What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-12 compared with 2024-08-12 · 377 added, 271 removed, 532 unchanged (55% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

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

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

Current Assets

Cash and cash equivalents

Investments in debt securities (U.S.

Treasury bills)

Accounts receivable, net

13 unchanged sentences

Deferred revenue

Due to Tekcapital and Affiliates

Total Current Liabilities

4 unchanged sentences

Stockholders’ Equity

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)

Common stock (par value $ 0.00001 , 50,000,000 shares authorized, and 2,420,934 and 747,416 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively) (1)

Additional paid-in capital (1)

7 unchanged sentences

CONDENSED STATEMENTS OF OPERATIONS

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

For the three and nine months ended September 30, 2024 and 2023

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Revenues, net

Cost of Goods Sold

Gross Profit (Deficit)

Operating Expenses:

13 unchanged sentences

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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

For the three and nine months ended September 30, 2024 and 2023

Stockholders’

11 unchanged sentences

Balances as of June 30, 2024

At-the-Market Offerings

Exercises of warrants related to inducement agreements

Exercises of warrants

Stock-based compensation

Balances as of September 30, 2024

Balances as of January 1, 2023

8 unchanged sentences

Balances as of June 30, 2023

Stock-based compensation

Balances as of September 30, 2023

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.

3 unchanged sentences

CONDENSED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2024 and 2023

For the nine months ended September 30, 2024 and 2023

Operating Activities

12 unchanged sentences

Investing Activities

Loan made to Tekcapital Europe, Ltd.

Repayment of amounts loaned to Tekcapital Europe, Ltd.

Purchases of debt securities (U.S.

Treasury bills)

Loan made to Tekcapital Europe, Ltd.

Repayment of amounts loaned to Tekcapital Europe, Ltd.

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 offerings of common stock and warrants

Proceeds from at-the-market offerings of common stock

Proceeds from exercises of warrants

13 unchanged sentences

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

June 30, 2024 and 2023 (Unaudited)

September 30, 2024 and 2023 (Unaudited)

NOTE 1 – GENERAL INFORMATION

2 unchanged sentences

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 19% of our issued and outstanding shares of common stock and was our largest shareholder as of June 30, 2024.

(collectively, together with Lucyd Ltd., “Tekcapital and Affiliates”), which owned approximately 10.8% of our issued and outstanding shares of common stock as of September 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.

5 unchanged sentences

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

The results of operations for the three and six months ended June 30, 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 nine months ended September 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;

2 unchanged sentences

As described more fully in Note 9, 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.

All share and per share related 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.

5 unchanged sentences

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

As of September 30, 2024, the Company held investments in U.S.

Treasury bills, which mature in March 2025.

These investments are classified as “held-to-maturity” and are recorded at amortized cost of $ 4,895,184 in the accompanying condensed balance sheet.

The aggregate fair value of these investments, based on quoted prices (unadjusted) in active markets for identical assets, is $4,901,300 as of September 30, 2024, which includes an unrealized gain of $ 6,116 .

Receivables and Credit Policy

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

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

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

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

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

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

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

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

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

We generally offer “net 30” payment terms on wholesale orders of $1,500 or more, subject to the wholesale customer’s completion of a credit check application and credit card authorization form.

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

Accounts receivable are reported at the amount billed to the customer, net of an allowance for doubtful accounts.

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

2 unchanged sentences

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 six months ended June 30, 2024 and 2023 is as follows:

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

Schedule of allowance for doubtful accounts

1 unchanged sentence

Bad debt expense (recovery)

Balance at June 30

Write-offs (1)

Balance at September 30

During the nine months ended September 30, 2023, the Company entered into a settlement agreement with a former wholesale customer.

As a result of this settlement, $47,646 of accounts receivable were written-off as uncollectible, while the $45,000 collected under the settlement agreement was reflected as a gain within general and administrative expenses in the condensed statement of operations.

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 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.

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

As of September 30, 2024 and December 31, 2023, the Company recorded an inventory prepayment in the amount of $ 139,065 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

3 unchanged sentences

Capitalized Software

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.

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

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

Property and Equipment

13 unchanged sentences

The Black-Scholes-Merton option pricing model incorporates various and highly subjective assumptions, including expected term and share price volatility.

The expected term of the stock options is estimated based on the simplified method as allowed by Staff Accounting Bulletin 107 (SAB 107).

The expected term of the stock options is estimated based on the simplified method as allowed by Staff Accounting Bulletin No.

The share price volatility is estimated using historical stock prices based upon the expected term of the options granted, using stock prices of comparably profiled public companies.

3 unchanged sentences

Revenue Recognition

Our revenue is generated from the sales of prescription and non-prescription optical glasses, sunglasses, and shipping charges, which are charged to the customer, associated with these purchases.

