What changed in this filing

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Item 1. Financial Statements

2023-08-11 compared with 2023-05-12 · 1165 added, 285 removed, 47 unchanged (97% of the section changed)

2 unchanged sentences

BALANCE SHEETS

March 31, 2023 (Unaudited) and December 31, 2022

Current Assets

Cash and cash

Accounts receivable, net

of allowance of $ 92,646

Prepaid expenses

Inventory prepayment

2023 (Unaudited) and December 31, 2022

and cash equivalents

in debt securities, at amortized cost (fair value of $ 1,950,220 )

receivable, net of allowances of $ 98,318 and $ 92,646 , respectively

current assets

Current Assets

Non-Current Assets

Patent costs, net

Capitalized software costs

Property and equipment,

software costs

and equipment, net

non-current assets

AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable and accrued

Deferred revenue

Due to Parent and Affiliates

payable and accrued expenses

to Parent and Affiliates

party convertible debt

Current Liabilities

Non-Current Liabilities

Commitments and contingencies

Stockholders’ Equity

Common stock (par value

$ 0.00001 , 50,000,000 shares authorized, and 7,715,757 and 7,307,157 shares issued and outstanding as of March 31, 2023 and December

31, 2022, respectively)

Additional paid-in capital

( 11,736,797 )

( 10,305,987 )

and contingencies

Stockholders’

stock (par value $ 0.00001 , 50,000,000 shares authorized, and 12,917,239 and 7,307,157 shares issued and outstanding as of June 30,

2023 and December 31, 2022, respectively)

paid-in capital

STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY

See accompanying Notes to the Financial Statements.

accompanying Notes to the Financial Statements.

EYEWEAR, INC.

STATEMENTS OF OPERATIONS

the three months ended March 31, 2023 and 2022

Three Months Ended

Revenues, net

the three and six months ended June 30, 2023 and 2022

Cost of Goods Sold

(Deficit) Profit

and administrative

and marketing

and development

party management fee

Operating Expenses

General and administrative

Sales and marketing

Research and development

Related party management fee

Total Operating Expenses

( 1,439,238 )

( 1,262,575 )

Income (Expense)

Other Income (Expense)

Interest Expense

Total Other Expense

$ ( 1,430,810 )

$ ( 1,206,559 )

Weighted average number of shares outstanding

Loss per share, basic and diluted

See accompanying Notes to the Financial Statements.

average number of shares outstanding

per share, basic and diluted

accompanying Notes to the Financial Statements.

EYEWEAR, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

the three months ended March 31, 2023 and 2022

the three and six months ended June 30, 2023 and 2022

Stockholders’

Balances, January 1, 2023

$ ( 10,305,987 )

Stock based compensation

Exercise of warrants by stockholders

( 1,430,810 )

Balances, March 31, 2023

$ ( 11,736,797 )

Balances, January 1, 2022

$ ( 4,624,154 )

Stock based compensation

( 1,206,559 )

Balances, March 31, 2022

$ ( 5,830,713 )

$ ( 582,092 )

See accompanying Notes to the Financial Statements.

January 1, 2023

based compensation

of warrants by stockholders (see Note 9)

March 31, 2023

based compensation

of stock options

of warrants by stockholders (see Note 9)

of warrants related to private placement transaction (see Note 9)

public offering (see Note 9)

June 30, 2023

January 1, 2022

based compensation

March 31, 2022

based compensation

of stock subscription receivable

June 30, 2022

accompanying Notes to the Financial Statements.

EYEWEAR, INC.

STATEMENTS OF CASH FLOWS

the three months ended March 31, 2023 and 2022

Operating Activities

$ ( 1,430,810 )

$ ( 1,206,559 )

Adjustments to reconcile net loss to net cash used in operating activities:

Non cash interest expense

Stock based compensation expense

Expenses paid by parent and affiliates

Provision for doubtful accounts

Changes in operating assets and liabilities:

Accounts receivable

Accounts payable and accrued expenses

Prepaid expenses

Other current assets

Other current liabilities

Contract assets and liabilities

Net cash flows from operating activities

( 1,427,072 )

Investing Activities

Purchases of property and equipment

Capitalized software expenditures

Net cash flows from investing activities

Financing Activities

Payment of deferred offering cost

Proceeds from exercise of warrants by stockholders

Proceeds from related party convertible debt

Repayment of related party convertible debt

Net cash flows from financing activities

Net Change In Cash

Cash at Beginning of Period

Cash at End of Period

Significant Non-Cash Transactions

Expenses paid for by Parent reported as increase in Due to Parent and Affiliates and related party convertible debt

See accompanying Notes to the Financial Statements.

the six months ended June 30, 2023 and 2022

to reconcile net loss to net cash used in operating activities:

cash interest expense

based compensation expense

paid by parent and affiliates

for doubtful accounts

in operating assets and liabilities:

payable and accrued expenses

current assets

current liabilities

assets and liabilities

cash flows from operating activities

of financial investments (debt securities)

of property and equipment

software expenditures

cash flows from investing activities

from second public offering (see Note 9)

from exercises of warrants related to private placement transaction (see Note 9)

from exercise of warrants by stockholders (see Note 9)

from exercise of stock options

of stock subscription receivable

of deferred offering costs

from related party convertible debt

of related party convertible debt

cash flows from financing activities

Change In Cash

at Beginning of Period

at End of Period

Non-Cash Transactions

paid for by Parent reported as increase in Due to Parent and Affiliates and related party convertible debt

accompanying Notes to the Financial Statements.

EYEWEAR, INC.

TO THE FINANCIAL STATEMENTS

March 31, 2023 and 2022 (Unaudited)

NOTE 1 – GENERAL INFORMATION

Innovative Eyewear, Inc.

(the “Company,” “us,” “we,” or “our”) is a corporation organized under the laws of the State of Florida that develops and sells cutting-edge 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.

The Company was founded by Lucyd Ltd.

2023 and 2022

1 – GENERAL INFORMATION

Eyewear, Inc.

(the “Company,” “us,” “we,” or “our”) is a corporation organized under

the laws of the State of Florida that develops and sells cutting-edge 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.

The Company was founded by Lucyd

(the “Parent” or “Lucyd”), a portfolio company of Tekcapital Plc through Tekcapital Europe, Ltd.

(collectively, the “Parent and Affiliates”), which owned approximately 67% of our issued and outstanding shares of common stock as of March 31, 2023.

Innovative Eyewear licensed the exclusive rights to the Lucyd® brand from Lucyd Ltd., which includes the exclusive use of all of Lucyd’s intellectual property, including our main product, Lucyd Lyte® glasses.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed balance sheet as of December 31, 2022 (which has been derived from audited financial statements) and the unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”).

Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting.

Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows.

In the opinion of management, all adjustments considered necessary for the fair presentation of the financial statements for the periods presented have been included.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for future periods or the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates, particularly given the significant economic disruptions and uncertainties associated with the ongoing economic environment, including potential supply chain constraints.

Receivables and Credit Policy

Trade receivables from customers are uncollateralized customer obligations due under normal trade terms.

For direct-to-consumer sales, payment is required before product is shipped.

(collectively,

the “Parent and Affiliates”), which owned approximately 40% of our issued and outstanding shares of common stock as of June 30,

Innovative Eyewear has licensed the exclusive rights to the Lucyd® brand from Lucyd Ltd., which includes the exclusive use

of all of Lucyd’s intellectual property, including our main product, Lucyd Lyte® glasses.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

accompanying condensed balance sheet as of December 31, 2022 (which has been derived from audited financial statements) and the

unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the

United States (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8

of Regulation S-X promulgated by the United States Securities and Exchange Commission (“SEC”).

