What changed in this filing

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Item 1A. Risk Factors

2025-03-24 compared with 2024-03-25 · 43 added, 74 removed, 538 unchanged (18% of the section changed)

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Risks Related to our Intellectual Property

We license some of our technology from Lucyd Ltd., the largest stockholder of the Company, and our inability to maintain this license could materially affect our business, financial condition, and operating results.

We license some of our technology from Lucyd Ltd.

and from a third party.

Our inability to maintain these licenses could materially affect our business, financial condition, and operating results.

Failure to adequately maintain and protect our intellectual property and proprietary rights could harm our brand, devalue our proprietary content, and adversely affect our ability to compete effectively.

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Such a delisting would likely have a negative effect on the price of our securities and would impair your ability to sell or purchase our securities when you wish to do so.

In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum stock price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.

Additionally, if our securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange.

You may be unable to sell your securities unless a market can be established or sustained.

On August 4, 2023, we received written notice from the Listing Qualifications Department of Nasdaq notifying us that, for a period of 30 consecutive business days, we failed to maintain a minimum closing bid price of $1.00 as required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had 180 calendar days, or until January 31, 2024, to regain compliance.

On February 1, 2024, the Company received a letter (the “Extension Notice”) from Nasdaq notifying the Company that it had been granted an additional 180-day period, or until July 30, 2024, to regain compliance with Nasdaq Listing Rule 5550(b)(1).

The optical industry is highly competitive, and if we do not compete successfully, our business may be adversely impacted.

We compete directly with large, integrated optical players that sell both at the retail level and online such as Ray-Ban ® that have multiple products, well regarded brands and retail banners, as well as established and well-regarded consumer electronics companies such as Bose ® .

This diversified and capable competition takes place both in physical retail locations as well as online, for smart glasses.

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We have a history of losses, and we may be unable to achieve or sustain profitability.

We had a net loss of $6,616,791 for the year ended December 31, 2023, and a net loss of $5,681,833 for the year ended December 31, 2022.

We have had net losses since inception, had a net loss of $7,665,515 for the year ended December 31, 2024, and had a net loss of $6,663,428 for the year ended December 31, 2023.

As of December 31, 2024, we had an accumulated deficit of $24,735,930.

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Meeting customer demand partially depends on our ability to obtain timely and adequate delivery of components for our products and services.

All of the components that go into the manufacturing of our products and services are sourced from a limited number of third-party suppliers predominantly in the U.S., and China.

All of the components that go into the manufacturing of our products and services are sourced from a limited number of third-party suppliers predominantly in the U.S.

There is currently a tariff on all products imported from China in the amount of 20%;

we cannot determine at this time how this will affect our future profitability, whether it will reduce the number of smart glasses that we sell, or whether we could pass these tariff costs on to our customers through pricing adjustments.

Our contract manufacturers purchase and provide many of these components on our behalf, including sun lenses, demo lenses, hinge and chip sets and other electronic components, and we do not have long-term arrangements with most of our component suppliers.

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government granted a temporary exclusion for plastic and metal frames with a retroactive effective date of September 1, 2019, and such exclusion expired in September 2020.

There remains to be uncertainty as to whether there will be, and the resulting impacts of, any changes to U.S.

Recently, the tariff was increased to 20%.

There remains to be uncertainty as to what the impact of the increased tariff will be or whether there will be any other changes to U.S.

government trade policy.

If we are unable to mitigate the full impact of the enacted tariffs or if there is a further escalation of tariffs, costs on a significant portion of our products may increase further and our financial results may be negatively affected.

If we are unable to mitigate the full impact of the enacted and increased tariffs (including whether we could pass these tariff costs on to our customers through pricing adjustments, and if so, whether such increased prices would decrease the number of glasses that we sell), our financial results may be negatively affected.

While it is too early to predict how the current and future China tariffs will impact our business, our financial results may also be impacted by any resulting economic slowdown.

The Company has researched alternate manufacturing solutions outside of China and believes it can shift production elsewhere if necessary.

The inability to fulfill, or any delays in processing, customer orders through third party optical laboratory optical laboratory could result in the loss of customers, issuances of refunds or credits, and may also adversely affect our income and reputation.

