear Inc's 2023 10-K

385 paragraphs added · 383 removed · 251 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

102 edited+60 added−47 removed40 unchanged
Biggest changeThe Company will seek to file new IP to protect new styles and features of its smart eyewear as they are introduced. 8 Our current U.S. and foreign patent portfolio is as listed below: App/Patent Number Title Country Filing Date Status Grant Date 10,908,419 Smartglasses and Methods and Systems for Using Artificial Intelligence to Control Mobile Devices Used for Displaying and Presenting Tasks and Applications and Enhancing Presentation and Display of Augmented Reality Information US June 28, 2018 Issued February 2, 2021 D899,493 Smart Glasses US March 22, 2019 Issued October 20, 2020 D900,203 Smart Glasses US March 22, 2019 Issued October 27, 2020 D899,494 Smart Glasses US March 22, 2019 Issued October 20, 2020 D899,495 Smart Glasses US March 22, 2019 Issued October 20, 2020 D899,496 Smart Glasses US March 22, 2019 Issued October 20, 2020 D900,204 Smart Glasses US March 22, 2019 Issued October 27, 2020 D900,205 Smart Glasses US March 22, 2019 Issued October 27, 2020 D900,920 Smart Glasses US March 22, 2019 Issued November 3, 2020 D900,206 Smart Glasses US March 22, 2019 Issued October 27, 2020 D899,497 Smart Glasses US March 22, 2019 Issued October 20, 2020 D899,498 Smart Glasses US March 22, 2019 Issued October 20, 2020 D899,499 Smart Glasses US March 22, 2019 Issued October 20, 2020 D899,500 Smart Glasses US March 22, 2019 Issued October 20, 2020 9 D954,135 Round Smartglasses Having Flat Connector Hinges US December 12, 2019 Issued June 7, 2022 D958,234 Round Smartglasses Having Pivot Connector Hinges US December 12, 2019 Issued July 19, 2022 D955,467 Sport Smartglasses Having Flat Connector Hinges US December 12, 2019 Issued June 21, 2022 D954,136 Smartglasses Having Pivot Connector Hinges US December 12, 2019 Issued June 7, 2022 62/941,466 Wireless Smartglasses with Quick Connect Front Frames US November 27, 2019 Non-Provisional Application filed on November 25, 2020; U.S.
Biggest changeApp/Patent Number Title Country Filing Date Status Grant Date 10,908,419 Smartglasses and Methods and Systems for Using Artificial Intelligence to Control Mobile Devices Used for Displaying and Presenting Tasks and Applications and Enhancing Presentation and Display of Augmented Reality Information U.S. June 28, 2018 Issued February 2, 2021 D899,493 Smart Glasses U.S.
We were founded by Lucyd Ltd., the inventor and licensor of the technology that our products are based upon which is a portfolio company of Tekcapital Europe Ltd. (“Tekcapital”). Tekcapital is a U.K. based university intellectual property accelerator. Tekcapital builds portfolio companies around new technologies.
We were founded by Lucyd Ltd., the inventor and licensor of the technology that our products are based upon, which is a portfolio company of Tekcapital Europe Ltd. (“Tekcapital”). Tekcapital is a U.K. based university intellectual property accelerator which builds portfolio companies around new technologies.
We then subject these rendered images for focus group review, to determine which designs we should move to the prototype development stage. Pre-production prototypes are developed by our factories in China to our specifications. Our factories source components for the smart eyewear in China including plastic and titanium for the frames, electronic components, speakers, microphones and batteries.
We then subject these rendered images to focus group review, to determine which designs we should move to the prototype development stage. Pre-production prototypes are developed by our factories in China, to our specifications. Our factories source components for the smart eyewear in China, including plastic and titanium for the frames, electronic components, speakers, microphones, and batteries.
Users will also be rewarded Gems for their engagement with ads on the platform, creating a positive feedback loop that rewards app engagement with premium content and experiences. 15 ● Command Tokens — Items that can be spent to create new custom voice assistant commands (based on Vyrb’s Voice Command Creation Interface). ● Mega-Tag Tokens — Items that can expand the number of mega-tags available to the user (mega-tags are a unique Vyrb feature, they are automatically applied hashtags that make a user’s posts more discoverable to others).
Users will also be rewarded Gems for their engagement with ads on the platform, creating a positive feedback loop that rewards app engagement with premium content and experiences. ● Command Tokens — Items that can be spent to create new custom voice assistant commands (based on Vyrb’s Voice Command Creation Interface). ● Mega-Tag Tokens — Items that can expand the number of mega-tags available to the user (mega-tags are a unique Vyrb feature, they are automatically applied hashtags that make a user’s posts more discoverable to others).
All packaging is designed in Miami and fabricated in China. Once completed, our products are tested in the United States, to assess functionality, fit and finish. Production orders are placed and fabricated in China based on anticipated demand, whereupon they undergo a rigorous thirteen-point third party product inspection process. The inspection is conducted on 100% of our manufactured products.
All packaging is designed in Miami and fabricated in China. Once completed, our products are tested in the United States, to assess functionality, fit, and finish. Production orders are placed and fabricated in China based on anticipated demand, whereupon they undergo a rigorous thirteen-point third-party product inspection process. This inspection is conducted on 100% of our manufactured products.
Relevant websites domain names including Lucyd.co, Lucyd.net, Lucyd.eu. 8. All supply and endorsement agreements. 9. All current inventory as of the execution date of license. 12 10. All social media accounts under the Lucyd name, including, but not limited to: Twitter, Facebook and Instagram. 11. All advertising material and trade show displays, brochures and related materials.
Relevant websites domain names including Lucyd.co, Lucyd.net, Lucyd.eu. 8. All supply and endorsement agreements. 9. All current inventory as of the execution date of license. 10. All social media accounts under the Lucyd name, including, but not limited to: Twitter, Facebook and Instagram. 11. All advertising material and trade show displays, brochures and related materials.
Independent Eyewear Stores The core of our B2B business is formed by our relationship with numerous eyewear store retailers across the United States and Canada, which provide Lucyd Lyte frames directly to their optical customers. Many of these retail stores have placed multiple stocking orders since launching our wholesale business in June 2021.
Independent Eyewear Stores The core of our B2B business is formed by our relationship with numerous eyewear store retailers across the United States and Canada, which provide Lucyd Lyte frames directly to their optical customers. Many of these retail stores have placed multiple stocking orders since launching our wholesale business in 2021.
“Send $___ to (contact)”: this command allows our user to send money to a contact via Venmo or Apple Pay. Follow the digital assistant’s prompts to confirm. 5. “Check my messages”: this command reads out our user’s latest incoming text messages and offers a prompt to reply to each. Close out the digital assistant to end the readout. 6.
“Send $___ to (contact)”: this command allows the user to send money to a contact via Venmo or Apple Pay. Follow the digital assistant’s prompts to confirm. 5. “Check my messages”: this command reads out the user’s latest incoming text messages and offers a prompt to reply to each. Close out the digital assistant to end the readout. 6.
All Lucyd logos such as, but not limited to: Lucyd ® word mark, Lucyd Hexagon, Upgrade Your Eyewear ® slogan and the Vyrb ® trademark. 5. All Lucyd company developed software and any new software developed by Innovative Eyewear, utilizing the Lucyd software, will be owned by Innovative Eyewear. 6. Lucyd Store portals through Shopify, Amazon and Walmart. 7.
All Lucyd logos such as, but not limited to: Lucyd ® word mark, Lucyd Hexagon, Upgrade Your Eyewear ® slogan and the Vyrb ® trademark. 5. All Lucyd company developed software and any new software developed by Innovative Eyewear, utilizing the Lucyd software, will be owned by Innovative Eyewear. 16 6. Lucyd Store portals through Shopify, Amazon and Walmart. 7.
The Shopify affiliate program enables Lucyd brand enthusiasts to get a financial reward for sharing the brand, and operates on similar terms as the Shareasale program where we provide a commission rate in exchange for converting web traffic. Retail Channels 1.
The Shopify affiliate program enables Lucyd brand enthusiasts to get a financial reward for sharing the brand, and operates on similar terms as the Shareasale program where we provide a commission rate in exchange for converting web traffic. 8 Retail Channels 1.
On March 26, 2020, we converted from a Florida limited liability company into a Florida corporation. Our Product In January 2020, we introduced our first beta product and began market testing. In January 2021, we officially launched our first commercial product, Lucyd Lyte ® (“Lucyd Lyte”).
On March 26, 2020, we converted from a Florida limited liability company into a Florida corporation. Our Products In January 2020, we introduced our first beta product and began market testing. In January 2021, we officially launched our first commercial product, Lucyd Lyte ® (“Lucyd Lyte”).
“Send a voice message to (contact)”: this command begins the recording of an audio message to be sent to named contact. 2. “Send a text to (contact)”: begins recording of a speech-to-text message to be sent by SMS to named contact. 3. “Call (contact)”: speed-dials the named contact. 4.
“Send a voice message to (contact)”: this command begins the recording of an audio message to be sent to named contact. 2. “Send a text to (contact)”: begins recording of a speech-to-text message to be sent by SMS to named contact. 3. “Call (contact)”: speed-dials the named contact. 1 4.
At just 1.0-1.45 ounces, our eyewear has a feather-light fit, suitable for all day vision correction or sun protection (traditional glasses weigh about 1 ounce). This is especially important while on the go. Our 1.0 ounce titanium aviators are among the lightest smart eyewear ever made. Long Battery Life .
At just 1.0 - 1.5 ounces, our eyewear has a feather-light fit, suitable for all day vision correction or sun protection (traditional glasses weigh about 1 ounce). This is especially important while on the go. Our 1.0 ounce titanium aviators are among the lightest smart eyewear ever made. Long Battery Life .
A goal of our products is to free our customers from other technologies. As such, we are designing Vyrb with a transparent, voice-centric interface in mind, so that as soon as our customers can say “Ok Google,” they are connected to a world of engaging audio content and have the ability to create audio posts and messages.
A goal of our products is to free our customers from other technologies. As such, we are designing Vyrb with a transparent, voice-centric interface, so that as soon as our customers can say “OK Google,” they are connected to a world of engaging audio content and have the ability to create audio posts and messages.
We were founded by Lucyd Ltd., the inventor and licensor of the technology that our products are based upon, which is a portfolio company of Tekcapital, our majority stockholder. The License Agreement is a royalty-free, fully paid up, perpetual license, for the exclusive use of the following assets: 1.
We were founded by Lucyd Ltd., the inventor and licensor of the technology that our products are based upon, which is a portfolio company of Tekcapital, our largest stockholder. The License Agreement is a royalty-free, fully paid up, perpetual license, for the exclusive use of the following assets: 1.
Our frame fronts are made with what we believe are high quality optical materials to ensure easy lens fitting by any optician. Customizable Product Offering . There are 70 lens types available for Lucyd Lyte, making it the most customizable smart eyewear in the world.
Our frame fronts are made with what we believe are high quality optical materials to ensure easy lens fitting by any optician. Customizable Product Offering . There are 80+ lens types available for Lucyd Lyte, making it the most customizable smart eyewear in the world.
The Manufacturer’s Suggested Retail Price (“MSRP”) for Lucyd Lyte 2.0 eyewear starts at $199, with advanced options and customizations available at higher price points, which are at the discretion of the customer. A basic prescription lens upgrade is offered for $40.
The Manufacturer’s Suggested Retail Price (“MSRP”) for Lucyd Lyte 2.0 eyewear starts at $149, with advanced options and customizations available at higher price points, which are at the discretion of the customer. A basic prescription lens upgrade is offered for $40.
By comparison, most of our U.S.-based competitors offer products that are more expensive, starting at approximately $249 or higher, with higher costs to add prescriptions. Quality . All of our frames can be outfitted in-house or by optical resellers with any combination of prescription, sunglass, readers and blue light formats.
By comparison, most of our U.S.-based competitors offer products that are more expensive, starting at approximately $249 or higher, with higher costs to add prescriptions. Quality . All of our frames can be outfitted in-house or by optical resellers with any combination of prescription, sunglass, reading, and blue light lens formats.
Our Lucyd Lyte line of smart eyewear enables prescription and sunglass wearers to interact with digital assistants and social media without having to take their eyes off the road and are nearly handsfree, thereby improving the safety and convenience of taking calls, listening to music and audibly accessing digital information on the go.
Our Lucyd Lyte line of smart eyewear enables prescription and sunglass wearers to interact with digital assistants and social media without having to take their eyes off the road and are nearly hands-free, thereby improving the safety and convenience of taking calls, listening to music, and audibly accessing digital information on the go.
We have an experienced board of directors with more than 80 years of combined experience in the eyewear industry, and a management team with substantial experience in software and electronics engineering and operating eyewear and technology companies.
We have an experienced board of directors with more than 100 years of combined experience in the eyewear industry, and a management team with substantial experience in software and electronics engineering and operating eyewear and technology companies.
Among these promotional activities were single-item B2C discounts, heavy B2B discounts on large bulk orders, a large number of free sample units provided to media, influencers and reviewers, and significant spending on upsells, promo items, and merchandising materials which were in many cases given to B2C and B2B customers for free.
Among these promotional activities were various B2C discounts, heavy B2B discounts on large bulk orders, a large number of free sample units provided to media, influencers, and reviewers, and significant spending on upsells, promo items, and merchandising materials which were in many cases given to B2C and B2B customers for free.
The synergistic fusion of these three markets enables, in our view, an opportunity to create a completely new experience of connected eyewear, which smoothly delivers the functionality of both optical glasses and headphones, eliminating the need for either on its own.
The synergistic fusion of these three markets (eyewear, digital assistants, and hearables) enables, in our view, an opportunity to create a completely new experience of connected eyewear, which smoothly delivers the functionality of both optical glasses and headphones, eliminating the need for either on its own.
“Check my mailbox”: this command announces the number of unread emails, and reads them out with a prompt to continue after each one. In the prompt after each one, our customers can tell their digital assistant “Reply” and dictate an email response to the previous email. 7.
“Check my mailbox”: this command announces the number of unread emails, and reads them out with a prompt to continue after each one. In the prompt after each one, the user can tell their digital assistant “Reply” and dictate an email response to the previous email. 7.
Nevertheless, several orthodoxies of the eyewear industry still hold, namely: if you want to sell a lot of eyewear, we believe it should be attractive, stylish, comfortable (e.g., lightweight, which we believe to be approximately 1oz) and cost roughly the same as traditional eyewear.
Nevertheless, several orthodoxies of the eyewear industry still hold, namely: if you want to sell a lot of eyewear, we believe it should be attractive, stylish, comfortable (e.g., lightweight, which we believe to be approximately one ounce), and cost roughly the same as traditional eyewear.
Building on our early successes of driving traffic to Lucyd.co, the website run by a subsidiary of our majority stockholder, from Facebook and TikTok, we deploy high quality content on multiple platforms to continuously keep customers engaged and drive brand awareness. We have two levels of margins, one for business to consumers (“B2C”), and one for business to business (“B2B”).