Certain information or footnote

disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the

rules and regulations of the SEC for interim financial reporting.

Accordingly, they do not include all the information and footnotes

necessary for a comprehensive presentation of financial position, results of operations, or cash flows.

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

presented have been included.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative

of the results to be expected for future periods or the full year.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the

reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates, particularly

given the significant economic disruptions and uncertainties associated with the ongoing economic environment, including potential supply

chain constraints.

highly liquid investments with original maturities of three months or less, including money market funds, certificates of deposit, and

US Treasury bills purchased three months or less from maturity, are considered cash equivalents.

of June 30, 2023, the Company held an investment in U.S.

Treasury bills, which matures in December 2023.

This investment is

classified as “held-to-maturity” and is recorded at amortized cost of $ 1,949,204 in the accompanying condensed balance sheet.

The fair value of this investment, based on quoted prices (unadjusted) in active markets for identical assets, is $ 1,950,220 as of June 30,

2023, which includes an unrealized gain of $ 1,016 .

and Credit Policy

receivables from customers are uncollateralized customer obligations due under normal trade terms.

For direct-to-consumer sales, payment

is required before product is shipped.

Trade receivables are stated at the amount billed to the customer.

Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoice.

Payments of trade receivables

are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest

unpaid invoice.

The Company, by policy, routinely assesses the financial strength of its customers.

To comply with industry standards, we offer “net 30” payments on wholesale orders of $1,500 or more.

For wholesale orders, to acquire an order on net 30 terms, the customer is provided a credit check application as well as a credit card authorization form.

The authorization form explicitly states when and for much we will bill the customer via credit card.

Accounts receivable are reported net of the allowance for doubtful accounts.

The allowance for doubtful accounts is based on the Company’s evaluation of each customer’s payment history, account aging, and financial position.

The Company recognized bad debt expense of $ 142 for the three months ended March 31, 2023, and had an allowance for doubtful accounts of $ 92,646 as of March 31, 2023.

Capitalized Software

The Company incurred software development costs related to development of the Vyrb app.

The Company capitalized these costs in accordance with ASC 985-20, “Software – Costs of Software to be Sold, Leased, or Marketed,” considering it is the Company’s intention to market and sell the software externally.

Planning, designing, coding, and testing occurred necessary to meet Vyrb’s design specifications.

As such, all coding, development, and testing costs incurred subsequent to establishing technical feasibility were capitalized.

We launched a beta version of the Vyrb application in December 2021 that demonstrates the functionality of the software.

We are planning the commercial launch of Vyrb in the fourth quarter of 2023, and expect an estimated useful life of five years for this product.

Our inventory includes purchased eyewear and is stated at the lower of cost or net realizable value, with cost determined on a specific identification method of inventory costing which attaches the actual cost to an identifiable unit of product.

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 March 31, 2023 and as of December 31, 2022.

As of December 31, 2022, the Company recorded an inventory prepayment in the amount of $ 197,750 , related to a down payment for eyewear purchased from the manufacturer;

this product was shipped during the three months ended March 31, 2023, and there was no prepayment balance remaining as of March 31, 2023.

Intangible Assets

Intangible assets relate to patent costs received in conjunction with the initial capitalization of the Company and internally developed utility and design patents.

To comply with industry standards,

we offer “net 30” payments on wholesale orders of $1,500 or more.

For wholesale orders, to acquire an order on net 30 terms,

the customer is provided a credit check application as well as a credit card authorization form.

The authorization form explicitly states

when and for much we will bill the customer via credit card.

receivable are reported net of the allowance for doubtful accounts.

The allowance for doubtful accounts is based on the Company’s

evaluation of each customer’s payment history, account aging, and financial position.

The Company recognized bad debt expense of

$ 5,672 and $ 5,814 for the three and six months ended June 30, 2023, respectively, and had an allowance for doubtful accounts of

$ 98,318 as of June 30, 2023.

There was no bad debt expense recognized for the three and six months ended June 30, 2022.

Company’s inventory includes purchased eyewear and is stated at the lower of cost or net realizable value, with cost determined

on a specific identification method of inventory costing which attaches the actual cost to an identifiable unit of product.

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 June 30, 2023

and as of December 31, 2022.

of June 30, 2023 and December 31, 2022, the Company recorded an inventory prepayment in the amount of $ 366,626 and $ 197,750 ,

respectively, related to down payment for eyewear purchased from the manufacturer, prior to shipment of the product that occurred after

June 30, 2023 and December 31, 2022, respectively.

assets relate to patent costs received in conjunction with the initial capitalization of the Company and internally developed utility

and design patents.

The Company amortizes these assets over the estimated useful life of the patents.

The Company reviews its intangibles assets for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Property and Equipment

Property and equipment are depreciated using the straight-line method over the estimated useful lives or lease terms if shorter.

Depreciation expense for the three months ended March 31, 2023 and 2022 was $ 10,307 and $ 3,983 , respectively.

For income tax purposes, accelerated depreciation methods are generally used.

The Company reviews its intangibles

assets for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Company incurred software development costs related to development of the Vyrb app.

The Company capitalized these costs in accordance

with ASC 985-20, “Software – Costs of Software to be Sold, Leased, or Marketed,” considering it is the Company’s

intention to market and sell the software externally.

Planning, designing, coding, and testing occurred necessary to meet Vyrb’s

design specifications.

As such, all coding, development, and testing costs incurred subsequent to establishing technical feasibility

were capitalized.

The Company launched a beta version of the Vyrb application in December 2021 that demonstrates the functionality

of the software.

Management is planning the commercial launch of Vyrb in the fourth quarter of 2023, and expects an estimated useful

life of five years for this product.

and Equipment

and equipment assets are depreciated using the straight-line method over their estimated useful lives or lease terms if shorter.

expense for the three months ended June 30, 2023 and 2022 was $ 10,307 and $ 3,916 , respectively.

Depreciation expense for the six

months ended June 30, 2023 and 2022 was $ 28,979 and $ 7,899 , respectively.

For income tax purposes, accelerated depreciation methods

are generally used.

Repair and maintenance costs are expensed as incurred.

The Company accounts for income taxes under an asset and liability approach that recognizes deferred tax assets and liabilities based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

The Company follows a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return.

Company accounts for income taxes under an asset and liability approach that recognizes deferred tax assets and liabilities based on

the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in

effect in the years in which the differences are expected to reverse.

Company follows a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected

to be taken, in a tax return.

Any interest and penalties accrued related to uncertain tax positions are recorded in tax expense.

The Company periodically assesses the realizability of its net deferred tax assets.

If, after considering all relevant positive and negative evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized, the Company will reduce the net deferred tax assets by a valuation allowance.

The realization of net deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of net operating loss carryforwards.

Stock-Based Compensation

The Company accounts for stock-based compensation to employees and directors in accordance with 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.

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 is 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 of comparably profiled public companies based upon the expected term of the award being valued.

Company periodically assesses the realizability of its net deferred tax assets.

If, after considering all relevant positive and negative

evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized, the Company will reduce

the net deferred tax assets by a valuation allowance.

The realization of net deferred tax assets is dependent on several factors, including

the generation of sufficient taxable income prior to the expiration of net operating loss carryforwards.

Company accounts for stock-based compensation to employees and directors in accordance with 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.