Our revenue is primarily generated from the sales of prescription and non-prescription optical glasses, sunglasses, and shipping charges, which are charged to the customer, associated with these purchases.

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

We have also recently started to generate revenue from the sale of subscriptions to the “Pro” version of our Lucyd app, which provides unlimited ChatGPT interactions and priority tech support for a monthly or annual fee.

To determine revenue recognition, we perform the following steps:

4 unchanged sentences

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

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.

During the nine months ended September 30, 2024 and 2023, we recognized $ 22,500 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.

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

costs incurred for shipping and handling are included in cost of goods sold at the time the related revenue is recognized.

For sales generated through our e-commerce channels, we identify the contract with a customer upon online purchase of our eyewear and transaction price at the manufacturer suggested retail price (“MSRP”) for non-prescription, polarized sunglass and blue light blocking glasses across all of our online channels.

15 unchanged sentences

Due to the nature of wholesale retail orders, no marketplace fees are applicable, only credit card processing fees.

We allow our customers to return our products, subject to our refund policy, which allows any customer to return our products for any reason and receive a full refund for frames (prescription lenses excluded) within the first 7 days for sales made through our website (Lucyd.co), 30 days for sales made through Amazon, and 30 days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible for returns).

As of January 2024, our return policy was updated to prohibit discretionary returns of prescription lenses.

Additionally in January 2024, we instituted a standard $ 15 restocking fee for standard frame returns, which is deducted from applicable refunds to cover shipping and restocking costs.

For all of our sales, at the time of sale, we establish a reserve for returns, based on historical experience and expected future returns, which is recorded as a reduction of sales.

For sales of subscriptions to the “Pro” version of our Lucyd app, we identify the individual contracts with customers through detailed transaction reports from the Apple App Store or Google Play Store, with each individual transaction representing a separate contract.

Revenue is recognized upon meeting the performance obligation, which is the right and availability of each customer to access the “Pro” features of the Lucyd app.

For those customers that purchase such access on a month-to-month basis, we recognize revenue in the month in which the purchase of such access is made.

For those customers which purchase an annual subscription, we recognize revenue on a straight-line basis over the subscription period, using a mid-month convention.

The balance of unearned revenue related to app subscriptions that has been deferred on our balance sheet as a contract liability was $ 2,513 as of September 30, 2024.

We allow our customers to return our physical products, subject to our refund policy, which allows any customer to return our physical products for any reason and receive a full refund for frames (prescription lenses excluded) within the first 7 days for sales made through our website (Lucyd.co), 30 days for sales made through Amazon, and 30 days for sales to most wholesale retailers and distributors (although certain sales to independent distributors are ineligible for returns).

As of January 2024, we updated our return policy to prohibit discretionary returns of prescription lenses, and also instituted a standard $ 15 restocking fee for standard frame returns, which is deducted from applicable refunds to cover shipping and restocking costs.

For all of our product sales, at the time of sale, we establish a reserve for returns, based on historical experience and expected future returns, which is recorded as a reduction of sales.

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 $ 8,536 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.

Costs incurred for shipping and handling are included in cost of goods sold at the time the related revenue is recognized.

The Company recorded an allowance for sales returns of $ 5,302 and $ 40,933 as September 30, 2024 and December 31, 2023, respectively.

NOTE 3 – GOING CONCERN

4 unchanged sentences

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

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

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

During the nine months ended September 30, 2024, the Company raised approximately $10.4 million of net cash proceeds through the issuance of equity via a combination of at-the-market offerings, registered direct offerings, and warrant exercises (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 September 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 if management believes it would be beneficial to do so.

NOTE 4 – INCOME TAX PROVISION / BENEFIT

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

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

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

The Company has no t recorded an income tax provision or benefit for the three and nine months ended September 30, 2024 and 2023 as it maintains a full valuation allowance against its net deferred tax assets.

NOTE 5 – TANGIBLE AND INTANGIBLE ASSETS

Schedule of property, plant and equipment

September 30,

Property & Equipment

6 unchanged sentences

Property and equipment, net

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.

Depreciation expense for the three months ended September 30, 2024 and 2023 was $ 23,956 and $ 17,017 , respectively.

Depreciation expense for the nine months ended September 30, 2024 and 2023 was $ 83,907 and $ 45,996 , respectively.

Schedule of intangible assets

September 30,

Finite-lived intangible assets

Intangible assets, gross

Accumulated amortization

Intangible assets, net

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.

Amortization expense for the three months ended September 30, 2024 and 2023 was $ 9,902 and $ 2,214 , respectively.

Amortization expense for the nine months ended September 30, 2024 and 2023 was $ 25,199 and $ 20,030 , respectively.