Building on our early successes of driving traffic to Lucyd.co, the website run by a subsidiary of our largest stockholder, from Facebook, Instagram, and TikTok, we deploy high quality content on multiple platforms to continuously keep customers engaged and drive brand awareness. 7 We have two levels of margins, one for business to consumers (“B2C”), and one for business to business (“B2B”).
As a company still in an early growth stage, we are investing heavily in our B2C and B2B efforts to capture as much market share as possible, which included in fiscal year 2022 several activities which impacted the gross deficit.
As a company still in an early growth stage, we are investing heavily in our B2C and B2B efforts to capture as much market share as possible, which included in fiscal years 2022 and 2023 several activities which impacted the gross deficit.
In 2021, pedestrian deaths were at a 40-year high according to the Governors Highway Safety Association, and experts believe smartphones were partially to blame.
In 2022, pedestrian deaths were at a 40-year high according to the Governors Highway Safety Association, and experts believe smartphones were partially to blame.
While we believe that our products are hybrid of eyeglasses and audio technology, which gives us a unique product that provides us with competitive advantages, we may face competition from many different entities now and in the future. As of now, we face competition from the following products: ● Bose Corporation’s Bose Frames .
While we believe that our products are a hybrid of eyeglasses and Bluetooth audio technology, which gives us a unique product that provides us with competitive advantages, we may face competition from many different entities now and in the future. Currently, we face competition from the following products: 5 ● Bose Corporation’s Bose Frames .
At or soon after this time, advertising and monetization features will be introduced into the app to make it a new revenue stream for our business. 14 We believe that Vyrb will enhance the utility of current and future Lucyd Lyte glasses by enabling users to be untethered from their smartphones, yet still be able to hear and make social media posts.
At or soon after this time, advertising and monetization features will be introduced into the app to make it a new revenue stream for our business. Vyrb enhances the utility of current and future Lucyd Lyte glasses by enabling users to be untethered from their smartphones, yet still be able to hear and make social media posts.
To support our resellers, we offer a strong co-op marketing program that includes free store display materials. As part of this strategy, we have launched a digital try-on kiosk for our resellers to help educate their in-store customers about Lucyd eyewear, and increase our brand’s physical presence in the optical industry.
To support our resellers, we offer a strong co-op marketing program that includes free store display materials. As part of this strategy, we provide digital try-on kiosks to our resellers to help educate their in-store customers about Lucyd eyewear and increase our brand’s physical presence in the optical industry.
The Vyrb app is contemplated to feature an in-app item shop with a number of fun and useful upgrades, such as: ● Loot Boxes — Random packs of multiple upgrade items, a best-selling in-app purchase format frequently deployed in online video games. ● Skins — Items that alter the appearance of the app to help personalize it to the user’s preferences, such as Dark Mode. ● Accents — Items that change the accent used by the app’s text-to-speech engine, which is employed frequently to vocalize textual content. ● Metal Mics — Items that lengthen the maximum allowable verbal post length and image/video sizes per post for users. ● Post Embellishments — Items that can be used to animate posts in the feed to make them more prominent. ● Sound FX Packs — Items that increase the number of audio emojis (Sound FX) available to the user, livening up their posts. ● Ad Tokens — Items that can be spent to expand the reach of a feed post to a larger audience. ● Vyrb Gold — A premium, monthly subscription to the app that blocks all ads and brings additional benefits like a more prominent username. ● Vyrb Gems — In-app currency that can be spent to tip a user’s favorite content creators, to buy premium paywalled content and to buy certain other in-app purchases.
We believe social interaction via smart eyewear will be instrumental in bringing new, youthful customers to our company. 18 The Product and Market for Vyrb The Vyrb app is contemplated to feature an in-app item shop with a number of fun and useful upgrades, such as: ● Loot Boxes — Random packs of multiple upgrade items, a best-selling in-app purchase format frequently deployed in online video games. ● Skins — Items that alter the appearance of the app to help personalize it to the user’s preferences, such as Dark Mode. ● Accents — Items that change the accent used by the app’s text-to-speech engine, which is employed frequently to vocalize textual content. ● Metal Mics — Items that lengthen the maximum allowable verbal post length and image/video sizes per post for users. ● Post Embellishments — Items that can be used to animate posts in the feed to make them more prominent. ● Sound FX Packs — Items that increase the number of audio emojis (Sound FX) available to the user, livening up their posts. ● Ad Tokens — Items that can be spent to expand the reach of a feed post to a larger audience. ● Vyrb Gold — A premium, monthly subscription to the app that blocks all ads and brings additional benefits like a more prominent username. ● Vyrb Gems — In-app currency that can be spent to tip a user’s favorite content creators, to buy premium paywalled content and to buy certain other in-app purchases.
Within six months of the launch of Lucyd Lyte, several optical stores in the United States and Canada have on- boarded the product and we have had discussions with several other large eyewear chains (by number of locations) regarding onboarding our product.
Within six months of the launch of Lucyd Lyte, several optical stores in the United States and Canada have on- boarded the product and we have had discussions with several other large eyewear chains regarding on-boarding our product.
Walmart.com, BestBuy.com, DicksSportingGoods.com, Brookstone.com, eBay and Touch of Modern In addition to our key online sales channel through Lucyd.co, our products are also sold on Walmart.com, BestBuy.com, DicksSportingGoods.com, Brookstone.com, and eBay. 5 4.
Walmart.com, BestBuy.com, DicksSportingGoods.com, Brookstone.com, and eBay In addition to our key online sales channel through Lucyd.co, our products are also sold on Walmart.com, BestBuy.com, DicksSportingGoods.com, Brookstone.com, and eBay. 4.
In the fourth quarter of 2022, we introduced key features in the Vyrb app, including live broadcasts for up to 100 users in one digital “room”, and the ability to upload external audio content into Vyrb, enabling longstanding content creators to import their existing libraries swiftly into the platform.
In 2022, we introduced key features in the Vyrb app, including live broadcasts for up to 100 users in one digital “room,” and the ability to upload external audio content into Vyrb, enabling longstanding content creators to import their existing libraries swiftly into the platform.
Several developments towards this end include developing our smart frames in two temple lengths, with a third length planned for 2023; the introduction of smart eyewear specifically for women and youth, which are typically missing from similar offerings; and the introduction of smart eyewear for adults with petite or narrow faces.
Several developments towards this end include developing our smart frames in multiple temple lengths; the introduction of smart eyewear specifically for women and youth, which are typically missing from similar offerings; and the introduction of smart eyewear for adults with petite or narrow faces.
However, through Amazon, we are still able to offer color lens sunglass variants and blue light blocker pairs, in addition to our charging dock accessory item. We are constantly testing traffic flow to Lucyd.co vs. Amazon to ensure our online ad spend is fully optimized. 3.
However, through Amazon, we are still able to offer color lens sunglass variants and blue light blocker pairs, in addition to our charging dock accessory item. We continually monitor and test traffic flow to Lucyd.co versus Amazon.com to ensure our online ad spend is fully optimized. 3.
Also in the fourth quarter of 2022, we completed development of core audio eyewear product improvements, such as upgrading all frames to quadraphonic sound, which have been rolled out across all new eyewear models as of January 2023. Our Mission Our mission is to Upgrade Your Eyewear ® .
In the fourth quarter of 2022, we completed development of core audio eyewear product improvements, such as upgrading all frames to quadraphonic sound, which have been rolled out across all of our new eyewear models.
The majority of our sales have been through e-commerce with current gross margins of approximately 75%; retail sales have gross margins of approximately 40%. Lens upgrades sold on Lucyd.co have a standardized profit margin of approximately 35%.
The majority of our sales have been through e-commerce with current gross margins of approximately 69%; wholesale sales have gross margins of approximately 32%. Lens upgrades sold on Lucyd.co have a standardized profit margin of approximately 35%.
This is a camera-focused smart eyewear product and, in our view, not a direct competitor as to its style, weight, pricing and suitability for all-day wear, as compared with our products; however, Snapchat Spectacles may introduce further entries in the space that may directly compete with Lucyd Lyte.
This is a camera-focused smart eyewear product and, in our view, not a direct competitor with our products due to its style, weight, pricing, and suitability for all-day wear. However, Snapchat Spectacles may introduce further entries in the space that may directly compete with Lucyd Lyte. Snapchat Spectacles version 3 have a list price of $380.
Recent data from the Governors Highway Safety Association indicates that from 2010 to 2020, the number of pedestrian deaths rose by 54%, while all other traffic deaths increased by 13% (Pedestrian Traffic Fatalities by State: 2021 Preliminary Data – (https://www.ghsa.org/resources/Pedestrians22).
Recent data from the Governors Highway Safety Association indicates that from 2010 to 2021, the number of pedestrian deaths rose by 77%, while all other traffic deaths increased by 25% (Pedestrian Traffic Fatalities by State: 2022 Preliminary Data – (https://www.ghsa.org/resources/Pedestrians23).
Furthermore, through the quick and easy touch controls on the Lucyd Lyte, the wearer can perform many tasks that they would normally pull out their phone for, untethering the eyes of the user from their smartphones throughout the day and enabling them to remain more visually vigilant and aware of the traffic around them. 3 Affordable Price Point .
Furthermore, through the quick and easy touch controls on Lucyd Lyte glasses, the wearer can perform many tasks for which they would normally pull out their phone – thus our glasses help untether the eyes of the user from their smartphones throughout the day and enable them to remain more visually vigilant and aware of the traffic around them. 6 Affordable Price Point .
Our Competitive Strengths A Unique Solution to a Common Problem . While immensely useful, smartphones can present a safety hazard to motorists, pedestrians and cyclists because smartphones can distract people from the task or activity at hand.
Our products may be rendered obsolete in the face of competition. Our Competitive Strengths A Unique Solution to a Common Problem . While immensely useful, smartphones can present a safety hazard to motorists, pedestrians, and cyclists because smartphones can distract people from the task or activity at hand.
Since the launch of Lucyd Lyte, we witnessed interest and demand from customers throughout the United States and have sold thousands of our smart glasses.
Say “Read my Notes” to play back. Since the launch of Lucyd Lyte, we witnessed interest and demand from customers throughout the United States and have sold thousands of our smart glasses.
Snapchat Spectacles Version 3 have a list price of $380. ● Ray-Ban Stories Glasses . Developed in association with Facebook, are a camera-focused smart eyewear product, and despite the fact they are available in prescription, in our view not a direct competitor; Ray-Ban may, however, introduce further entries in the space that may directly compete with Lucyd Lyte.
Developed in association with Facebook, these are a camera-focused smart eyewear product, and despite the fact they are available in prescription, in our view not a direct competitor. Ray-Ban may, however, introduce further entries in the space that may directly compete with Lucyd Lyte.
All of our products are designed in Miami, manufactured in China, and sold through e-commerce, channels, including on our website (Lucyd.co), BestBuy.com, DicksSportingGoods.com and Amazon.com, or sold by over 200 optical and sporting goods retailers.
All of our products are designed in Miami, manufactured in China, and sold through e-commerce channels, including on our website (Lucyd.co), BestBuy.com, DicksSportingGoods.com, Brookstone.com, and Amazon.com, and sold by over 300 optical and sporting goods retailers. Additionally, we are pursuing online and in-store big box retailers, and in-store and online specialty retailers.
For all new intellectual property, Innovative Eyewear will own and control it and be responsible for all prosecution and maintenance costs. The Addendum also confirms that Innovative Eyewear issued Lucyd Ltd. 3,750,000 shares of its common stock as consideration for the license. Sales Representation Agreement On March 4, 2021, we entered into a commission-only, sale representation agreement with D.
For all new intellectual property, Innovative Eyewear will own and control it and be responsible for all prosecution and maintenance costs. The Addendum also confirms that Innovative Eyewear issued Lucyd Ltd. 3,750,000 shares of its common stock as consideration for the license.
From the beginning, Innovative Eyewear has supported those in need through its donation of glasses frames to New Eyes ( https://new-eyes.org/about-us ), a charity dedicated to helping children and adults in need of eyewear.
We are also very active in supporting the various communities we serve through donations and support. From the beginning, Innovative Eyewear has supported those in need through our donation of glasses frames to New Eyes ( https://new-eyes.org/about-us ), a charity dedicated to helping children and adults in need of eyewear.
Additionally, the Lucyd website ships worldwide and is used to provide a quick and smooth buying experience. 2. Amazon Amazon.com/lucyd is our brand shop on Amazon. It drives approximately half of our online sales, but limits the number of variations we can offer on our frames (e.g., prescription lenses are not permitted on Amazon).
Amazon Amazon.com/lucyd is our brand shop on Amazon. It drives approximately half of our online sales, but limits the number of variations we can offer on our frames (e.g., prescription lenses are not permitted on Amazon).
Our Business Strategy When we organized Innovative Eyewear two years ago, there were, in our view, no attractive smart eyewear that addressed the basic consumer need for good looking designer glasses that were stylish, comfortable, lightweight and provided the functionality of hearables, and priced around the same as regular glasses.
We believe that the similarities between smartwatches and smart eyewear compared to their traditional counterparts indicate that the future of eyewear will also be smart . 4 Our Business Strategy When we initially organized Innovative Eyewear four years ago, there was, in our view, no attractive smart eyewear that addressed the basic consumer need for good looking designer glasses that were stylish, comfortable, lightweight, and provided the functionality of hearables, and priced around the same as regular glasses.
To date we have onboarded Chris Clark, a pro golfer, Monique Billings, a WNBA basketball player, and Hadar Adora, an up-and-coming musical artist. We plan to add additional influencers to enhance awareness and sell-through for a number of key demographics. Influencers are a key part of our marketing strategy, as they help our products relate to large, variable audiences.
To date, we have onboarded Chris Clark, a pro golfer; Monique Billings, a WNBA basketball player; Emmanuel Ogbah, an NFL football player; and Hadar Adora, an up-and-coming musical artist. We plan to add additional influencers to enhance awareness and sell-through for a number of key demographics.
We view the integration of Bluetooth technology into the arms of the glasses as one of the key next steps to Upgrade Your Eyewear ® .
We view the integration of Bluetooth technology into the arms of the glasses as one of the key next steps to Upgrade Your Eyewear ® . Our focus therefore is to enhance one of the world’s most important wearables: eyewear.
We also attend major regional eyewear and sporting goods trade shows to build awareness among our potential retail partners. Our influencers To accelerate brand awareness and product sales, we are embarking on an influencer strategy to engage leading figures in sports and the arts, who like and enjoy wearing Lucyd Lyte ® .
Our influencers To accelerate brand awareness and product sales, we are embarking on an influencer strategy to engage leading figures in sports and the arts, who like and enjoy wearing Lucyd Lyte®.
Long form and video content generation are a key focus points for the brand, they allow us to better leverage both emerging and critical smart eyewear narratives through persistent search engine optimization (SEO); increasing our organic brand awareness across the board, in addition to strategic loyalty, influencer and affiliate marketing campaigns.