The Black-Scholes-Merton option

pricing model incorporates various and highly subjective assumptions, including expected term and share price volatility.

expected term of the stock options is 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 of comparably profiled public companies based

upon the expected term of the award being valued.

The risk-free interest rate assumption is determined using the rates for U.S.

Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

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, on our own website Lucyd.co, and on Amazon.

To determine revenue recognition, we perform the following steps:

(i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy a performance obligation.

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.

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.

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.

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.

Our e-commerce revenue is recognized upon meeting the performance obligation when the eyewear is shipped to end customers.

consumers enjoy free USPS first class postage, with faster delivery options available for extra cost, for sales processed through our website and on Amazon.

For Amazon sales, shipping is free for U.S consumers while international customers pay shipping charges on top of MSRP.

Any costs associated with fees charged by the online platforms (Shopify for Lucyd.co website and Amazon) are not recharged to customers and are recorded as a component of cost of goods sold as incurred.

The Company charges applicable state sales taxes in addition to the MSRP for both online channels and all other marketplaces on which the company sells products.

For sales to our retail store partners, we identify the contract with a customer upon receipt of an order of our eyewear through our Shopify wholesale portal or direct purchase order.

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.

The pricing includes shipping charges, while excluding any state sales tax charges applicable.

zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

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, on our own

website Lucyd.co, and on Amazon.

determine revenue recognition, we perform the following steps:

(i) identify the contract(s) with a customer, (ii) identify the performance

obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations

in the contract, and (v) recognize revenue when (or as) we satisfy a performance obligation.

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.

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.

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.

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.

Our e-commerce revenue is recognized upon meeting the performance obligation when the eyewear

is shipped to end customers.

consumers enjoy free USPS first class postage, with faster delivery options available for extra

cost, for sales processed through our website and on Amazon.

For Amazon sales, shipping is free for U.S consumers while international

customers pay shipping charges on top of MSRP.

Any costs associated with fees charged by the online platforms (Shopify for Lucyd.co website

and Amazon) are not recharged to customers and are recorded as a component of cost of goods sold as incurred.

The Company charges applicable

state sales taxes in addition to the MSRP for both online channels and all other marketplaces on which the company sells products.

sales to our retail store partners, we identify the contract with a customer upon receipt of an order of our eyewear through our Shopify

wholesale portal or direct purchase order.

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.

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.

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.

sales to distributors, we identify the contract with a customer upon receipt of an order of our eyewear through a direct purchase order.

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.

Due to the nature of wholesale orders, no e-commerce fees are applicable.

The Company’s sales do not contain any variable consideration.

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)

Due to the nature

of wholesale orders, no e-commerce fees are applicable.

Company’s sales do not contain any variable consideration.

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)

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.

Additionally, we reviewed all individual returns received in April 2023 pertaining to orders processed prior to March 31, 2023.

days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible 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.

Additionally, we reviewed all individual returns received in July 2023 pertaining to

orders processed prior to June 30, 2023.

As a result, the Company determined that an allowance for sales returns was necessary.

The Company recorded an allowance for sales returns of $ 1,925 and $ 24,897 as of March 31, 2023 and December 31, 2022, respectively.

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.

NOTE 3 – GOING CONCERN

The Company has a limited operating history.

The Company’s business and operations are sensitive to general business and economic conditions in the United States.

The Company recorded an allowance for sales returns of $ 4,441 and $ 24,897 as of June 30, 2023 and December 31, 2022, respectively.

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.

3 – GOING CONCERN

Company has a limited operating history.

The Company’s business and operations are sensitive to general business and economic conditions

in the United States.

A host of factors beyond the Company’s control could cause fluctuations in these conditions.

Adverse conditions may include recession, downturn, or otherwise, changes in regulations or restrictions in imports, competition, or changes in consumer taste including the economic impacts from the COVID-19 pandemic.

Adverse conditions

may include recession, downturn, or otherwise, changes in regulations or restrictions in imports, competition, or changes in consumer

These adverse conditions could affect the Company’s financial condition and the results of its operations.

The Company meets its day to day working capital requirements through monies raised through sales of eyewear and issuances of equity, including the initial public offering completed on August 2022 and subsequent exercises of warrants by stockholders.

The Company also previously issued a convertible note held by its parent company, which was repaid in full during the three months ended March 31, 2023.

The Company’s forecasts and projections indicate that the Company expects to have sufficient cash reserves and future income to operate within the level of its current facilities.

The Company anticipates that its available liquidity will be sufficient to fund operations through at least the end of May 2024.

NOTE 4 – INCOME TAX PROVISION

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

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

The Company has no t recorded a tax provision for the three months ended March 31, 2023 and 2022 as it maintains a full valuation allowance against its net deferred tax assets.

NOTE 5 – INTANGIBLE ASSETS

meets its day-to-day working capital requirements using monies raised through sales of eyewear and issuances of equity, including our

initial public offering completed in August 2022, a secondary public offering completed in June 2023, and exercises of warrants by stockholders

(see Note 9 for additional details).

The Company also previously issued a convertible note held by its parent company, which was repaid

in full during the six months ended June 30, 2023.

The Company’s forecasts and projections indicate that the Company expects to

have sufficient cash reserves and future income to operate within the level of its current facilities.

The Company anticipates that its

available liquidity will be sufficient to fund operations through at least the end of August 2024.

4 – INCOME TAX PROVISION

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

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

The Company has no t recorded a tax provision for the three and six months ended June 30, 2023 and 2022 as it maintains a full valuation

allowance against its net deferred tax assets.

5 – INTANGIBLE ASSETS

Schedule of intangible assets

Finite-lived intangible assets

Intangible assets, gross

intangible assets

assets, gross

Accumulated amortization

Intangible assets, net

Amortization expense totalled $ 5,956 and $ 1,739 for the three months ended March 31, 2023 and 2022, respectively.

Future amortization is expected to approximate $ 23,800 per year.

NOTE 6 – RELATED PARTY ADVANCES AND OTHER INTERCOMPANY AGREEMENTS

Convertible Note and Due to Parent and Affiliates

During the three months ended March 31, 2023 and during 2022, the Company had the availability of, but not the contractual right to, intercompany financing from the Parent and Affiliates in the form of either cash advances or borrowings under a convertible note (as discussed below).

The convertible notes balances were $ 61,356 at December 31, 2022.

In January 2023, the Company borrowed an additional $ 48,143 under such convertible notes, and subsequently repaid the outstanding balances of the convertible notes in full in February 2023, such that there were no amounts outstanding under convertible notes as of March 31, 2023.

Management Service Agreement

In 2020, the Company entered into a management services agreement with a related party (related through common ownership), for which the Company was billed $25,000 quarterly.

Effective February 1, 2022, the original management services agreement was amended to have the Company billed at $35,000 quarterly.

While the agreement does not stipulate a specific maturity date, it can be terminated with 30 calendar days written notice by any party.

The related party currently provides the following services:

expense totalled $ 11,860 and $ 17,816 for the three and six months ended June 30, 2023, respectively.

expense totalled $ 2,442 and $ 4,181 for the three and six months ended June 30, 2022, respectively.

6 – RELATED PARTY ADVANCES AND OTHER INTERCOMPANY AGREEMENTS

Note and Due to Parent and Affiliates

the six months ended June 30, 2023 and during 2022, the Company had the availability of, but not the contractual right to, intercompany

financing from the Parent and Affiliates in the form of either cash advances or borrowings under a convertible note (as discussed below).

convertible notes balances were $ 61,356 at December 31, 2022.