NOTE 6 – RELATED PARTY TRANSACTIONS AND AGREEMENTS

Convertible Note and Due to Tekcapital and Affiliates

Through December 31, 2023, the Company had the availability of, but not the contractual right to, intercompany financing from Tekcapital and Affiliates in the form of either cash advances or borrowings under a convertible note (as discussed below).

Through December 1, 2023, the Company had the availability of, but not the contractual right to, intercompany financing from Tekcapital and Affiliates in the form of either cash advances or borrowings under a convertible note.

The convertible notes balances were $ 61,356 at January 1, 2023.

In January 2023, the Company borrowed an additional $ 48,143 under such convertible notes, and subsequently repaid the outstanding balances of the convertible notes in full in February 2023.

No further amounts were borrowed under these convertible notes, and the convertible notes matured on December 1, 2023 with no amounts outstanding.

No further amounts were borrowed under these convertible notes for the remainder of 2023, and the convertible notes matured on December 1, 2023 with no amounts outstanding.

New Lucyd Ltd.

16 unchanged sentences

Tekcapital Europe, Ltd.

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 ).

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.

subsequently repaid all of the outstanding balance of the loan (including principal and accrued interest) during the nine months ended September 30, 2024, and no amounts remain outstanding or payable to us under this agreement .

Management Service Agreement

5 unchanged sentences

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

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.

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

During the nine months ended September 30, 2024 and 2023, the Company incurred $ 105,000 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 $ 23,274 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.

The Company recognized $ 22,904 and $ 22,992 of expense related to this month-to-month arrangement for the three months ended September 30, 2024 and 2023, respectively, and recognized $ 69,409 and $ 68,752 of expense related to this month-to-month arrangement for the nine months ended September 30, 2024 and 2023, respectively.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

10 unchanged sentences

Thereafter (through 2033)

Also, on January 3, 2024, entered into a multi-year non-exclusive license agreement with a third party (IngenioSpec, LLC) for multiple smart eyewear patents.

Also, on January 3, 2024, we entered into a multi-year non-exclusive license agreement with a third party (IngenioSpec, LLC) for multiple smart eyewear patents.

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 June 30, 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 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.

5 unchanged sentences

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:

Summary information regarding the number of options, exercise price, and remaining contractual life as of and during the nine months ended September 30, 2024 (as retroactively adjusted for the reverse stock split described in Note 9) is as follows:

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

5 unchanged sentences

Forfeited / Expired

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.

As at September 30, 2024

Exercisable as at September 30, 2024

During the three and nine months ended September 30, 2024, we recognized $ 100,000 and $ 495,309 of expense, respectively, related to stock options.

As of September 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 $ 193,000 remains to be recognized over the next 1.10 years.

On January 11, 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.

However, the employee later separated from the Company, and these options were all forfeited or expired as of September 30, 2024.

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.

During the three and nine months ended September 30, 2024, we recognized $ 5,075 and $ 15,225 of expense, respectively, related to restricted stock units awarded in 2023;

as of September 30, 2024, unrecognized restricted stock unit expense of $ 3,383 remains to be recognized between October 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.

1 unchanged sentence

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.

During the three and nine months ended September 30, 2024, we recognized $ 40,950 and $ 81,900 , respectively, of expense related to this arrangement.

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 nine months ended September 30, 2024, we recognized $ 5,423

and $ 10,845 ,

respectively, of expense related to this arrangement, and will recognize the remaining expense for these shares awarded of $ 10,845

on a straight-line basis from October 1, 2024 through March 31, 2025.

NOTE 9 – STOCKHOLDERS’ EQUITY

Change in Capital Structure – 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

5 unchanged sentences

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;

The net proceeds received by the Company from these transactions amounted to approximately $ 1,845,000 .

From July 12, 2024 through August 30, 2024, the Company sold 273,517 shares of common stock and received approximately $ 1,446,000 of gross proceeds before deducting sales agent commissions and offering expenses.

The net proceeds received by the Company from these transactions amounted to approximately $ 1,399,000 .

The Company also paid $ 50,000 of legal fees to HCW during the nine months ended September 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.

13 unchanged sentences

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

Warrant Exercises

During September 2024, the Company entered into multiple warrant inducement transactions with certain holders of its existing warrants.

The Company intends to use the net proceeds from these transactions for working capital and general corporate purposes.

On September 3, 2024, the

Company entered into inducement letter agreements with certain holders of existing warrants (originally issued on June 26, 2023) to

purchase an aggregate of 126,699

shares of common stock.

The warrant holders exercised for cash the existing warrants at a reduced exercise price of $ 5.00

per share, resulting in gross proceeds to the Company of approximately $ 633,000 ;

in addition to the shares of common stock issued as a result of the warrant exercise, the warrant holders also received new

unregistered Series A and Series B warrants (the relevant details of which are outlined in the table below).