Long form and video content generation are key focus points for the brand, as they allow us to better leverage both emerging and critical smart eyewear narratives through persistent search engine optimization (SEO), increasing our organic brand awareness across the board, in addition to strategic loyalty, influencer, and affiliate marketing campaigns. 10 Our online marketing strategy is primarily driven by pay-per-click advertisements on mainstream search engines, social media apps, and Amazon and other marketplaces.
We expect that our retail sales will account for the majority of our sales by the end of 2023. E-commerce Channels 1. Company website: Lucyd.co Lucyd.co is our primary e-commerce point of sale.
Our online retail sales accounted for the majority of our sales in 2023. E-commerce Channels 1. Company website: Lucyd.co Lucyd.co is our primary e-commerce point of sale.
To facilitate this, we have been developing Vyrb, our full stack social media application that enables the user to receive and send posts through Lucyd Lyte smart glasses with an individual’s voice.
To facilitate this, we have been developing Vyrb, our full stack social media application that enables the user to receive and send posts through Lucyd Lyte smart glasses with an individual’s voice. The beta application launched in December 2021, and the full release is anticipated for 2024 once additional improvements to the user experience are completed.
We continuously present new models of eyewear to our network of followers to vote on those styles they find most appealing. We view this as community approved design.
We continuously present new models of eyewear to our network of followers to vote on those styles they find most appealing. We view this as community approved design. Competition The smart eyewear industry in which we operate is competitive and subject to changes in practice.
At Innovative Eyewear, we are dedicated to a touch-free interface and untethering our customers eyes from their smartphone screens, through our smart eyewear product.
The combination of hearables and digital assistants provides a transparent, ergonomic interface between the users and their digital lives. At Innovative Eyewear, we are dedicated to a touch-free interface and untethering our customers eyes from their smartphone screens, through our smart eyewear product.
At 12 hours of playback per charge, Lucyd Lyte 2.0 glasses outpace most, if not all, of the competition on battery life. Capital Light Business Model .
At 12 hours of playback per charge, our current product offering of Lucyd eyewear outpaces most, if not all, of the competition on battery life. Capital Light Business Model .
Lucyd Lyte is a perfect fit for the fitness tech and audio product spaces, so athletes and musicians are a natural fit for our brand and the active lifestyles that Lucyd products promote.
Influencers are a key part of our marketing strategy, as they help our products relate to large, variable audiences. Lucyd Lyte is a perfect fit for the fitness tech and audio product spaces, so athletes and musicians are a natural fit for our brand and the active lifestyles that Lucyd products promote.
Not available directly from the manufacturer in prescription, and in only one frame shape. The cost of the Amazon Echo Glasses is higher than Lucyd Lyte. While lightweight like Lucyd Lyte glasses, Amazon Echo Glasses have, in our view, a less fashionable form factor, and the battery life is about half of that of Lucyd Lyte. ● Snapchat Spectacles .
While lightweight like Lucyd Lyte glasses, Amazon Echo Glasses have, in our view, a less fashionable form factor, and the battery life is about half of that of Lucyd Lyte.
Landstrom to act as our commission based, manufacturer’s representative, with the exclusive right to solicit offers on behalf of us to purchase our products in the United States, for the named big box stores. The term of the Representation Agreement is five years. Contract may be terminated for “good cause” with 90 days’ notice by either party.
The Representation Agreement provides for D. Landstrom to act as our commission-based manufacturer’s representative, with the exclusive right to solicit offers on behalf of us to purchase our products in the United States, for the named big box stores.
The site offers the most customization options of any of our sales channels and a full prescription lens lab, offering a total of 70 different lens combinations (21 key lens tints offered in plano, single prescription and progressive bifocal; seven types of reading lenses).
The site offers the most customization options of any of our sales channels and a full prescription lens lab, offering over 80 different lenses (21 key lens tints offered in plano, single prescription and progressive bifocal; seven types of reading lenses). Additionally, the Lucyd website ships worldwide and is used to provide a quick and smooth buying experience. 2.
We believe that Vyrb will effectively leverage multiple successful gamification models from the world of social media to provide a flexible and highly interactive user experience that can potentially draw high-value content creators.
We believe that Vyrb will effectively leverage multiple successful gamification models from the world of social media to provide a flexible and highly interactive user experience that can potentially draw high-value content creators. Employees As of December 31, 2023, we had 11 full time employees, spread over business development, marketing, finance, sales, app design, support and frame design.
In the case of typical livestreaming applications, a functionality Vyrb supports, they are often exorbitant, taking as much as 50% in effective fees on in-app currency transactions.
In the case of typical livestreaming applications, a functionality Vyrb supports, they are often exorbitant, taking as much as 50% in effective fees on in-app currency transactions. 19 Also, we plan for users to be able to charge a fixed price to be able to access particular audio posts.
These are a Bluetooth eyewear product, but in a bulkier form factor and with what we believe to be comparable models at a higher list price ($249 MSRP) than Lucyd Lyte 2.0 ($199). ● Amazon’s Echo Glasses . Another entry in the Bluetooth eyewear space offered at a $249 list price.
These are a Bluetooth eyewear product, but in a bulkier form factor and with what we believe to be comparable audio quality at a higher list price ($249 MSRP) than Lucyd Lyte 2.0 ($149-$199). However, Bose has recently announced plans to withdraw from the smart eyewear market.
No. 18/048,715 n/a 29/815,040 Charging Cradle US November 10, 2021 Pending n/a 207956 Safety Smartglasses Canada November 17, 2021 Pending n/a 207957 Safety Shields Canada November 17, 2021 Pending n/a 2021307950576 Safety Smartglasses China December 2, 2021 Pending n/a ZL 2021307955902 Safety Shields China December 2, 2021 Issued May 3, 2022 63/297,056 Charging Cradle for Smartglasses US January 6, 2022 Non-Provisional Application filed on December 29, 2022; U.S.
November 10, 2021 Pending n/a 63/297,056 Charging Cradle for Smartglasses U.S. January 6, 2022 Non-Provisional Application filed on December 29, 2022; U.S. App. No. 18/147,002 n/a 212589 Charging Cradle Canada May 9, 2022 Pending n/a ZL 2022302715131 Charging Cradle China May 10, 2022 Issued October 21, 2022 18/147,002 Charging Cradle for Smartglasses U.S.
No. 18/147,002 n/a 212589 Charging Cradle Canada May 9, 2022 Pending n/a ZL 2022302715131 Charging Cradle China May 10, 2022 Issued October 21, 2022 18/048,715 Safety Glasses US October 21, 2022 Pending n/a 3180624 Safety Glasses Canada November 1, 2022 Pending n/a 202211367067X Safety Glasses China November 2, 2022 Pending n/a 18/147,002 Charging Cradle for Smartglasses US December 27, 2022 Pending n/a 11 Additionally, we have acquired the exclusive rights to 11 registered trademarks and applications as follows: Trademark Trademark Number Status Jurisdiction LUCYD UK00003258030 Registered UK Lucyd Lens UK00003258093 Registered UK Lucyd Loud UK00003400531 Registered UK Upgrade your eyewear UK00003400579 Registered UK GaaS UK00003451728 Registered UK Vyrb UK00003477240 Registered UK Lyte UK00003526151 Registered UK Upgrade your eyewear Application No. 90/407,646 Application US LUCYD Application No. 90/407,723 Application US Lyte Application No. 90/381051 Application US Vyrb Application No. 90/820713 Application US Material Agreements License Agreement between Innovative Eyewear, Inc. and Lucyd Ltd.
ZL200510067143.5 Radiation Detection System for Eyewear and Other Products China Additionally, we have acquired the exclusive rights to 11 registered trademarks and applications as follows: Trademark Trademark Number Status Jurisdiction LUCYD UK00003258030 Registered UK Lucyd Lens UK00003258093 Registered UK Lucyd Loud UK00003400531 Registered UK Upgrade your eyewear UK00003400579 Registered UK GaaS UK00003451728 Registered UK Vyrb UK00003477240 Registered UK Lyte UK00003526151 Registered UK Upgrade your eyewear Application No. 90/407,646 Application US LUCYD Application No. 90/407,723 Application US Lyte Application No. 90/381051 Application US Vyrb Application No. 90/820713 Application US Material Agreements License Agreement between Innovative Eyewear, Inc. and Lucyd Ltd.
Based on our current discussion with several major optical chains (by store size), we believe at least one major optical chain or national optical buying group will onboard our product line in 2023. 3.
Based on our current discussion with several major optical businesses (by store size), we believe at least one additional major optical chain or national optical buying group will onboard our product line in 2024. However, there can be no assurances that any of these retailers and distributors will sell our products. 3.
This device introduces our products to prospective retail customers and enables them to digitally try-on our line of smart glasses in a touch free manner. We anticipate introducing six styles of Nautica smart eyewear, six to twelve additional styles of Lucyd Lyte glasses, and our first Bluetooth safety glasses in 2023.
This device introduces our products to prospective retail customers and enables them to digitally try-on our line of smart glasses in a touch-free manner. This system was later upgraded in 2023.
Upon termination, commissions of orders procured will extend 180 days beyond termination date. Thus far, the representation has resulted in a successful launch of the Company’s products on BestBuy.com.
The term of the Representation Agreement is five years, and the contract may be terminated for “good cause” with 90 days’ notice by either party. Upon termination, commissions of orders procured will extend 180 days beyond the termination date. Thus far, the Representation Agreement has resulted in a successful launch of the Company’s products on BestBuy.com.
“Find (cuisine type) food nearby”: this command reads through a list of nearby restaurants and their ratings, and prompts our user for directions or to call after each one. 1 8.
“Find (cuisine type) food nearby”: this command reads through a list of nearby restaurants and their ratings, and prompts the user for directions or to call after each one. 8. “Call me an Uber”: this command prompts the user on which type of Uber ride they want, then asks to confirm to send a car to the user’s location. 9.
We plan to add A-list musical talent to the brand in the near future, as well as a host of audio content creators to support the Vyrb experience. Our Market Opportunity According to Statista, the total addressable market for eyewear in the U.S. is projected to be $33.8 billion in 2023.
We plan to add A-list musical talent to the brand in the near future, as well as a host of audio content creators to support the Vyrb experience.
All of our frames are manufactured with prefabricated, ready to wear sunglass or blue light lenses, and are directly shipped to the customer in this state if the customer declines purchasing custom lens upgrades.
For large bulk orders from clients, we are able to order this inventory on demand, due to the expected lead times in the traditional frame sourcing business. 9 All of our frames are manufactured with prefabricated, ready-to-wear sunglass or blue light lenses, and are directly shipped to the customer in this state if the customer declines to purchase custom lens upgrades.
All styles are each available with 70 different lens types, resulting in hundreds of variations of products currently available. Additionally, Lucyd Lyte glasses enable the wearer to listen to music, take and make calls, and use voice assistants to perform many common smartphone tasks hands-free. Some of the many things that can be done with Lucyd Lyte glasses include: 1.
Our smartglasses enable the wearer to listen to music, take and make calls, and use voice assistants to perform many common smartphone tasks hands-free. Some of the many things our customers can do with their Lucyd Lyte glasses include: 1.
This is what we have sought to achieve, and in our view have accomplished with the introduction of Lucyd Lyte eyewear. Intellectual Property We license from Lucyd Ltd., a subsidiary of our majority stockholder, an intellectual property portfolio designed to protect our unique eyewear designs and certain technological features in current and anticipated future products.
Intellectual Property We license from Lucyd Ltd., a subsidiary of our largest stockholder, an intellectual property portfolio designed to protect our unique eyewear designs and certain technological features in current and anticipated future products. Since 2021, the Company has begun filing patents under its own name.
More recently, the company has begun filing patents under its own name. We have licensed and filed 48 patents to date, covering all of our current product designs and certain advanced features such as Vyrb, replaceable front frames, and multi-channel Bluetooth connectivity.
We have licensed and filed numerous patents covering all of our current product designs and certain advanced features such as Vyrb, replaceable front frames, and multi-channel Bluetooth connectivity. The Company will seek to file new intellectual property to protect new styles and features of its smart eyewear as they are introduced.
Pursuant to this agreement, we received a license to utilize the global lifestyle brand Nautica ® for our smart eyewear products. The company intends to launch their first line of Nautica Powered by Lucyd sport lifestyle audio glasses in 2023.
Pursuant to this agreement, we received a license to utilize received a license to utilize the iconic athletic brand Reebok® for our smart eyewear products. We plan to launch a cobranded line of Reebok® Powered by Lucyd smartglasses later in 2024.
Additionally, we are pursuing online and in-store big box retailers, and in-store and online specialty 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 2023. 4 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 introduce new models in an effort to offer a wide variety of designs.
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 introduce new models in an effort to offer a wide variety of designs.
The common denominator among markets for the hearables and digital assistant is that they facilitate real-time access to digital data, whether it is through music, calls, navigational directions, or information, among other uses. The combination of hearables and digital assistants provides a transparent, ergonomic interface between the users and their digital lives.
We view the popularity of voice assistants as an important catalyst for the smart eyewear market since hands-free access to voice-based AI is a notable feature thereof. The common denominator among markets for the hearables and digital assistant is that they facilitate real-time access to digital data, whether it is through music, calls, navigational directions, or information, among other uses.
In addition, we have launched an expansive offering consisting of 16 version 1.0 models and 15 version 2.0 models so far, which offer a similar amount of style variety as many traditional eyewear collections. When paired with the Vyrb application, Lucyd Lyte glasses will provide a new and safer wearable user experience suitable for everyone.
Our expansive product offering currently consists of 29 different models, which offers a similar amount of style variety as many traditional eyewear collections. When paired with the Vyrb application, Lucyd Lyte glasses will provide a new and safer wearable user experience suitable for everyone. 3 Our goal is to become a meaningful player in the smart eyewear market.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+25 added−31 removed218 unchanged
Biggest changeWe depend on search engines, social media platforms, digital application stores, content-based online advertising, and other online sources to attract consumers to and promote our website and our mobile applications, which may be affected by third-party interference beyond our control and as we grow our customer acquisition costs may rise.
Biggest changeRisks Related to Our Dependence on Third Parties ● We face risks associated with suppliers from whom our products are sourced and are dependent on a limited number of suppliers. ● Our projects could be hindered due to our dependence on third parties to complete many of our contracts. ● We depend on search engines, social media platforms, digital application stores, content-based online advertising, and other online sources to attract consumers to and promote our website and our mobile applications, which may be affected by third-party interference beyond our control; and, as we grow, the cost of acquiring new customers may continue to rise and become uneconomical.
Risks associated with our e-commerce and multichannel business include: ● uncertainties associated with our websites, mobile applications and in-store virtual try-on kiosks including changes in required technology interfaces, website downtime and other technical failures, costs and technical issues as we upgrade our systems software, inadequate system capacity, computer viruses, human error, security breaches, legal claims related to our systems operations, and fulfillment; ● our partnership with select third-party apps, through which we sell a portion of our products, are subject to changes in their technology interfaces, website downtime and other technical failures, costs, and issues; ● disruptions in internet service or power outages; ● reliance on third parties for computer hardware and software, as well as delivery of merchandise to our customers; ● rapid technology changes; ● credit or debit card fraud and other payment processing related issues; ● cybersecurity and consumer privacy; and ● natural disasters or adverse weather conditions.
