Item 1. Business
Item 1.
Business .
Our
History
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 prescription eyewear and sun protection. Founded and headquartered in Miami, Florida, we were initially organized
as a Florida limited liability company effective August 15, 2019. 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. 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”). This initial
product offering embodied our goal of creating smart eyewear for all day wear that looks like and is priced similarly to designer eyewear,
but is also light weight and comfortable, and enables the wearer to remain connected to their digital lives. The product was initially
launched with six styles, and in September 2021, an additional six styles were added.
We
recently launched version 2.0 of our Lucyd Lyte eyewear, and our current product offering consists of 16 version 1.0 models and 15 version
2.0 models, which offers a similar amount of style variety as many traditional eyewear collections. 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.
“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 $___ 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.
“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.
“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.
“Call me an Uber”:
this command prompts our user on which type of Uber ride they want, then asks to confirm to send a car to our user’s location.
9.
“What time is it?”:
announces the current time.
10.
“Play (song/album/artist)”:
this command begins playing the requested song, album or artist via Apple Music.
11.
“Get me directions to (location)”:
this command begins navigating on phone, with audible directions on glasses.
12.
“Take a memo”: this command
begins recording a speech-to-text memo in Notes. 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. 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.
We believe smart eyewear is a product category whose time has come, and we believe we are well positioned to capitalize on and help develop
this exciting new sector–where eyewear meets electronics in a user-friendly, mass market format, priced similarly to designer eyewear.
In
first quarter of 2022 we introduced a virtual try-on kiosk for select retail stores. 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. In addition, we anticipate the following upgrades to accessory products in 2023:
● The
patent-pending Lucyd charging dock will be upgraded to feature a charging status LED and
USB data capability, enabling it to be used as a USB hub for computers in addition to a charging
hub.
● The
Lucyd virtual try-on kiosk will be upgraded with a store control panel enabling the kiosk
owner to change the display into Spanish language mode and control which frames and lens
options are shown in the digital experience.
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. 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 ® . Our smart eyewear is a fusion of headphones with glasses, bringing vision correction
and protection together with digital connectivity and clear audio, while also offering a safer solution for listening to music outdoors
(as compared to in-ear headphones). The convenience of having a Bluetooth headset and comfortable glasses in one, especially for those
who are already accustomed to all-day eyewear use, offers a lifestyle upgrade at a price most consumers can afford.
In
a sense, we view this integration of technology and vison correction/protection as the next evolutionary step in the development of eyewear.
Over the entire course of eyewear development and history, many of the innovations have dealt with improving the lenses of the glasses.
Notably, eyewear frames have not improved much in the past 400 years, with the exception, in our view, of the utilization of plastic
to reduce weight and provide a wider range of designs and finishes, and the introduction of new hinge types. 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 is to enhance one of the world’s most important wearables: eyewear.
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Additionally,
as part of our commitment to a great customer experience, we listen to feedback from our customers, and continuously strive to improve
customer satisfaction and experience with our products. Our customers’ extensive feedback pointed to a need and desire for better
interaction with social media while on-the-go. We are addressing this need by developing an exciting software application called Vyrb™,
which enables Lucyd Lyte users to hear and reply to social media posts, with their voice, hands-free, through their glasses (“Vyrb”).
Other Vyrb users will be able hear these posts. Additionally, Vyrb offers Lucyd Lyte users external social media sharing features, which
allow posts made on Vyrb to be exported to other platforms such as Facebook, Twitter and Instagram. We launched Vyrb in December 2021
for both iOS and Android, and we believe that Vyrb is one of the first social applications designed specifically with a focus on smart
glasses and other voice enabled wearables. We subsequently expanded Vyrb’s capabilities through software upgrades released in the
fourth quarter of 2022, and anticipate the commercial launch of Vyrb in the fourth quarter of 2023.
We
have made strong strides towards our goal of making smart eyewear accessible to the mass market. 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. 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
goal is to become a meaningful player in the smart eyewear market. Innovative Eyewear’s early successes have shown our ability
to not only compete, but to lead in this rapidly changing and expanding technological eyewear market, and our goal is to continue spearheading
innovation in the field.
Giving
Back
We
donate an optical frame for every Lucyd Lyte sold at retail locations.
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 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’ve partnered with New Eyes because they fit the Lucyd brand mission: enhancing
the vision of people all over the world, and we believe that it simply is the right thing to do.