This transaction closed

on September 4, 2024, and the net proceeds received by the Company amounted to approximately $ 489,000 .

On September 18, 2024, the

Company entered into inducement letter agreements with certain holders of existing warrants (originally issued on May 1, 2024 in

connection with the First Registered Direct Offering described above) to purchase an aggregate of 148,567

shares of common stock.

The warrant holders exercised for cash the existing warrants at an adjusted exercise price of $ 5.13

per share, resulting in gross proceeds to the Company of approximately $ 762,000 ;

in addition to the shares of common stock issued as a result of the warrant exercise, the warrant holders also received new

unregistered Series C and Series D warrants (the relevant details of which are outlined in the table below).

This transaction closed

on September 19, 2024, and the net proceeds received by the Company amounted to approximately $ 672,000 .

On September 22, 2024, the

Company entered into inducement letter agreements with certain holders of existing warrants (originally issued on May 29, 2024 in

connection with the Second Registered Direct Offering described above) to purchase an aggregate of 263,160

shares of common stock.

The warrant holders exercised for cash the existing warrants at an adjusted exercise price of $ 9.875

per share, resulting in gross proceeds to the Company of approximately $ 2.6

in addition to the shares of common stock issued as a result of the warrant exercise, the warrant holders also received new

unregistered Series E and Series F warrants (the relevant details of which are outlined in the table below).

This transaction closed

on September 24, 2024, and the net proceeds received by the Company amounted to approximately $ 2.3

In connection with each of the aforementioned warrant inducement transactions, the Company issued placement agent warrants to HCW, the relevant details of which are outlined in the table below.

On September 23, 2024, one of the holders of the Series A and Series B warrants exercised an aggregate of 40,000 warrants on a cashless basis and received 20,482 shares of common stock.

In addition, on September 24, 2024, one of the holders of the warrants issued in connection with the First Registered Direct Offering elected to exercise their warrants to purchase an aggregate of 61,475 shares of common stock.

The Company received approximately $300,000 of gross proceeds from this exercise.

As of September 30, 2024, the Company’s remaining outstanding warrants were as follows:

Schedule of stockholders' equity note, warrants or rights

Exercise Price

Issuance Date

Expiration Date

Listed (IPO) Warrants

Common (SPO) Warrants

Private Warrants

Series A Warrants

Series B Warrants

Series C Warrants

Series D Warrants

Series E Warrants

Series F Warrants

Underwriter / Placement Agent Warrants

On September 25, 2024, our board of directors approved the adoption of a limited duration stockholder rights plan (the “Rights Plan”), and declared a dividend to stockholders of record at the close of business on September 25, 2024 of one common stock purchase right (a “Right”) for each outstanding share of our common stock.

Each Right entitles the holder to purchase from the Company six shares of our common stock at an exercise price of $ 6.21 per share.

The Rights are evidenced by and trade with the certificates for the shares of our common stock outstanding as of September 25, 2024, and will accompany any new shares of our common stock that are issued after that date.

Under the Rights Plan, the Rights generally will become exercisable only if a person or group acquires beneficial ownership of 20% or more of our common stock in a transaction not approved by our board of directors.

In that situation, each holder of a Right (other than the acquiring person or group, whose rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Plan, a number of shares of our common stock having a market value of twice such price.

The Rights expire at or prior to the earlier of (i) September 25, 2025, (ii) the redemption or exchange of the Rights in accordance with the terms of the Rights Plan, (iii) the closing of certain merger or other acquisition transactions involving the Company, and (iv) the date of the Company’s next meeting of its stockholders.

The Rights Plan is not intended to prevent a takeover of the Company and should not interfere with any merger or other business combination approved by our board of directors.

However, the Rights Plan may cause substantial dilution to a person or group that acquires beneficial ownership of twenty percent (20%) or more of our outstanding common stock.

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.

During the nine months ended September 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 unaudited 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 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.

Due to the net losses for all periods presented in the unaudited 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 9) is as follows:

1 unchanged sentence

three months ended

six months ended

nine months ended

September 30,

Basic and diluted:

2 unchanged sentences

NOTE 11 – SUBSEQUENT EVENTS

Reverse Stock Split

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 .

In October 2024, the Company issued an aggregate

shares of common stock to certain holders of the Company’s Series A and Series B Warrants who had elected to exercise such warrants;

the Company received approximately

of gross proceeds from these exercises.

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

7 unchanged sentences

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:

Notably, by the end of the first quarter of 2025 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.

To date, most Lucyd products have been designed for sunglass use, but starting in 2024 we have begun to offer alternative lens options such as blue light and transitional lenses on our stock frames, allowing for more customization without increasing unit price.

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.

The Company believes its diversification into safety and sport smartglasses (Lucyd Armor and Reebok ® ), for which high-quality competing products are scarce, will buttress our position in the emerging smart eyewear market by offering a unique value proposition to customers.