Risks associated with our e-commerce and multichannel business include: ● uncertainties associated with our websites, mobile applications and in-store virtual try-on kiosks including changes in required technology interfaces, website downtime and other technical failures, costs and technical issues as we upgrade our systems software, inadequate system capacity, computer viruses, human error, security breaches, legal claims related to our systems operations, and fulfillment; ● our partnership with select third-party apps, through which we sell a portion of our products, are subject to changes in their technology interfaces, website downtime and other technical failures, costs, and issues; 30 ● disruptions in internet service or power outages; ● reliance on third parties for computer hardware and software, as well as delivery of merchandise to our customers; ● rapid technology changes; ● credit or debit card fraud and other payment processing related issues; ● cybersecurity and consumer privacy; and ● natural disasters or adverse weather conditions.
Additionally: ● the key personnel operating the acquired IP may decide not to work with us; ● we may be unable to maintain uniform standards, controls, procedures and policies among acquired IPs; ● we may be unable to successfully implement infrastructure, logistics and systems integration; ● we may be held liable for legal claims (including environmental claims) arising out of activities of the acquired IP prior to our acquisitions, some of which we may not have discovered during our due diligence, and we may not have indemnification claims available to us or we may not be able to realize on any indemnification claims with respect to those legal claims; ● we will assume risks associated with deficiencies in the internal controls of acquired IPs; ● we may not be able to realize the cost savings or other financial benefits we anticipated; and ● our ongoing business may be disrupted or receive insufficient management attention.
Additionally: ● the key personnel operating the acquired IP may decide not to work with us; 42 ● we may be unable to maintain uniform standards, controls, procedures, and policies among acquired IPs; ● we may be unable to successfully implement infrastructure, logistics and systems integration; ● we may be held liable for legal claims (including environmental claims) arising out of activities of the acquired IP prior to our acquisitions, some of which we may not have discovered during our due diligence, and we may not have indemnification claims available to us or we may not be able to realize on any indemnification claims with respect to those legal claims; ● we will assume risks associated with deficiencies in the internal controls of acquired IPs; ● we may not be able to realize the cost savings or other financial benefits we anticipated; and ● our ongoing business may be disrupted or receive insufficient management attention.
The CPRA will restrict use of certain categories of sensitive personal information that we handle; further restrict the use of cross-context behavioral advertising techniques on which our products may rely in the future; establish restrictions on the retention of personal information; expand the types of data breaches subject to the private right of action; and establish the California Privacy Protection Agency to implement and enforce the new law, as well as impose administrative fines.
The CPRA will restrict use of certain categories of sensitive personal information that we handle; further restrict the use of cross-context behavioral advertising techniques on 34 which our products may rely in the future; establish restrictions on the retention of personal information; expand the types of data breaches subject to the private right of action; and establish the California Privacy Protection Agency to implement and enforce the new law, as well as impose administrative fines.
Our competitors, most of whom have significantly greater resources than we do, may also be able to benefit from changes in e-commerce technologies, which could harm our competitive position. 27 If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our solutions may become less competitive.
Our competitors, most of whom have significantly greater resources than we do, may also be able to benefit from changes in e-commerce technologies, which could harm our competitive position. If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our solutions may become less competitive.
The market price of our securities could be subject to wide fluctuations in response to a variety of factors, which include: ● actual or anticipated fluctuations in our quarterly or annual operating results; ● publication of research reports by securities analysts about us or our competitors or our industry; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● additions and departures of key personnel; ● strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; ● the passage of legislation or other regulatory developments affecting us or our industry; 40 ● speculation in the press or investment community; ● changes in accounting principles; ● terrorist acts, acts of war or periods of widespread civil unrest; ● natural disasters and other calamities; and ● changes in general market and economic conditions.
The market price of our securities could be subject to wide fluctuations in response to a variety of factors, which include: ● actual or anticipated fluctuations in our quarterly or annual operating results; ● publication of research reports by securities analysts about us or our competitors or our industry; ● the public’s reaction to our press releases, our other public announcements and our filings with the SEC; ● our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; ● additions and departures of key personnel; ● strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy; ● the passage of legislation or other regulatory developments affecting us or our industry; ● speculation in the press or investment community; ● changes in accounting principles; 43 ● terrorist acts, acts of war or periods of widespread civil unrest; ● natural disasters and other calamities; and ● changes in general market and economic conditions.
If our products or services do not meet applicable governmental safety standards or our customers’ expectations regarding quality or safety, we could experience lost sales and increased costs, be exposed to legal and reputational risk, and face fines or penalties which could materially adversely affect our financial results. 28 Refunds, cancellations, and warranty claims could harm our business.
If our products or services do not meet applicable governmental safety standards or our customers’ expectations regarding quality or safety, we could experience lost sales and increased costs, be exposed to legal and reputational risk, and face fines or penalties which could materially adversely affect our financial results. Refunds, cancellations, and warranty claims could harm our business.
The benefits we currently experience from our suppliers’ relationships could be adversely affected if our suppliers: ● discontinue selling products to us; ● raise their prices; ● increase lead times for products and/or key components We also source inputs directly from suppliers outside of the United States, including China.
The benefits we currently experience from our suppliers’ relationships could be adversely affected if our suppliers: 38 ● discontinue selling products to us; ● raise their prices; ● increase lead times for products and/or key components We also source inputs directly from suppliers outside of the United States, including China.
In some cases, litigation or other actions may be necessary to protect or enforce our trademarks and other intellectual property rights. 33 We generally enter into confidentiality and invention assignment agreements with our employees and consultants, as well as confidentiality agreements with other third parties, including suppliers and other partners.
In some cases, litigation or other actions may be necessary to protect or enforce our trademarks and other intellectual property rights. We generally enter into confidentiality and invention assignment agreements with our employees and consultants, as well as confidentiality agreements with other third parties, including suppliers and other partners.
We face additional risks related to the manufacturing facility we contract with in China and suppliers in China, including port of entry risks such as longshoremen strikes, import restrictions, foreign government regulations, trade restrictions, customs, and duties. 22 We source components from suppliers located in China.
We face additional risks related to the manufacturing facility we contract with in China and suppliers in China, including port of entry risks such as longshoremen strikes, import restrictions, foreign government regulations, trade restrictions, customs, and duties. We source components from suppliers located in China.
Please see “Business—Material Agreements” for a more complete description of the License Agreement. 32 Failure to adequately maintain and protect our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively.
Please see “Business—Material Agreements” for a more complete description of the License Agreement. Failure to adequately maintain and protect our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively.
To maintain a proprietary market position in foreign countries, we may seek to protect some of our proprietary inventions through foreign counterpart patent applications. Statutory differences in patentable subject matter may limit the protection we can obtain on some of our inventions outside of the United States.
To maintain a proprietary market position in foreign countries, we may seek to protect some of our proprietary inventions through 36 foreign counterpart patent applications. Statutory differences in patentable subject matter may limit the protection we can obtain on some of our inventions outside of the United States.
Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies.
Pursuant to Section 107 of the JOBS 41 Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies.
If we are not able to continue to expand our customer base, or fail to retain customers, our net revenue will grow slower than expected or decline. 23 The growth of our e-commerce channel is critical to our continued customer retention and growth.
If we are not able to continue to expand our customer base, or fail to retain customers, our net revenue will grow slower than expected or decline. The growth of our e-commerce channel is critical to our continued customer retention and growth.
These laws are not consistent, and compliance with them in the event of a widespread data breach is complex and costly. 30 Further, the California Consumer Privacy Act (CCPA) took effect on January 1, 2020.
These laws are not consistent, and compliance with them in the event of a widespread data breach is complex and costly. Further, the California Consumer Privacy Act (CCPA) took effect on January 1, 2020.
Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities.
Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, and we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities.
Some of our current intellectual property is licensed from Lucyd Ltd., the majority stockholder of the Company, pursuant to a license agreement we entered into with Lucyd Ltd. on April 1, 2020 (the “License Agreement”).
Some of our current intellectual property is licensed from Lucyd Ltd., the largest stockholder of the Company, pursuant to a license agreement we entered into with Lucyd Ltd. on April 1, 2020 (the “License Agreement”).
Overall growth of our net revenue will depend on a number of factors, including our ability to: ● Increase exogenous distribution of our products in optical stores, big box retailers, specialty retailers and through multiple e-commerce channels; ● Price our products so that we are able to attract new customers, and expand our relationships with existing customers; ● Accurately forecast our net revenue and plan our operating expenses accordingly; ● Successfully compete with other companies that are currently in, or may in the future enter, the smart eyewear industry or the markets in which we compete, and respond to developments from these competitors such as pricing changes and the introduction of new products and features, noting that most, if not all, of our competitors have stronger balance sheets and larger staffs to devote to their products; ● Comply with existing and new laws and regulations applicable to our business; ● Develop new product offerings, with services and features, including in response to new trends, competitive dynamics, or the needs of customers; ● Successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our business; ● Avoid interruptions or disruptions in our supply chain from natural disasters and political uncertainty; ● Provide customers with a high-quality experience and customer service and support that meets their needs; ● Hire, integrate, and retain talented sales, customer experience, product design, and development and other personnel; ● Effectively manage growth of our business, personnel, and operations; ● Effectively manage our costs related to our business and operations; and, ● Enhance our reputation and the value of the Lucyd brand. 21 Because we have a limited history operating our business, it is difficult to evaluate our current business and future prospects, including our ability to plan for and model future growth.
Overall growth of our net revenue will depend on a number of factors, including our ability to: ● Increase exogenous distribution of our products in optical stores, big box retailers, specialty retailers and through multiple e-commerce channels; ● Price our products so that we are able to attract new customers, and expand our relationships with existing customers; ● Accurately forecast our net revenue and plan our operating expenses accordingly; ● Successfully compete with other companies that are currently in, or may in the future enter, the smart eyewear industry or the markets in which we compete, and respond to developments from these competitors such as pricing changes and the introduction of new products and features, noting that most, if not all, of our competitors have stronger balance sheets and larger staffs to devote to their products; ● Comply with existing and new laws and regulations applicable to our business; ● Develop new product offerings, with services and features, including in response to new trends, competitive dynamics, or the needs of customers; ● Successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our business; ● Avoid interruptions or disruptions in our supply chain from natural disasters and political uncertainty; ● Provide customers with a high-quality experience and customer service and support that meets their needs; ● Hire, integrate, and retain talented sales, customer experience, product design, and development and other personnel; ● Effectively manage growth of our business, personnel, and operations; 24 ● Effectively manage our costs related to our business and operations; and, ● Enhance our reputation and the value of the Lucyd brand.
However, we may not succeed in any of the foregoing, and the planned investments may not result in profitability. 20 We have limited experience in the smart eyewear space.
However, we may not succeed in any of the foregoing, and the planned investments may not result in profitability. 23 We have limited experience in the smart eyewear space.
We allow our customers to return our products, subject to our refund policy, which allows any customer to return our products for any reason and receive a full refund within the first 7 days for sales made through our website, 30 days for sales made through Amazon, and 30 days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible for returns).
We allow our customers to return our products, subject to our refund policy, which allows any customer to return our products for any reason and receive a full refund for frames (prescription lenses excluded) within the first 7 days for sales made through our website, 30 days for sales made through Amazon, and 30 days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible for returns).
In June 2020, the U.S. government granted a temporary exclusion for plastic and metal frames with a retroactive effective date of September 1, 2019, and such exclusion expired in September 2020. Given the recent change in the U.S. presidential administration, there is uncertainty whether there will be, and the resulting impacts of, any changes to U.S. government trade policy.
In June 2020, the U.S. government granted a temporary exclusion for plastic and metal frames with a retroactive effective date of September 1, 2019, and such exclusion expired in September 2020. There remains to be uncertainty as to whether there will be, and the resulting impacts of, any changes to U.S. government trade policy.
Our competitive price model and pricing pressures in the optical retail industry may inhibit our ability to reflect these increased costs in the prices of our products, in which case such increased costs could have a material adverse effect on our business, financial condition, and results of operations. We currently derive all of our revenue from sales of our glasses.
Our competitive price model and pricing pressures in the optical retail industry may inhibit our ability to reflect these increased costs in the prices of our products, in which case such increased costs could have a material adverse effect on our business, financial condition, and results of operations.
Our number of customers may decline materially or fluctuate as a result of many factors, including, among other things: ● the quality, consumer appeal, price, and reliability of products and services offered by us; ● intense competition in the optical retail industry by better financed participants; ● negative publicity related to our brand or brand influencers; ● the impact of the COVID-19 pandemic or a future outbreak of disease or similar public health concern; ● customer dissatisfaction with changes we make to our products and services.
Our number of customers may decline materially or fluctuate as a result of many factors, including, among other things: ● the quality, consumer appeal, price, and reliability of products and services offered by us; ● intense competition in the optical retail industry by better financed participants; ● negative publicity related to our brand or brand influencers; and ● customer dissatisfaction with changes we make to our products and services.
In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include: ● our ability to accurately forecast and achieve net revenues and appropriately plan our expenses; ● changes to financial accounting standards and the interpretation of those standards, which may affect the way we recognize and report our financial results; ● the effectiveness of our internal controls; ● the early-stage nature of our business and the need to scale our operations and, ● the impact of the COVID-19 pandemic on our business.
In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include: ● our ability to accurately forecast and achieve net revenues and appropriately plan our expenses; ● changes to financial accounting standards and the interpretation of those standards, which may affect the way we recognize and report our financial results; ● the effectiveness of our internal controls; 32 ● the early-stage nature of our business and the need to scale our operations; and ● our ability to introduce our new cobranded products and product upgrades.
In the event of a de-listing, we would take actions to restore our compliance with NASDAQ’s listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock and Warrants to become listed again, stabilize the market price or improve the liquidity of our common stock and Warrants, prevent our common stock and Warrants from dropping below the NASDAQ minimum bid price requirement or prevent future non-compliance with NASDAQ’s listing requirements.
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum stock price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.
While we have taken measures designed to protect the security of the confidential and personal information under our control, we cannot assure you that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats.
While we have taken measures designed to protect the security of the confidential and personal information under our control, we cannot assure you that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. 29 A security breach may also cause us to breach our contractual obligations.
Such a de-listing would likely have a negative effect on the price of our common stock and Warrants and would impair your ability to sell or purchase our common stock and Warrants when you wish to do so.
Such a delisting would likely have a negative effect on the price of our securities and would impair your ability to sell or purchase our securities when you wish to do so.
Our ability to meet temporary unforeseen increases in demand has been, and may in the future be, impacted by our reliance on the availability of components from these suppliers.
Our ability to meet temporary unforeseen increases in demand has been, and may in the future be, impacted by our reliance on the availability of components from these suppliers. We may in the future experience component shortages, and the predictability of the availability of these components may be limited in certain situations.
In addition, international supply chains may be impacted by events outside of our control, including but not limited to the COVID-19 pandemic, and limit our ability to procure timely delivery of supplies or finished goods and services.