Additionally,
university students, educators, healthcare workers, uniformed service members, and veterans are eligible for an ongoing 18% discount
off all frames and lens upgrades on www.lucyd.co .
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. 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. 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).
We believe that the distraction created by smartphones originates in two forms: (1) via headphones or earbuds, where the user is
deprived of full audible situational awareness; and, (2) via the visual interface of the phone, which distracts the user completely from
their surroundings. Lucyd Lyte open ear audio helps address this problem by having the speakers mounted at the temples (in the arms)
of the glasses. There is nothing in the ear canal and, as a result, individuals can better maintain situational awareness, such as hearing
the traffic around them, as well as nearby sounds. Many of our competitors have relatively bulky speakers enclosed within the temples,
while Lucyd Lyte’s speakers and temples are thin, which allows them to look similar to traditional designer glasses. 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.
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Affordable
Price Point . Our Lucyd Lyte eyewear provides both optical-quality glasses and a Bluetooth headset together,
at roughly the same price as a traditional pair of designer glasses, which is core to the disruptive potential of our product. 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. 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. 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. 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. Innovative Eyewear has a partnership with a high-quality optical lab in Boston to produce prescription and custom
lenses for our frames quickly and affordably. Our contract with a third-party optical lab also allows us to offer direct prescription
fulfillment to our customers.
Comfort . 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 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 . All of our products are sold through multiple e-commerce channels, including on our
website (Lucyd.co), BestBuy.com, DicksSportingGoods.com and Amazon.com, and are distributed through optical or other retailers (such
as, but not limited to, Metro Optics Eyewear and Marca Eyewear Group, Inc.). We believe this capital light approach is highly scalable
and efficient in the deployment of resources. We view “capital light” as being more efficient by obviating the need to build
factories and retail stores, while partnering with existing companies in both of these groups.
Multiple-Channel
Approach . We sell our products both through multiple online channels and multiple categories of brick-and-mortar
retail stores. We believe this multi-channel approach provides us with an advantage against our competitors who sell in a narrower selection
of channels.
Experienced
Management Team . 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.
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.
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. 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.
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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 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.
Sales
We
have two major sales channels: (1) e-commerce via Lucyd.co and Amazon and, (2) our ongoing development of a network of eyewear, sporting
goods and electronics resellers, including but not limited to, BestBuy.com, DicksSportingGoods.com and Brookstone, to offer our frames.
Most of our resellers are experienced opticians who provide valuable feedback that informs the development of our product lines, which
we would not receive if we were solely direct to consumer. Additionally, we have a robust presence on multiple e-commerce and social
media platforms, which facilitates several customer on-ramps for the Lucyd brand, and numerous ad campaign strategies. 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”).
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%. 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. 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. Additionally,
the logistical costs of the high number of B2C returns in fiscal year 2022 contributed to the deficit. However, with the better establishment
of the Lucyd brand expected in 2023, and with the current improvements to the product and increase in MSRP by $50, we expect to neutralize
the gross deficit in fiscal year 2023 as our per-unit profitability is increasing. 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. 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). 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). 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.
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.
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4.
Social Selling
Not
only do we use social media to drive traffic to our main sales channels, but we also take advantage of intra-social shops as well, and
have deployed shopping experiences through Facebook, Instagram and TikTok to gain further brand awareness.
We
also offer two affiliate platforms via shareasale.com and Shopify for peer-driven sales. The Shareasale program is for professional affiliate
and deal promotion companies, and increases revenue on Lucyd.co by offering direct commissions in exchange for converting web traffic.
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.
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. 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. We have launched our
in-store digital try-on kiosk to key retailers in December 2021 and we have upgraded the kiosk’s capabilities to allow for
the customer to try different lens tints, explore an FAQ, download the company’s Vyrb™ social app, and enable in-store reordering
from the kiosk.
2.
National Eyewear Chains
Lucyd
eyewear is currently being evaluated by multiple leading eyewear chains in the United States for potential inclusion in their brick-and-mortar
stores. After the recent introduction of Ray Ban Stories smart eyewear, many retailers are keen to include one or more smart eyewear
products in their stores and on their e-commerce platforms. 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.
Big Box Retail Stores
(Electronics, sporting goods, general merchandise)
In
addition to mainstream optical channels, we have begun placing our products and are pursuing additional product placements with leading
big box stores, either in their eyewear or electronics departments. Specifically, we have begun selling our products on Bestbuy.com and
Dickssportinggoods.com.