Since these products are very competitively priced against their traditional counterparts, we believe in their potential to enhance the Company’s revenues and open new retail partnerships with businesses outside of the optical market.

Products and History

15 unchanged sentences

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.

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 design.

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.

In October 2024, we launched the Lucyd Armor line, an ANSI-certified smart safety glass designed for all-day wear.

This new line provides all the powerful features of Lucyd eyewear in a stylish safety wrap.

With the addition of the Lucyd Armor line, our current product offering consists of 34 different models, which offers a similar amount of style variety as many traditional eyewear collections.

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.

1 unchanged sentence

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 onboarded the product and we have had discussions with several other large eyewear chains regarding our frames.

We plan to launch the Reebok ® Powered by Lucyd sport smart glasses collection in the first quarter of 2025, followed by a Reebok ® Optical Smart Eyewear collection in mid-2025.

Since the initial launch of Lucyd Lyte, we have witnessed growing interest and demand from customers throughout the United States and have sold thousands of our smart glasses.

Over the past few years, numerous optical stores in the United States and Canada have onboarded our products, and we continue to pursue expansion with various large eyewear chains and other large retailers 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.

5 unchanged sentences

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.

This is a new revenue stream for our business, and represents 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.

2 unchanged sentences

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.

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

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 we have started deployment of

these new display systems to customers as of October 2024.

Key Factors Affecting Performance

12 unchanged sentences

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.

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.

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

In October 2024, we began shipping and deploying to customers enhanced countertop and freestanding displays with large, interactive screens

and engaging social media content.

Investing in business growth

9 unchanged sentences

The Lucyd Lyte version 2.0 product is receiving higher ratings online compared to our previous products, indicating that customers are appreciative of improvements in product design, functionality, and build quality.

Many of our Lyte XL variants carry a 4.0/5 rating or higher.

Our newest Amazon launch of the Eddie Bauer ® Powered by Lucyd smart eyewear carries a 4.8/5 rating.

This is a strong signal of positive feedback on our products that indicates our ability to grow and scale with America’s largest online retailer and other platforms.

1 unchanged sentence

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 June 30, 2024, we had over 20,000 cumulative total orders from customers online since inception.

As of September 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.

We expect to allocate a significant portion of our advertising expenditures towards influencer marketing programs.

We allocate a sizeable portion of our advertising expenditures towards influencer marketing programs.

Components of Results of Operations

Our revenue is generated from the sales of prescription and non-prescription optical glasses and sunglasses, and shipping charges associated with these purchases, which are charged to the customer.

Our revenue is primarily generated from the sales of prescription and non-prescription optical glasses and sunglasses, and shipping charges associated with these purchases, which are charged to the customer.

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

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.

21 unchanged sentences

Gross Profit and Gross Margin

We define gross profit as net revenue less cost of goods sold.

Gross profit is net revenue less cost of goods sold.

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

11 unchanged sentences

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”):

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

Three months ended

September 30,

Three months ended

September 30,

Revenues, net

Cost of Goods Sold

Gross Profit (Deficit)

Operating Expenses:

7 unchanged sentences

Total Other Income (Expense), net

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).

revenues for the three months ended September 30, 2024 were $253,599, representing an increase of 14% as compared to revenues of $221,875

during the three months ended September 30, 2023.

This increase

is primarily attributable to strategic reductions in price discounts and adjustments to our pricing and Manufacturer’s Suggested

Retail Price, aimed at enhancing profitability and attracting distributors to manage our wholesale channel.

While the total number of

units sold remained relatively stable compared to the prior year quarter, the higher average order value and focused efforts in specific

channels contributed to the overall revenue growth.

We believe these strategies reflect customers’ recognition of the quality and

value proposition of our recent new product launches and support our long-term growth objectives.

Additionally, we believe consumer awareness

of smart eyewear is increasing, thanks in part to aggressive marketing from our main competitor, and the overall concept of our product

is becoming less of a novelty and more of an accepted mobile computing platform.

Revenue generated through the e-commerce channel increased significantly from the prior year quarter, with net sales through our Lucyd.co website growing by 46%.

Wholesale revenue decreased approximately 11% 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 18 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.

For the three months ended September 30, 2024, approximately 54% of sales were processed on our online store (Lucyd.co), 22% on Amazon.com, and 23% through reseller partners, with 1% of our net revenues generated from Lucyd “Pro” app subscriptions.

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.

For the three months ended September 30, 2024, we generated an aggregate of $187,568 of revenue from sales of non-prescription frames and accessories, $63,459 from sales of frames with prescription lenses, and $2,572 of revenue from app subscriptions.

All of the $56,194 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.

1 unchanged sentence

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.

