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Item 1. Financial Statements

2024-08-12 compared with 2024-05-14 · 419 added, 267 removed, 384 unchanged (64% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

March 31, 2024 (Unaudited) and December 31, 2023

June 30, 2024 (Unaudited) and December 31, 2023

Current Assets

Cash and cash equivalents

Accounts receivable, net of allowances of $ 21,437 and $ 25,772 , respectively

Accounts receivable, net

Prepaid expenses

12 unchanged sentences

Deferred revenue

Due to Tekcapital and Affiliates

Total Current Liabilities

2 unchanged sentences

TOTAL LIABILITIES

Commitments and contingencies (Note 7)

Commitments and contingencies (see Note 7)

Stockholders’ Equity

Common stock (par value $ 0.00001 , 50,000,000 shares authorized, and 13,233,544 and 12,917,239 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively)

Common stock (par value $ 0.00001 , 50,000,000 shares authorized, and 1,527,034 and 747,416 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively) (1)

Additional paid-in capital

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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Retroactively adjusted the values of Common stock and Additional paid-in capital as well as the number of shares issued and outstanding in order to give effect to the Company’s 1-for-20 reverse stock split.

See Note 2 and Note 11.

See accompanying Notes to the Condensed Financial Statements.

1 unchanged sentence

CONDENSED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2024 and 2023

For the three and six months ended June 30, 2024 and 2023

Three Months Ended

Six Months Ended

Revenues, net

Cost of Goods Sold

Gross Profit (Deficit)

Operating Expenses:

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Total Operating Expenses

Other Income (Expense)

Interest Expense

2 unchanged sentences

Loss per share, basic and diluted (1)

Retroactively adjusted shares outstanding and per share information to give effect to the Company’s 1-for-20 reverse stock split.

See Note 2 and Note 11.

See accompanying Notes to the Condensed Financial Statements.

INNOVATIVE EYEWEAR, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the three months ended March 31, 2024 and 2023

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three and six months ended June 30, 2024 and 2023

Stockholders’

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Balances as of March 31, 2024

Balances as of January 1, 2023

At-the-Market Offerings

First Registered Direct Offering

Second Registered Direct Offering

Issuance of shares to brand ambassador

Issuance of shares related to vesting of restricted share units

Stock-based compensation

Balances as of June 30, 2024

Balances as of January 1, 2023

Exercises of warrants by stockholders

Stock-based compensation

Balances as of March 31, 2023

Exercises of stock options

Exercises of warrants by stockholders

Exercises of warrants related to private placement transaction

Second public offering

Stock-based compensation

Balances as of June 30, 2023

See Note 2 and Note 11.

See accompanying Notes to the Condensed Financial Statements.

1 unchanged sentence

CONDENSED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2024 and 2023

For the six months ended June 30, 2024 and 2023

Operating Activities

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(Recovery of) provision for doubtful accounts

Write-off of previously-capitalized software costs

Changes in operating assets and liabilities:

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Repayment of amounts loaned to Tekcapital Europe, Ltd.

Purchases of debt securities (U.S.

Treasury bills)

Purchases of property and equipment

1 unchanged sentence

Financing Activities

Proceeds from second public offering

Proceeds from at-the-market offerings

Proceeds from first registered direct offering

Proceeds from second registered direct offering

Proceeds from exercises of warrants

Repayment of related party convertible debt (see Note 6)

Proceeds from exercise of stock options

Repayment of related party convertible debt

Repayment of amounts due to Tekcapital and Affiliates

6 unchanged sentences

Issuance of shares for prepayment to third party service provider

Issuance of shares for prepayment to brand ambassador

See accompanying Notes to the Condensed Financial Statements.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

March 31, 2024 and 2023 (Unaudited)

June 30, 2024 and 2023 (Unaudited)

NOTE 1 – GENERAL INFORMATION

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The Company was founded by Lucyd Ltd., a portfolio company of Tekcapital Plc through Tekcapital Europe, Ltd.

(collectively, together with Lucyd Ltd., “Tekcapital and Affiliates”), which owned approximately 40% of our issued and outstanding shares of common stock and was our largest shareholder as of March 31, 2024.

(collectively, together with Lucyd Ltd., “Tekcapital and Affiliates”), which owned approximately 19% of our issued and outstanding shares of common stock and was our largest shareholder as of June 30, 2024.

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.

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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, 2024 are not necessarily indicative of the results to be expected for future periods or the full year.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for future periods or the full year.

Certain prior period amounts have been reclassified to conform to current period presentation;

approximately $22,000 of capitalized costs related to the Company’s website previously reported within Capitalized software costs are now reported within Property and equipment, net.

Change in Capital Structure

As described more fully in Note 11, effective July 18, 2024, the Company effected a 1-for-20 reverse stock split for all of its issued and outstanding common stock.

All share and per share amounts presented in these financial statements and accompanying notes, including but not limited to shares issued and outstanding, dollar amounts of common stock and additional paid-in capital, earnings/(loss) per share, and warrants and options, have been retroactively adjusted for all periods presented in order to reflect this change in capital structure.

There were no changes to the total number of authorized common shares or par value per common share as a result of this change.

Use of Estimates

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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.

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

The allowance for doubtful accounts is determined based upon a variety of judgments and factors.

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Receivable balances are written-off against the allowance when such balances are deemed to be uncollectible.

A roll forward of the allowance for doubtful accounts for the three months ended March 31, 2024 and 2023 is as follows:

A roll forward of the allowance for doubtful accounts for the six months ended June 30, 2024 and 2023 is as follows:

Schedule of allowance for doubtful accounts

1 unchanged sentence

Bad debt expense (recovery)

Balance at March 31

Balance at June 30

The 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.

Provisions for excess, obsolete, or slow-moving inventory are recorded after periodic evaluation of historical sales, current economic trends, forecasted sales, estimated product life cycles, and estimated inventory levels.

Such provisions were $ 0 and $ 31,637 as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024 and December 31, 2023, the Company recorded an inventory prepayment in the amount of $ 59,407 and $ 323,520 , respectively, related to down payments for eyewear purchased from the manufacturer, prior to shipment of the product that occurred after the respective balance sheet dates.

Such provisions were $ 0 and $ 31,637 as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, the Company recorded an inventory prepayment in the amount of $ 70,779 and $ 323,520 , respectively, related to down payments for eyewear purchased from the manufacturer, prior to shipment of the product that occurred after the respective balance sheet dates.

Intangible Assets

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Capitalized Software

The Company has incurred software development costs related to development of the Vyrb application, and has capitalized certain of these costs as 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.

Although we have launched an open beta version of Vyrb (for both iOS and Android) and have continued to add new features to the app, the revenue-generating features of Vyrb have not yet been launched and are planned to launch later in 2024.

Amortization of the capitalized software costs related to the Vyrb app will begin once revenue-generating operations associated with the software have commenced.

The Company has incurred software development costs related to development of the Vyrb application, and had previously capitalized approximately $ 88,000 of these costs related to coding, development, and testing subsequent to establishing technical feasibility of the app, as it was the Company’s intention to market and sell this software externally.

Although we launched Vyrb as an open beta version in 2021, and continued to add new features to the app throughout 2022 and 2023, we had not officially launched the Vyrb app.

During 2024, management decided to shift our primary software development focus to the Lucyd app, which was launched in April 2023 as a free application that enables the user to converse with the extremely popular ChatGPT AI language model on our glasses.

Certain elements and features developed for the Vyrb app may potentially be incorporated into future releases of the Lucyd app.

Based on this decision, during the three and six months ended June 30, 2024, we expensed the previously-capitalized Vyrb software development costs totalling approximately $ 88,000 to research and development expense.

Property and Equipment

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

For restricted stock units, the fair value of the share-based award is based on the quoted market price of our common shares on the NASDAQ stock exchange.

For awards of restricted stock units and shares of common stock, the fair value of the award is based on the quoted market price of our common shares on the NASDAQ stock exchange.

Revenue Recognition

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subsequently, we recognize such revenue and cost of goods sold as payments are received.

During the three months ended March 31, 2024 and 2023, we recognized $ 7,500 of revenue for each period, that was included in the contract liability balances as of January 1, 2024 and 2023, respectively.

During the six months ended June 30, 2024 and 2023, we recognized $ 15,000 of revenue for each period, that was included in the contract liability balances as of January 1, 2024 and 2023, respectively.

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.

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Additionally, we review all individual returns received in the month following the balance sheet date pertaining to orders processed prior to the balance sheet date in order to determine whether an allowance for sales returns is necessary.

The Company recorded an allowance for sales returns of $ 8,937 and $ 40,933 as March 31, 2024 and December 31, 2023, respectively.

The Company recorded an allowance for sales returns of $ 8,536 and $ 40,933 as June 30, 2024 and December 31, 2023, respectively.