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Increases in other operating costs, may increase our cost of products sold or selling, general, and administrative expenses.

The Company sells prescription upgrades at an approximate 35% profit margin, which can increase our margin exposure in the event of defective returns, and render returned pairs unsellable due to the original lenses being removed.

As of January 2024, the Company’s return policy was updated to prohibit discretionary returns of prescription lenses, which we believe will reduce the impact of lens returns on our margins.

Lens upgrades remain an important driver of sales and increased AOV (average order value), and the Company is continuously working to keep customer satisfaction high with this offering to keep the returns as low as possible.

We currently derive all of our revenue from sales of our glasses.

Our competitive price model and pricing pressures in the optical retail industry may inhibit our ability to reflect these increased costs in the prices of our products, in which case such increased costs could have a material adverse effect on our business, financial condition, and results of operations especially since we believe that one of our competitive advantages is how the price point for our glasses is generally lower than that of certain of our competitors.

We currently derive principally all of our revenue from sales of our glasses and lenses.

A decline in sales of our eyewear would negatively affect our business, financial condition, and results of operations.

We derive all of our revenue from the sale of one product line, our Lucyd Lyte smart eyewear.

Our glasses are sold in highly competitive markets with limited barriers to entry.

We derive substantially all of our revenue from the sale of smartglasses and custom lenses.

Our glasses are sold in highly competitive markets with limited barriers to entry, although in our view the barriers to building commercially viable smartglasses are significant, due to the complexity of materials and assembly involved.

Introduction by competitors of comparable products at lower price points, a maturing product lifecycle, a decline in consumer spending, or other factors could result in a material decline in our revenue.

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However, updates to the Company’s prescription lens return policy in January 2024, as mentioned above, is expected to support a reduction in excessive lens costs.

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

We expect a number of factors to cause our results of operations and operating cash flows to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.

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We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.

We have funded our operations since inception primarily through net proceeds from the sale of convertible loan notes common stock sales through two registered crowdfunds and our initial public offering.

Since our inception, we have primarily funded our operations through net proceeds generated from the offering and sale of shares of our common stock and warrants to investors.

We cannot be certain when, or if, our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business.

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Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock.

Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, and we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities.

Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities.

As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests.

The occurrence of any of these foregoing risks could adversely affect our business, financial condition, and results of operations and expose us to unknown risks or liabilities.

If we fail to successfully launch or after we launch receive sufficient revenue from our cobranded collections with Nautica, Eddie Bauer, and Reebok, our business, financial condition, and results of operations would be harmed.

We believe that the launch of our cobranded collections with Nautica, Eddie Bauer, and Reebok will grow our brand and company due to the global renown of those partners.

If we are unable to successfully launch these cobranded collections, we may not be able to grow as currently anticipated and may be required to shift our current business plans.

Even if we are able to successfully launch our cobranded collections with Nautica, Eddie Bauer, and Reebok, there is no guarantee that we will receive sufficient revenue to pay the licensing fees that would be owed to Nautica, Eddie Bauer, and Reebok.

Specifically, we minimally owe $14,171,210 over the next ten years in licensing fees.

If we fail to successfully launch, or after we launch receive insufficient revenue from our cobranded collections with Nautica, Eddie Bauer, and Reebok, our business, financial condition, and results of operations would be harmed.

We recently launched our cobranded collections with Nautica and Eddie Bauer in the first and second quarters of 2024, respectively.

We also plan to launch our Reebok cobranded collection in the second quarter of 2025.

We believe these brand partnerships will grow our company due to the global renown of these partners, and we believe that these brand partnerships will play a significant role in our future revenue growth by offering a more diversified product portfolio 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).

However, if we are unable to successfully launch the Reebok cobranded collection, we may not be able to grow as currently anticipated and may be required to shift our current business plans.

Further, following the launch our cobranded collections with Nautica, Eddie Bauer, and Reebok, there is no guarantee that we will receive sufficient revenue to pay the licensing fees that would be owed to Nautica, Eddie Bauer, and Reebok.