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

For the three months ended September 30, 2023, approximately 42% of sales were processed on our online store (Lucyd.co), 29% on Amazon.com, and 29% with reseller partners.

For the three months ended September 30, 2023, we generated $187,086 of revenue from sales of non-prescription frames and accessories, and $34,789 from sales of frames with prescription lenses.

All of the $63,027 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.

1 unchanged sentence

Cost of Goods Sold

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;

Our total cost of goods sold increased to $194,255 for the three months ended September 30, 2024, as compared to $141,531 for the prior year quarter.

This year-over-year increase of 37% was driven by a combination of factors, including:

(i.) higher cost of frames, largely attributable to the new Eddie Bauer® Powered by Lucyd collection, due to the increased number of components, deluxe finishes, and materials associated with that product line, (ii.) higher shipping and logistics costs, and (iii.) the impact of certain period costs and other one-off items, most notably including approximately $44,000 of credits related to custom duties and taxes included in the prior year quarter amounts which did not recur in the current quarter.

These increased costs were partially offset by significant decreases in lens fulfilment costs, which decreased by approximately 50% from the prior year quarter.

This is primarily attributable to actions taken by management in the current year to better manage these costs, including (i.) the launch of the 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, and (ii.) the engagement of a new lower-cost lens supplier based in Miami, Florida.

Cost of goods sold for the three months ended September 30, 2024 included the cost of frames of $107,469;

cost of prescription lenses incurred with third-party vendors of $38,247;

commissions, affiliate referral fees, and e-commerce platform fees of $24,413;

shipping and logistics costs of $24,754;

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

and shipping and logistics costs of $22,512.

Out of our total cost of goods sold for the current quarter of $194,255, $38,247 related to orders with prescription lenses, while $156,008 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 anticipate that our cost of goods sold will improve in future periods as new products – i.e., Lucyd Armor and Reebok® Powered by Lucyd – sourced from a new supplier are launched in the fourth quarter of 2024 and first quarter of 2025, respectively, as the frames for these product lines are designed differently from our other products 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;

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.

Cost of goods sold for the three months ended September 30, 2023 included the cost of frames of $79,410;

cost of prescription lenses incurred with third-party vendors of $76,346;

period costs (credits) of approximately $(44,000) related to custom duties and taxes;

and other items including affiliate referral fees, e-commerce platform fees, commissions, and custom duties and importation fees for a total of $22,312.

Out of our total cost of goods sold for the three months ended September 30, 2023 of $141,531, $76,346 related to orders with prescription lenses, while $65,185 pertained to non-prescription orders.

We anticipate further growth in revenues in the fourth quarter of 2024, largely in part to the launch of our the new Lucyd Armor product line, along with corresponding growth in total cost of goods sold.

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.

Additionally, our new lower-cost supplier has indicated significant price breaks of up to 50% are possible as we increase unit volume, demonstrating the profit potential for Lucyd Armor and Reebok sunglasses.

Our gross profit for the current quarter was $59,344, as compared to $80,344 for the prior year quarter.

Our gross margin was 23% in the current quarter and 36% in the prior year quarter, representing a decline of approximately 13 percentage points from the prior year period.

This decrease in gross profit and gross margin was primarily the result of higher cost of goods sold as a result of the factors described above, as well as the impact of period costs (credits) as described above.

That said, the current quarter gross margin of 23% represents an improvement from our gross margin of 2% in the quarter ended March 31, 2024 and 18% in the quarter ended June 30, 2024.

This indicates a positive trend, and we expect our gross margin to continue to improve given the ongoing impact of lower lens fulfilment costs coupled with the anticipated lower unit costs associated with the Lucyd Armor product line launching the fourth quarter of 2024 and the Reebok® Powered by Lucyd product line launching in the first quarter of 2025.

We believe that in the long term, the majority of our business will ultimately come from frame sales to distributors and eyewear retailers.

We anticipate that the upcoming launches of new product lines in the fourth quarter of 2024 and first half of 2025 will help us progress towards our long-term goal of shifting our sales mix more towards the wholesale channel, which should bring consistent, large-scale orders with minimal marketing costs.

Operating Expenses

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:

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.

Our operating expenses increased by 9% to $1,821,407 for the three months ended September 30, 2024, as compared to $1,677,140 for the three months ended September 30, 2023.

This increase was primarily due to the following:

General and administrative expenses

Our general and administrative expenses increased

by $206,435 or 23% to $1,121,972 for the three months ended September 30, 2024, as compared to $915,537 for the prior year quarter.

increase was primarily attributable to an increase in legal costs of approximately $168,000, largely as a result of various shareholder

and equity-related matters 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.

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

Sales and marketing expenses

Our sales and marketing expenses were $533,066 for the three months ended September 30, 2024 and $533,902 for the three months ended September 30, 2023, or essentially flat year-over-year.