In addition, international supply chains may be impacted by events outside of our control, and limit our ability to procure timely delivery of supplies or finished goods and services.
Any of these events could have a material adverse effect on our business, financial condition, and operating results. 37 An overall decline in the health of the economy and other factors impacting consumer spending, such as recessionary conditions, governmental instability, inclement weather, and natural disasters, may affect consumer purchases, which could reduce demand for our products and harm our business, financial conditions, and results of operations.
An overall decline in the health of the economy and other factors impacting consumer spending, such as recessionary conditions, governmental instability, inclement weather, and natural disasters, may affect consumer purchases, which could reduce demand for our products and harm our business, financial conditions, and results of operations.
Once we no longer qualify as an “emerging growth company” under the JOBS Act and lose the ability to rely on the exemptions related thereto discussed above and depending on our status as per Rule 12b-2 of the Securities Exchange Act of 1934, as amended, our independent registered public accounting firm may also need to attest to the effectiveness of our internal control over financial reporting under Section 404.
Once we no longer qualify as an “emerging growth company” under the JOBS Act and lose the ability to rely on the exemptions related thereto discussed above and depending on our status as per Rule 12b-2 of the Securities Exchange Act of 1934, as amended, our independent registered public accounting firm may also need to attest to the effectiveness of our internal control over financial reporting under Section 404. 40 Based on the number of personnel available to serve the Company’s accounting function, management believes we are not able to adequately segregate responsibility over financial transaction processing and reporting.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock. 38 Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.
In the event we are required to develop alternative, non-infringing technology, this could require significant time (during which we would be unable to continue to offer our affected offerings), effort and expense, and may ultimately not be successful.
In the event we are required to develop alternative, non-infringing technology, this could require significant time (during which we would be unable to continue to offer our affected offerings), effort and expense, and may ultimately not be successful. Any of these events could harm our business and cause our results of operations, liquidity, and financial condition to suffer.
If we lose the ability to use a domain name, we could incur significant additional expenses to market our products within that country, including the development of new branding. This could substantially harm our business, results of operations, financial condition and prospects.
If we lose the ability to use a domain name, we could incur significant additional expenses to market our products within that country, including the development of new branding.
Further, if the insurance coverage we maintain is not adequate to cover losses that occur, or if we are required to purchase additional insurance for other aspects of our business, we could be liable for significant additional costs.
Further, if the insurance coverage we maintain is not adequate to cover losses that occur, or if we are required to purchase additional insurance for other aspects of our business, we could be liable for significant additional costs. Additionally, if any of our insurance providers becomes insolvent, it would be unable to pay any operations-related claims that we make.
In addition, although we seek to detect and investigate all data security incidents, security breaches, and other incidents of unauthorized access to our information technology systems and data can be difficult to detect and any delay in identifying such breaches or incidents may lead to increased harm and legal exposure of the type described above. 26 The cost of investigating, mitigating, and responding to potential security breaches and complying with applicable breach notification obligations to individuals, regulators, partners, and others can be significant.
In addition, although we seek to detect and investigate all data security incidents, security breaches, and other incidents of unauthorized access to our information technology systems and data can be difficult to detect and any delay in identifying such breaches or incidents may lead to increased harm and legal exposure of the type described above.
Certain technological advances, greater availability of, or increased consumer preferences for, vision correction alternatives to prescription eyeglasses or contact lenses, and future drug development for the correction of vision-related problems may reduce the demand for our products and adversely impact our business and profitability.
Such efforts will require significant time, expense, and attention as there is intense competition for such individuals. 31 Certain technological advances, greater availability of, or increased consumer preferences for, vision correction alternatives to prescription eyeglasses or contact lenses, and future drug development for the correction of vision-related problems may reduce the demand for our products and adversely impact our business and profitability.
In addition, if we are unable to provide high-quality support to customers or help resolve issues in a timely and acceptable manner, our ability to attract new customers and retain customers could be adversely affected. If our number of customers declines or fluctuates for any of these reasons among others, our business would suffer.
In addition, if we are unable to provide high-quality support to customers or help resolve issues in a timely and acceptable manner, our ability to attract new customers and retain customers could be adversely affected.
We had a net loss of $5,681,833 for the year ended December 31, 2022, and a net loss of $3,244,506 for the year ended December 31, 2021. As of December 31, 2022, we had an accumulated deficit of $10,305,987. Because we have a short operating history it is difficult for us to predict our future operating results.
We had a net loss of $6,616,791 for the year ended December 31, 2023, and a net loss of $5,681,833 for the year ended December 31, 2022. As of December 31, 2023, we had an accumulated deficit of $16,922,778. Because we have a limited operating history it is difficult for us to predict our future operating results.
Our profitability and cash flows may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage. Efficient inventory management is a key component of our business success and profitability.
If our number of customers declines or fluctuates for any of these reasons among others, our business would suffer. 27 Our profitability and cash flows may be negatively affected if we are not successful in managing our inventory balances and inventory shrinkage. Efficient inventory management is a key component of our business success and profitability.
If companies or governmental entities block, limit, or otherwise restrict customers from accessing our products and services, our business could be negatively impacted, the number of customers could decline or grow more slowly, and our results of operations could be adversely affected. 31 We could incur significant liabilities related to, and significant costs in complying with, environmental, health, and safety laws and regulations.
If companies or governmental entities block, limit, or otherwise restrict customers from accessing our products and services, our business could be negatively impacted, the number of customers could decline or grow more slowly, and our results of operations could be adversely affected.
We may decide to pursue strategic licensing deals to accelerate our growth. These potential brand acquisitions may not be successful. We may not be able to successfully integrate future IP acquisitions or generate sufficient revenues from future acquisitions, which could cause our business to suffer.
We may not be able to successfully integrate future IP acquisitions or generate sufficient revenues from future acquisitions, which could cause our business to suffer.
There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, financial condition, and results of operations.
There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, financial condition, and results of operations. 35 Risks Related to Intellectual Property We license some of our technology from Lucyd Ltd., the largest stockholder of the Company, and our inability to maintain this license could materially affect our business, financial condition, and operating results.
While it is too early to predict how the current and future China tariffs will impact our business, our financial results may also be impacted by any resulting economic slowdown.
While it is too early to predict how the current and future China tariffs will impact our business, our financial results may also be impacted by any resulting economic slowdown. The Company has researched alternate manufacturing solutions outside of China and believes it can shift production elsewhere if necessary.
The market prices of our common stock has been volatile and can fluctuate substantially, which could result in substantial losses for our investors. The market price of our common stock is highly volatile, and since our initial public offering in August 2022, the market price of our common stock has ranged from $0.70 to $7.00 per share.
The market price of our common stock is highly volatile, and since our initial public offering in August 2022, the market price of our common stock has ranged from $0.37 to $7.00 per share.
Any of these events could harm our business and cause our results of operations, liquidity, and financial condition to suffer. 34 Risks Related to Our Dependence on Third Parties We face risks associated with suppliers from whom our products are sourced and are dependent on a limited number of suppliers.
Risks Related to Our Dependence on Third Parties We face risks associated with suppliers from whom our products are sourced and are dependent on a limited number of suppliers.
We rely heavily on our information technology systems, as well as those of our third-party vendors, business partners, and service providers, for our business to effectively operate and to safeguard confidential information; any significant failure, inadequacy, interruption, or data security incident could adversely affect our business, financial condition, and operations.
If we fail to maintain, protect, and enhance our brand successfully or to maintain loyalty among customers, or if we incur substantial expenses in unsuccessful attempts to maintain, protect, and enhance our brand, we may fail to attract or increase the engagement of customers, and our business, financial condition, and results of operations may suffer. 28 We rely heavily on our information technology systems, as well as those of our third-party vendors, business partners, and service providers, for our business to effectively operate and to safeguard confidential information; any significant failure, inadequacy, interruption, or data security incident could adversely affect our business, financial condition, and operations.
Additionally, if any of our insurance providers becomes insolvent, it would be unable to pay any operations-related claims that we make. 36 General Risk Factors Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.
General Risk Factors Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.
Eyeglasses are regulated as medical devices by the FDA, and our failure, or the failure of any third-party manufacturer or optical laboratory, to obtain and maintain the necessary agency authorizations for our products could have a material adverse effect on our business.
If we are not able to successfully market and sell our cobranded products, we will not receive sufficient revenue to pay the licensing fees and would need to use the proceeds from our other products to pay the fees. 33 Eyeglasses are regulated as medical devices by the FDA, and our failure, or the failure of any third-party manufacturer or optical laboratory, to obtain and maintain the necessary agency authorizations for our products could have a material adverse effect on our business.
We rely on a limited number of third-party suppliers and contract manufacturers for the components that go into the manufacturing of our products. In particular, our frames are provided by only a handful of suppliers. We also assemble and fulfill prescription glasses at a single third-party optical laboratory.
In particular, our frames are provided by only a handful of suppliers. We also assemble and fulfill prescription glasses at a single third-party optical laboratory. Our reliance on a limited number of contract manufacturers and logistics partners for our products increases our risks of being unable to deliver our products in a timely and cost-effective manner.
Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could disrupt or reduce the efficiency of our operations. 25 Our systems and those of our third-party service providers and business partners may be vulnerable to security incidents, attacks by hackers, acts of vandalism, computer viruses, misplaced or lost data, human errors or other similar events.
Our systems and those of our third-party service providers and business partners may be vulnerable to security incidents, attacks by hackers, acts of vandalism, computer viruses, misplaced or lost data, human errors or other similar events.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, our ability to develop our products and services, support our business growth, and respond to business challenges could be significantly impaired, and our business may be adversely affected. 29 If we incur additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any additional debt could include restrictive covenants that restrict our operations, including our ability to pay dividends on our common stock.
If we incur additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any additional debt could include restrictive covenants that restrict our operations, including our ability to pay dividends on our common stock.
We may incur costs to defend against, face liability or for being vulnerable to intellectual property infringement claims brought against us by others. Third parties may assert claims against us alleging that we infringe upon, misappropriate, dilute or otherwise violate their intellectual property rights, particularly as we expand our business and the number of products we offer.
Third parties may assert claims against us alleging that we infringe upon, misappropriate, dilute or otherwise violate their intellectual property rights, particularly as we expand our business and the number of products we offer. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.
Maintaining adequate inventory requires significant attention and monitoring of market trends, local markets, developments with suppliers, and our distribution network, and it is not certain that we will be effective in our inventory management. 24 If we fail to maintain and enhance our brand, our ability to engage or expand our base of customers will be impaired, and our business, financial condition, and results of operations may suffer.
Maintaining adequate inventory requires significant attention and monitoring of market trends, local markets, developments with suppliers, and our distribution network, and it is not certain that we will be effective in our inventory management.
In addition, a failure by a third-party subcontractor, supplier or manufacturer to comply with applicable laws, regulations or client requirements could negatively impact our business and, for government clients, could result in fines, penalties, suspension or even debarment being imposed on us, which could have a material adverse impact on our business, financial condition, and results of operations.
In addition, a failure by a third-party subcontractor, supplier or manufacturer to comply with applicable laws, regulations or client requirements could negatively impact our business and, for government clients, could result in fines, penalties, suspension or even debarment being imposed on us, which could have a material adverse impact on our business, financial condition, and results of operations. 39 We depend on search engines, social media platforms, digital application stores, content-based online advertising, and other online sources to attract consumers to and promote our website and our mobile applications, which may be affected by third-party interference beyond our control and as we grow our customer acquisition costs may rise.
Because we derive most of our revenue from the sale of our glasses, any material decline in sales of our glasses would have a material adverse impact on our business, financial condition, and operating results.
Because we derive most of our revenue from the sale of our glasses, any material decline in sales of our glasses would have a material adverse impact on our business, financial condition, and operating results. 26 We face significant risks due to our dependency on foreign supply and manufacturing chains, geopolitical and economic changes, and changes in public perception about internationally sourced and manufactured products.
If we fail to satisfy the continued listing requirements of NASDAQ, such as the corporate governance requirements or the minimum closing bid price requirement, NASDAQ may take steps to de-list our common stock and Warrants.
Risks Relating to Our Business, Strategy and Industry Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities. If we fail to satisfy the continued listing requirements of Nasdaq such as the corporate governance requirements or the minimum stock price requirement, Nasdaq may take steps to delist our securities.
These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims. We may be particularly vulnerable to such claims, as companies having a substantial online presence are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights.
We may be particularly vulnerable to such claims, as companies having a substantial online presence are frequently subject to litigation based on allegations of infringement or other violations of intellectual property rights. As we gain an increasingly high public profile, the possibility of intellectual property rights claims against us grows.
We face significant risks due to our dependency on foreign supply and manufacturing chains, geopolitical and economic changes, and changes in public perception about internationally sourced and manufactured products.
A decline in sales of our eyewear would negatively affect our business, financial condition, and results of operation. ● We face significant risks due to our dependency on foreign supply and manufacturing chains, geopolitical and economic changes, and changes in public perception about internationally sourced and manufactured products. ● We rely on a limited number of contract manufacturers and logistics partners for our products.
Increases in transportation costs (including increases in fuel costs), issues with overseas shipments, supplier-side delays, as well as reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure, and unexpected delivery interruptions or delays also have the potential to derail our distribution process.
Increases in transportation costs (including increases in fuel costs), issues with overseas shipments, supplier-side delays, as well as reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure, and unexpected delivery interruptions or delays also have the potential to derail our distribution process. 25 Moreover, volatile economic conditions may make it more likely that our suppliers and logistics providers may be unable to timely deliver supplies, or at all, and there is no guarantee that we will be able to timely locate alternative suppliers of comparable quality at an acceptable price.
We currently have General Liability and Product Liability policies covering our business. These policies may not provide sufficient coverage in the face of significant claims or multiple claims. Claims exceeding our insurance coverage could create significant increases in internal costs. This even could have a material adverse effect on our business, financial condition, and operating results.
Claims exceeding our insurance coverage could create significant increases in internal costs. This could even have a material adverse effect on our business, financial condition, and operating results. We may decide to pursue strategic licensing deals to accelerate our growth. These potential brand acquisitions may not be successful.
Our business could be adversely affected if one or more of our manufacturers is impacted by a natural disaster, an epidemic such as COVID-19, or other interruption at a particular location.
Our business could be adversely affected if one or more of our manufacturers is impacted by a natural disaster, an epidemic, or other interruption at a particular location. Additionally, we do not own or operate a warehouse or a warehouse management company or system, and we currently rely on three third-party warehouses.
As we gain an increasingly high public profile, the possibility of intellectual property rights claims against us grows. Our competitors and others may now and in the future have significantly larger and more mature patent portfolios than us.
Our competitors and others may now and in the future have significantly larger and more mature patent portfolios than us.
At the time of sale, we establish a reserve for returns, based on historical experience and expected future returns, which is recorded as a reduction of sales. If we experience a substantial increase in refunds, our cancellation reserve levels might not be sufficient and our business, financial condition, and results of operations could be harmed.