4.
License Agreements and
Specialty Retail Stores
We
are leaving no stone unturned in our mission to bring smart eyewear mainstream. We have licensed two leading fashion brands, Nautica
and Eddie Bauer, to produce new powered by Lucyd cobranded frames, which will be launched in 2023 on Lucyd sales channels as well
as in select Nautica and Eddie Bauer stores . Additionally, we are pursuing other potential sales outlets such as home shopping
channels, cellular stores and boutique retailers.
6
Manufacturing
and Supply Chain
Our
products are designed and specified in the United States and subsequently manufactured in China. The products are designed in-house,
3-D CAD files are then produced with product renderings. 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. 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. Inspections include testing procedures to help ensure our customers receive only functional, high-quality
products. 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.
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. If a customer orders with prescription or specialty lenses, then
the smart eyewear frames are sent to an optical contractor laboratory in Boston, Massachusetts, to have the lenses cut, ground and mounted
in the frames, whereupon they are directly shipped to customers.
Our
in-store kiosks are comprised of a fixture, a tablet, and proprietary software, which enable the prospective customer to virtually try
on our smart glasses. The fixtures, which sport our Company name, are manufactured by a U.S.-based third-party company, and are designed
to serve as a holding mechanism for the tablet. We purchase each tablet through Amazon.com, which is then fitted to the kiosk fixture.
The Company currently utilizes Samsung’s tablets for its in-store kiosks. Once each tablet is fitted to its kiosk fixture, the
tablet is loaded with software which ultimately presents the Company’s try-on application. This software-based chain of processes
relies on the tablet’s built-in camera and enables the prospective buyer of our smart eyewear to virtually try-on the glasses,
which are superimposed in different styles onto the customer’s face using the front-facing camera. The tablet is fitted to the
kiosk and loaded with our software in our Miami facility, from where they are shipped to a third-party warehouse in Miami for distribution
to retail stores.
Marketing
We
employ a 360-degree marketing strategy that encompasses both brand and user generated content syndication across earned, owned and paid
platforms (channels where the company pays a fee to have its product advertised). 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.
Our
online marketing strategy is primarily driven by pay-per-click advertisements on mainstream search engines, social media apps, and Amazon
and other marketplaces. In addition, we support our primary efforts with influencer created and promoted “UGC” (user-generated
content), email automations and newsletters, and website push notifications. We have also deployed nationwide broadcast cable TV campaigns
and plan to use this channel in the future.
We
believe we are trendsetters in creating relevant, omni-channel touchpoints that derive meaningful experiences and products designed for
our customers.
Our
wholesale marketing strategy is primarily focused on traditional sales email and call outreach, national and regional optical trade shows,
and optical and athletic trade advertisements.
7
From
a brand perspective, strategically offering value-added optical smart eyewear coupled with expansive end-user customization our social
audio app initiatives can potentially rapidly expand brand awareness and revenue. At Innovative Eyewear, we strive to lead and own critical
narratives within the Bluetooth and smart eyewear space.
We
seek to create memorable experiences and products that resonate with our customers, coupled with premium content and campaigns designed
to expand our brand presence and market share. 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 ® . 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. 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. 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. The market for digital assistants
like Siri, Google Voice, Bixby and Alexa has grown rapidly worldwide, and is projected at $4.5 billion in revenue in 2023. The worldwide
hearables market was estimated at $69.0 billion in 2022. We view the popularity of hearables as an important catalyst for the smart eyewear
market.
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. 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
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. 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.