In January 2023, the Company borrowed an additional $ 48,143 under

such convertible notes, and subsequently repaid the outstanding balances of the convertible notes in full in February 2023, such

that there were no amounts outstanding under convertible notes as of June 30, 2023.

Service Agreement

2020, the Company entered into a management services agreement with Tekcapital Europe Ltd.

(a related party, related through common ownership),

for which the Company was billed $25,000 quarterly.

Effective February 1, 2022, the original management services agreement was amended

to have the Company billed at $35,000 quarterly.

While the agreement does not stipulate a specific maturity date, it can be terminated

with 30 calendar days written notice by any party.

related party currently provides the following services:

and advice to the Company in accordance with their area of expertise;

1 unchanged sentence

assistance, and consultation services to support the Company or in relation to any other related matter.

During the three months ended March 31, 2023 and 2022, the Company incurred $ 35,000 in each period under its agreement with Tekcapital Europe Ltd.

Rent of Office Space

Prior to the February 1, 2022 amendment of the aforementioned management services agreement, the Company was provided with rent-free office space by the Parent and Affiliates.

Effective February 1, 2022, Tekcapital began to bill the Company for an allocation of rent paid by Tekcapital on the Company’s behalf.

The Company recognized $ 22,769 of expense related to this arrangement for the three months ended March 31, 2023.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Legal Matters

We are not 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.

Our executive offices are located at 11900 Biscayne Blvd., Suite 630 Miami, Florida 33181.

Our executive offices are provided to us by the parent of our majority stockholder, Tekcapital (see Note 6).

the three months ended June 30, 2023 and 2022, the Company incurred $ 35,000 in each respective period under the management services

During the six months ended June 30, 2023 and 2022, the Company incurred $ 70,000 in each respective period under the

management services agreement.

of Office Space

to the February 1, 2022 amendment of the aforementioned management services agreement, the Company was provided with rent-free office

space by the Parent and Affiliates.

Effective February 1, 2022, Tekcapital began to bill the Company for an allocation of rent paid

by Tekcapital on the Company’s behalf.

The Company recognized $ 22,992 and $ 45,760 of expense related to this month-to-month arrangement

for the three and six months ended June 30, 2023, respectively.

7 – COMMITMENTS AND CONTINGENCIES

are not 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.

executive offices are located at 11900 Biscayne Blvd., Suite 630 Miami, Florida 33181.

Our executive offices are provided to us by the

parent of Tekcapital (see Note 6).

We consider our current office space adequate for our current operations.

License Agreements

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.

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.

Guaranteed minimum royalty payments due during the 2023 calendar year are less than $ 25,000 .

On December 23, 2022, we entered into a multi-year global licensing agreement with Authentic Brands Group, which became effective October 1, 2022.

Pursuant to this agreement, we received a license to utilize the outdoor brand Eddie Bauer® for our smart eyewear products.

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.

Guaranteed minimum royalty payments due during the 2023 calendar year are less than $ 25,000 .

Other Commitments

See related party management services agreement discussed in Note 6.

NOTE 8 – STOCK-BASED COMPENSATION

During the three months ended March 31, 2023, we granted the following option awards, all of which had an exercise price of $ 1.275 per share, and expire on January 13, 2028:

Options to purchase an aggregate of 330,000 shares of common stock were issued to the Company’s officers and management, of which 1/3 vested immediately, 1/3 shall vest on January 13, 2024, and the remaining 1/3 shall vest on January 13, 2025.

Options to purchase an aggregate of 75,000 shares of common stock were issued to non-management directors, which vest evenly over three years, whereby 1/3 shall vest on each of January 13, 2024, January 13, 2025, and January 13, 2026.

Options to purchase an aggregate of 162,000 shares of common stock were issued to certain employees and consultants, which vest evenly over three years, whereby 1/3 shall vest on each of January 13, 2024, January 13, 2025, and January 13, 2026.

Options to purchase an aggregate of 75,000 shares of common stock were issued an employee, which vest evenly over three years, whereby 1/6 of the options shall vest every six months.

Options to purchase an aggregate of 6,000 shares of common stock were issued to a consultant, which vested immediately.

Details of the number of share options and the weighted average exercise price outstanding as of and during the three months ended March 31, 2023 are as follows:

2022 and 2023, we entered into various multi-year license agreements which grant us the right to sell certain branded smart eyewear,

including the Nautica, Eddie Bauer, and Reebok brands.

These agreements require us to pay royalties based on a percentage of net retail

and wholesale sales during the period of the license, and also require guaranteed minimum royalty payments.

The aggregate future minimum

payments due under these license agreements are as follows:

Schedule of future minimum

(through 2033)

related party management services agreement discussed in Note 6.

8 – STOCK-BASED COMPENSATION

the six months ended June 30, 2023, we granted the following option awards, all of which had an exercise price of $ 1.275 per share

and expire on January 13, 2028:

to purchase an aggregate of 330,000 shares of common stock were issued to the Company’s officers and management, of which 1/3

vested immediately, 1/3 shall vest on January 13, 2024, and the remaining 1/3 shall vest on January 13, 2025.

to purchase an aggregate of 75,000 shares of common stock were issued to non-management directors, which vest evenly over three years,

whereby 1/3 shall vest on each of January 13, 2024, January 13, 2025, and January 13, 2026.

to purchase an aggregate of 162,000 shares of common stock were issued to certain employees and consultants, which vest evenly over

three years, whereby 1/3 shall vest on each of January 13, 2024, January 13, 2025, and January 13, 2026.

to purchase an aggregate of 75,000 shares of common stock were issued an employee, which vest evenly over three years, whereby 1/6

of the options shall vest every six months.

to purchase an aggregate of 6,000 shares of common stock were issued to a consultant, which vested immediately.

Additionally,

on June 1, 2023, we modified the terms of certain options awarded in 2021 to purchase an aggregate of 140,000 shares of common stock,

in order to extend their expiration dates from July 21, 2023 to July 21, 2024.

There were no changes to the exercise price

or other terms of these stock options, and these options were already fully vested prior to the modification.

As a result of this modification,

we recognized incremental stock option expense of $ 9,188 for the three and six months ended June 30, 2023.

of the number of stock options and the weighted average exercise price outstanding as of and during the six months ended June 30,

2023 are as follows:

Schedule of number of share options and the weighted average exercise price outstanding

1 unchanged sentence

As at January 1, 2023

As at March 31, 2023

Exercisable as at March 31, 2023

As of March 31, 2023, the weighted average remaining contractual life of options was 2.16 years for outstanding options, and 1.80 years for exercisable options.

As of March 31, 2023, unrecognized stock option expense of $ 1,627,154 remains to be recognized over next 3.29 years.

NOTE 9 – STOCKHOLDERS’ EQUITY

On August 17, 2022, as part of the Company’s initial public offering, the Company issued 1,960,000 warrants to purchase 1,960,000 shares of common stock, which began trading and are currently trading on the Nasdaq Capital Market, under the symbol “LUCYW.” Additionally, pursuant to the terms of the underwriting agreement for the offering, the Company issued to the underwriter certain other warrants to purchase up to 58,800 shares of the Company’s common stock.

In February 2023, holders of the Company’s publicly-traded warrants exercised such warrants to purchase an aggregate of 408,600 shares of the Company’s common stock, at an adjusted exercise price of $ 3.75 per share, resulting in cash proceeds to the Company of $ 1,532,250 .