Amounts billed to a customer for shipping and handling are reported as revenues.

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

Company meets its day-to-day working capital requirements using monies raised through sales of eyewear and issuances of equity.

May 1, 2024, the Company closed on an offering of common stock and warrants for gross proceeds of approximately $ 1.0

million (see Note 10 for details).

The Company has also entered into an agreement with a related party,

under which the Company may borrow up to $1.25 million (see Note 6 for details);

as of March 31, 2024, the Company has not

borrowed any amounts under this agreement.

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

have sufficient liquidity to fund operations through at least the next 12 months.

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

During the three

months ended June 30, 2024, the Company raised approximately $5.2 million of net proceeds through the issuance of equity via a combination

of at-the-market offerings and registered direct offerings (see Note 9 for details).

The Company has also entered into an agreement with

a related party, under which the Company may borrow up to $1.25 million (see Note 6 for details);

as of June 30, 2024, the Company has

not borrowed any amounts under this agreement.

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

sufficient liquidity to fund operations through at least the next 12 months.

However, the Company may raise additional funds this

year if management believes it would be beneficial.

NOTE 4 – INCOME TAX PROVISION

1 unchanged sentence

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, 2024 and 2023 as it maintains a full valuation allowance against its net deferred tax assets.

The Company has no t recorded a tax provision for the three and six months ended June 30, 2024 and 2023 as it maintains a full valuation allowance against its net deferred tax assets.

NOTE 5 – TANGIBLE AND INTANGIBLE ASSETS

4 unchanged sentences

Office Equipment

Internal-Use Software

Internal-Use Software and Website Costs

Property and equipment, gross

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Property and equipment, net

Depreciation expense for the three months ended March 31, 2024 and 2023 was $ 21,659 and $ 10,307 , respectively.

Depreciation expense for the three months ended June 30,

2024 and 2023 was $ 38,292 and $ 18,672 , respectively.

Depreciation expense for the six months ended June 30, 2024 and 2023 was $ 59,951 and $ 28,979 , respectively.

Schedule of intangible assets

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Intangible assets, net

Amortization expense for the three months ended March 31, 2024 and 2023 was $ 7,814 and $ 5,956 , respectively.

Amortization expense for the three months ended June 30,

2024 and 2023 was $ 7,483 and $ 11,860 , respectively.

Amortization expense for the six months ended June 30, 2024 and 2023 was $ 15,297 and $ 17,816 , respectively.

NOTE 6 – RELATED PARTY TRANSACTIONS AND AGREEMENTS

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New Lucyd Ltd.

The Company entered into

an agreement with Lucyd Ltd.

pursuant to which the Company can receive up to $ 1,250,000

either (a) in services provided by Lucyd Ltd.

Financing Agreement

On March 1, 2024, the Company entered into an agreement with Lucyd Ltd.

pursuant to which the Company can receive up to $ 1,250,000 either (a) in services provided by Lucyd Ltd.

to the Company or (b) in cash upon request of funds by the Company.

The Company has

not borrowed any amounts under this agreement.

Once funds or services are received by the Company, it will issue a convertible note

to Lucyd Ltd.

(the “Convertible Note”) that will bear interest at 10 %

per annum and include the option to convert the Convertible Note into the Company’s common stock upon certain Conversion

Events (as defined in the Convertible Note).

Upon issuance, the Convertible Note will have a maturity date of September

1, 2025 , at which time all outstanding principal and accrued interest, if any, will be payable in full in

cash or in the Company’s common stock at the discretion of the holder .

The Company will be able to prepay the Convertible Notes at any time with the written

consent of Lucyd Ltd.

Once funds or services are received by the Company, it will issue a convertible note to Lucyd Ltd.

that will bear interest at 10 % per annum and include the option to convert the note into shares of the Company’s common stock upon certain conversion events.

Upon issuance, the convertible note will have a maturity date of September 1, 2025 , at which time all outstanding principal and accrued interest, if any, will be payable in full in cash or in the Company’s common stock.

The Company will be able to prepay the convertible notes at any time with the written consent of Lucyd Ltd.

The Company has not borrowed any amounts under this agreement.

Loan to Tekcapital Europe, Ltd.

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Pursuant to this agreement, the Company loaned 600,000 British pounds sterling (equivalent to approximately $ 768,000 ) to Tekcapital Europe, Ltd.

The loan bears simple interest at a rate of 10 % per annum and was required to be repaid on or before April 11, 2024 .

The loan bore simple interest at a rate of 10 % per annum and was required to be repaid on or before April 11, 2024 .

Tekcapital Plc executed the agreement as guarantor for Tekcapital Europe, Ltd.

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Tekcapital Europe, Ltd.

repaid the substantially all of the principal balance of the loan in March 2024.

repaid substantially all of the principal balance of the loan in March 2024.

As of March 31, 2024, the only amounts remaining outstanding and payable to us under the loan were 7,616 British pounds sterling of principal and 10,717 British pounds sterling of accrued interest (in total, approximately $ 23,000 ).

This balance is reflected in the condensed balance sheet as a current asset Due from Tekcapital and Affiliates, net of other amounts payable to Tekcapital and Affiliates for other related party agreements.

These remaining amounts were repaid to us during the three months ended June 30, 2024, and as of June 30, 2024, no amount remains outstanding or payable under this agreement.

Management Service Agreement

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

During the three months ended March 31, 2024, the Company incurred $ 35,000 in each respective period under the management services agreement.

During the three months ended June 30, 2024 and 2023, the Company incurred $ 35,000 in each respective period under the management services agreement.

During the six months ended June 30, 2024 and 2023, the Company incurred $ 70,000 in each respective period under the management services agreement.

Rent of Office Space

Under an agreement between the Company and Tekcapital, Tekcapital bills the Company for an allocation of rent paid by Tekcapital on the Company’s behalf.

The Company recognized $ 23,231 and $ 22,769 of expense related to this month-to-month arrangement for the three months ended March 31, 2024 and 2023, respectively.

The Company recognized $ 23,274 and $ 22,992 of expense related to this month-to-month arrangement for the three months ended June 30, 2024 and 2023, respectively, and recognized $ 46,505 and $ 45,760 of expense related to this month-to-month arrangement for the six months ended June 30, 2024 and 2023, respectively.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Legal Matters

We are not currently the subject of any material pending legal proceedings;

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On January 3, 2024, we settled and resolved certain matters with a third party, including a complaint that had been brought before the International Trade Commission and an investigation instituted by the International Trade Commission in 2023, and entered into a multi-year non-exclusive license agreement with the third party covering multiple smart eyewear patents (as described more fully below).

In 2022 and 2023, we entered into several multi-year license agreements which grant us the right to sell certain branded smart eyewear, including the Nautica, Eddie Bauer, and Reebok brands worldwide.

License Agreements

In 2022 and 2023, we entered into various multi-year license agreements which grant us the right to sell certain branded smart eyewear, including the Nautica, Eddie Bauer, and Reebok brands worldwide.

These agreements require us to pay royalties based on a percentage of net retail and wholesale sales during the period of the license, and also require guaranteed minimum royalty payments.

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Pursuant to this license agreement, the Company added licenses for 46 new patents to its portfolio of owned and licensed patents and applications.

The Company fully prepaid this license for the term of the agreement, and as of March 31, 2024 does not have any obligation for future payments under this agreement.

The Company fully prepaid this license for the term of the agreement, and as of June 30, 2024 does not have any obligation for future payments under this agreement.

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

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NOTE 8 – STOCK-BASED COMPENSATION

During the three months ended March 31, 2024, we granted options to purchase an aggregate of 10,000 shares of common stock at $ 0.4201 per share to an employee, of which 1/5 vested immediately, and 1/5 shall vest on each six-month anniversary of the grant date.

The options expire on January 11, 2029.

Summary information regarding the number of options, exercise price, and remaining contractual life as of and during the three months ended March 31, 2024 is as follows:

Stock Options

Summary information regarding the number of options, exercise price, and remaining contractual life as of and during the six months ended June 30, 2024 (as retroactively adjusted for the reverse stock split described in Note 11) is as follows:

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

Weighted Average

Price per share

Exercise Price

Weighted Average

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Forfeited / Expired

As at March 31, 2024

Exercisable as at March 31, 2024

of March 31, 2024, the aggregate intrinsic value for all options outstanding as well as all options exercisable was 0 zero, and

unrecognized stock option expense of approximately $ 463,000

remains to be recognized over next 1.11

Also during the three months ended March 31, 2024, we recognized $ 5,075 of expense related to restricted stock units awarded in 2023;

as of March 31, 2024, unrecognized restricted stock unit expense of approximately $ 14,000 remains to be recognized between April 1, 2024 and November 30, 2024.