Specifically, the aggregate future minimum payments due under the license agreements related to these brands is $14,010,000 over the next nine years, although we have the option to cancel the agreements during the fifth year.

If we are not able to successfully market and sell our cobranded products, we will not receive sufficient revenue to pay the licensing fees and would need to use the proceeds from our other products to pay the fees.

There can be no assurance that we will be able to profitably manage these cobranded collections, or that they will achieve anticipated revenues and earnings.

Eyeglasses are regulated as medical devices by the FDA, and our failure, or the failure of any third-party manufacturer or optical laboratory, to obtain and maintain the necessary agency authorizations for our products could have a material adverse effect on our business.

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and in the most serious cases, criminal penalties.

Due to the nature of Vyrb as a social media application, and our collection of customer data in the process of taking orders, we are subject to rapidly changing and increasingly stringent laws, regulations, obligations, and industry standards relating to privacy, data security, and data protection.

Due to the nature of the Lucyd app as a social application, and our collection of customer data in the process of taking orders, we are subject to rapidly changing and increasingly stringent laws, regulations, obligations, and industry standards relating to privacy, data security, and data protection.

The restrictions and costs imposed by these laws and other obligations, or our actual or perceived failure to comply with them, could subject us to liabilities that adversely affect our business, operations, and financial performance.

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The CPRA will restrict use of certain categories of sensitive personal information that we handle;

further restrict the use of cross-context behavioral advertising techniques on

which our products may rely in the future;

further restrict the use of cross-context behavioral advertising techniques on which our products may rely in the future;

establish restrictions on the retention of personal information;

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These laws and regulations include not be adequate to indemnify us for the full extent of our potential liabilities.

Finally, since the Vyrb social app allows users to create and share various types of multimedia content in a public space operated by the Company, the Company has a basic responsibility to ensure that illegal or otherwise personally harmful content is removed from the platform with speed, which if we fail to do so, could potentially result in legal action against the Company.

Finally, since the Lucyd app allows users to speak to each other in a public space operated by the Company, the Company has a basic responsibility to ensure that users are not exposed to harmful content, which if we fail to do so, could potentially result in legal action against the Company.

Our business could be adversely impacted by changes in the internet and mobile device accessibility of users.

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Risks Related to Intellectual Property

Some of our current intellectual property is licensed from Lucyd Ltd., the largest stockholder of the Company, pursuant to a license agreement we entered into with Lucyd Ltd.

We license some of our technology from Lucyd Ltd.

and from a third party.

Our inability to maintain these licenses could materially affect our business, financial condition, and operating results.

Some of our current intellectual property is licensed from Lucyd Ltd., one of our larger stockholders, pursuant to a license agreement we entered into with Lucyd Ltd.

on April 1, 2020 (the “License Agreement”).

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related to Innovative Eyewear current products and trademarks.

There can be no assurance that the license will not be terminated by Lucyd Ltd.

and if we are unable to continue to license the technology (because of, for example, intellectual property infringement claims brought by third-parties against us or against Lucyd Ltd.) then our business, financial condition and operating results would be adversely affected.

Please see “Business—Material Agreements” for a more complete description of the License Agreement.

Some of our current intellectual property is licensed from IngenioSpec, LLC, a third-party entity, pursuant to license agreement we entered into on January 3, 2024.

Pursuant to this license agreement, we acquired a multi-year non-exclusive license for multiple smart eyewear patents that we fully prepaid at the time of entry into the agreement.

There can be no assurance that these licenses will not be terminated by the respective counterparty and if we are unable to continue to license such technology then our business, financial condition and operating results would be adversely affected.

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In addition, because patent applications in the United States are currently maintained in secrecy for a period of time prior to issuance, and patent applications in certain other countries generally are not published until more than 18 months after they are first filed, and because publication of discoveries in scientific or patent literature often lags behind actual discoveries, we cannot be certain that we were the first creator of inventions covered by our pending patent applications or that we were the first to file patent applications on such inventions.

To maintain a proprietary market position in foreign countries, we may seek to protect some of our proprietary inventions through

foreign counterpart patent applications.

To maintain a proprietary market position in foreign countries, we may seek to protect some of our proprietary inventions through foreign counterpart patent applications.