As of March 31, 2023, 1,551,400 of such warrants remain outstanding.

None of the warrants issued to the underwriter have been exercised as of March 31, 2023.

NOTE 10 – EARNINGS PER SHARE

The Company calculates earnings/(loss) per share data by calculating the quotient of earnings/(loss) divided by the weighted average number of common shares outstanding during the respective period as required by ASC 260-10-50.

Due to the net losses for the three months ended March 31, 2023 and 2022, all shares underlying the related party convertible debt, common stock warrants, and common stock options were excluded from the earnings per share calculation due to their anti-dilutive effect.

Calculation of net earnings per common share — basic and diluted:

Forfeited / Expired

at June 30, 2023

as at June 30, 2023

of June 30, 2023, the weighted average remaining contractual life of options was 2.22 years for outstanding options, and 1.58 years

for exercisable options.

of June 30, 2023, unrecognized stock option expense of $ 1,193,562 remains to be recognized over next 1.39 years.

9 – STOCKHOLDERS’ EQUITY

Public Offering

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.

Each share of common stock was sold together with one warrant.

Each Common Warrant is exercisable to purchase one share of common stock

at an initial exercise price of $1.05 per share, subject to certain adjustments as set forth in the warrant agreement.

In addition, pursuant

to the terms of the placement agency agreement for the offering, the Company issued to the placement agent certain other warrants to

purchase up to 180,000 shares of the Company’s common stock at an exercise price of $ 1.31 per share.

The net proceeds received

by the Company from this offering amounted to $ 4,115,688 .

August 17, 2022, as part of the Company’s initial public offering, the Company issued a total of 2,254,000 warrants to purchase

2,254,000 shares of common stock, which began trading and are currently trading on the Nasdaq Capital Market, under the symbol “LUCYW”

(which we refer to as the “Listed Warrants”).

Additionally, pursuant to the terms of the related underwriting agreement for

the initial public offering, the Company issued to the underwriter certain other warrants to purchase up to 58,800 shares of the Company’s

common stock , which have an exercise price of $ 8.228 per share.

February 2023, holders of the Company’s Listed Warrants exercised such warrants to purchase an aggregate of 408,600 shares

of the Company’s common stock, at an adjusted exercise price of $ 3.75 per share, resulting in cash proceeds to the Company of $ 1,532,250 .

April 1, 2023 and April 16, 2023, holders of the Company’s Listed Warrants exercised such warrants to purchase an aggregate

of 321,120 shares of the Company’s common stock, at an adjusted exercise price of $ 3.75 per share, resulting in cash proceeds to

the Company of $ 1,204,200 .

April 17, 2023, the Company entered into a warrant exercise inducement letter agreement (“Inducement Letter”) with certain

accredited investors that were existing holders of the Company’s Listed Warrants to purchase an aggregate of 150,000 shares of

the Company’s common stock for cash, wherein the investors agreed to exercise all of their existing Listed Warrants at an exercise

price of $ 3.75 per share.

The gross proceeds to the Company from this transaction, before deducting estimated expenses and fees, was

In consideration for the immediate exercise of the existing Listed Warrants for cash, the exercising holders received new warrants

to purchase up to an aggregate of 300,000 shares of common stock (the “Private Warrants”) in a private placement pursuant

to Section 4(a)(2) of the Securities Act of 1933, as amended.

The Private Warrants are immediately exercisable upon issuance at

an exercise price of $ 3.75 per common share and will expire on April 19, 2028.

The Private Warrants were offered in a private placement

pursuant to an applicable exemption from the registration requirements of the Securities Act and, along with the shares of common stock

issuable upon their exercise, have not been registered under the Securities Act of 1933, and may not be offered or sold in the United

States absent registration with the SEC or an applicable exemption from such registration requirements.

The securities were offered only

to accredited investors.

The net proceeds received by the Company from this transaction amounted to $ 391,268 .

of the aforementioned other warrants issued to underwriters and placement agents have been exercised.

of June 30, 2023, the Company’s remaining outstanding warrants are as follows:

Schedule of stockholders' equity note, warrants or rights

agent warrants

10 – EARNINGS PER SHARE

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

of common shares outstanding during the respective period as required by ASC 260-10-50.

Due to the net losses for the three and six months

ended June 30, 2023 and 2022, all shares underlying the related party convertible debt, common stock warrants, and common stock

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

of net earnings per common share — basic and diluted:

Schedule of calculation of net earnings per common share - basic and diluted

three months ended

Basic and diluted:

( 1,430,810 )

( 1,206,559 )

Weighted-average number of common shares

Basic and diluted net loss per common share

NOTE 11 – SUBSEQUENT EVENTS

Warrant Transactions

Between April 1, 2023 and April 16, 2023, holders of the Company’s warrants (see Note 9) exercised warrants to purchase an aggregate of 321,120 shares of the Company’s common stock, at an adjusted exercise price of $ 3.75 per share, resulting in cash proceeds to the Company of $ 1,204,200 .

April 17, 2023, the Company entered into a warrant exercise inducement letter agreement (“Inducement Letter”) with

certain accredited investors that were existing holders of warrants to purchase an aggregate of 150,000 shares of the

Company’s common stock for cash, wherein the investors agreed to exercise all of their existing warrants at an exercise price

of $ 3.75 per share.

The gross proceeds to the Company from this transaction, before deducting estimated expenses and fees, was

In consideration for the immediate exercise of the existing warrants for cash, the exercising holders received new

warrants to purchase up to an aggregate of 300,000 shares of common stock (the “New Warrants”) in a private placement

pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The New Warrants are immediately exercisable upon

issuance at an exercise price of $ 3.75 per common share and will expire on April 19, 2028.

The New Warrants and the shares of

common stock issuable upon their exercise, have not been registered under the Securities Act of 1933, and may not be offered or sold

in the United States absent registration with the SEC or an applicable exemption from such registration requirements.

Warrants were offered only to accredited investors.

six months ended

Weighted-average

number of common shares

and diluted net loss per common share

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

following discussion and analysis of our financial condition and results of operations should be read together with our financial statements

and the related notes and the other financial information included elsewhere in this Quarterly Report.

This discussion contains forward-looking

statements that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking

statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report.

mission of our company is to upgrade the world’s eyewear, by adding useful tech features to comfortable and stylish sunglasses

and eyeglasses.

Our products enable seamless Bluetooth connection to your digital life and prescription vision correction in one affordable

and convenient package.

Our flagship brand of smart eyewear is called Lucyd, and Lucyd eyewear is enjoyed by thousands of people around

the world who want the convenience and utility of wireless headphones and glasses in one.

Furthermore, we are revolutionizing the concept

of eyewear overall, by enabling connection to the powerful ChatGPT AI assistant right on our glasses, using a novel and ergonomic voice

The Company believes the advent of this powerful feature to our eyewear will significantly enhance user adoption of Lucyd

frames, and provide a new revenue stream for the business in the form of in-app purchases.

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.

recently launched version 2.0 of our Lucyd Lyte eyewear, and our current product offering consists of 15 version 2.0 models, which offers

a similar amount of style variety as many traditional eyewear collections.

All styles are each available with 80+ different lens types,

resulting in hundreds of variations of products currently available.

new Lucyd Lyte version 2.0 collection features several key breakthroughs for the smart eyewear product category:

playback and call time were extended to 12 hours, a 50% increase over the version 1.0 and making Lyte one of the longest-lasting

true wireless audio devices on the market.

four-speaker array was introduced, improving audio fidelity significantly compared to the version 1.0 model and many other smart

eyewear products.

of the frames deployed the Company’s new expert design team, producing smart eyewear that follows trending styles in 2023 in

the traditional eyeglasses and sunglasses markets.