Additionally, on March 28, 2024, we entered into an agreement for a third party to provide us with financial advisory and investment banking services.

As at June 30, 2024

Exercisable as at June 30, 2024

As of June 30, 2024, the aggregate

intrinsic value for all options outstanding as well as all options exercisable was zero 0 , and unrecognized stock option expense of

approximately $ 293,000

remains to be recognized over the next 0.71

During the six months ended June 30, 2024, we granted options to purchase an aggregate of 500 shares of common stock at $ 8.402 per share to an employee, of which 1/5 vested immediately, and 1/5 were to vest on each six-month anniversary of the grant date.

The options were to expire on January 11, 2029.

However, the employee later separated from the Company, and these options were all forfeited or expired.

Restricted Stock Units

During the three and six months ended June 30, 2024, we recognized $ 5,075 and $ 10,150 of expense, respectively, related to restricted stock units awarded in 2023;

as of June 30, 2024, unrecognized restricted stock unit expense of approximately $ 8,500 remains to be recognized between July 1, 2024 and November 30, 2024.

On March 28, 2024, we entered into an agreement for a third party to provide us with financial advisory and investment banking services, for a minimum term of six months.

As consideration for the services provided to the Company, we issued to the counterparty 15,000 shares of our common stock.

No expense related to this agreement has been recognized in the condensed statement of operations for the three months March 31, 2024, although the fair value of the shares transferred has been recognized in the condensed balance sheet as of March 31, 2024 as a prepaid expense.

The related expense will be recognized over a 6-month period from April 1, 2024 through September 30, 2024.

The total value of consideration transferred, measured using the fair value of our common stock at the date of issuance, was $ 81,900 .

During the three and six months ended June 30, 2024, we recognized $ 40,950 of expense related to this arrangement, and will recognize the remaining expense of $ 40,950 during the three months ending September 30, 2024.

On April 1, 2024, we entered into a brand ambassador agreement with an individual for a two-year term.

As compensation for the first year of the agreement, we issued the individual 4,500 shares of our common stock.

The value of the consideration transferred, measured using the fair value of our common stock at the date of issuance, was $ 21,690 .

During the three and six months ended June 30, 2024, we recognized $ 5,423 of expense related to this arrangement, and will recognize the remaining expense for these shares awarded of $ 16,267 on a straight-line basis from July 1, 2024 through March 31, 2025.

NOTE 9 – STOCKHOLDERS’ EQUITY

At-the-Market Offerings

On April 15, 2024, the Company entered into an at-the-market offering agreement with H.C.

Wainwright & Co., LLC, as sales agent (“HCW”), relating to the sale of common stock.

From April 15, 2024 through April 28, 2024, the Company sold 2,828 shares of common stock and received approximately $ 13,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 12,000 .

Following the first registered direct offering described below, from May 2, 2024 through May 24, 2024, the Company sold 34,900 shares of common stock and received approximately $ 536,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 518,000 .

Following the second registered direct offering described below, from June 13, 2024 through June 30, 2024, the Company sold 246,743 shares of common stock and received approximately $ 1,918,000 of gross proceeds before deducting sales agent commissions and offering expenses, and the net proceeds received by the Company from these transactions amounted to approximately $ 1,845,000 .

The Company also paid $ 50,000 of legal fees to HCW during the three months ended June 30, 2024;

this payment has been reflected in the unaudited condensed financial statements as a reduction to additional paid in capital, as it represents a related cost of the at-the-market equity offering transactions.

First Registered Direct Offering

On May 1, 2024, the Company closed on a registered direct offering of 210,043 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 210,043 shares of common stock at an exercise price of $ 4.88 per share, for a combined purchase price per share and warrant of $ 4.88 .

In exchange, the Company received approximately $1.0 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 15,754 shares of common stock at an exercise price of $ 6.10 per share.

The net proceeds received by the Company from this transaction amounted to approximately $ 837,000 .

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Approximately $ 100,000 of the net proceeds received from this registered direct offering were used to pay a former agent for their waiver of a contractual right of first refusal;

such payment has been reflected in the unaudited condensed financial statements as a reduction to additional paid in capital, as it represents a related cost of the equity transaction.

Second Registered Direct Offering

On May 29, 2024, the Company closed on a registered direct offering of 263,159 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 263,159 shares of common stock at an exercise price of $ 9.50 per share, for a combined purchase price per share and warrant of $ 9.50 .

In exchange, the Company received approximately $2.5 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 19,737 shares of common stock at an exercise price of $ 11.876 per share.

The net proceeds received by the Company from this transaction amounted to approximately $ 2.1 million.

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Other Matters

During the three and six months ended June 30, 2024, the Company made a release payment of $ 325,000 to a shareholder counterparty for the waiver of certain of that counterparty’s pre-existing contractual rights related to the Company’s equity offerings described above.

This payment is reflected within General and administrative expenses in the condensed statements of operations.

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.

Due to the net losses for the three months ended March 31, 2024 and 2023, 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.

The calculation of net earnings/(loss) per share is as follows:

Due to the net losses for all periods presented in the condensed statements of operations, all shares underlying the common stock options, common stock warrants, and related party convertible debt were excluded from the earnings per share calculation due to their anti-dilutive effect.

The calculation of net earnings/(loss) per share (as retroactively adjusted for the reverse stock split described in Note 11) is as follows:

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

three months ended

six months ended

Basic and diluted:

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NOTE 11 – SUBSEQUENT EVENTS

At-the-Market Offering

On April 15, 2024, the Company entered into an

at-the-market offering agreement with H.C.

Wainwright & Co., LLC, as sales agent (“HCW”), relating to the sale of common

In accordance with the terms of the offering agreement, Form S-3 shelf registration, and related prospectus documents filed with

the SEC, the Company offered to sell up to $ 1,120,446 of shares of its common stock from time to time, through HCW acting as agent.

From April 15, 2024 through April 28, 2024, the

Company sold 50,395 shares of common stock at purchase prices of approximately $ 0.25 per share, and received approximately $ 13,000 of

gross proceeds before deducting sales agent fees and expenses.

The net proceeds received by the Company from these transactions

amounted to approximately $ 12,000 .

Following the May 1, 2024 registered direct offering

described below, the Company filed an amended prospectus document, reducing the maximum remaining aggregate offering amount under the

at-the-market facility to $ 538,599 of shares of common stock.

Registered Direct Offering

May 1, 2024, the Company closed on a registered direct offering of 4,200,822

shares of its common stock and, in a concurrent private placement, warrants to purchase up to 4,200,822

shares of common stock at an exercise price of $ 0.244

per share, for a combined purchase price per share and warrant of $ 0.244 .

In exchange, the Company received approximately $1.0 million of gross proceeds, before deducting placement agent fees and expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 315,062

shares of common stock at an exercise price of $ 0.305

The net proceeds received by the Company from this transaction amounted to approximately $ 837,000 .

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Reverse Stock Split

At our annual meeting of shareholders on July 8, 2024, the Company’s shareholders approved an amendment to the Company’s articles of incorporation to effect a reverse stock split of our issued and outstanding common stock at a ratio between 1-for-14 and 1-for-24 .

Subsequently, the board of directors authorized a reverse stock split in a ratio of 1-for-20 shares, and we filed with the Florida Secretary of State a certificate of amendment to our articles of incorporation.

Effective July 18, 2024, each 20 shares of the Company’s issued and outstanding common stock were combined into one share of common stock, except to the extent that the reverse stock split would have resulted in any of the Company’s stockholders owning a fractional share, in which case such fractional share was rounded up to the next highest whole share.

Additionally, pursuant to their terms, the shares of common stock underlying the Company’s outstanding stock options and warrants were similarly adjusted along with corresponding adjustments to their exercise prices.

All share and per share amounts presented in these financial statements and accompanying notes, included but not limited to shares issued and outstanding, earnings/(loss) per share, and warrants and options, as well as the dollar amounts of common stock and additional paid-in capital, have been retroactively adjusted for all periods presented in order to reflect this change in capital structure.

There was no change to the total number of authorized common shares of 50,000,000 , and there was no change in the par value per common share of $ 0.00001 .

At-the-Market Offerings

On July 11, 2024, the Company further amended its prospectus document, and offered to sell up to $ 1,446,737 of shares of its common stock from time to time, through HCW acting as agent.

From July 12, 2024 through August 8, 2024, the Company sold 43,535 shares of common stock and received approximately $ 252,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 242,000 .

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

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Our flagship product, Lucyd Lyte ® , enables the wearer to listen to music, take and make calls, and use voice assistants and ChatGPT to perform many common smartphone tasks hands-free.

Notably, by the end of 2024 the Company anticipates completing its mission to introduce a smart upgrade for all four of the major types of eyewear:

prescription eyeglasses, ready-to-wear sunglasses, safety glasses, and sport glasses.