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. 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. The 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. App. No. 17/104,849
n/a
D954,137
Flat Connector Hinges for Smartglasses Temples
US
December 19, 2019
Issued
June 7, 2022
D974,456
Pivot Hinges and Smartglasses Temples
US
December 19, 2019
Issued
n/a
11,282,523
Voice Assistant Management
US
March 25, 2020
Issued
March 22, 2022
29/743,256
Wayfarer Smartglasses
US
July 20, 2020
Pending
n/a
D951,334
Round Smartglasses
US
July 20, 2020
Issued
May 10, 2022
17/104,849
Wireless Smartglasses with Quick Connect Front Frames
US
November 25, 2020
Pending
n/a
29/806,200
Smartglasses
US
September 1, 2021
Pending
n/a
29/806,204
Smartglasses
US
September 1, 2021
Pending
n/a
29/806,207
Smartglasses
US
September 1, 2021
Pending
n/a
29/806,209
Smartglasses
US
September 1, 2021
Pending
n/a
207516
Smartglasses
Canada
October 29, 2021
Pending
n/a
207517
Smartglasses
Canada
October 29, 2021
Pending
n/a
207518
Smartglasses
Canada
October 29, 2021
Pending
n/a
207519
Smartglasses
Canada
October 29, 2021
Pending
n/a
29/814,016
Safety Smartglasses
US
November 2, 2021
Pending
n/a
29/814,017
Safety Shields
US
November 2, 2021
Pending
n/a
10
63/274,920
Safety Glasses
US
November 2, 2021
Non-Provisional Application filed on October 21, 2022; U.S. App. 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. 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
18/048,715
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.
On
April 1, 2020, we entered into an exclusive, worldwide license agreement with Lucyd Ltd. for all fields of use of the Lucyd ®
brand, and the associated intellectual property and assets (the “License Agreement”). 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.
All Lucyd intellectual
property, including, all patents, patent applications and any continuations of such.
2.
All Lucyd trademarks.
3.
All Lucyd collateral material,
artwork, subscriber lists, eyeglass model and frame shots and renders, as well as 3D models.
4.
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.
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.
Under
the terms of the License Agreement, we have the exclusive right to effectuate sublicenses, either exclusively or non-exclusively, to
any or all of our licensed intellectual property, at its sole discretion. Upon execution of the License Agreement, we paid Lucyd Ltd.
£1 for the life of the licensed assets, and the License Agreement shall continue in perpetuity, unless terminated according to
the terms of the agreement. Additionally, we issued 3,750,000 shares of our common stock to Lucyd Ltd. as compensation for entering into
the License Agreement and for the contribution of certain other assets. Lucyd Ltd. may terminate the license with immediate effect by
providing written notice to us if, among other things: we commit a material breach, as such is defined by the terms of the agreement;
or, if we suspend, or threaten to suspend, payment of our debts or are unable to pay our debts.
The
License Agreement requires us to indemnify Lucyd against all liabilities, costs, expenses, damages, and losses (including but not limited
to any direct, indirect or consequential losses, loss of profit, loss of reputation and all interest, penalties, and legal costs (calculated
on a full indemnity basis) and all other reasonable professional costs and expenses) suffered or incurred by Lucyd Ltd. arising out of
or in connection with actual or alleged infringement of third party intellectual property rights; our breach or non-performance of or
the enforcement of License Agreement. We have the right to sublicense any of our rights under the License Agreement, provided that any
sublicense also shall enter into a supplemental agreement satisfactory to Lucyd Ltd.
On
October 5, 2021, the parties to the License Agreement executed an Addendum, to the exclusive license agreement, which clarified
that Innovative Eyewear shall commercialize, continue with any on-going intellectual property prosecutions and pay all maintenance or
other patent fees (the “Addendum”). 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. Landstrom Associates, Inc. for prospecting
a wholesale relationship with Walmart, Target and Best Buy stores in the United States (the “Representation Agreement”).
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 term
of the Representation Agreement is five years. 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 termination date. Thus far, the representation
has resulted in a successful launch of the Company’s products on BestBuy.com.
Distribution
Agreement
On
June 30, 2021, we entered into a distribution agreement with 8 Points Inc., a subsidiary of Marca Eyewear Group Inc., for exclusive
distribution of Lucyd Lyte products in Canada (the “Distribution Agreement”). The Distribution Agreement provides that 8
Points Inc. will have exclusive purchase and distribution rights and obligations in Canada. The term of the Distribution Agreement is
3.5 years and either party may terminate by providing 180 days’ notice to the other party. The distributor will perform services,
which shall include, but shall not be limited to the following):
1.
Sales of our products into retail distribution by servicing
potential purchasers and by generating new business within the Territory (as defined in the Distribution Agreement).
13
2.
Handling of all account inquiries on sales made pursuant to
this Distribution Agreement.
3.
Innovative Eyewear will receive all Canadian returns on a timely
basis. Currently, distributor will organize customer returns such that all returns will be shipped in bulk to Company’s distribution
center in Miami, Florida.
4.
Company will provide marketing activities to support the sales
of all the collections sold by the Distributor in the territory.
5.