The collection features many style firsts for a smart eyewear collection designed

in the United States, that have proven commercially successful in traditional eyewear, such as titanium rose gold and champagne crystal

styles for women, and gunmetal gray and acetate aviator styles for men.

upgrade to a Bluetooth 5.2 chip improves connection stability, especially for older devices.

Responsiveness

of touch controls improved with an audible tone added to alert the wearer when they have used a command successfully.

transition of the LED status indicators to the interior of the temples, a change based on consumer feedback, makes the product more

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.

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.

anticipate introducing eight 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:

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 multi-device hub for computers in addition to a charging hub.

will complete a total overhaul of our retail fixtures in the third quarter of this year, offering our new enhanced video and audio

demo displays to all current and prospective retail partners.

Our new modular display system, of which the first units shipped in

the late second quarter, incorporates two different center stations focused on audio and video experiences, along with side pieces

for stores with additional counter space to exhibit any number of our frames.

Over the course of the third quarter of this year,

we plan to upgrade the store fixtures of most of our retail partners to the new display systems, which we believe will enhance sell-through

of our products.

Initial retailer feedback on the new display system has been positive, as it eliminates key issues with the Company’s

previous displays, by providing enough consumer information to make an educated buying decision, by allowing the customer to interact

with and listen to music on live products, and by the addition of a security tether to make it suitable for all retail environments.

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.

This new feature allows content creators to share content they made outside of Vyrb on the Vyrb network, and in the future we plan to

allow users to monetize this content as well as the content they generate originally on the platform.

For example, we plan to enable

podcasters to import their existing podcast library into Vyrb, and set a paywall for other users to access the content.

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.

April 2023, we introduced a major software upgrade for our glasses with the launch of the Lucyd app for iOS/Android.

This free application

enables the user to converse with the extremely popular ChatGPT AI language model on the glasses, to instantly gain the benefit of one

of the world’s most powerful AI assistants in a hands-free ergonomic interface.

The app deploys a powerful and unique Siri and

Google Voice integration with the Open AI API for ChatGPT, developed internally by the company and now pending patent.

This development

instantly makes all Lucyd eyewear perhaps the smartest smartglasses available today, and represents a significant marketing opportunity

for the company’s core smartglasses product, and a potential in-app purchase revenue stream for the Company.

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 our online channels, with our wholesale pricing offering

volume discounts to these prices.

Please refer to discussion in the Components of Results of Operations section below for more details

regarding our pricing structure.

business model is capital light, as we have elected not to build our own manufacturing facilities and Company-owned retail distribution,

but rather have contracted with existing sources of production and proven consumer-facing retail distribution.

summation, the ultimate synopsis from management on the status of the Company at the end of the second quarter of 2023 is as follows:

Company’s products are in their best position ever to lead the wearables market and the optical market, and pioneer a breakthrough

of smart eyewear to the mainstream consumer.

This includes a number of factors, including the development of new custom components

launching in the third quarter;

the overall improvement of fit, style, and functionality coming to our products with each successive

and the combination of our core technology with the globally renowned Nautica, Eddie Bauer, and Reebok brands pending launch

over the next three to six months.

Company has built its strongest team to date, with 12 full-time staff extremely devoted to building the global standard in smart

Company was the first to market with a touch-free voice interface for ChatGPT, demonstrating our ability to rapidly incorporate new

innovations into our core product to the immediate and great benefit of all users.

Company has launched a very sophisticated and attractive modular display system that is primed to introduce smart eyewear to lay

customers and maximize sell-through in any retail environment suitable for our products.

optical industry itself has begun to recognize us as a leader of innovation in optics, as shown in recent coverage that lists us

alongside major, well-established players in the space.

feedback on our products is generally more favorable with each successive release, as evidenced by improving Amazon ratings.

we underwent some significant challenges with product defects and returns, primarily in 2022 but also leading into 2023, the result

of this was a total overhaul of our supply chain that yielded more reliable factories and an overall significant quality improvement

on all of our glasses, positioning us well for the future.

Factors Affecting Performance

of retail points of purchase

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.

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

We currently offer an expansive line of 16 different styles and several accessories, with plans to continuously expand this

offering over time.

In the first quarter of 2023, we added approximately 50 new retail partners, comprised of independent optical stores,

and in the second quarter of 2023 we added approximately 25 new independent optical stores and seven Duty Free stores operated by Privato

store client retention and re-orders

ability to sustain and increase revenue is correlated positively with our ability to receive re-orders from stores, either directly or

through our wholesale distributors.

To support our sales to retail stores directly, we offer a strong co-op marketing program that includes

free and paid store display materials.

As part of this strategy, we have launched a new modular display system with engaging video screens

and audio testing capabilities for our resellers to help educate their in-store customers about Lucyd Lyte and enable customers to try

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.

in business growth

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.

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 will also increase our general and administrative expenses in the foreseeable

future to cover the additional costs for finance, compliance, supply chain, quality assurance and investor relations as we grow as a

public company.

Performance Indicators

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 300 retail stores selling Lucyd Lyte, primarily located within the

United States and Canada, across 250+ unique wholesale accounts.

Based on the existing demand for our products, current distribution,

and recently consummated supply agreements, we anticipate that our products will be available in a significant number of new third-party

retail locations in 2023.

expect this number to gradually increase as we continue to improve our product, roll out our co-op marketing program and introduce more

of our modular display systems into retail stores, to facilitate customer education and product sell-through .

The Company has consistently introduced its products in dozens of new points of sale every quarter;

however, we expect a more notable

increase with the rollout of our Powered by Lucyd branded products over the next year.

The introduction of fashion-branded products from

our partnerships with Nautica, Eddie Bauer, and Reebok are expected to significantly increase our retail store presence due to the popularity

and built-in following of these brands, particularly Nautica which has a large audience for their traditional eyewear, and Eddie Bauer

due to their large US brick-and-mortar retail presence.

Ratings (B2C)

Lucyd Lyte version 2.0 product is receiving significantly higher ratings online compared to our previous products, indicating that customers

are appreciative of improvements in product design, functionality and build quality.

11 out of 15 of the sunglass styles on Amazon carry

a 4.1/5 rating or higher, compared to most products with an approximate 3.5/5 rating from our previous collection.

This is a very strong

signal of early positive feedback on our products that indicates our ability to grow and scale with America’s largest online retailer

and other platforms.

of online orders (B2C)

our e-commerce business, we track the number of online orders as an indicator of the success of our online marketing efforts.

30, 2023, we had 15,422 cumulative total orders from customers online since inception.

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

of Results of Operations

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.

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.

In addition, we have introduced a minimum advertised

price on the new models of $139 and $159, respectively, to support our retail partners with guaranteed minimum pricing.

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 lens.

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

with rare exceptions such as a reseller ordering a customized unit for display purposes.

consumers enjoy free USPS first class postage, with faster delivery options available for extra cost, for sales processed through our

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 we sell.

wholesale pricing for eyewear sold to retail store partners and distributors includes volume discounts, due to the nature of large quantity

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.

of Goods Sold

of goods sold includes the costs incurred to acquire materials, assemble, and sell our finished products.

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.

wholesale sales these costs include (i) product costs stated at the lesser of cost and net realizable value and inclusive of inventory

reserves, (ii) freight, import, and inspection costs, and (iii) credit card fees.