We believe this will expand our customer base significantly by having a large eyeglass and sunglass offering that better aligns with the needs of optical retailers.

To date, most Lucyd products have been designed for sunglass use, so adding styles designed specifically for indoor eyeglass use has the opportunity to attract a much larger customer base and more optical retail partners.

Additionally, the Lucyd Armor and Reebok ® Powered by Lucyd frames will align with the style and performance needs of safety and sport eyewear users respectively, for which we have not previously had a suitable product offering.

Products and History

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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 lightweight 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.

The product was initially launched with six styles, and in September 2021, an additional six styles were added, including the Company’s first titanium-front smart eyewear.

A final four styles were added to this collection in 2022, including the Company’s first matte finish and tortoise style models, along with improvements to hinge design.

In the first quarter of 2022 we introduced a virtual try-on kiosk for select retail stores.

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In January 2024, we launched the Nautica ® Powered by Lucyd smart eyewear collection in eight different styles, along with various branded accessories including a power brick, cleaning cloth, and a slipcase adorned with the iconic Nautica sail logo.

We anticipate launching the Eddie Bauer ® Powered by Lucyd and Reebok ® Powered by Lucyd smart eyewear collections later in 2024.

This collection introduced the Company’s first “global fit” style, which supports low nose bridge customers.

In April 2024, we launched the Eddie Bauer ®

Powered by Lucyd smart eyewear collection in four different styles, which showcases the first-to-market rimless smart eyewear

We believe the Eddie Bauer collection is the Company’s most premium product to date, and features brushed titanium hardware,

improved sound quality, and includes the patent-pending Lucyd Dock with every unit.

We anticipate launching the Reebok ® Powered by Lucyd smart eyewear collection later in the second half of 2024, followed by a Reebok ® Optical Smart Eyewear collection in the first half of 2025.

Our current product offering consists of 33 different 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 thousands of variations of products currently available.

The Company is continuously iterating and improving its frame lineup, offering a mixture of “Lucyd icons” (styles that have consistently performed well since the introduction of Lucyd Lyte) and new styles seasonally to align with market trends and evolving consumer demand.

All styles are available with 80+ different lens types, resulting in thousands of variations of products currently available.

The Company currently has over 100 licensed patents and applications.

Since the launch of Lucyd Lyte, we have 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 regarding on-boarding our product.

Within six months of the launch of Lucyd Lyte, several optical stores in the United States and Canada have onboarded the product and we have had discussions with several other large eyewear chains regarding our frames.

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.

The Vyrb app launched in open beta on iOS and Android app stores in 2021, as the Company’s first social media platform.

In 2022, we introduced key features in the Vyrb app, including live broadcasts for up to 100 users in one digital “room,” and the ability to upload external audio content into Vyrb, enabling longstanding content creators to import their existing libraries swiftly into the platform.

In the first quarter of 2023, we introduced several new features for the Vyrb app, including market-leading audio accessibility features for social media, such as the ability to create and listen to a feed of audio content completely hands-free, using unique voice assistant commands created for the app.

We plan to continue to develop the expansive Vyrb platform into a feature-rich social toolbox for customers.

This includes the introduction of revenue-generating features such as native ads and in-app upgrades, as well as gamification features such as a points and rewards system.

Additional new features for the Vyrb app are planned to launch in 2024, including a fully upgraded user interface.

Once this update to the interface is completed, the app will be considered officially launched, and the Company will begin to promote it and capitalize on it in earnest.

In April 2023, we introduced another major

software upgrade for our glasses with the launch of the Lucyd app for iOS and Android.

This free application enables the user to converse

with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful

AI assistants in a hands-free ergonomic interface.

The app deploys a powerful and unique Siri integration with the Open AI API for ChatGPT,

developed internally by the Company.

The Company has filed a patent application related to this software upgrade.

We believe this development

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

Company’s core smartglass product.

In addition, the Company plans to launch new features for the Lucyd app in 2024, including a

paid “Pro” version of the app, which will provide another potential incremental revenue stream for the Company from glasses

Software and Apps

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

This free application enables the user to converse with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful AI assistants in a hands-free ergonomic interface.

The app deploys a powerful and unique Siri integration with the Open AI API for ChatGPT, developed internally by the Company.

The Company has filed a patent application related to this software.

In the second quarter of 2024, we added a Pro version of the app, which provides unlimited ChatGPT interactions and priority tech support for a modest monthly or annual fee.

The Company anticipates that this will become a new revenue stream for our business, and will represent our first diversification in product revenue from frames and lenses.

In July 2024, we launched a new feature called “Walkie” for the Lucyd app, which enables thousands of users to join each other on walkie-talkie style communication channels.

This feature was designed with the upcoming smart safety glass product in mind, to enable coworking teams to communicate freely on smart eyewear.

We plan to launch more new features for the Lucyd app in the future, such as an audio equalizer enabling the user to optimize sound output for different types of content such as calls and podcasts, a “Find My Glasses” feature, and touch control customizations.

We believe these developments make our Lucyd eyewear perhaps the smartest smartglasses available today, and represent a significant marketing opportunity for our core smartglass products.

A large part of our strategy is not just to provide a leading smart eyewear platform, but to build a highly functional mobile software and interactive retail fixture ecosystem to support user adoption and “stickiness” with our products.

While the Lucyd app provides additional value to end users after purchase, we also wanted to make the purchase process itself more engaging and tech-forward.

To this end, we have also developed all-new interactive LCD retail fixtures, featuring a new proprietary kiosk app that we have just recently developed in-house.

These new displays offer a complete Lucyd experience, including virtual try-on, social media content, detailed product info and videos, and seamless music demos.

The new display systems, installed with the Lucyd shopping app, are expected to provide an immersive onboarding experience for prospective customers in retail stores carrying our frames, and will start shipping to partners in the fourth quarter of 2024.

Key Factors Affecting Performance

Expansion of retail points of purchase

In addition to sustained growth of our e-commerce business, our future revenues are correlated positively with our placement of Lucyd glasses in optical stores, as well as sporting goods stores and other specialty stores.

To address this, we have assembled a team with decades of experience in the eyewear industry and are offering a strong co-op marketing program and reordering incentives program.

We currently offer an expansive line of 29 different styles and several accessories, and are in the process of expanding our product offerings to include cobranded eyewear with well-known brands like Nautica, Eddie Bauer, and Reebok.

In total, the Company expects to offer 38 total smart eyewear SKUs across these brands and Lucyd by the end of 2024.

In addition to sustained growth of our e-commerce business, we believe our future revenues are correlated positively with our placement of Lucyd glasses in optical stores, as well as sporting goods stores and other specialty stores.

To support this growth, we have partnered with Windsor Eyes as our premier distributor for the optical market.

Windsor Eyes brings decades of experience in the eyewear industry and a team of experienced, professional eyewear sales reps.

In July 2024, they have just started to market our frames, and have already introduced our frames into three new eyewear retailers.

We currently offer an expansive line of 33 different styles and several accessories (including our co-branded product offerings with Nautica and Eddie Bauer), and are in the process of expanding our product offerings to include co-branded eyewear with other well-known brands like Reebok.

In total, the Company expects to offer 38 total smart eyewear models by the end of 2024.

Retail store client retention and re-orders

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To support our sales to retail stores directly, we offer a strong co-op marketing program that includes free and paid store display materials.

Additionally, we consistently incorporate retail partner feedback directly into our frames to better serve our end users.

As part of this strategy, we have launched a new modular display system with engaging video screens and audio testing capabilities for our resellers to help educate their in-store customers about Lucyd Lyte and enable customers to try them on.

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.

As of March 31, 2024, 45 display systems have been deployed so far to retailers.

As of June 30, 2024, 73 digital display systems have been deployed to retailers.

Enhanced countertop and freestanding displays with large, interactive screens and engaging social media content are planned to launch in the fourth quarter of 2024.

Investing in business growth

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

As of March 31, 2024, we had over 20,000 cumulative total orders from customers online since inception.

As of June 30, 2024, we had over 20,000 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.

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We sell products through our retail store resellers, distributors, on our own website Lucyd.co, and on Amazon.com.

Our newest flagship Lucyd Lyte XL brand frames are priced at $179 on acetate models and $199 on titanium models for non-prescription glasses across all of our online channels.

Our flagship Lucyd Lyte XL brand frames are priced at $179 on acetate models and $199 on titanium models for non-prescription glasses across all of our online channels.

Our co-branded Nautica ® Powered by Lucyd and Eddie Bauer ® Powered by Lucyd frames are priced at $199 – $219 and $249 – $299, respectively.

When adding a prescription lens upgrade to our glasses on the Lucyd.co website, the price can increase from between $40 for a basic clear prescription lens, all the way up to $449 for our proprietary Blueshift transitional blue light lenses in a progressive high index (ultra-thin) format.