Compared to the prior year quarter, we spent more on events and trade shows, and less on influencers and paid ads, in the current quarter;

this reflects short-term tactical shifts in our marketing approach to react to current trends and opportunities as they arise, and make smart investments in advertising and marketing spending that we believe will maximize our impact and provide for future growth.

From a long-term perspective, while we expect that our total 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.

Research and development costs

Our research and development costs decreased by 32% to $131,369 for the three months ended September 30, 2024, as compared to $192,701 for the three months ended September 30, 2023, primarily due to product development cycle timing.

Related party management fee

Our related party management fee was $35,000 for each of the three-month periods ended September 30, 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 September 30, 2024 was $41,386.

This amount was primarily comprised of dividends from our investments in money market funds, partially offset by other unrelated expenses.

Total other income (expense), net in the three months ended September 30, 2023 was $45,691.

This amount was primarily comprised of interest, dividends, and investment returns from our investments in money market funds and U.S.

Treasury bills.

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

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

Nine months ended

September 30,

Nine months ended

September 30,

Revenues, net

Cost of Goods Sold

Gross Profit (Deficit)

Operating Expenses:

7 unchanged sentences

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.

Our revenues for the nine months ended September 30, 2024 were $945,752, representing an increase of 76% as compared to revenues of $536,725 during the nine months ended September 30, 2023.

The increase in revenue was primarily attributable to significant growth in the e-commerce channel, with net sales through our Lucyd.co website and Amazon.com increasing by approximately 190% and 45%, respectively, from the prior year nine months, while wholesale revenues declined by approximately 33%.

Overall, our revenue growth is mainly driven by our new product launches over the past year (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 year period).

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).

Also contributing to our growth in revenues are our continued investments in marketing and advertising initiatives, as well as increased public interest and growth in smart glasses and the wearable products category.

The decline in wholesale revenues was largely driven by a change in our focus during the current year 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 18 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.

For the nine months ended September 30, 2024, approximately 61% of sales were processed on our online store (Lucyd.co), 26% on Amazon.com, and 13% with reseller partners.

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

For the nine months ended September 30, 2024, we generated an aggregate of $687,855 of revenue from sales of non-prescription frames and accessories, $255,325 from sales of frames with prescription lenses, and $2,572 of revenue from app subscriptions.

All of the $246,455 in sales generated on Amazon.com during the current nine months were for non-prescription frames and accessories, as we only offer prescription lenses through our website.

Of the $575,577 in online sales generated through Lucyd.co, $255,325 was related to frames with prescription lenses and $320,252 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.

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

For the nine months ended September 30, 2023, approximately 37% of sales were processed on our online store (Lucyd.co), 32% on Amazon, and 31% with reseller partners.

For the nine months ended September 30, 2023, we generated $454,233 of revenue from sales of non-prescription frames and accessories, and $82,492 from sales of frames with prescription lenses.

All of the $170,284 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.

1 unchanged sentence

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;

Our total cost of goods sold increased to $824,281 for the nine months ended September 30, 2024, as compared to $475,906 for the prior year nine months.

This year-over-year increase of 73% was comparable to our year-over-year increase in net revenue of 76%, and was primarily driven by higher sales volumes and gross sales during the current nine months as compared with the prior year comparable period.

Cost of frames increased by approximately 90% from the prior year nine months, primarily related to the increase in sales volumes and also partially attributable to 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 for that product line.

Cost of lenses increased by approximately 49% from the prior year nine months, mainly driven by sales channel mix, as a higher relative proportion of our sales in the current nine 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 actions taken by management in the current year to better manage these costs, including (i.) the launch of the 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, and (ii.) the engagement of a new lower-cost lens supplier based in Miami, Florida.

Cost of goods sold for the nine months ended September 30, 2024 notably included, but was not limited to, the cost of frames of $434,876;

cost of prescription lenses incurred with third-party vendors of $196,030;

commissions, affiliate referral fees, and e-commerce platform fees of $94,444;

1 unchanged sentence

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.

Out of our total cost of goods sold for the current nine months of $824,281, $196,030 related to orders with prescription lenses, while $628,251 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;

Cost of goods sold for the nine months ended September 30, 2023 notably included, but was not limited to, the cost of frames of $215,713;

cost of prescription lenses incurred with third-party vendors of $131,561;

commissions, affiliate referral fees, and e-commerce platform fees of $89,694;

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.

Out of our total cost of goods sold for the prior year nine months of $475,906, $131,561 related to orders with prescription lenses, while $344,345 pertained to non-prescription orders.

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.

Our gross profit for the current nine months was $121,471, as compared to $60,819 for the prior year nine months.

Our gross margin was 13% in the current nine months and 11% in the prior year nine months, representing an improvement of approximately 2 percentage points from the prior year period.