If we experience a substantial increase in refunds, our cancellation reserve levels might not be sufficient and our business, financial condition, and results of operations could be harmed. However, updates to the Company’s prescription lens return policy in January 2024, as mentioned above, is expected to support a reduction in excessive lens costs.
Maintaining and enhancing our appeal and reputation as a stylish, innovative, and coveted brand is critical to attracting and expanding our relationships with customers.
If we fail to maintain and enhance our brand, our ability to engage or expand our base of customers will be impaired, and our business, financial condition, and results of operations may suffer. Maintaining and enhancing our appeal and reputation as a stylish, innovative, and coveted brand is critical to attracting and expanding our relationships with customers.
We may in the future experience component shortages, and the predictability of the availability of these components may be limited, which may be heightened in light of Covid-19 safety measures undertaken in China, our principal country of manufacturing. In the event of a component shortage or supply interruption from suppliers of these components, we may experience supply chain delays.
In the event of a component shortage or supply interruption from suppliers of these components, we may experience supply chain delays.
Unanticipated fluctuations in our quarterly operating results could result in a decline in our stock price. 41 Our failure to meet the continued listing requirements of NASDAQ could result in a de-listing of our common stock and Warrants.
Unanticipated fluctuations in our quarterly operating results could result in a decline in our stock price.
Further, defending a suit, regardless of its merit, could be costly, divert management attention, and harm our reputation.
The cost of investigating, mitigating, and responding to potential security breaches and complying with applicable breach notification obligations to individuals, regulators, partners, and others can be significant. Further, defending a suit, regardless of its merit, could be costly, divert management attention, and harm our reputation.
Additionally, sourcing could be impacted by current and future travel restrictions and/or the shut-down of certain businesses globally due to the COVID-19 pandemic. We rely on a limited number of contract manufacturers and logistics partners for our products. A loss of any of these partners could negatively affect our business.
We rely on a limited number of contract manufacturers and logistics partners for our products. A loss of any of these partners could negatively affect our business. We rely on a limited number of third-party suppliers and contract manufacturers for the components that go into the manufacturing of our products.
Based on the number of personnel available to serve the Company’s accounting function, management believes we are not able to adequately segregate responsibility over financial transaction processing and reporting. Further, the Company does not have a formal internal control environment in place and operating effectively.
Further, the Company does not have a formal internal control environment in place and operating effectively.
Item 1A. Risk Factors . Our business involves a high degree of risk and uncertainty, including the following risks and uncertainties: Risks Relating to Our Business, Strategy and Industry The optical industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted.
Risks Related to our Business, Strategy and Industry ● Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities. ● We have a history of losses, and we may be unable to achieve or sustain profitability. ● The optical industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted. ● We have limited experience in scaling a smart eyewear business.
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Moreover, volatile economic conditions may make it more likely that our suppliers and logistics providers may be unable to timely deliver supplies, or at all, and there is no guarantee that we will be able to timely locate alternative suppliers of comparable quality at an acceptable price.
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Item 1A. Risk Factors . Our business involves a high degree of risk and uncertainty, including the following. Summary Risk Factors The risk factors described below are a summary of the principal risk factors associated with an investment in us. These are not the only risks we face.
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Our overseas sourcing and manufacturing could also suffer due to health-related concerns surrounding infectious diseases, such as Covid-19 safety measures in China, our primary country of supply.
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You should carefully consider these risk factors, together with the risk factors set forth in detail below and the other reports and documents filed by us with the SEC.
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If we fail to maintain, protect, and enhance our brand successfully or to maintain loyalty among customers, or if we incur substantial expenses in unsuccessful attempts to maintain, protect, and enhance our brand, we may fail to attract or increase the engagement of customers, and our business, financial condition, and results of operations may suffer.
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If we are unable to manage our expected growth effectively, our brand, and financial performance may suffer, which may have a material adverse effect on our business, financial condition, and operating results. ● Increases in component costs, shipping costs, long lead times, supply shortages, and supply changes could disrupt our supply chain; factors such as wage rate increases and inflation can have a material adverse effect on our business, financial condition, and operating results. 20 ● We currently derive all of our revenue from sales of our glasses.
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Moreover, we or our third-party service providers may be more vulnerable to such attacks in remote work environments, which have increased in response to the COVID-19 pandemic. A security breach may also cause us to breach our contractual obligations.
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A loss of any of these partners could negatively affect our business. ● If we fail to cost-effectively retain our existing customers or to acquire new customers, our business, financial condition, and results of operations would be harmed. ● If we fail to successfully launch or after we launch receive sufficient revenue from our cobranded collections with Nautica, Eddie Bauer, and Reebok, our business, financial condition, and results of operations would be harmed. ● Eyeglasses are regulated as medical devices by the FDA, and our failure, or the failure of any third-party manufacturer or optical laboratory, to obtain and maintain the necessary marketing authorizations for our products could have a material adverse effect on our business. ● Our profitability and cash flows may be negatively affected if we are not successful in managing our supply chain and customer demands for product deliveries. ● If we fail to maintain and enhance our brand, our ability to engage or expand our base of customers will be impaired, and our business, financial condition, and results of operations may suffer. ● We rely heavily on our information technology systems, as well as those of our third-party vendors, business partners, and service providers, for our business to effectively operate and to safeguard confidential information; any significant failure, inadequacy, interruption, or data security incident could adversely affect our business, financial condition, and operations. ● Our multichannel channel business faces distinct risks, and our failure to successfully manage it could have a negative impact on our profitability. ● If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our solutions may become less competitive. ● We depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain, and motivate our personnel, we may not be able to grow effectively. ● A decline in sales of our eyewear would negatively affect our business, financial condition, and results of operations. ● We could be adversely affected by product liability, product recall or personal injury issues. 21 Risks Related to our Intellectual Property ● We license some of our technology from Lucyd Ltd., the largest stockholder of the Company, and our inability to maintain this license could materially affect our business, financial condition, and operating results. ● Failure to adequately maintain and protect our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively. ● We may incur costs to defend against, face liability or for being vulnerable to intellectual property infringement claims brought against us by others.
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Such efforts will require significant time, expense, and attention as there is intense competition for such individuals.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFrom June 1, 2020, through February 1, 2022, we paid Tekcapital $25,000 per fiscal quarter under a management service agreement, which included rent-free office space, utilities, advisory services and other services. This agreement was amended effective February 1, 2022 such that we are billed $35,000 per fiscal quarter and no longer receive rent-free office space.
Biggest changePrior to February 1, 2022, we were provided with rent-free office space by Tekcapital pursuant to the terms of a management service agreement. Effective February 1, 2022, the management services agreement was amended such that (among other things) the office space provided by Tekcapital is no longer rent-free.
Item 2. Properties . Our executive offices are located at 11900 Biscayne Blvd., Suite 630, North Miami, Florida 33181. Our executive offices are provided to us by the parent of our majority stockholder, Tekcapital. We consider our current office space adequate for our operations.
Item 2. Properties . Our executive offices are located at 11900 Biscayne Blvd., Suite 630, North Miami, Florida 33181. Our executive offices are provided to us by Tekcapital. We consider our current office space adequate for our operations.
Since then, Tekcapital bills us for an allocation of rent paid by Tekcapital on our behalf, and we recognized $74,442 of expense related to rent for the year ended December 31, 2022. Our management service agreement with Tekcapital does not stipulate a specific maturity date, and can be terminated with 30 calendar days written notice by any party.
Tekcapital now bills us for an allocation of rent paid by Tekcapital on our behalf. Our agreement with Tekcapital does not stipulate a specific end date, and can be terminated with 30 calendar days written notice by any party.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings . We are not the subject of any material pending legal proceedings, however, may from time to time become a party to various legal proceedings arising in the ordinary course of business. Except as discussed below, we are not the subject of any pending legal proceedings. Item 4. Mine Safety Disclosures .
Biggest changeItem 3. 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 4. Mine Safety Disclosures . Not applicable. 45 P ART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders As of December 30, 2022, the approximate number of holders of record of our common stock was 3,828 and the closing price of our common stock was $1.37 per share. As of December 30, 2022, the approximate number of holders of record of our Warrants was 1 and the closing price of our Warrants was $0.15 per Warrant.
Biggest changeHolders As of December 31, 2023, the approximate number of holders of record of our common stock was 3,780 and the closing price of our common stock was $0.42 per share. As of December 31, 2023, the approximate number of holders of record of our Warrants was 1 and the closing price of our Warrants was $0.05 per Warrant.
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Use of Proceeds from Registered Securities On August 17, 2022, we consummated our initial public offering of 980,000 units at a price to the public of $7.50 per unit, each unit consisting of one share of Common Stock and two Warrants, with each Warrant exercisable to acquire one share of common stock.
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Recent Sales of Unregistered Securities There were no sales of unregistered securities during the three months ended December 31, 2023. Purchases of Securities by the Issuer and Affiliated Purchasers On April 12, 2023, an individual cashlessly exercised of 300,000 stock options and received 85,638 shares of common stock. Item 6. Reserved .
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The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-261616). The SEC declared the registration statement effective on August 12, 2022.
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Of the gross proceeds received from the initial public offering, we received approximately $6.1 million, and we paid a total of approximately $588,000 in underwriting discounts and commissions and $600,000 for other costs and expenses related to the initial public offering.
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No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates.
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There has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC on August 16, 2023, pursuant to Rule 424(b). Recent Sales of Unregistered Securities The Company did not issue any unregistered securities during the three months ended December 31, 2022. Item 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeProvision for Income Taxes Provision for income taxes consists of income taxes related to foreign and domestic federal and state jurisdictions in which we conduct business, adjusted for allowable credits, deductions, and valuation allowance against deferred tax assets. 47 Results of Operations Years Ended December 31, 2022 and 2021 Year ended December 31, 2022 2021 2022 vs 2021 Revenues, net 659,788 100 % 690,670 100 % (30,882 ) -4 % Less: Cost of Goods Sold (716,077 ) 109 % (542,416 ) 79 % (173,661 ) 32 % Gross Profit (56,289 ) -9 % 148,254 21 % (204,543 ) -138 % Operating expenses: General & administrative (2,796,669 ) 424 % (1,386,079 ) 201 % (1,410,590 ) 102 % Sales and marketing (2,059,012 ) 312 % (1,771,012 ) 256 % (288,000 ) 16 % Research and development (524,692 ) 80 % (86,261 ) 12 % (438,431 ) 508 % Related party management fee (140,000 ) 21 % (109,975 ) 16 % (30,025 ) 27 % Total Operating Expenses (5,520,373 ) 837 % (3,353,327 ) 486 % (2,167,046 ) 65 % Other Income/(Expense): Interest Expense (105,171 ) 16 % (39,433 ) -6 % (65,738 ) 0 % Total Other Income/(Expense) (105,171 ) 16 % (39,433 ) -6 % (65,738 ) 0 % Net Loss (5,681,833 ) 861 % (3,244,506 ) 470 % (2,437,327 ) 75 % Revenue Our revenues for the year ended December 31, 2022, were $659,788, representing a decrease of approximately 4% as compared to revenues of $690,670 during the year ended December 31, 2021.
Biggest changeResults of Operations Years Ended December 31, 2023 (“current year”) and December 31, 2022 (“prior year”) Year ended December 31, 2023 Year ended December 31, 2022 Change between the year ended December 31, 2023 and 2022 Revenues, net $ 1,152,479 100 % $ 659,788 100 % $ 492,691 75 % Less: Cost of Goods Sold (1,271,808 ) 110 % (716,077 ) 109 % (555,731 ) 78 % Gross Deficit (119,329 ) -10 % (56,289 ) -9 % (63,040 ) 112 % Operating Expenses: General and administrative (3,886,960 ) 337 % (2,796,669 ) 424 % (1,090,291 ) 39 % Sales and marketing (2,047,069 ) 178 % (2,059,012 ) 312 % 11,943 -1 % Research & development (662,184 ) 57 % (524,692 ) 80 % (137,492 ) 26 % Related party management fee (140,000 ) 12 % (140,000 ) 21 % - 0 % Total Operating Expenses (6,736,213 ) 584 % (5,520,373 ) 837 % (1,215,839 ) 22 % Other Income (Expense) 195,150 -17 % - 195,150 n/m Interest Expense (3,036 ) 0 % (105,171 ) 16 % 102,135 -97 % Total Other Income (Expense), net 192,114 -17 % (105,171 ) 16 % 297,285 -283 % Net Loss $ (6,663,428 ) 578 % $ (5,681,833 ) 861 % $ (981,595 ) 17 % 50 Revenue Our revenues for the year ended December 31, 2023, were $1,167,479, representing an increase of approximately 77% as compared to revenues of $659,788 during the year ended December 31, 2022.
We believe that our income tax positions would be sustained on audit and do not anticipate any adjustments that would result in a material change to the Company’s financial position. We have incurred taxable losses since inception but are current in our tax filing obligations. We are not presently subject to any income tax audit in any taxing jurisdiction.
We believe that our income tax positions would be sustained on audit and do not anticipate any adjustments that would result in a material change to the Company’s financial position. 56 We have incurred taxable losses since inception but are current in our tax filing obligations. We are not presently subject to any income tax audit in any taxing jurisdiction.
At contract inception, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
At contract inception, we assess the goods or services promised within each contract and determine those that are performance obligations, and also assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Our revenue is recognized upon meeting the performance obligation which is delivery of our eyewear products to the retail store and also recorded net of returns and discounts. Our wholesale pricing for eyewear sold to the retail store partners includes volume discounts, due to the nature of large quantity orders.
Our revenue is recognized upon meeting the performance obligation, which is delivery of the Company’s eyewear products to the retail store and is also recorded net of returns and discounts. Our wholesale pricing for eyewear sold to the retail store partners includes volume discounts, due to the nature of large quantity orders.
For retail sales placed on one of our e-commerce channels, these costs include (i) product costs held at the lesser of cost and net realizable value and inclusive of inventory reserves, (ii) freight, import, and inspection costs, (iii) optical laboratory costs for RX glasses, (iv) merchant fees, (v) fees paid to third-party e-commerce platforms, and (vi) cost of shipping the product to the consumer.
For retail sales placed on one of our e-commerce channels, these costs include (i) product costs held at the lesser of cost and net realizable value and inclusive of inventory reserves, (ii) freight, import, and inspection costs, (iii) optical laboratory costs for prescription glasses, (iv) merchant fees, (v) fees paid to third-party e-commerce platforms, and (vi) cost of shipping the product to the consumer.
Stock-Based Compensation We account for stock-based compensation to employees and directors in accordance with FASB ASC Topic 718, which requires that compensation expense be recognized in the financial statements for stock-based awards based on the grant date fair value. For stock option awards, the Black-Scholes-Merton option pricing model was used to estimate the fair value of share-based awards.
Stock-Based Compensation We account for stock-based compensation to employees and directors in accordance with FASB ASC Topic 718, which requires that compensation expense be recognized in the financial statements for stock-based awards based on the grant date fair value. For stock option awards, the Black-Scholes-Merton option pricing model is used to estimate the fair value of share-based awards.