Glasses with prescription lenses are provided by the Company through our website Lucyd.co, while our sales through Amazon and to our e-commerce partners only include non-prescription glasses (with rare exceptions, such as a reseller ordering a customized unit for display purposes).

Glasses with prescription lenses are provided by the Company 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).

Lens customizations remain an important product differentiator and upselling opportunity.

Lucyd.co consumers enjoy free USPS first class postage on orders over $149, with faster delivery options available for extra cost, for sales processed through our website.

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

research and development expenses related to (i) development of new styles and features of our smart eyewear, (ii) development and improvement of our e-commerce website, and (iii) development of our Vyrb social media app for wearables.

Interest and Other Income, Net

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Treasury bills, as well as interest income and expense related to loans with related parties.

Results of Operations

The following table summarizes our results of operations for the three months ended March 31, 2024 (the “current quarter”) and the three months ended March 31, 2023 (the “prior year quarter”):

Results of Operations – Quarterly

The following table summarizes our results of operations for the three months ended June 30, 2024 (the “current quarter”) and the three months ended June 30, 2023 (the “prior year quarter”):

Three months ended

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Cost of Goods Sold

Gross Profit (Deficit)

Operating Expenses:

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Total Other Income (Expense), net

Our revenues for the three months ended March 31, 2024 were $383,471, representing an increase of 165% as compared to revenues of $144,921 during the three months ended March 31, 2023.

The increase in revenue was primarily attributable to significant growth in the e-commerce channel, largely driven by our significant investments in advertising and marketing initiatives during the latter portion of 2023 and through the current quarter, combined with recent new product launches (including the Lyte XL and Nautica ® Powered by Lucyd collections).

Net sales through our Lucyd.co website and Amazon.com grew by more than 400% and over 150%, respectively, from the prior year quarter.

This growth in e-commerce sales was partially offset by significant price discounts granted in the current quarter, in order to respond to aggressive discounts offered by key competing products, and to support our continued market share growth.

Wholesale revenue decreased approximately 72%

from the prior year quarter, largely driven by a change in our focus from small, independent retailers to major national retailers, the

latter of which have slower product approval and purchasing cycles.

However, we believe that focusing on introducing our product in major

national retailers will have a significant positive impact on the Company’s revenues in the next 6-24 months.

For the three months ended March 31, 2024,

approximately 67% of sales were processed on our online store (Lucyd.co), 29% on Amazon.com, and 4% with reseller partners.

channel mix positively impacted our revenue for the current quarter as compared with the prior year 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 March 31, 2024, we

generated an aggregate of $272,742 of revenue from sales of non-prescription frames and accessories, and $110,729 from sale of frames

with prescription lenses.

All of the $113,619 in sales generated on Amazon.com during the current quarter were for non-prescription frames

and accessories, as we only offer prescription lenses through our website.

Of the $255,920 in online sales generated through Lucyd.co,

$110,729 was related to frames with prescription lenses and $145,191 was related to glasses with non-prescription lenses.

E-commerce sales

remain to be the most material portion of our sales to date.

For the three months ended March 31, 2023, approximately 35% of sales were processed on our online store (Lucyd.co), 31% on Amazon.com, and 34% with reseller partners.

For the three months ended March 31, 2023, we generated $33,350 of revenue from sales of non-prescription frames and accessories and $16,918 was generated from sales of frames with prescription lenses.

Our revenues for the three months ended June 30, 2024 were $308,682, representing an increase of 82% as compared to revenues of $169,929 during the three months ended June 30, 2023.

The increase in revenue was primarily driven by significant growth in the e-commerce channel, with net sales through our Lucyd.co website growing by more than 200% from the prior year quarter, and was primarily attributable to our recent new product launches (including the Lyte XL collection in the fourth quarter of 2023, and the co-branded Nautica ® Powered by Lucyd and Eddie Bauer ® Powered by Lucyd collections in the first half of 2024).

We believe our brand partnerships play a significant role in our revenue growth by offering a more diversified product line that speaks to consumers from different demographics (for example, Nautica ® generally appeals to a more fashion-forward customer than Lucyd Lyte, and Eddie Bauer ® generally appeals to an older demographic than our other lines).

Wholesale revenue decreased approximately 8% from the prior year quarter, largely driven by a change in our focus from small, independent retailers to major national retailers, the latter of which have slower product approval and purchasing cycles.

However, we believe that focusing on introducing our product in major national retailers will have a significant positive impact on the Company’s revenues in the next 3 to 21 months.

For the three months ended June 30, 2024, approximately 59% of sales were processed on our online store (Lucyd.co), 25% on Amazon.com, and 16% with reseller partners.

This sales channel mix positively impacted our revenue for the current quarter as compared with the prior year 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, 2024, we generated an aggregate of $227,545 of revenue from sales of non-prescription frames and accessories, and $81,137 from sale of frames with prescription lenses.

All of the $76,641 in sales generated on Amazon.com during the current quarter were for non-prescription frames and accessories, as we only offer prescription lenses through our website.

Of the $182,521 in online sales generated through Lucyd.co, $81,137 was related to frames with prescription lenses and $101,384 was related to glasses with non-prescription lenses.

E-commerce sales remain to be the most material portion of our sales to date;

however, out of all of our sales channels, we believe that the wholesale optical channel represents the most promising opportunity for growth.

We anticipate that as smart eyewear becomes more normalized for prescription wear, major national eye care providers will begin to onboard smart eyewear products, and we believe we are the value leader in that sector.

For 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.

For the three months ended June 30, 2023, we generated $139,144 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 2023 period were for non-prescription frames and accessories as we only offer prescription lenses through our website.

Of the $50,268 in online sales generated through Lucyd.co, $16,918 related to frames with prescription lenses and $33,350 of glasses sold were with non-prescription lenses.

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.

Cost of Goods Sold

Our total cost of goods sold increased to $376,520 for the three months ended March 31, 2024, as compared to $134,630 for the prior year quarter.

This year-over-year increase of 180% was primarily driven by higher sales volumes during the current quarter as compared with the prior year quarter.

Cost of frames increased by approximately 150% from the prior year quarter, which was generally in-line with (although slightly lower than) the increase in net sales from the prior year quarter, both proportionally and on an absolute dollar basis.

Cost of lenses increased by more than 300% from the prior year quarter, mainly driven by the combination of (i) the introduction of our new proprietary Blueshift premium lenses in August 2023, which are more expensive than other lenses to produce, and (ii) sales channel mix, as a higher relative proportion of our sales in the current quarter were through our online store (Lucyd.co), and the cost of prescription lenses attributable to this channel increased our cost of goods sold while not impacting cost of goods sold for sales realized through Amazon or retail store partners.

Cost of goods sold for the three months ended March 31, 2024 included but was not limited to the cost of frames of $184,978;

Our total cost of goods sold increased to $253,506 for the three months ended June 30, 2024, as compared to $199,745 for the prior year quarter.

This year-over-year increase of 27% was primarily driven by higher sales volumes during the current quarter as compared with the prior year quarter, partially offset by the impacts of certain period costs and other one-off items, most notably including approximately $44,000 of custom duties and taxes expensed in the prior year quarter which did not recur in the current quarter.

Cost of frames increased by approximately 124% from the prior year quarter, which was primarily attributable to the combination of (i) higher cost of goods sold associated with the new Eddie Bauer ® Powered by Lucyd collection, due to the increased number of components, deluxe finishes, and materials, and (ii) the timing of physical inventory verification and cycle counts, and associated inventory adjustments.

Cost of lenses increased by approximately 65% from the prior year quarter, which was primarily attributable to sales volume increases, partially offset by management’s efforts to reduce lens fulfilment costs.

We also recently contracted with a new lower-cost lens supplier in July 2024, which is expected to further reduce lens costs by as much as 40% starting in the third quarter of 2024.

Cost of goods sold for the three months ended June 30, 2024 included the cost of frames of $160,023;

cost of prescription lenses incurred with our third-party vendor of $54,714;

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shipping and logistics costs of $24,754;

and quality assurance costs related to our products sold of $4,238.

Out of $376,520 of our total cost of goods sold for the current quarter, $103,069 related to orders with prescription lenses, while $273,451 pertained to non-prescription orders.

Cost of goods sold for the three months ended

March 31, 2023 included the cost of frames of $73,798;

and inventory adjustment credits of $(13,990).

Out of our total cost of goods sold for the current quarter of $253,506, $54,714 related to orders with prescription lenses, while $198,792 pertained to non-prescription orders.

We anticipate that our cost of goods sold will improve in future periods as new products (i.e., Lucyd Armor and Reebok ® Powered by Lucyd ) from a new supplier are launched in the fourth quarter of 2024, as the frames for these product lines are designed for shorter wear periods, and accordingly have fewer components, thus reducing their price.