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.

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.

time we expect our total cost of goods sold on a per unit basis to decrease as a result of an increase in scale.

Increase in scale is

achieved as a result of increase in volumes from both business to consumer and business to business (retail store) orders.

to expand our products with line extensions and new models and broaden our presence in retail stores carrying our products.

Profit and Gross Margin

define gross profit as net revenues less cost of goods sold.

Gross margin is gross profit expressed as a percentage of net revenues.

Our gross margin may fluctuate in the future based on a number of factors, including the cost at which we can obtain, transport, and

assemble our inventory, the rate at our vendor network expands, and how effective we can be at controlling costs, in any given period.

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.

margins in 2022 and the first six months of 2023 were adversely impacted by supply chain challenges with our previous manufacturer.

received a high number of defective frames in 2022 despite our rigorous inspection procedure, which involves a third-party inspection

agency reviewing 100% of new units as they come off the production line, testing every pair of glasses for sound quality and basic functionality.

Despite this, a large number of inaccurately-tested frames made it to our customers, precipitating a large number of replacement units

and lenses which negatively impacted margins.

To address this problem, we immediately underwent a new manufacturer search program in

2022 which we believe yielded two higher-quality factories, that are now producing all of our glasses to a higher quality standard.

operating expenses consist primarily of:

general & administrative

expenses that include primarily consulting and payroll expenses, IT & software, legal, postage and non-customer product shipping,

and other administrative expense;

and marketing expenses including cost of online and TV advertising, marketing agency fees, influencers, trade shows, and other initiatives;

party management fees for a range of back-office services provided by Tekcapital LLC;

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.

and Other Income, Net

and other income, net, consists primarily of interest expense paid on convertible note loan due to the Parent.

for Income Taxes

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.

of Operations

Months Ended June 30, 2023 and 2022

following table summarizes our results of operations for the three months ended June 30, 2023 (the “current quarter”)

and the three months ended June 30, 2022 (the “prior quarter”):

three months ended

2023 and 2022

Cost of Goods Sold

(Deficit) Profit

and administrative

and marketing

& development

party management fee

Operating Expenses

Income (Expense)

Other Income (Expense)

revenues for the three months ended June 30, 2023 were $169,929, representing a decrease of approximately 17% as compared to revenues

of $204,741 during the three months ended June 30, 2022.

Our revenue is generated entirely from sales of eyewear products, namely smart

frames, lenses, and accessories.

The decline in revenue was primarily driven by significant discounts offered by key competing products

including the Amazon Echo Frames, Ray Ban Stories, and Bose Frames, all of which dropped their prices to or below the price point of

Lucyd frames during temporary and extended discount sales .

The power of these recognizable brands coupled with aggressive discounting meant that the competitive landscape was more saturated compared

To help respond to the ramp-up in the competition’s discounts, the Company introduced several promotions in 2023 to support

our continued market share growth.

Additionally, the reduction in revenue is partly attributable to a significant decrease in spending

on marketing by the Company compared to 2022, due to the Company’s decision to preserve more for our marketing budget for the fourth

quarter of 2023, when we anticipate the Company’s significantly improved Lyte 2.0 XL and Nautica Powered by Lucyd product lines

will be available.

a sequential quarter basis, our current quarter net revenues grew approximately 17% from the three months ended March 31, 2023.

the three months ended June 30, 2023, approximately 32% of sales were processed on our online store (Lucyd.co), 36% on Amazon, and

32% with reseller partners.

This sales channel mix negatively impacted our revenue for the period as compared with the prior quarter,

due to the fact we charge an additional $35 to $275 for our prescription lenses available only on Lucyd.co.

For the three months ended

June 30, 2023, we generated $137,686 of revenue from sales of non-prescription frames and accessories, and $30,784 from sales of

frames with prescription lenses.

All of the $62,212 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.

Of the $52,389 in online sales generated through Lucyd.co,

$30,784 was related to frames with prescription lenses and $21,605 was related to glasses with non-prescription lenses.

E-commerce sales

are the most material portion of our sales to date.

the three months ended June 30, 2022, approximately 35% of sales were processed on our online store (Lucyd.co), 36% on Amazon, and

29% with retail store partners.

For the three months ended June 30, 2022, we generated $161,107 of revenue from sales of non-prescription

frames, and $43,634 from sales of frames with prescription lenses.

All of the $73,959 in sales generated on Amazon during the period

were for non-prescription frames, as we only offer prescription lenses through our website.

Of the $71,910 in online sales generated

through Lucyd.co, $8,128 was related to frames with prescription lenses and $63,782 was related to glasses with non-prescription lenses.

the decline in net revenues, there have recently been several notable advances in our technology products and partnerships which speak

to the potential to grow revenues well beyond the current level:

hardware improvements include the development of a new proprietary four-speaker audio temple for the Lucyd Lyte flagship line, the

increase in battery life of all of our flagship to 12 hours of playback, which is longer than the vast majority of wireless audio

products, and design improvements to the frames overall that were the result of hiring two new expert eyewear designers.

software improvements include the development of a live broadcasting feature on the Company’s proprietary Vyrb mobile app,

the ability to import any form of audio content into Vyrb to support the migration of existing audio content creators to the platform,

and the introduction of the Company’s Digital Try-on Display into dozens of retail stores, to offer an immersive product experience

for in-store shoppers at our partner locations.

● Our partnership with Authentic Brands Group,

which provides us with the right to use the Nautica, Eddie Bauer, and Reebok brands, foretells significantly improved consumer adoption,

due to the global popularity of these brands and existing traditional eyewear customers who already buy eyewear under these three brands.

The anticipated upcoming launch of the Nautica Powered by Lucyd line later this year, made possible by the exclusive agreement with Authentic

Brands Group, represents significant revenue potential.

We intend to partner with Nautica-branded sales channels and expect to be able

to increase our presence in other retail channels via the Nautica brand, a household name in dozens of countries.

We anticipate rolling

out our Nautica Powered by Lucyd line on Nautica.com and in Nautica stores in 2024.

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 over 280 stores.

of goods sold

total cost of goods sold increased to $199,745 for the three months ended June 30, 2023, as compared to $161,494 for the three months

ended June 30, 2022.

This increase is primarily attributable to significant custom duties and importation fees paid during the current

quarter, as well as higher Amazon fees, partially offset by lower cost of frames as a result of the decrease in sales volumes during

the current quarter as compared with the prior quarter.

Additionally, a large number of replacement units provided for customer retention

due to the supply chain challenges mentioned above, and free units supplied for unbiased reviews and influencer content creation purposes,

contributed significantly to the increase in cost of goods sold.

Furthermore, smart eyewear is a highly specialized product that has

the combined specifications and component requirements of a wireless Bluetooth headset and optical eyewear in one, meaning it is expensive

to manufacture in small quantities of a few thousand at a time.

As demand and awareness for smart eyewear continues to grow over time,

the Company expects that its per unit cost will decrease as its order volumes increase.

of goods sold for the three months ended June 30, 2023 included the cost of frames of $71,564;

cost of prescription lenses incurred

with our third-party vendor of $33,092;

affiliate referral fees, sales commission expense, and e-commerce platform fees of $50,794;

custom duties and importation fees of $44,295.