Distributor will provide logistic service to distribute the
product in the territory covering all provinces and provide internal customer service and warehousing and shipping, as well as after
purchase care to customer.
6.
Distributor will provide a minimum purchase of $4.6 million
worth of Lucyd Lyte products over 30 months to maintain exclusivity for sales in Canada.
7.
Monthly minimum committed purchases increase incrementally
over the term of the Distribution Agreement. In the event that 8 Points Inc. does not meet the minimum monthly purchase requirements
then we may convert 8 Points Inc. exclusive contract to a non-exclusive contract or terminate the Distribution Agreement.
The
distributor has not met the requirements to maintain exclusivity; as such, we have converted the Distribution Agreement to a non-exclusive
contract in accordance with the terms of the agreement as outlined above.
Nautica ®
License Agreement
On
September 28, 2022, we entered into a multi-year global licensing agreement with Nautica Apparel, Inc., which became effective July 1,
2022. 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. This agreement
requires us to pay royalties based on a percentage of net retail and wholesale sales, and also requires guaranteed minimum royalty payments.
The agreement has a base term of 10 years but is cancellable at our option during the fifth year. The future minimum payments due during
the noncancelable portion of the contract term (2022-2027) are approximately $1.1 million in aggregate; future minimum payments due during
the remaining term of the contract (2028-2032) are approximately $3.6 million in aggregate.
The
Next Step
Vyrb™
Social Audio App
We
believe eyewear should enable customers to freely interact with social media. While digital assistants, once enabled, can provide the
basis for this interaction, we believe that the ability to receive and send social media posts with an individual’s voice may greatly
enhance ease of use of these platforms on the go. 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 application launched
out of beta in December 2021, and the further development of the Vyrb app is continuing on pace, with two major features launched
in December 2022: the ability to host live audio streams with up to 100 visitors and six live speakers at a time; and the ability
to import external audio files into Vyrb, which allows longstanding podcasters and other content creators to add their content libraries
into Vyrb. After the introduction of several more features and key user experience improvements, we anticipate a commercial launch of
Vyrb in the fourth quarter of 2023. 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. 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. We believe social interaction
via smart eyewear will be instrumental in bringing new, youthful customers to our company.
A
number of companies recently have started to launch voice mediated social media applications, such as Clubhouse, Discord, Audlist, Listen
and Riffr. We are designing Vyrb to host audiobooks, podcasts and entire music albums on the platform. With Vyrb, Lucyd Lyte customers
are able to hear their social media feeds, post messages, hold gatherings and musical performances (by inviting other Vyrb users to connect
with each other at a specific date and time), and enjoy social media with the authenticity of their own voice, all through their eyewear
and without taking their phone out of their pocket.
The
Product and Market for Vyrb
Vyrb
is being designed as a full social media experience to enhance voice-based communications on wearables and mobile devices. The sophistication
of Vyrb’s interface enables a large array of in-app purchases and subscriptions, as well as easy connectivity with the Lucyd Lyte
line of smart eyewear. In addition to an ad-driven revenue model that is typical of social media applications, the robust and highly
variable selection of planned in-app purchases provide important improvements and fine-tuned customizations to help personalize the user
experience. We plan to roll out these and other exciting features of Vyrb over the course of several software updates.
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. Gems can also be traded to other users for their
items on the Vyrb Marketplace module. 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
spend approximately 145 minutes per day on social media applications and regularly click on advertisements they view through their applications.
We believe Vyrb is strategically positioned to become a prime advertisement space, allowing both visual and audible advertisements to
be purchased. Vyrb ads will be shown in a user’s regular newsfeed, which we believe will create an opportunity and need for a subscription
in-app purchase (Vyrb Gold) for a premium, ad-free browsing experience. For ease of use, Vyrb ads can be created by any user through
the application in just moments: users will be able to purchase “Ad Token” items from the in-app store, and then use these
tokens to turn standard posts into wide-reaching ads. A rapid-response reporting system will be developed and monitored to remove objectionable
or illegal content from the platform. With its focus on high quality audio, we are designing Vyrb to lift up professional and creative
audio content developers by helping them reach new audiences. To ensure a positive user experience, we are developing a system in Vyrb
which will automatically promote positively reviewed content, and automatically remove content that has been reported in a high ratio
compared to the number of viewers, providing the basis for user product discovery as well as a failsafe against any mistake in our manual
and algorithmic moderation of the application’s hosted content.