We estimate that the unit cost of these new product lines will be at least 30% lower than our Lucyd Lyte models.

Cost 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;

commissions, affiliate referral fees, and e-commerce platform fees of $50,794;

shipping and logistics costs of $8,313;

and quality assurance

costs related to our products sold of $11,700.

Out of $134,630 of our total cost of goods sold for the three months ended March 31,

2023, $22,123 related to orders with prescription lenses, while $112,507 pertained to non-prescription orders.

Also, during the current

quarter we incurred approximately $29,000 of product certification costs to support the expansion of our product sales in jurisdictions

outside the U.S.

We anticipate further growth in sales in 2024.

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

As we continue to refine

our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles.

have also launched new Lucyd Shift and Lucyd Blueshift transitional lenses in place of branded third-party transitional lenses, offering

similar functionality for a lower cost of goods, while also enabling a slightly lower cost to the customer.

Additionally, we have been

informed by key suppliers that significant price reductions over 10% are possible as we continue to scale our production quantities.

Our gross profit for the current quarter was $6,951, as compared to $10,291 for the prior year quarter.

Our gross margin was 2% and 7% in the current quarter and prior year quarter, respectively.

This decline in gross profit and gross margin

was primarily attributable to the aforementioned increase in the cost of lenses.

While we have started to realize some economies of scale

in the cost of frames, and in the area of shipping and logistics, the cost of prescription lenses has grown disproportionately and significantly

more than our revenue, which has had a significant negative impact on our gross profit margin.

Prescription smart eyewear offered direct-to-consumer

has been a key unique selling point used to attract new customers, bringing an important marketing benefit since it is not offered by

most of our competitors.

We are working with our current prescription lens provider to explore opportunities to reduce costs and we are

also actively in discussions with alternative prescription lens suppliers whom we believe may help further lower our lens fulfilment costs.

Ultimately, we believe that the majority of our business will come from frame sales to distributors and eyewear retailers, who will outfit

lenses themselves for the final customer.

We anticipate that the launches of more co-branded products later this year will help us progress

towards our long-term goal of shifting our sale mix over time more towards the wholesale channel, which carries higher margins for us

as such sales to our third-party retail store partners do not include the cost of prescription lenses.

Also, during the current quarter we incurred approximately $29,000 of product certification costs to support the expansion of our product sales in jurisdictions outside the U.S.

and custom duties and importation fees of $44,295.

Out of our total cost of goods sold for the three months ended June 30, 2023 of $199,745, $33,092 related to orders with prescription lenses, while $166,653 pertained to non-prescription orders.

We anticipate further growth in sales in 2024, along with corresponding growth in total cost of goods sold, primarily from additional product related costs.

As we continue to refine our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles.

We have also launched new Lucyd Shift and Lucyd Blueshift transitional lenses in place of branded third-party transitional lenses, offering similar functionality for a lower cost of goods, while also enabling a slightly lower cost to the customer.

Additionally, we have recently engaged a new local lens supplier based in Miami, Florida, starting in July 2024, which should significantly reduce our cost of lens fulfilment costs across the board starting in the third quarter of 2024, by as much as 40% per prescription order.

Gross Profit (Deficit)

Our gross profit for the current quarter was $55,176, as compared to a gross deficit of $(29,816) for the prior year quarter.

Our gross margin was positive 18% in the current quarter and negative 18% in the prior year quarter, representing an improvement of approximately 36 percentage points from the prior year period.

This increase in gross profit and gross margin was primarily attributable to certain period costs and other one-off items, including approximately $44,000 of custom duties and taxes expensed in the prior year quarter which did not recur in the current quarter, and inventory adjustment credits of approximately $14,000 in the current quarter.

Together, these items represented approximately 22 percentage points of the total improvement in gross margin.

The remaining improvement in gross margin was primarily attributable to the combination of (i) greater economies of scale as a result of higher unit volumes, and (ii) management’s recent efforts to reduce lens fulfilment costs (i.e.

the change in our return policy in January 2024 to prohibit custom lens refunds, and the switch to a more affordable lab).

Overall, our gross profit indicates a positive trend, as our increase in net sales of 82% compared with our increase in cost of goods sold of 27% reflects our sales growth outpacing our fixed unit costs.

This is reflective of reduced discounting online as we seek to improve our suitability as a provider to brick and mortar channels.

Ultimately, we believe that the majority of our business will come from frame sales to distributors and eyewear retailers, who will outfit lenses themselves for the final customer.

We anticipate that the launch of Reebok co-branded products later this year will help us progress towards our long-term goal of shifting our sale mix over time more towards the wholesale channel, which carries higher margins for us as such sales to our third-party retail store partners do not include the cost of prescription lenses.

Operating Expenses

Our operating expenses increased by 40% to $2,021,542 for the three months ended March 31, 2024, as compared to $1,439,238 for the three months ended March 31, 2023.

Our operating expenses increased by 56% to $2,029,534 for the three months ended June 30, 2024, as compared to $1,304,475 for the three months ended June 30, 2023.

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:

General and administrative expenses

Our general and administrative expenses increased

by 12% to $1,108,946 for the three months ended March 31, 2024, as compared to $993,772 for the prior year quarter.

This increase

was largely driven by the combination of (i) additional team members, (ii) the cost of various licensing agreements we have entered into

in order to support our co-branding initiatives and expand our patent portfolio, which are assessed annually in January, and (iii) higher

legal expenses.

We expect our general and administrative expenses to be lower in future quarters due to certain one-time fees this

Sales and marketing expenses

Our sales and marketing expenses increased by 155% to $661,295 for the three months ended March 31, 2024, as compared to $259,297 for the three months ended March 31, 2023.

This year-over-year increase is primarily attributable to the restructuring of our e-commerce business during the prior year quarter, during which we temporarily paused and postponed our marketing spending, and management made a tactical decision to preserve a significant portion of our marketing budget for later in the year, in order to better align the timing of marketing spending with major new product launches and thus maximize impact.

In the latter portion of 2023 and continuing through the current quarter, we have significantly increased our advertising and marketing efforts, particularly in the areas of spending on paid ads on websites and social media platforms, in order to drive growth in our revenues and market share.

Research and development costs

Our research and development costs increased by 43% to $216,301 for the three months ended March 31, 2024, as compared to $151,169 for the three months ended March 31, 2023.

This increase was primarily attributable to additional resources added to the team for app development, and new mold costs associated with the creation of the safety and sport (Reebok) product format.

and administrative expenses

Our general and administrative expenses increased by $326,945 or 34% to $1,295,299 for the three months ended June 30, 2024, as compared to $968,354 for the prior year quarter.

This increase was primarily attributable to a $325,000 release payment made to a shareholder counterparty for the waiver of certain of that counterparty’s pre-existing contractual rights related to the Company’s equity offerings during the current quarter.

The Company maintains a lean staff salaried at market rates, and a significant portion of our general and administrative expenses consist of corporate overhead type costs which are fixed or semi-fixed in nature (e.g., rent, compliance, legal and professional services, etc.);

as such, our general and administrative expenses are not expected to scale up significantly as our revenue increases.

and marketing expenses

Our sales and marketing expenses increased by approximately $339,000 or 327% to $442,433 for the three months ended June 30, 2024, as compared to $103,643 for the three months ended June 30, 2023.

This year-over-year increase is primarily attributable to the fact that the prior year quarter included a 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.

Going forward, we expect our sales and marketing expense to typically fall within the range of $350,000 to $500,000 per quarter, with some variation to align with the timing of major product launches in order to maximize impact of spending.

From a long-term perspective, while we expect that sales and marketing expenses will scale up to some degree as our revenue increases, we anticipate that such increases in sales and marketing expenses will be mitigated somewhat by our planned focus on growing the wholesale optical channel, which, due to the nature of that channel, inherently does not require costly marketing campaigns to acquire each customer and as a result typically carries a lower marketing cost per unit sold.

Additionally, we generally expect that a retailer who is successful with our products will reorder in large quantities, also without significant marketing expenditure.

and development costs

Our research and development costs increased by 30% to $256,802 for the three months ended June 30, 2024, as compared to $197,478 for the three months ended June 30, 2023.

This increase was primarily attributable to the write-off of approximately $88,000 of previously-capitalized software costs related to the development of the Vyrb app (which was launched as an open beta version in 2021, and has had new features added over time, but had never been officially launched) as a result of management’s decision in 2024 to de-emphasize the Vyrb app in favor of shifting our primary software development focus to the Lucyd app.

Certain elements and features developed for the Vyrb app may potentially be incorporated into future releases of the Lucyd app.

party management fee

Our related party management fee was $35,000 for each of the three-month periods ended June 30, 2024 and 2023, based on the terms of the management services agreement between us and Tekcapital.