For the year ended December 31, 2022, we generated $579,214 of revenue from sales of non-prescription frames and accessories and $80,574 was generated from sales of frames with prescription lenses. All of the $252,799 in sales generated on Amazon.com during the period were for non-prescription frames and accessories as we only offer prescription lenses through our website.
For the year ended December 31, 2022, we generated $579,214 of revenue from sales of non-prescription frames and accessories and $80,574 was generated from sales of frames with prescription lenses. All of the $252,799 in sales generated on Amazon.com during the prior year were for non-prescription frames and accessories, as we only offer prescription lenses through our website.
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.
In instances where the collectibility 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.
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. No provisions were determined as needed as of December 31, 2022 and 2021.
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. No provisions were determined as needed as of December 31, 2023 and 2022.
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 2023.
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 2024.
For Amazon sales, shipping is free for U.S consumers while international customers pay shipping charges. Any costs associated with fees charged by the online platforms (Shopify for Lucyd.co website and Amazon) are not recharged to customers. We charge applicable state sales taxes for both online channels and all other marketplaces on which sell.
For Amazon sales, shipping is free for U.S consumers while international customers pay shipping charges. Any costs associated with fees charged by the online platforms (Shopify for our Lucyd.co website and Amazon.com) are not recharged to customers. We charge applicable state sales taxes for online channels and all other marketplaces on which sell.
Shipping and Handling Costs incurred for shipping and handling are included in cost of goods sold at the time the related revenue is recognized. Amounts billed to a customer for shipping and handling are reported as revenues.
Shipping and Handling Costs incurred for shipping and handling are included in cost of revenue at the time the related revenue is recognized. Amounts billed to a customer for shipping and handling are reported as revenues.
Of the $208,477 in online sales generated through Lucyd.co, $80,574 related to frames with prescription lenses and $127,873 of glasses sold were with non-prescription lenses. E-commerce sales are the most material portion of our sales to date.
Of the $208,447 in online sales generated through Lucyd.co, $80,574 related to frames with prescription lenses and $127,873 of glasses sold were with non-prescription lenses. E-commerce sales are the most material portion of our sales to date since inception.
Operating Expenses Our operating expenses consist primarily of: ● general & administrative expenses that include primarily consulting and payroll expenses, IT & software, legal, stock compensation expense, postage and non-customer product shipping, and other administrative expense; ● sales and marketing expenses including cost of online and TV advertising, marketing agency fees, influencers, trade shows, and other initiatives; ● related party management fees for a range of back-office services provided by Tekcapital LLC and ● research and development expenses related to (i) development of new styles and features of our smart eyewear, (ii) development and improvement of our e-commerce website, and (iii) development of our Vyrb social media app for wearables.
Operating Expenses Our operating expenses consist primarily of: ● general & administrative expenses that include primarily consulting and payroll expenses, IT & software, legal, and other administrative expenses; ● sales and marketing expenses including cost of online and TV advertising, marketing agency fees, influencers, trade shows, and other initiatives; ● related party management fees for a range of back-office services provided by Tekcapital LLC; and ● research and development expenses related to (i) development of new styles and features of our smart eyewear, (ii) development and improvement of our e-commerce website, and (iii) development of our Vyrb social media app for wearables.
We view this business model as capital light, by electing not to build our own manufacturing facilities and Company-owned retail distribution, but rather contract with existing sources of production and proven consumer-facing retail distribution.
We view our business model as capital light, as we have elected not to build our own manufacturing facilities and Company-owned retail distribution, but rather contract with existing sources of production and proven consumer-facing retail distribution.
Additionally, we review all individual returns received in the month following the balance sheet date pertaining to orders processed prior to the balance sheet date in order to determine whether an allowance for sales returns is necessary. The Company recorded an allowance for sales returns of $24,897 and $22,266 as of December 31, 2022 and 2021, respectively.
Additionally, we review all individual returns received in the month following the balance sheet date pertaining to orders processed prior to the balance sheet date in order to determine whether an allowance for sales returns is necessary. We recorded an allowance for sales returns of $25,933 and $24,897 as of December 31, 2023 and 2022, respectively.
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. The COVID-19 pandemic along with other geopolitical and macroeconomic factors has caused disruption in the global financial markets, which could reduce our ability to access capital and negatively affect our liquidity in the future.
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. Current geopolitical and macroeconomic factors have caused disruption in the global financial markets, which could reduce our ability to access capital and negatively affect our liquidity in the future.
As demand and awareness for smart eyewear continues to grow, the Company expects that its per unit cost will decrease as its order volumes increase.
As demand and awareness for smart eyewear continues to grow, the Company expects that its per unit cost will decrease as its order volumes increase and we realize economies of scale.
The Company’s sales to both retail partners and through our e-commerce channels do not contain any variable consideration. 55 We allow our customers to return our products, subject to our refund policy, which allows any customer to return our products for any reason within the first: ● 7 days for sales made through our website (Lucyd.co) ● 30 days for sales made through Amazon ● 30 days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible for returns) For all of our sales, at the time of sale, we establish a reserve for returns, based on historical experience and expected future returns, which is recorded as a reduction of sales.
We allow our customers to return our products, subject to our refund policy, which allows any customer to return our products for any reason within the first: ● 7 days for sales made through our website (Lucyd.co) ● 30 days for sales made through Amazon ● 30 days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible for returns) For all of our sales, at the time of sale, we establish a reserve for returns, based on historical experience and expected future returns, which is recorded as a reduction of sales.
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 similar to traditional prescription eyewear.
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.
As of December 31, 2022 and 2021, we recorded an inventory prepayment in the amount of $197,750 and $64,715, respectively, related to down payment on eyewear purchased from the manufacturer, prior to shipment of the product that occurred after December 31, 2022 and 2021, respectively. 53 Intangible Assets Intangible assets relate to: ● Internally-developed and licensed utility and design patents.
As of December 31, 2023 and 2022, we recorded an inventory prepayment in the amount of $323,520 and $197,750, respectively, related to down payment on eyewear purchased from the manufacturer, prior to shipment of the product that occurred after the respective balance sheet dates. Intangible Assets Intangible assets relate to: ● Internally-developed and licensed utility and design patents.
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.
As of December 31, 2023, 45 display systems have been deployed so far to retailers. 47 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.
Consequently, we expect sales of prescription lens, offered through our website to decrease, as our third-party retail partners outfit our Lyte frames with more prescriptions. As a result, over time we expect prescription lens costs to gradually decrease as a percentage of our overall cost of goods sold.
Consequently, we expect sales of prescription lens, offered through our website to decrease, as our third-party retail partners outfit our Lyte frames with more prescriptions. As a result, over time we expect prescription lens costs to gradually decrease as a percentage of our overall cost of goods sold. We anticipate growth in both wholesale and e-commerce channel sales in 2024.
The determination was made using our business progress. Revenue Recognition Our revenue is generated from the sales of prescription and non-prescription optical glasses, sunglasses, and shipping charges, which are charged to the customer, associated with these purchases. We sell products through our retail store resellers, distributors, and on our own website Lucyd.co and on Amazon.
Components of Results of Operations Net Revenue Our revenue is generated from the sales of prescription and non-prescription optical glasses and sunglasses, and shipping charges associated with these purchases, which are charged to the customer. We sell products through our retail store resellers, distributors, on our own website Lucyd.co, and on Amazon.com.
The pricing includes shipping charges, while excluding any state sales tax charges applicable. Due to the nature of wholesale retail orders, no e-commerce fees are applicable.
The pricing includes shipping charges, while excluding any state sales tax charges applicable. Due to the nature of wholesale distributor orders, no e-commerce fees are applicable. Our sales do not contain any variable consideration.
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 December 31, 2022, we did not have any off-balance sheet arrangements.
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.
Research and development costs Our research and development costs increased by 508% to $524,692 for the year ended December 31, 2022, as compared with $86,261 for the year ended December 31, 2021.
Research and development costs Our research and development costs increased by 26% to $662,184 for the year ended December 31, 2023, as compared with $524,692 the year ended December 31, 2022.
This sales channel mix impacted our cost of goods sold, as the cost of prescription lenses attributable to our Lucyd.co sales increased our cost of goods sold through Lucyd.co while not impacting cost of goods sold for sales realized through Amazon or retail store partners.
Cost of goods sold was also impacted by sales channel mix, as a higher relative proportion of our sales in the current year were through our online store (Lucyd.co), and the cost of prescription lenses attributable to this channel increased our cost of goods sold while not impacting cost of goods sold for sales realized through Amazon or retail store partners.
Critical Accounting Policies and Significant Developments and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP.
Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements. 55 Critical Accounting Policies and Significant Developments and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP.
We believe our existing cash and cash equivalents, proceeds from the aforementioned offering, proceeds received from investors’ exercises of warrants, funds available under our existing credit facility, and cash flows from operating activities will be sufficient to fund our operations for at least the next twelve months.
We believe our existing cash and cash equivalents (including the proceeds from the aforementioned second public offering and proceeds received from investors’ exercises of warrants), plus planned capital-raising activities will be sufficient to fund our operations for at least the next twelve months.
Our revenue is recognized upon meeting the performance obligation, which is delivery of our eyewear products to the distributor and is also recorded net of returns and discounts. Our wholesale pricing for eyewear sold to distributors includes volume discounts, due to the nature of large quantity orders. The pricing includes shipping charges, while excluding any state sales tax charges applicable.
If collectability of substantially all of the contract consideration is probable, our revenue is recognized upon meeting the performance obligation, which is delivery of our eyewear products to the distributor, and is also recorded net of returns and discounts. Our wholesale pricing for eyewear sold to distributors includes volume discounts, due to the nature of large quantity orders.
We expect that the online portion of our sales will gradually decrease on a percentage basis but remain an important component of our total sales as we onboard more retail stores. We pursued growth in retail store segment in the year ended 2021 and during 2022, growing our retail store presence to over 250 stores as of December 31, 2022.
Over time, we expect that the online portion of our sales will gradually decrease on a percentage basis but remain an important component of our total sales as we onboard more retail stores. We currently have a retail store presence in approximately 350 stores, up from over 250 stores as of December 31, 2022.
We apply a manufacturer suggested retail price (“MSRP”) of $199 (for our standard frames) to $229 (for our titanium frames) for non-prescription, polarized sunglass and blue light blocking glasses across all of our online channels, with our wholesale pricing offering volume discounts to these prices.
We apply a manufacturer suggested retail price (“MSRP”) of $149 – $199 for non-prescription, polarized sunglass, and blue light blocking glasses across all of our online channels, with our wholesale pricing offering volume discounts to these prices. Please refer to discussion in the Components of Results of Operations for more details regarding our pricing structure.
This increase was primarily attributable to (i) an increase of approximately $436,000 in employee-related costs, resulting from increases in our staffing and new employment agreements entered into with executives, (ii) increased costs associated with being a publicly-traded company, including directors’ remuneration, legal and insurance expense, and public and investor relations, which altogether resulted in an increase in expense of approximately $416,000, (iii) bad debt expense in the current year of approximately $116,000, and (iv) an increase in consulting fees of approximately $103,000 as a result of our growth and increased used of consultants.
This increase was primarily attributable to (i) an increase of approximately $560,000 in employee-related costs, resulting from increases in our staffing and new employment agreements entered into with executives, (ii) increased costs associated with being a publicly-traded company, including directors’ remuneration, insurance expense, public and investor relations, and filing fees, which altogether resulted in an increase in expense of approximately $430,000, (iii) higher license costs, which increased approximately $146,000, and (iv) and increase in depreciation and amortization expense of approximately $53,000.
As part of this strategy, we have launched the Lucyd Digital Try-on Display for our resellers to help educate their in-store customers about Lucyd Lyte and enable customers to try them on virtually.
As part of this strategy, we have launched a new modular display system with engaging video screens and audio testing capabilities for our resellers to help educate their in-store customers about Lucyd Lyte and enable customers to try them on.
When adding a prescription lens upgrade to our glasses on the Lucyd.co website, the price can increase from between $40 for a basic clear prescription lens, all the way up to $450 for the latest Transitions ® progressive bifocal lens.
When adding a prescription lens upgrade to our glasses on the Lucyd.co website, the price can increase from between $40 for a basic clear prescription lens, all the way up to $500 for our proprietary Blueshift Polarized transitional blue light lenses in a progressive format.
This decrease was primarily driven by the aforementioned inventory write-offs during the current year totaling $147,820. We expect gross profit for the fiscal year ending December 31, 2023, to improve, primarily due to economies of scale from large, anticipated orders.
This decrease was primarily driven by the factors outlined above. We expect gross profit for the fiscal year ending December 31, 2024, to improve, primarily due to economies of scale from large, anticipated orders.
For sales generated through our e-commerce channels, we identify the contract with a customer upon online purchase of our eyewear and transaction price at the manufacturer suggested retail price (“MSRP”) for non-prescription, polarized sunglass and blue light blocking glasses across all of our online channels.
All revenue, including sales processed online and through our retail store resellers and distributors, is reported net of sales taxes collected from customers on behalf of taxing authorities, returns, and discounts. 57 For sales generated through our e-commerce channels, we identify the contract with a customer upon online purchase of our eyewear and transaction price at the manufacturer suggested retail price (“MSRP”) for non-prescription, polarized sunglass and blue light blocking glasses across all of our online channels.
Glasses with prescription lenses are only available through our website Lucyd.co, while our sales through Amazon and to our retail partners only include non-prescription glasses. U.S. consumers enjoy free USPS first class postage, with faster delivery options available for extra cost, for sales processed through our website.
Glasses with prescription lenses are provided by the Company through our website Lucyd.co, while our sales through Amazon and to our e-commerce partners only include non-prescription glasses (with rare exceptions, such as a reseller ordering a customized unit for display purposes). 48 U.S. consumers enjoy free USPS first class postage, with faster delivery options available for extra cost, for sales processed through our website.
As of December 31, 2022 and December 31, 2021, all shares underlying the related party convertible debt and common stock options were excluded from the earnings per share calculation, due to their anti-dilutive effect.
As of December 31, 2023 and December 31, 2022, all shares underlying the related party convertible debt and common stock options were excluded from the earnings per share calculation, due to their anti-dilutive effect. 58 Item 7A. Quantitative and Qualitative Disclosures About Market Risk . Not required for smaller reporting companies.
We anticipate our cost of goods sold, on a per unit basis, will decrease with scale, and this will likely have a positive impact on our gross margins.
We anticipate our cost of goods sold, on a per unit basis, will decrease with scale, and this will likely have a positive impact on our gross margins. Gross margins in 2022 and the first half of 2023 were adversely impacted by supply chain challenges with our previous manufacturer.
The Black-Scholes-Merton option pricing model incorporates various and highly subjective assumptions, including expected term and share price volatility. The expected term of the stock options was estimated based on the simplified method as allowed by Staff Accounting Bulletin 107 (SAB 107).
The Black-Scholes-Merton option pricing model incorporates various and highly subjective assumptions, including expected term and share price volatility. ● The expected term of the stock options was estimated based on the simplified method as allowed by Staff Accounting Bulletin 107 (SAB 107). ● The share price volatility at the grant date is estimated using historical stock prices based upon the expected term of the options granted, using stock prices of comparably profiled public companies. ● The risk-free interest rate assumption is determined using the rates for U.S.