Out of $199,745 of our total cost of goods sold for the three months ended June 30,

2023, $33,092 related to orders with prescription lenses, while $166,653 pertained to non-prescription orders.

of goods sold for the three months ended June 30, 2022 included the cost of frames of $94,230;

cost of prescription lenses incurred

with our third-party vendor of $20,661;

and affiliate referral fees, sales commission expense, e-commerce platform fees of $44,406.

our total cost of goods sold for the three months ended June 30, 2022, $19,584 related to orders with prescription lenses, while

$141,910 pertained to non-prescription orders.

time, we expect third-party retail stores to become our primary sales channel as we onboard additional stores.

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

We anticipate growth in both wholesale and e-commerce channel sales in the second half of 2023 ,

and we also expect corresponding growth in total cost of goods sold, primarily from additional product related costs.

We believe this

growth will be attributable to several factors:

our products continue to improve with each successive launch, notably in terms of comfort

and sound quality;

consumer awareness of our category continues to grow with smartglass sales overall increasing every year;

the Company is deploying new marketing tactics focused heavily on influencer content which we believe will better inform consumers about

our products.

Gross (deficit) profit

gross deficit was $29,816 for the three months ended June 30, 2023, as compared to a gross profit of $43,247 for the three months ended

June 30, 2022.

This decrease was primarily due to the combination of increased returns and concessions made for customer retention, significant

discounts offered during the current quarter in order to help drive unit sales and grow our market share, and the aforementioned significant

custom duties and importation fees paid during the current quarter, partially offset by modest growth in the wholesale and Lucyd.co sales

All told however, this is a minimal loss for a company producing significant innovations in both wearable hardware and software,

and management believes that the Company can be successful in the future with moderate advances in consumer sentiment surrounding smart

eyewear, via the further enhancement of the AI capabilities of our glasses with the Lucyd app, and via the powerful multi-brand partnership

with Authentic Brands Group.

expect gross profit for the fiscal year ending December 31, 2023 to improve, primarily due to economies of scale from large, anticipated

wholesale / retail partner orders.

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.

operating expenses increased by 10% to $1,304,475 for the three months ended June 30, 2023, as compared to $1,189,614 for the three

months ended June 30, 2022.

This increase was primarily due to the continued investments in the future growth and development of

our business and included, but was not limited to, the following:

and administrative expenses

general and administrative expenses increased by 36% to $968,354 for the three months ended June 30, 2023, as compared to $710,135 for

the three months ended June 30, 2022.

This increase was primarily due to an increase in employee-related costs, resulting from increases

in our staffing and new employment agreements entered into with executives in the latter portion of 2022.

and marketing expenses

sales and marketing expenses decreased by 74% to $103,643 for the three months ended June 30, 2023, as compared to $391,919 for

the three months ended June 30, 2022.

The decrease was primarily due to the reversal of approximately $309,000 of previously-recognized

stock-based compensation for certain individuals within the Company’s sales and marketing function whose awards expired without

ever having vested, as the related performance conditions (sales quotas) for those awards were not met.

This decrease was partially offset

by costs associated with ongoing efforts to further develop the Company’s brand presence and awareness across all of our sales

anticipate these costs to further increase 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 to help educate our in-store customers about Lucyd Lytes,

and increase our brand’s physical presence and role in the eyewear industry.

and development costs

research and development costs increased by 276% to $197,478 for the three months ended June 30, 2023, as compared to $52,560 for the

three months ended June 30, 2022.

This increase was primarily attributable to an expansion of the Company’s software initiatives

to include the Lucyd app, and therefore increased the portion of the work hours spent by the CEO and CTO (as well as a portion of their

stock-based compensation expense) on new software development on the Vyrb app, the new Lucyd app, and our glasses, as well as external

coding teams we have engaged to write the programming for our software and enhance our software user experiences with code updates.

planned features include the ability to access AI other than ChatGPT from the Lucyd app, the addition of an audio content library for

users to enjoy, and further enhancements to the core AI functionality.

In terms of the Vyrb app, we are planning launching a full peer-to-peer

content marketplace in the style of Patreon, but with a focus on audio and content designed on and for wearables.

Additionally, the Company

hired a new full-time software engineer, and spent significant amounts on new product molds to enhance our core product offering.

party management fee

related party management fee was $35,000 for each of the three months ended June 30, 2023 and 2022, based on the terms of the management

services agreement between us and an affiliate of our Parent.

income (expense)

other income (expense), net in the three months ended June 30, 2023 was $46,489, and was primarily comprised of refunds of certain

amounts that had been previously charged to the Company from the Parent and Affiliates in prior periods.

other income (expense) net in the three months ended June 30, 2021 was $(47,445), and was primarily comprised of interest expense

on intercompany financing from the Parent and Affiliates in the form of borrowings under a convertible note.

The convertible notes were

repaid in full during the six months ended June 30, 2023, and there were no amounts remaining outstanding under such convertible

notes as of June 30, 2023.

Months Ended June 30, 2023 and 2022

following table summarizes our results of operations for the six months ended June 30, 2023 (the “current year period”)

and the six months ended June 30, 2022 (the “prior year period”):

six months ended

2023 and 2022

Cost of Goods Sold

(Deficit) Profit

and administrative

and marketing

& development

party management fee

Operating Expenses

Income (Expense)

Other Income (Expense)

Our revenues for the six months ended June 30,

2023 were $314,850, representing a decrease of approximately 29% as compared to revenues of $440,763 during the six months ended June

Our revenue is generated entirely from sales of eyewear products, namely smart frames, lenses, and accessories.

in revenue was primarily attributable to significant discounts offered during the current year period in order to help drive unit sales

and grow our market share, which accounted for slightly more than half of the total revenue decline.

Key competing products, including

the Amazon Echo Frames, Ray Ban Stories, and Bose Frames, dropped their prices to or below the price point of Lucyd frames during temporary

and extended discount sales;

the power of these recognizable brands coupled with aggressive discounting meant that the competitive landscape

was more saturated compared to 2021.

To help respond to the ramp-up in the competition’s discounts, we introduced several promotions

in 2023 to support our continued market share growth.

The decline in revenue was also partially attributable to (i) lower revenues generated

through the wholesale sales channel, which accounted for almost 40% of the total revenue decline, due in large part to a significant

one-time sale to a retail store reseller / distributor in the prior year period, which was non-recurring in the current year period,

and (ii) the negative impact of manufacturing defects as discussed above, along with shipping delays of new product during the first

quarter as a result of factory shutdowns related to COVID-19 outbreaks in China.

the six months ended June 30, 2023, approximately 33% of sales were processed on our online store (Lucyd.co), 34% on Amazon, and

33% with reseller partners.

For the six months ended June 30, 2023, we generated $265,689 of revenue from sales of non-prescription

frames and accessories, and $47,702 from sales of frames with prescription lenses.

All of the $107,257 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.

Of the $102,657

in online sales generated through Lucyd.co, $47,702 was related to frames with prescription lenses and $54,955 was related to glasses

with non-prescription lenses.

E-commerce sales are the most material portion of our sales to date.

the six months ended June 30, 2022, approximately 25% of sales were processed on our online store (Lucyd.co), 34% on Amazon, and

41% with reseller partners.

This sales channel mix negatively 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 six months ended June 30, 2022, we generated $368,412

of revenue from sales of non-prescription frames and $72,351 was generated from sales of frames with prescription lenses.

$135,534 in sales generated on Amazon.com during the period were for non-prescription frames as we only offer prescription lenses through

Of the $124,740 in online sales generated through Lucyd.co, $35,508 related to frames with prescription lenses and $89,232

of glasses sold were with non-prescription lenses.

Ecommerce sales are the most material portion of our sales to date.