Income (Expense), net

Total other income (expense), net in the three months ended June 30, 2024 was $25,959.

This amount was primarily comprised of dividends from our investments in money market funds.

Total 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.

Results of Operations – Year to Date

The following table summarizes our results of operations for the six months ended June 30, 2024 (the “current six months”) and the six months ended June 30, 2023 (the “prior year six months”):

Six months ended

Revenues, net

Cost of Goods Sold

Gross Profit (Deficit)

Operating Expenses:

General and administrative

Sales and marketing

Research and development

Related party management fee

Our related party management fee was $35,000 for each of the three months ended March 31, 2024 and 2023, based on the terms of the management services agreement between us and Tekcapital.

Other Income (Expense), net

Total other income (expense), net in the three months ended March 31, 2024 was $43,280.

Total Operating Expenses

Other Income (Expense)

Interest Expense

Total Other Income (Expense), net

Our revenues for the six months ended June 30, 2024 were $692,153, representing an increase of 120% as compared to revenues of $314,850 during the six months ended June 30, 2023.

The increase in revenue was primarily attributable to significant growth in the e-commerce channel, largely driven by our significant investments in advertising and marketing initiatives during the latter portion of 2023 and through the current period, combined with recent new product launches (including the Lyte XL collection in the fourth quarter of 2023 and the co-branded Nautica ® Powered by Lucyd and Eddie Bauer ® Powered by Lucyd collections in the current six months).

Net sales through our Lucyd.co website and Amazon.com grew by more than 300% and by approximately 77%, respectively, from the prior year six months.

This growth in e-commerce sales was partially offset by significant price discounts granted in the current six months (particularly during the first quarter of 2024), in order to respond to aggressive discounts offered by key competing products and support our continued market share growth.

Wholesale revenue decreased approximately 39% from the prior year six months, largely driven by a change in our focus from small, independent retailers to major national retailers, the latter of which have slower product approval and purchasing cycles.

However, we believe that focusing on introducing our product in major national retailers will have a significant positive impact on the Company’s revenues in the next 3 to 21 months.

For the six months ended June 30, 2024, approximately 63% of sales were processed on our online store (Lucyd.co), 28% on Amazon.com, and 9% with reseller partners.

This sales channel mix positively impacted our revenue for the current six months as compared with the prior year six months, due to the fact we charge an additional $35 to $275 for our prescription lenses available only on Lucyd.co.

For the six months ended June 30, 2024, we generated an aggregate of $500,287 of revenue from sales of non-prescription frames and accessories, and $191,866 from sale of frames with prescription lenses.

All of the $190,260 in sales generated on Amazon.com during the current six months were for non-prescription frames and accessories, as we only offer prescription lenses through our website.

Of the $438,441 in online sales generated through Lucyd.co, $191,866 was related to frames with prescription lenses and $246,575 was related to glasses with non-prescription lenses.

E-commerce sales remain to be the most material portion of our sales to date;

however, out of all of our sales channels, we believe that the wholesale optical channel represents the most promising opportunity for growth.

For 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.

Cost of Goods Sold

Our total cost of goods sold increased to $630,026 for the six months ended June 30, 2024, as compared to $334,375 for the prior year six months.

This year-over-year increase of 88% was primarily driven by higher sales volumes during the current six months as compared with the prior year comparable period, partially offset by the impacts of certain period costs and other one-off items, most notably including approximately $44,000 of custom duties and taxes expensed in the prior year six months which did not recur in the current six months.

Cost of frames increased by approximately 137% from the prior year six months, primarily related to the increase in sales volumes and also partially attributable to the combination of (i) higher cost of goods sold associated with the new Eddie Bauer ® Powered by Lucyd collection, due to the increased number of components, deluxe finishes, and materials, and (ii) the timing of physical inventory verification and cycle counts, and associated inventory adjustments.

Cost of lenses increased by approximately 186% from the prior year six months, mainly driven by (i) the introduction of our new proprietary Blueshift premium lenses in August 2023, which are more expensive than other lenses to produce, and (ii) sales channel mix, as a higher relative proportion of our sales in the current six months were through our online store (Lucyd.co), and the cost of prescription lenses attributable to this channel increased our cost of goods sold while not impacting cost of goods sold for sales realized through Amazon or retail store partners.

These cost increases were partially offset by management’s efforts to reduce lens fulfilment costs.

Cost of goods sold for the six months ended June 30, 2024 notably included, but was not limited to, the cost of frames of $345,001;

cost of prescription lenses incurred with our third-party vendor of $157,782;

commissions, affiliate referral fees, and e-commerce platform fees of $70,031;

shipping and logistics costs of $40,668;

and product certification costs of $29,100.

Out of our total cost of goods sold for the current six months of $630,026, $157,782 related to orders with prescription lenses, while $472,244 pertained to non-prescription orders.

We estimate that the unit cost of these new product lines will be at least 30% lower than our Lucyd Lyte models.

Cost of goods sold for the six months ended June 30, 2023 notably included, but was not limited to, the cost of frames of $136,303;

cost of prescription lenses incurred with our third-party vendor of $55,215;

commissions, affiliate referral fees, and e-commerce platform fees of $67,382;

custom duties and importation fees of $44,295;

and quality assurance costs related to our products sold of $11,700.

Out of $334,375 of our total cost of goods sold for the six months ended June 30, 2023, $55,215 related to orders with prescription lenses, while $279,159 pertained to non-prescription orders.

We anticipate further growth in sales in 2024, along with corresponding growth in total cost of goods sold, primarily from additional product related costs.

As we continue to refine our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles.

Additionally, we have recently engaged a new local lens supplier based in Miami, Florida, starting in July 2024, which should significantly reduce our cost of lens fulfilment costs across the board starting the third quarter of 2024, by as much as 40% per prescription order.

Gross Profit (Deficit)

Our gross profit for the current six months was $62,127, as compared to a gross deficit of $(19,525) for the prior year six months.

Our gross margin was positive 9% in the current six months and negative 6% in the prior year six months, representing an improvement of approximately 15 percentage points from the prior year period.

This change in gross profit and gross margin was primarily attributable to certain period costs and other one-off items, including approximately $44,000 of custom duties and taxes expensed in the prior year six months which did not recur in the current year, inventory adjustment credits of approximately $14,000 in the current six months, and product certification costs of approximately $29,000 in the current six months.

Together, these items represented approximately 12 percentage points of the total improvement in gross margin.

The remaining improvement in gross margin was primarily attributable to greater economies of scale as a result of higher unit volumes.

We are continuing to work with all of suppliers and vendors, including our prescription lens suppliers and our key frame suppliers, to reduce our unit costs.

Ultimately, we believe that the majority of our business will come from frame sales to distributors and eyewear retailers, who will outfit lenses themselves for the final customer.

We anticipate that the launches of more co-branded products later this year will help us progress towards our long-term goal of shifting our sale mix over time more towards the wholesale channel, which carries higher margins for us as such sales to our third-party retail store partners do not include the cost of prescription lenses.

Operating Expenses

Our operating expenses increased by 48% to $4,051,076 for the six months ended June 30, 2024, as compared to $2,743,713 for the six months ended June 30, 2023.

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

Our general and administrative expenses increased by 23% to $2,404,245 for the six months ended June 30, 2024, as compared to $1,962,126 for the prior year six months.

This increase was largely driven by the combination of (i) a $325,000 release payment made to a shareholder counterparty during the current six months for the waiver of certain of that counterparty’s pre-existing contractual rights related to the Company’s equity offerings during the second quarter of 2024, (ii) the cost of various licensing agreements we have entered into in order to support our co-branding initiatives and expand our patent portfolio, which are assessed annually in January, and (iii) higher investor relations costs.

These increases were partially offset by a decrease in salary and employee-related expenses recorded to general and administrative expenses, primarily due to certain employees spending a higher relative proportion of their time working on research and development activities.

as such, our general and administrative expenses are not expected to scale up significantly as our revenue increases.

and marketing expenses

Our sales and marketing expenses increased by 204% to $1,103,728 for the six months ended June 30, 2024, as compared to $362,940 for the six months ended June 30, 2023.

This year-over-year increase is primarily attributable to the combination of the following main drivers:

the restructuring of our e-commerce business during the prior year six months, during which we temporarily paused and postponed our marketing spending, and management made a tactical decision to preserve a significant portion of our marketing budget for later in the year, in order to better align the timing of marketing spending with major new product launches and thus maximize impact.

In the latter portion of 2023 and continuing through the current six months, we have significantly increased our advertising and marketing efforts, particularly in the areas of spending on paid ads on websites and social media platforms, in order to drive growth in our revenues and market share.

the fact that the prior year six months included a 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.