To address this, we 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 16 different styles and several accessories, with plans to continuously expand this offering over time.
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.
This proprietary virtual try on software and display 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.
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.
We anticipate these costs to further increase as we continue to invest in and build our brand, expand the number of e-commerce platforms we sell our products on, invest in retail store co-op marketing programs to help educate our in-store customers about Lucyd Lytes, and increase our brand’s physical presence and role in the eyewear industry. 51 Related party management fee Our related party management fee was $140,000 for the year ended December 31, 2022, as compared with $109,975 for the year ended December 31, 2021.
We anticipate our marketing costs to increase in 2024 as we continue to invest in and build our brand, expand the number of e-commerce platforms on which we sell our products, invest in retail store co-op marketing programs and displays to help educate in-store customers about our products, and increase our brand’s physical presence and role in the eyewear industry.
After deducting underwriting discounts and offering expenses, net proceeds received by the Company amounted to $6,189,734.
The net proceeds received by the Company from this offering amounted to $6,189,734.
As of December 31, 2022, we received a total of 11,988 orders from customers online. We believe that the addition of new styles, as well as further investment in brand awareness, product ambassadors, and influencer campaigns, will enable continued growth of online orders in the foreseeable future.
We believe that the addition of new styles, as well as further investment in brand awareness, product ambassadors, and influencer campaigns, will enable continued growth of online orders in the foreseeable future. We expect to allocate a significant portion of our advertising expenditures towards influencer marketing programs.
All of the $266,733 in sales generated on Amazon.com during the period were for non-prescription frames as we only offer prescription lenses through our website. Of the $282,364 in online sales generated through Lucyd.co, $159,785 related to frames with prescription lenses and $122,579 of glasses sold were with non-prescription lenses.
All of the $384,293 in sales generated on Amazon.com during the current year were for non-prescription frames and accessories, as we only offer prescription lenses through our website and our optical store partners. Of the $554,060 in online sales generated through Lucyd.co, $189,074 was related to frames with prescription lenses and $364,986 was related to glasses with non-prescription lenses.
In February 2023, investors exercised warrants to purchase an aggregate of 408,600 shares of our common stock, at an adjusted exercise price of $3.75 per share, resulting in cash proceeds to us of $1,532,250. 52 However, our future capital requirements will depend on many factors, including, but not limited to, growth in the number of retail store customers, 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.
However, our future capital requirements will depend on many factors, including, but not limited to, growth in the number of retail store customers, 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 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.
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 Lucyd Lyte.
Liquidity and Capital Resources Cash Flow Data: Year ended Year ended December 31, December 31, 2022 2021 Net cash flows from operating activities $ (3,224,418 ) $ (1,214,160 ) Net cash flows from investing activities (219,951 ) (118,454 ) Net cash flows from financing activities 6,955,751 1,385,318 Net Change in Cash $ 3,511,382 $ 52,704 Initial Public Offering On August 17, 2022, the Company closed on its initial public offering of 980,000 units, consisting of 980,000 shares of its common stock and 1,960,000 warrants to purchase 1,960,000 shares of common stock, at a combined offering price of $7.50 per unit in exchange for gross proceeds of approximately $7.35 million, before deducting underwriting discounts and offering expenses.
Initial Public Offering On August 17, 2022, the Company closed on its initial public offering of 980,000 units, consisting of 980,000 shares of its common stock and 1,960,000 warrants to purchase 1,960,000 shares of common stock, at a combined offering price of $7.50 per unit in exchange for gross proceeds of approximately $7.35 million, before deducting underwriting discounts and offering expenses.
More generally, the outbreak of COVID-19 could adversely affect economies and financial markets globally, potentially leading to an economic downturn, which could decrease consumer spending and adversely affect demand for our products. 44 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 such as cellular shops.
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.
This sales channel mix impacted our revenue for the period, due to the fact we charge additional $35 to $275 for our prescription lenses available only on Lucyd.co. For the year ended December 31, 2021, we generated $530,885 of revenue from sales of nonprescription frames and $159,815 was generated from sales of frames with prescription lenses.
This sales channel mix positively impacted our revenue for the current year as compared with the prior year, due to the fact we charge additional $35 to $275 for our prescription lenses available only on Lucyd.co.
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.
To support our sales to retail stores directly, we offer a strong co-op marketing program that includes free and paid store display materials.
This increase was primarily due to the expansion of our business following the launch of Lucyd Lyte in January 2021 and included, but was not limited to, the following: General and administrative expenses Our general and administrative expenses increased by 102% to $2,796,669 for the year ended December 31, 2022, as compared to $1,386,079 for the year ended December 31, 2021.
This increase was primarily due to the following: General and administrative expenses Our general and administrative expenses increased by 39% to $3,886,960 for the year ended December 31, 2023, as compared to $2,796,669 for the year ended December 31, 2022.
When consumers place their orders directly on our online store, we save approximately 12-15% on marketplace fees than when consumers place their orders directly from third-party platforms like Amazon and eBay. 46 We expect our cost of goods sold to fluctuate as a percentage of net revenue primarily due to product mix, customer preferences and resulting demand, customer shipping costs, and management of our inventory and merchandise mix.
We expect our cost of goods sold to fluctuate as a percentage of net revenue primarily due to product mix, customer preferences and resulting demand, customer shipping costs, and management of our inventory and merchandise mix.
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 Lucyd Lyte. We started onboarding our first retail stores in June 2021. Currently, we have over 250 retail stores selling Lucyd Lyte primarily in the United States and Canada, across 180 unique wholesale accounts.
We started onboarding our first retail stores in June 2021. Currently, we have approximately 350 retail stores selling Lucyd Lyte primarily in the United States and Canada, across just over 300 unique wholesale accounts.
We expect that operating losses could continue in the foreseeable future as we continue to invest in the expansion and development of our business.
As of the date of this Annual Report on Form 10-K, we have not borrowed any amounts under this convertible note. 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.
Overview We develop and sell smart eyeglasses and sunglasses, which are designed to allow our customers to remain connected to their digital lives, while also offering vision correction and protection. Our flagship product, Lucyd Lyte, enables the wearer to listen to music, take and make calls, and use voice assistants to perform many common smartphone tasks hands-free.
Overview We develop and sell cutting-edge smart eyeglasses and sunglasses, which are designed to allow our customers to remain connected to their digital lives, while also offering vision correction and protection.
Out of our total cost of goods sold for the year ended December 31, 2022, $113,024 related to orders with prescription lenses, while $639,294 pertained to non-prescription orders. For the year ended December 31, 2022, approximately 32% of sales were processed on our online store (Lucyd.co), 38% on Amazon, and 30% with reseller partners.
E-commerce sales are the most material portion of our sales to date since inception. For the year ended December 31, 2022, approximately 32% of sales were processed on our online store (Lucyd.co), 38% on Amazon.com, and 30% with reseller partners.
As we expect retail stores to become our primary sales channel as we on board new stores, we also expect our overall gross margin to be better than that of the wholesale channel, since no e-commerce platform fees or prescription lens costs apply in wholesale channels.
As we expect retail stores to eventually become our primary sales channel as we onboard new stores, we also expect our overall gross margin to improve, since no e-commerce platform fees or prescription lens costs apply in wholesale channels. 52 Operating expenses Our operating expenses increased by 22% to $6,736,213 for the year ended December 31, 2023, as compared to $5,520,373 for the year ended December 31, 2022.
The fair value of common stock used in the option pricing model for stock-based awards granted in 2021 was determined using the most recent price paid by independent investors through a Regulation Crowdfunding (“CF”) securities offering undertaken by the Company.
Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. ● For options granted after our initial public offering on August 17, 2022, the fair value of common stock used in the option pricing model is based on the quoted market price of our common shares on the NASDAQ stock exchange. ● For options granted prior to our initial public offering, the fair value of common stock used in the option pricing model was determined using the most recent price paid by independent investors through a Regulation Crowdfunding (“CF”) securities offering undertaken by the Company.
We intend to use proceeds from this offering primarily on (i) sales and marketing, (ii) expanding our inventory, (iii) updating and developing our in-store displays, (iv) developing new smart eyewear styles and sizes, as well as further development and commercialization of the Vyrb app, and (v) working capital and other general corporate purposes.
We used the proceeds from this offering primarily on (i) sales and marketing, (ii) expanding our inventory, (iii) updating and developing our in-store displays, (iv) developing new smart eyewear styles and sizes, as well as further development and commercialization of the Vyrb app, and (v) working capital and other general corporate purposes. 54 Second Public Offering On June 26, 2023, the Company closed on a public offering of 4,500,000 units consisting of 4,500,000 shares of its common stock and 4,500,000 warrants to purchase 4,500,000 shares of common stock (the “Common Warrants”) at a combined offering price of $1.05 per unit in exchange for gross proceeds of approximately $4.73 million, before deducting underwriting discounts and offering expenses.
Cost of goods sold Our total cost of goods sold increased to $716,077 for the year ended December 31, 2022, as compared to $542,416 for the year ended December 31, 2021.
We anticipate that a partnership with a major eyeglass distributor will substantially increase our wholesale sales. Cost of goods sold Our total cost of goods sold increased to $1,240,171 for the year ended December 31, 2023, as compared to $716,077 for the year ended December 31, 2022.
Key components of cost of goods sold for the year ended December 31, 2021 included, but were not limited to, the cost of frames of $303,909, cost of prescription lenses incurred with our third-party vendor of $144,957, affiliate referral fees, sales commission expense, e-commerce platform fees of $89,950, and quality assurance costs related to our products sold of $3,600.
Cost of prescription lenses incurred with our third-party vendor of $271,229, affiliate referral fees, sales commission expense, and e-commerce platform fees of $190,326, and quality assurance costs related to our products sold of $13,100.
For sales to distributors, we identify the contract with a customer upon receipt of an order of our eyewear through a direct purchase order and after collectability of substantially all of the contract consideration is probable.
The pricing includes shipping charges, while excluding any state sales tax charges applicable. Due to the nature of wholesale retail orders, no e-commerce fees are applicable. For sales to distributors, we identify the contract with a customer upon receipt of an order of our eyewear through a direct purchase order.
We expect to allocate a significant portion of our advertising expenditures towards influencer marketing programs. Components of Results of Operations Net Revenue Our revenue is generated from the sales of prescription and non-prescription optical glasses, sunglasses, and shipping charges, which are charged to the customer, associated with these purchases.
For restricted stock units, the fair value of the share-based award is based on the quoted market price of our common shares on the NASDAQ stock exchange. Revenue Recognition Our revenue is generated from the sales of prescription and non-prescription optical glasses, sunglasses, and shipping charges, which are charged to the customer, associated with these purchases.
For the year ended December 31, 2021, approximately 41% of sales were processed on our online store (Lucyd.co), 39% on Amazon and 20% from retail store partners. Over time, we expect third-party retail stores to become our primary sales channel as we onboard additional stores.
Out of our total cost of goods sold for the year ended December 31, 2022, $113,024 related to orders with prescription lenses, while $639,294 pertained to non-prescription orders. Over time, we expect third-party retail stores to become our primary sales channel as we onboard additional stores.
As we continue to scale up the volume of our ecommerce business, we fully expect the standardized lens profit margin to bring more revenue than overall lens costs in the future. 50 Out of our total cost of goods sold for the year ended December 31, 2021, $211,620 related to orders with prescription lenses, while $330,796 pertained to non-prescription orders.
Out of our total cost of goods sold for the year ended December 31, 2023, $271,229 related to orders with prescription lenses, while $969,064 pertained to non-prescription orders.
For the year ended December 31, 2022, approximately 32% of sales were processed on our online store (Lucyd.co), 38% on Amazon, and 30% with reseller partners. This sales channel mix impacted our revenue for the period, due to the fact we charge an additional $35 to $275 for our prescription lenses available only on Lucyd.co.
For the year ended December 31, 2023, approximately 47% of sales were processed on our online store (Lucyd.co), 33% on Amazon.com, and 20% with reseller partners. This product mix represents the fact that the e-commerce channels have grown more rapidly than our wholesale business.
Sales and marketing expenses Our sales and marketing expenses increased by 16% to $2,059,012 for the year ended December 31, 2022, as compared to $1,771,012 for the year ended December 31, 2021.
These increased expenses were partially offset by recoveries of bad debts, and lower costs related to consultants and other outside service providers. Sales and marketing expenses Our sales and marketing expenses were essentially flat year-over-year at $2,047,069 for the year ended December 31, 2023, as compared with $2,059,012 in the prior year.
We sell products through our retail store resellers, distributors, and on our own website Lucyd.co and on Amazon. Our flagship product line increased in price with the launch of the version 2.0 models, from $149 to $199 on acetate models, and $179 to $229 on titanium models for non-prescription glasses across all of our online channels.
Our newest flagship Lucyd Lyte XL brand frames are priced at $179 on acetate models and $199 on titanium models for non-prescription glasses across all of our online channels.
Interest and Other Income, Net Interest and other income, net, consists primarily of interest expense paid on convertible note loan due to the Parent.
Interest and Other Income, Net Interest and other income, net, primarily includes interest, dividends, and investment returns from our investments in money market funds and U.S. Treasury bills, and interest expense paid on convertible note loan due to Tekcapital (which was repaid in full in February 2023).
Removed
Innovative Eyewear owns the exclusive rights to the Lucyd brand and the Lyte product line. Our mission is to Upgrade Your Eyewear ® .
Added
Our flagship product, Lucyd Lyte, enables the wearer to listen to music, take and make calls, and use voice assistants and ChatGPT to perform many common smartphone tasks hands-free. 46 Our mission is to Upgrade Your Eyewear ® .
Removed
After the full launch of Lucyd Lyte in January 2021, we had strong interest and demand from customers in the U.S. and have since sold thousands of our smart eyewear. In order to meet the growing demand for our products, and in an effort to expand our reach, we have engaged over 180 unique wholesale accounts.
Added
Since the initial launch of Lucyd Lyte in 2021, we have sold thousands of our smartglasses, and have significantly upgraded and expanded our product offerings – including the launch of Lucyd Lyte 2.0 and Lyte XL smartglasses in 2023, and most recently with the launch of the Nautica® Powered by Lucyd smart eyewear collection in January 2024.
Removed
All of our products are designed in Miami, manufactured in Asia, and currently sold through two major types of channels: 1. e-commerce, primarily via our website (Lucyd.co) and marketplaces such as Amazon, Bestbuy.com, and DicksSportingGoods.com; and, 2. a growing network of independent eyewear and sporting goods stores.
Added
We plan to further expand our product offerings through the launch of new cobranded collections with Eddie Bauer and Reebok later in 2024. All of our products are designed in Miami, manufactured in Asia, and currently sold through two major types of channels: 1.
Removed
Please refer to discussion in the Components of Results of Operations for more details regarding our pricing structure. We are working to expand these channels with national eyewear chains, big box retail stores (electronics, sporting goods, general merchandise) and specialty retail stores.

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