Vyrb
users will be able to purchase and support content from indie and professional creators via an in-app currency (referred to as “ gems ”
in this document, a virtual point the user typically accumulates by viewing ad content or by purchasing them). Creators will receive
gems from typical users as tips during live broadcasts, and in exchange for access to premium posts. The creators will then be able to
cash out these gems at an exchange rate that provides profit to Vyrb. For example, users purchase the gems, its in-app loyalty token
at a rate of $1 each, but creators only receive $0.75 for each gem they cash out. A 25% effective platform fee would put the content
transaction fees of Vyrb at a lower rate than most digital content marketplaces. 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.
To
acquire the gems, users must buy them in the Vyrb Shop or gain them by engaging with sufficient ad content (e.g., using the application
for an hour, or an amount of time that effectively pays for the gem). While Vyrb allows users the flexibility of choice of either buying
or earning these gems, we believe that there is a huge revenue stream potential for us through a strategic implementation of the Vyrb
Shop and peer-to-peer content transactions.
Also,
we plan for users to be able to charge a fixed price to be able to access particular audio posts. For example, this feature could be
used by a podcaster to sell their premium episodes, or by a recording artist to sell their music albums. In tandem with this feature,
audio posts will be divisible into tracks to support long form content such as albums and audiobooks. Vyrb will take a flat percentage
fee on all sales of premium content within the application by allowing creators to cash out gems they receive for selling their content.
We believe the major benefit of this system is that it will provide audio content creators a new platform for rapidly creating, listing
and selling their content, and help create an environment full of rich, unique and interactive audio experiences such as live “radio
shows,” indie content and virtual concerts for typical Vyrb users.
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. A fundamental aspiration of Vyrb is to
provide a new platform and source of revenue for high quality audio content creators in particular; to that end, we designed Vyrb with
a goal of providing a rapid, user-friendly platform for creators and consumers to share, sell and enjoy the best audio the web has to
offer. We believe that through Vyrb, we can make the interaction between our users and our product a fun and rewarding experience, which
can also be monetized by the company and content creators alike. By putting audio front and center, we hope to provide a new meeting
ground for audio content creators and those who enjoy lots of music, podcasts and talk shows. We hope to provide a mutually beneficial
relationship, where Vyrb takes a reasonable fee on the transacting of these parties in exchange for bringing them together.
16
Competition
The
smart eyewear industry in which we operate is competitive and subject to changes in practice. 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 . 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. 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 . 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. 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. Ray-Ban Spectacles have a well-known and respected brand,
and a list price starting at $299, which makes them 50% more expensive than Lucyd Lyte. They weigh considerably more (20-70% depending
upon the Lyte model) than Lucyd Lyte glasses, have a shorter battery life, thicker temple profiles and are not water resistant.
All
of the competitors discussed above have substantially greater manufacturing, financial, research and development, personnel and marketing
resources than we do. As a result, although we believe our products are currently superior, our competitors may be able to develop superior
products, and compete more aggressively and sustain their competitive advantage over a longer period of time than us. Our products may
be rendered obsolete in the face of competition.
Employees
As
of December 31, 2022, we had 9 full time employees with two in product development, two in sales, one in finance, one in customer
service, one in marketing, one in graphic design and one in video production. Employees are supported by a number of consultants and
part time employees, including a group of 8 independent sales representatives.
Other
Our
principal executive offices are located at 11900 Biscayne Blvd., Suite 630, North Miami, Florida 33181, our telephone number is (954)
826-0329 and our Internet website address is www.lucyd.co. We make available free of charge on or through our Internet website our annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A,
and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission (the “SEC”).
Alternatively, you may also access our reports at the SEC’s website at www.sec.gov.
17
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. You should carefully consider these risk factors, together with the risk factors set forth in Item 1A. of this Report
and the other reports and documents filed by us with the SEC.
Risks
Related to our Business, Strategy and Industry
● 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. 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.
● We
currently derive all of our revenue from sales of our glasses. 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. 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.
● 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.
18
● 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.
Risks
Related to our Intellectual Property
● We
license some of our technology from Lucyd Ltd., the majority 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.
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.
● 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
Related to Our Common Stock
● Our
directors, executive officers and principal stockholders have substantial control over our company, which could limit your ability to
influence the outcome of key transactions, including a change of control.
19
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.