Additionally, we generally expect that a retailer who is successful with our products will reorder in large quantities, also without significant marketing expenditure

and development costs

Our research and development costs increased by 36% to $473,103 for the six months ended June 30, 2024, as compared to $348,647 for the six months ended June 30, 2023.

Certain elements and features developed for the Vyrb app may potentially be incorporated into future releases of the Lucyd app.

Also contributing to the year-over-year increase were (i) an increase in allocated salary and employee-related expenses, primarily due to certain employees spending a higher relative proportion of their time working on research and development activities, and (ii) new mold costs associated with the creation of the safety and sport (Reebok) product format.

party management fee

Our related party management fee was $70,000 for each of the six months ended June 30, 2024 and 2023, based on the terms of the management services agreement between us and Tekcapital.

Income (Expense), net

Total other income (expense), net in the six months ended June 30, 2024 was $69,239.

This amount was primarily comprised of dividends from our investments in money market funds, and, to a lesser extent, interest income earned on a short-term loan to a related party.

Total other income (expense), net in the three months ended March 31, 2023 was $(1,863), and was primarily comprised of interest expense on financing from a related party in the form of borrowings under a convertible note, which was repaid in full during the prior year quarter.

Total other income (expense), net in the six months ended June 30, 2023 was $44,626, 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.

Liquidity and Capital Resources

Three months ended

As of June 30, 2024 and December 31, 2023, our cash and cash equivalents were approximately $5.9 million and $4.3 million, respectively.

Our working capital (current assets less current liabilities) was approximately $6.8 million and $5.0 million as of June 30, 2024 and December 31, 2023, respectively.

Six months ended

Net cash flows from operating activities

2 unchanged sentences

Net Change in Cash

Net cash flows used in operating activities for the three months ended March 31, 2024 are primarily reflective of our net loss for the period, resulting from our operating costs to support and grow our business, including employee-related costs, sales and marketing, and research and development.

Net cash flows used in investing activities for the three months ended March 31, 2024 are mainly related to the continuing growth and expansion of our patent portfolio.

Net cash flows used in financing activities for the three months ended March 31, 2024 are mainly driven by the payment to Tekcapital and affiliates for services provided under related party agreements.

Net cash flows used in operating activities for the six months ended June 30, 2024 are primarily reflective of our net loss for the period, resulting from our operating costs to support and grow our business, including employee-related costs, sales and marketing, and research and development.

Net cash flows used in investing activities for the six months ended June 30, 2024 are mainly related to the continuing growth and expansion of our patent portfolio.

Net cash flows used in financing activities for the six months ended June 30, 2024 are mainly driven by proceeds from equity offerings as described below.

Equity Offerings

At-the-Market

On April 15, 2024, we entered into an at-the-market offering agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC, as sales agent (“HCW”), relating to the sale of common stock.

Under this agreement, during the three months ended June 30, 2024, we sold a total of 284,471 shares and received approximately $2.5 million of gross proceeds, before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from sales under the ATM Agreement amounted to approximately $2.4 million.

We intend to use the net proceeds from sales under the ATM Agreement primarily for working capital and general corporate purposes.

Registered Direct Offering

May 1, 2024, the Company closed on a registered direct offering of 4,200,822 shares of its common stock and, in a concurrent

private placement, warrants to purchase up to 4,200,822 shares of common stock at an exercise price of $0.244 per share, for a

combined purchase price per share and warrant of $0.244.

In exchange, the Company received approximately $1.0 million of gross

proceeds, before deducting placement agent fees and expenses.

In addition, the Company issued to the placement agent warrants to

purchase up to 315,062 shares of common stock at an exercise price of $0.305 per share.

The net proceeds received by the Company

from this transaction amounted to approximately $732,000.

We intend to use the net proceeds of this offering primarily for working

capital and general corporate purposes.

On May 1, 2024, the Company closed on a registered direct offering of 210,043 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 210,043 shares of common stock at an exercise price of $4.88 per share, for a combined purchase price per share and warrant of $4.88.

In exchange, the Company received approximately $1.0 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 15,754 shares of common stock at an exercise price of $6.10 per share.

The net proceeds received by the Company from this transaction amounted to approximately $0.8 million.

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Approximately $0.1 million of the net proceeds received from this registered direct offering were used to pay a former agent for their waiver of a contractual right of first refusal;

such payment has been reflected in the unaudited condensed financial statements as a reduction to additional paid in capital, as it represents a related cost of this equity transaction.

Registered Direct Offering

On May 29, 2024, the Company closed on a registered direct offering of 263,159 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 263,159 shares of common stock at an exercise price of $9.50 per share, for a combined purchase price per share and warrant of $9.50.

In exchange, the Company received approximately $2.5 million of gross proceeds, before deducting underwriting discounts and offering expenses.

In addition, the Company issued to the placement agent warrants to purchase up to 19,737 shares of common stock at an exercise price of $11.876 per share.

The net proceeds received by the Company from this transaction amounted to approximately $2.1 million.

We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.

Other Factors

We expect that operating losses could continue

in the foreseeable future as we continue to invest in the expansion and development of our business.

We believe our existing cash and

cash equivalents (including the proceeds from the aforementioned May 2024 registered direct offering), plus planned future sales

of our common stock through our at-the-market offering facility, and the availability to borrow funds through the

March 2024 related party agreement with Lucyd Ltd., will be sufficient to fund our operations for at least the next twelve months.

However, our future capital requirements will

depend on many factors, including, but not limited to, growth in the number of retail store customers, licenses, the needs of our e-commerce

business and retail distribution network, expansion of our product and software offerings, and the timing of investments in technology

and personnel to support the overall growth of our business.

To the extent that current and anticipated future sources of liquidity are

insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing.

We expect that operating losses could continue in the foreseeable future as we continue to invest in the expansion and development of our business.

We believe our existing cash and cash equivalents (including the proceeds from the equity offerings described above), plus the availability to borrow funds via the March 2024 related party agreement with Lucyd Ltd., will be sufficient to fund our operations for at least the next twelve months.

However, our future capital requirements will depend on many factors, including, but not limited to, growth in the number of retail store customers, licenses, the needs of our e-commerce business and retail distribution network, expansion of our product and software offerings, and the timing of investments in technology and personnel to support the overall growth of our business.

To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing.

The sale of additional equity would result in additional dilution to our stockholders.

The incurrence of debt financing would result in

debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict

our operations.

The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.

There can be no assurances that we will be able to raise additional capital.

In the event that additional financing is

required from outside sources, we may not be able to negotiate terms acceptable to us or at all.

Geopolitical and macroeconomic factors

could cause disruption in the global financial markets, which could reduce our ability to access capital and negatively affect our liquidity

in the future.

If we are unable to raise additional capital when required, or if we cannot expand our operations or otherwise capitalize

on our business opportunities because we lack sufficient capital, our business, results of operations, financial condition, and cash flows

would be adversely affected.

In the event that additional financing is required from outside sources, we may not be able to negotiate terms acceptable to us or at all.

Geopolitical and macroeconomic factors could cause disruption in the global financial markets, which could reduce our ability to access capital and negatively affect our liquidity in the future.

If we are unable to raise additional capital when required, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations, financial condition, and cash flows would be adversely affected.

Off-Balance Sheet Arrangements

As of March 31, 2024, we did not have any off-balance sheet arrangements.

As of June 30, 2024, we did not have any off-balance sheet arrangements.

Critical Accounting Policies and Significant Estimates

There have been no material changes in our critical accounting policies and significant estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 25, 2024.

Subsequent Events – Change in Capital Structure

On July 8, 2024, the Company filed with the Florida Secretary of State a Certificate of Amendment to the Company’s Certificate of Incorporation (the “Certificate of Amendment”) which became effective on July 16, 2024 to effect a one-for-twenty (1-for-20) reverse stock split (the “Reverse Stock Split”) of shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”).

The Reverse Stock Split was approved by the Company’s stockholders at the 2024 annual meeting on July 8, 2024.

As a result of the Reverse Stock Split, each twenty (20) shares of issued and outstanding Common Stock were automatically combined into one (1) issued and outstanding share of Common Stock, without any change in the par value per share.

No fractional shares were issued as a result of the Reverse Stock Split;

to the extent that the Reverse Stock Split would have resulted in any of the Company’s stockholders owning a fractional share, such fractional share was rounded up to the next highest whole share.

On July 18, 2024, immediately following the Reverse Stock Split, the number of shares of Common Stock outstanding was reduced from 28,029,462 shares to 1,534,858 shares.

Additionally, pursuant to their terms, the shares of Common Stock underlying the Company’s outstanding stock options and warrants were similarly adjusted along with corresponding adjustments to their exercise prices.

The number of authorized shares of Common Stock under the Certificate of Incorporation remained unchanged.

Quantitative and Qualitative Disclosures about Market Risk

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What changed 10-Q

Item 1. Financial Statements