Statutory differences in patentable subject matter may limit the protection we can obtain on some of our inventions outside of the United States.

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This could substantially harm our business, results of operations, financial condition and prospects.

We may incur costs to defend against, face liability or for being vulnerable to intellectual property infringement claims brought against us by others.

We may incur costs to defend against, face

liability or for being vulnerable to intellectual property infringement claims brought against us by others.

Third parties may assert claims against us alleging that we infringe upon, misappropriate, dilute or otherwise violate their intellectual property rights, particularly as we expand our business and the number of products we offer.

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Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

Since the completion of our initial public offering in August 2022, we have been required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.

Though we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC.

As an “emerging growth company,” as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act (and the rules and regulations of the Securities and Exchange Commission thereunder).

Once we no longer qualify as an “emerging growth company” under the JOBS Act and lose the ability to rely on the exemptions related thereto discussed above and depending on our status as per Rule 12b-2 of the Securities Exchange Act of 1934, as amended, our independent registered public accounting firm may also need to attest to the effectiveness of our internal control over financial reporting under Section 404.

Since the completion of our initial public offering in August 2022, we have been required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.

As an “emerging growth company,” as defined in the JOBS Act, which will be in effect until after five years from our initial public offering, we may take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act (and the rules and regulations of the Securities and Exchange Commission thereunder).

Based on the number of personnel available to serve the Company’s accounting function, management believes we are not able to adequately segregate responsibility over financial transaction processing and reporting.

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We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Pursuant to Section 107 of the JOBS

Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies.

Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies.

As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors.

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If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes appearing elsewhere in this 10-K.

We base our estimates on short duration historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses.

Significant estimates and judgments involve:

inventory valuation;

intangible assets;

income taxes;

valuation of our common stock and equity awards;

revenue recognition, including revenue-related reserves;

shipping and handling;

and the computation of earnings/loss per share.

Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.

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Claims exceeding our insurance coverage could create significant increases in internal costs.

This could even have a material adverse effect on our business, financial condition, and operating results.

We may decide to pursue strategic licensing deals to accelerate our growth.

These potential brand acquisitions may not be successful.

We may not be able to successfully integrate future IP acquisitions or generate sufficient revenues from future acquisitions, which could cause our business to suffer.

If we license an intellectual property (IP) from a company, there can be no assurance that we will be able to profitably manage this intellectual property or successfully integrate a new business unit without substantial costs, delays or other operational or financial problems.

There can be no assurance that the IP we acquire in the future will achieve anticipated revenues and earnings.

Additionally:

the key personnel operating the acquired IP may decide not to work with us;

we may be unable to maintain uniform standards, controls, procedures, and policies among acquired IPs;

we may be unable to successfully implement infrastructure, logistics and systems integration;

we may be held liable for legal claims (including environmental claims) arising out of activities of the acquired IP prior to our acquisitions, some of which we may not have discovered during our due diligence, and we may not have indemnification claims available to us or we may not be able to realize on any indemnification claims with respect to those legal claims;

we will assume risks associated with deficiencies in the internal controls of acquired IPs;

we may not be able to realize the cost savings or other financial benefits we anticipated;

our ongoing business may be disrupted or receive insufficient management attention.

Future acquisitions may require us to obtain additional equity or debt financing, which may not be available on attractive terms.

Moreover, to the extent an acquisition transaction financed by non-equity consideration results in additional goodwill, it will reduce our tangible net worth, which might have an adverse effect on our credit and bonding capacity.

This even could have a material adverse effect on our business, financial condition, and operating results.

Risks Related to Our Common Stock

The market prices of our common stock has been volatile and can fluctuate substantially, which could result in substantial losses for our investors.

The market price of our common stock is highly volatile, and since our initial public offering in August 2022, the market price of our common stock has ranged from $0.37 to $7.00 per share.

The market price of our common stock is highly volatile, and since our initial public offering in August 2022, the market price of our common stock has ranged from $3.31 to $96.00 per share (as adjusted for our reverse stock split).

The market price of our securities could be subject to wide fluctuations in response to a variety of factors, which include:

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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-K

Item 1A. Risk Factors