This 100% improvement in gross profit (in absolute dollar terms) and the slight improvement in gross margins is the net result of the various factors discussed in detail above.

We continue to work with all of suppliers and vendors to reduce our unit costs.

Our gross margins during the current year period are increasing and trending in a positive direction, and we expect our gross margin to continue to improve given the ongoing impact of lower lens fulfilment costs that have started to be realized in the current quarter, coupled with the anticipated lower unit costs associated with the Lucyd Armor product line launching the fourth quarter of 2024 and the Reebok® Powered by Lucyd product line launching in the first quarter of 2025.

We believe that in the long term, the majority of our business will ultimately come from frame sales to distributors and eyewear retailers.

Additionally, we anticipate that the upcoming launches of new product lines in the fourth quarter of 2024 and first half of 2025 will help us progress towards our long-term goal of shifting our sales mix more towards the wholesale channel, which carries higher margins for us.

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.

Our operating expenses increased by 33% to $5,872,483 for the nine months ended September 30, 2024, as compared to $4,420,853 for the nine months ended September 30, 2023.

This increase was primarily due to the following:

General and administrative expenses

Our general and administrative expenses increased by 23% to $3,526,217 for the nine months ended September 30, 2024, as compared to $2,877,663 for the prior year nine months.

This increase was largely driven by the combination of (i) a $325,000 release payment made to a shareholder counterparty during the current nine 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) an increase in legal costs of approximately $187,000, largely as a result of various shareholder and equity-related matters during the current year period, (iii) the cost of various licensing agreements we have entered into in order to support our co-branding initiatives and expand our patent portfolio, and (iv) higher investor relations costs.

These increases were partially offset by lower insurance costs.

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.

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

Sales and marketing expenses

Our sales and marketing expenses increased by 83% to $1,636,794 for the nine months ended September 30, 2024, as compared to $896,842 for the nine months ended September 30, 2024.

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.

the restructuring of our e-commerce business during the first half of 2023, 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 nine 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 nine 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.

Research and development costs

Our research and development costs increased by 12% to $604,472 for the nine months ended September 30, 2024, as compared to $541,348 for the nine months ended September 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.

The impact of the aforementioned write-off was partially offset by the impacts of product development cycles and timing of associated research and development spending.

Related party management fee

Our related party management fee was $105,000 for each of the nine months ended September 30, 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 nine months ended September 30, 2024 was $110,625.

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 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.

Total other income (expense), net in the nine months ended September 30, 2023 was $90,317, and was primarily comprised of the combination of (i) approximately $52,000 of interest, dividends, and investment returns from our investments in money market funds and U.S.

Treasury bills;

and (ii) approximately $35,000 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

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

As of September 30, 2024 and December 31, 2023, our cash and cash equivalents were approximately $4.5 million and $4.3 million, respectively.

Our working capital (current assets less current liabilities) was approximately $10.3 million and $5.0 million as of September 30, 2024 and December 31, 2023, respectively.

Nine months ended

September 30,

Net cash flows from operating activities

2 unchanged sentences

Net Change in Cash

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.

Net cash flows used in operating activities for the nine months ended September 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 nine months ended September 30, 2024 are mainly related to the investment of a portion of the proceeds from our recent equity offerings (as described below) in 6-month U.S.

Treasury bills.

Net cash flows provided by financing activities for the nine months ended September 30, 2024 are mainly driven by proceeds from multiple equity offering transactions as described below.

Equity Offerings

At-the-Market

At-the-Market Offerings

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.

Under this agreement, during the nine months ended September 30, 2024, we sold a total of 557,988 shares and received approximately $3.9 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 $3.7 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

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.

5 unchanged sentences

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

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.

3 unchanged sentences

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

Warrant Exercises

During September 2024, the Company entered into multiple warrant inducement transactions with certain holders of its existing warrants.

Through these transactions, certain holders of various existing warrants to purchase an aggregate of 538,426 shares of common stock agreed to exercise such warrants (at adjusted or reduced exercise prices) in exchange for an aggregate of 538,426 shares of common stock plus new warrants (Series A through Series F warrants, with varying terms and exercise prices) to purchase an aggregate of 1,340,012 shares of common stock.

In exchange, the Company received approximately $4.0 million of gross proceeds, before deducting underwriting discounts and offering expenses.

The total net proceeds received by the Company from these transactions amounted to approximately $3.5 million.

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

On September 23, 2024, one of the holders of the Series A and Series B warrants exercised an aggregate of 40,000 warrants on a cashless basis and received 20,482 shares of common stock.

The Company received approximately $300,000 of gross proceeds from this exercise.

Other Factors

10 unchanged sentences

Off-Balance Sheet Arrangements

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

As of September 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

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements