Innovative Eyewear Inc 10-K

Item 1. Business . Our History We develop and sell smart eyeglasses and sunglasses, which are designed to allow our customers to remain connected to their digital lives, while also offering prescription eyewear and sun protection. Founded and headquartered in Miami, Florida, we were initially organized as a Florida limited liability company effective August 15, 2019. On March 26, 2020, we converted from a Florida limited liability company into a Florida corporation. We were founded by Lucyd Ltd., the inventor and licensor of the technology that our products are based upon, which is a portfolio company of Tekcapital Europe Ltd. (“Tekcapital”). Tekcapital is a U.K. based university intellectual property accelerator which builds portfolio companies around new technologies. Our Products Our smart eyewear products enable the wearer to listen to music, take and make calls, and use voice assistants and ChatGPT to perform many common smartphone tasks hands-free. Since the official launch of our first commercial product, our goal has been to create smart eyewear for all-day wear that looks like and is priced similarly to designer eyewear, but is also lightweight and comfortable, and enables the wearer to remain connected to their digital lives. Through our various product offerings as described below, we have created a smart upgrade for all four of the major types of eyewear: prescription eyeglasses, ready-to-wear sunglasses, safety glasses, and sport glasses. ● Our core product line, Lucyd Lyte ® (which includes the Lyte XL units), was first introduced in 2021 and continues to grow and expand with the ongoing addition of new styles and multiple technological upgrades and advancements. 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. We currently offer 13 different models under the Lucyd Lyte collection. ● In January 2024, we launched the Nautica ® Powered by Lucyd smart eyewear collection in eight different styles, along with various branded accessories including a power brick, cleaning cloth, and a slipcase adorned with the iconic Nautica sail logo. 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 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. ● We plan to launch the Reebok ® Powered by Lucyd sport smart sunglasses collection in the second quarter of 2025, and launch the Reebok ® Powered by Lucyd premium optical collection in the fourth quarter of 2025. Our current product offering consists of 26 different models (soon to increase to 34 different styles with the pending launch of the Reebok ® sport collection), which offers a similar amount of style variety as many traditional eyewear collections. All styles are available with 100+ different lens types, resulting in thousands of variations of products currently available. 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). 1 Some of the many things our customers can do with their Lucyd smartglasses include: 1. “Send a voice message to (contact)”: this command begins the recording of an audio message to be sent to named contact. 2. “Send a text to (contact)”: begins recording of a speech-to-text message to be sent by SMS to named contact. 3. “Call (contact)”: speed-dials the named contact. 4. “Send $___ to (contact)”: this command allows the user to send money to a contact via Venmo or Apple Cash. 5. “Check my messages”: this command reads out the user’s latest incoming text messages and offers a prompt to reply to each. 6. “Check my mailbox”: this command announces the number of unread emails, and reads them out with a prompt to continue after each one. In the prompt after each one, the user can tell their digital assistant “Reply” and dictate an email response to the previous email. 7. “Find (cuisine type) food nearby”: this command reads through a list of nearby restaurants and their ratings, and prompts the user for directions or to call after each one. 8. “Call me an Uber”: this command prompts the user on which type of Uber ride they want, then asks to confirm to send a car to the user’s location. 9. “What time is it?”: announces the current time. 10. “Play (song/album/artist)”: this command begins playing the requested song, album, or artist via Apple Music. 11. “Get me directions to (location)”: this command begins navigating on phone, with audible directions on glasses. 12. “Take a memo”: this command begins recording a speech-to-text memo in Notes, which can also be played back to the user. Since the initial launch of Lucyd Lyte, we witnessed growing interest and demand from customers throughout the United States and have sold thousands of our smart glasses. We believe smart eyewear is a product category whose time has come, and we believe we are well positioned to capitalize on and help develop this exciting new sector – where eyewear meets electronics in a user-friendly, mass market format, priced similarly to designer eyewear. The Company currently has 115 patents and applications, 44 of which were licensed from Lucyd Ltd., 25 assigned directly to Innovative Eyewear, and 46 licensed from Ingeniospec. Software and Apps In April 2023, we introduced a major software upgrade for our glasses with the launch of the Lucyd app for iOS and Android. This free application enables the user to converse with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful AI assistants in a hands-free ergonomic interface. The app deploys a powerful and unique Siri integration with the Open AI API for ChatGPT, as well as a Bixby integration for Samsung phones, developed internally by the Company. The Company has filed a patent application related to this software. 2 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. 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. This feature was designed with the new Lucyd Armor smart safety glass product in mind, to enable coworking teams to communicate freely on smart eyewear. We plan to launch more new features for the Lucyd app in the future, such as an audio equalizer enabling the user to optimize sound output for different types of content such as calls and podcasts, and touch control customizations. We believe these developments make our Lucyd eyewear perhaps the smartest smartglasses available today, and represent a significant marketing opportunity for our core smartglass products. Kiosks and Retail Fixtures 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. We have engineered and provided a variety of virtual try-on kiosks, modular display systems, and interactive LCD fixtures to fit any retail environment. These devices introduce our products to prospective retail customers and enable them to digitally try-on our line of smart glasses in a touch-free manner. Many of our retail fixtures allow for customization to suit our retail store partners’ needs, and the most recently developed fixtures feature a proprietary kiosk app we recently developed in-house. Our most advanced displays offer a complete Lucyd experience, including virtual try-on, social media content, detailed product info and videos, and seamless music demos – which overall provide an immersive onboarding experience for prospective customers in retail stores carrying our frames. Our Mission Our mission is to Upgrade Your Eyewear ® . Our smart eyewear is a fusion of headphones with glasses, bringing vision correction and protection together with digital connectivity and clear audio, while also offering a safer solution for listening to music outdoors (as compared to in-ear headphones). The convenience of having a Bluetooth headset and comfortable glasses in one, especially for those who are already accustomed to all-day eyewear use, offers a lifestyle upgrade at a price most consumers can afford. In a sense, we view this integration of technology and vison correction/protection as the next evolutionary step in the development of eyewear. Over the entire course of eyewear development and history, many of the innovations have dealt with improving the lenses of the glasses. Notably, eyewear frames have not improved much in the past 400 years, with the exception, in our view, of the utilization of plastic to reduce weight and provide a wider range of designs and finishes, and the introduction of new hinge types. We view the integration of Bluetooth technology into the arms of the glasses as one of the key next steps enhance one of the world’s most important wearables: eyewear. Additionally, as part of our commitment to a great customer experience, we listen to feedback from our customers, and continuously strive to improve customer satisfaction and experience with our products. We have made strong strides towards our goal of making smart eyewear accessible to the mass market. Several developments towards this end include developing our smart frames in multiple temple lengths; the introduction of smart eyewear specifically for women and youth, which are typically missing from similar offerings; and the introduction of smart eyewear for adults with petite or narrow faces. Our expansive product offering currently consists of 26 different models (soon to increase to 34 different styles with the pending launch of the Reebok ® sport collection), which offers a similar amount of style variety as many traditional eyewear collections. When paired with the Lucyd app, our smartglasses provide a new and safer wearable user experience suitable for everyone. Our goal is to become a meaningful player in the smart eyewear market. Our successes to date demonstrate our ability to not only compete, but to lead in the rapidly changing and expanding technological eyewear market, and we intend to continue spearheading innovation in the field. 3 Giving Back We donate an optical frame for every Lucyd Lyte sold at retail. We are also very active in supporting the various communities we serve through donations and support. From the beginning, Innovative Eyewear has supported those in need through our donation of glasses frames to New Eyes ( https://new-eyes.org/about-us ), a charity dedicated to helping children and adults in need of eyewear. We’ve partnered with New Eyes because they fit the Lucyd brand mission: enhancing the vision of people all over the world, and we believe that it simply is the right thing to do. We have also participated in a partnership with the Miami Rescue Mission to support our local community with eyewear. Our most recent donation was made in January 2024, and consisted of 3,000 eyeglass, sunglass, and reading glass frames. Additionally, university students, educators, healthcare workers, uniformed service members, and veterans are eligible for an ongoing 18% discount off all frames and lens upgrades on www.lucyd.co . Our Market Opportunity One of our key opportunities is converting traditional eyeglass and sunglass wearers to smart eyewear consumers, since these customers are already familiar with wearing optical products. According to a 2021 report of the Vision Council, a non-profit trade association that serves member companies of the optical industry, there are approximately 167 million adults wearing prescription eyeglasses in the United States. According to the Vision Council, the total addressable market for eyewear in the U.S. was $68 billion in 2024, growing at about 2.7% from 2023. The smartglass market size was estimated at $1.9 billion worldwide in 2024, and is expected to grow at a compounded annual growth rate of 27% from 2025 to 2030 according to Grand View Research. At the same time, the market for digital assistants like Siri, Google Voice, Bixby, and Alexa has grown rapidly worldwide in recent years, estimated at over 8 billion voice assistant-enabled devices in use in 2024, doubling the amount from 2020 and indicating strong proliferation of voice-controlled devices. We view the popularity of voice assistants as an important catalyst for the smart eyewear market, since hands-free access to voice-based AI is a notable feature thereof and a key advantage of our products over standalone smartphone usage. The common denominator among markets for hearables and digital assistants is that they facilitate real-time access to digital data, whether it is through music, calls, navigational directions, or information, among other uses. The combination of hearables and digital assistants provides a transparent, ergonomic interface between the users and their digital lives. At Innovative Eyewear, we are dedicated to a touch-free interface and untethering our customers eyes from their smartphone screens, through our smart eyewear product. The synergistic fusion of these three markets (eyewear, digital assistants, and hearables) enables, in our view, an opportunity to create a completely new experience of connected eyewear, which smoothly delivers the functionality of both optical glasses and headphones, eliminating the need for either on its own. Nevertheless, several orthodoxies of the eyewear industry still hold, namely: if you want to sell a lot of eyewear, we believe it should be attractive, stylish, comfortable (e.g., lightweight, which we believe to be approximately one ounce), and cost roughly the same as traditional eyewear. This is what we have sought to achieve, and in our view have accomplished with the introduction of Lucyd Lyte eyewear. A key indicator of the potential future success of smart eyewear in the consumer market is the rise of smartwatches, which as early as 2018 have intermittently surpassed traditional wristwatches in unit sales in the United States. We believe that the similarities between smartwatches and smart eyewear compared to their traditional counterparts indicate that the future of eyewear will also be smart . Our Business Strategy When we initially organized Innovative Eyewear five years ago, there was, in our view, no attractive smart eyewear that addressed the basic consumer need for good looking designer glasses that were stylish, comfortable, lightweight, and provided the functionality of hearables, and priced around the same as regular glasses. 4 At the core of our strategy are the following principles: 1. Consumers prefer smart eyewear that looks and feels like traditional glasses and sunglasses; this is a key element in the design of all of our frames, and makes it easier for traditional eyewear users to switch to our products. 2. For a smart eyewear line to achieve mass market penetration, it should cost a similar amount to traditional designer eyewear, especially while the category is still emerging and most consumers and not yet familiar with it. 3. Smart eyewear must be user-friendly and have an interface that is easy to navigate by the wearer, even when their hands are wet or gloved. As such, we deploy highly tactile interfaces on our eyewear. 4. The battery life of smart eyewear should be sufficient to support smart functionalities throughout the day without needing to be recharged mid-day. 5. Rather than burdening our hardware with mechanical features such as cameras and microdisplays which may be unnecessary for many users, we instead leverage software platforms that can add functionality without increasing the weight or size of the frames. 6. By adhering to the above principles, we can eliminate any “costs of switching” from traditional eyewear to smart eyewear, and build customer lifetime value by offering a more powerful combination of fashion, smart features, and vision correction and protection than available from other companies. All of our products are designed in Miami, manufactured in China, and sold through e-commerce channels, including on our website (Lucyd.co), BestBuy.com, DicksSportingGoods.com, Brookstone.com, Walmart.com, Target.com, and Amazon.com, and sold by over 300 optical and sporting goods retailers. Additionally, we are pursuing online and in-store big box retailers, and in-store and online specialty retailers. Based on the existing demand for our products, current distribution, and recently consummated supply agreements, we anticipate that our products will be available in a significant number of new third-party retail locations in 2025. We believe that people care about what they wear on their faces, and because we understand that customers have diverse preferences about the shape, size, and design of their eyewear, we aim to continuously introduce new models in an effort to offer a wide variety of designs. We continuously present new models of eyewear to our network of followers to vote on those styles they find most appealing. We view this as community approved design. Competition The smart eyewear industry in which we operate is competitive and subject to changes in practice. While we believe that our products are a hybrid of eyeglasses and Bluetooth audio technology, which gives us a unique product that provides us with competitive advantages, we may face competition from many different entities now and in the future. Currently, we face competition from the following products: ● Amazon’s Carrera Echo Glasses (Third Gen). ● Solos Glasses. ● Ray-Ban Meta Glasses. 5 All of the competitors discussed above have substantially greater manufacturing, financial, research and development, personnel, and marketing resources than we do. As a result, although we believe our products are currently superior, our competitors may be able to develop superior products, and compete more aggressively and sustain their competitive advantage over a longer period of time than us. Our products may be rendered obsolete in the face of competition. We do not see our products as directly competing with augmented reality / head-mounted display products such as Apple Vision Pro, due to radically different use cases and pricing structures. Our Competitive Strengths A Unique Solution to a Common Problem . While immensely useful, smartphones can present a safety hazard to motorists, pedestrians, and cyclists because smartphones can distract people from the task or activity at hand. According to the Governors Highway Safety Association, there were over 7,000 pedestrian deaths in the U.S. in 2023, and experts believe smartphones were partially to blame. Recent data from the Governors Highway Safety Association indicates that since 2010, the number of pedestrian deaths rose by 77%, while all other traffic deaths increased by 22% (Pedestrian Traffic Fatalities by State: 2023 Preliminary Data – (https://www.ghsa.org/resources/Pedestrians24). We believe that the distraction created by smartphones originates in two forms: (1) via headphones or earbuds, where the user is deprived of full audible situational awareness; and (2) via the visual interface of the phone, which distracts the user completely from their surroundings. Lucyd Lyte open-ear audio helps address this problem by having the speakers mounted at the temples (in the arms) of the glasses. There is nothing in the ear canal and, as a result, individuals can better maintain situational awareness, such as hearing the traffic around them, as well as nearby sounds. Many of our competitors have relatively bulky speakers enclosed within the temples, while Lucyd Lyte’s speakers and temples are thin, which allows them to look similar to traditional designer glasses. Furthermore, through the quick and easy touch controls on Lucyd Lyte glasses, the wearer can perform many tasks for which they would normally pull out their phone – thus our glasses help untether the eyes of the user from their smartphones throughout the day and enable them to remain more visually vigilant and aware of the traffic around them. Affordable Price Point . Our Lucyd Lyte eyewear provides both optical-quality glasses and a Bluetooth headset together, at roughly the same price as a traditional pair of designer glasses, which is core to the disruptive potential of our product. Our Lucyd Lyte line of smart eyewear enables prescription and sunglass wearers to interact with digital assistants and social media without having to take their eyes off the road and are nearly hands-free, thereby improving the safety and convenience of taking calls, listening to music, and audibly accessing digital information on the go. The Manufacturer’s Suggested Retail Price (“MSRP”) for Lucyd Lyte 2.0 eyewear starts at $149, with advanced options and customizations available at higher price points, which are at the discretion of the customer. A basic prescription lens upgrade is offered for $40. By comparison, most of our U.S.-based competitors offer products that are more expensive, starting at approximately $249 or higher, with higher costs to add prescriptions. Quality . All of our frames can be outfitted in-house or by optical resellers with any combination of prescription, sunglass, reading, and blue light lens formats. Our frame fronts are made with what we believe are high quality optical materials to ensure easy lens fitting by any optician. Customizable Product Offering . There are 100+ lens types available for Lucyd Lyte, making it the most customizable smart eyewear in the world. Innovative Eyewear has a partnership with a high-quality optical lab in Boston to produce prescription and custom lenses for our frames quickly and affordably. Our contract with a third-party optical lab also allows us to offer direct prescription fulfillment to our customers. Comfort . At just 1.0 - 1.5 ounces, our eyewear has a feather-light fit, suitable for all day vision correction or sun protection (traditional glasses weigh about 1 ounce). This is especially important while on the go. Our 1.0 ounce titanium aviators are among the lightest smart eyewear ever made. Long Battery Life . At 12 hours of playback per charge, our current product offering of Lucyd eyewear outpaces most, if not all, of the competition on battery life. 6 Capital Light Business Model . All of our products are sold through multiple e-commerce channels, including on our website (Lucyd.co), BestBuy.com, DicksSportingGoods.com, Brookstone.com, Walmart.com, Target.com, and Amazon.com, and are distributed through optical or other retailers (such as, but not limited to, Metro Optics Eyewear and Marca Eyewear Group, Inc.). We believe this capital light approach is highly scalable and efficient in the deployment of resources. We view “capital light” as being more efficient by obviating the need to build factories and retail stores, while partnering with existing companies in both of these groups. Multiple-Channel Approach . We sell our products both through multiple online channels and multiple categories of brick-and-mortar retail stores. We believe this multi-channel approach provides us with an advantage against our competitors who sell in a narrower selection of channels. Experienced Management Team . We have an experienced board of directors with more than 100 years of combined experience in the eyewear industry, and a management team with substantial experience in software and electronics engineering and operating eyewear and technology companies. Sales We have two major sales channels: (1) e-commerce via Lucyd.co and Amazon, and (2) our ongoing development of a network of eyewear, sporting goods, and electronics resellers, including but not limited to, BestBuy.com, DicksSportingGoods.com, Brookstone.com, Walmart.com, and Target.com, to offer our frames. Most of our resellers are experienced opticians who provide valuable feedback that informs the development of our product lines, which we would not receive if we were solely direct to consumer. Additionally, we have a robust presence on multiple e-commerce and social media platforms, which facilitates several customer on-ramps for the Lucyd brand, and numerous ad campaign strategies. Building on our early successes of driving traffic to our website Lucyd.co, from Facebook, Instagram, and TikTok, we deploy high quality content on multiple platforms to continuously keep customers engaged and drive brand awareness. Our business model leverages dual revenue streams through B2C and B2B channels, with e-commerce sales generating robust gross margins of approximately 69% and wholesale operations delivering steady gross margins of approximately 32%. Our Lucyd.co platform’s lens upgrade program maintains consistent profit margins of approximately 35%. In 2024, we strengthened our competitive position through strategic supplier optimization, partnering with a premier frame manufacturer while simultaneously achieving cost efficiencies in lens sourcing. This enhancement in our supply chain, combined with our calculated market penetration investments in 2023 (including strategic promotional pricing and targeted product seeding to media partners, influencers, and industry reviewers), has positioned us for sustained margin improvement and scalable growth. Online retail sales accounted for the majority of our sales in 2024 and 2023. E-commerce Channels 1. Company website: Lucyd.co Lucyd.co is our primary e-commerce point of sale. The site offers the most customization options of any of our sales channels and a full prescription lens lab, offering over 100 different lens types, including transition lenses and progressive bifocals. Additionally, the Lucyd website ships worldwide and is used to provide a quick and smooth buying experience. 2. Amazon Amazon.com/lucyd is our brand shop on Amazon. It drives approximately one third of our online sales, but limits the number of variations we can offer on our frames (e.g., prescription lenses are not permitted on Amazon). However, through Amazon, we are still able to offer color lens sunglass variants and blue light blocker pairs, in addition to our charging dock accessory item. We continually monitor and test traffic flow to Lucyd.co versus Amazon.com to ensure our online ad spend is fully optimized. 7 3. Walmart.com, Target.com, BestBuy.com, DicksSportingGoods.com, Brookstone.com, and eBay In addition to our key online sales channel through Lucyd.co, our products are also sold on Walmart.com, Target.com, BestBuy.com, DicksSportingGoods.com, Brookstone.com, and eBay. 4. Social Selling Not only do we use social media to drive traffic to our main sales channels, but we also take advantage of intra-social shops as well, and have deployed shopping experiences through Facebook, Instagram, and TikTok to gain further brand awareness. We also offer two affiliate platforms via Shareasale.com and Shopify for peer-driven sales. The Shareasale program is for professional affiliate and deal promotion companies, and increases revenue on Lucyd.co by offering direct commissions in exchange for converting web traffic. The Shopify affiliate program enables Lucyd brand enthusiasts to get a financial reward for sharing the brand, and operates on similar terms as the Shareasale program where we provide a commission rate in exchange for converting web traffic. Retail Channels 1. Independent Eyewear Stores The core of our B2B business is formed by our relationship with numerous eyewear store retailers across the United States and Canada, which provide our smart frames directly to their optical customers. Many of these retail stores have placed multiple stocking orders since launching our wholesale business in 2021. To support our resellers, we offer a strong co-op marketing program that includes free store display materials. As part of this strategy, we provide customizable modular display systems and interactive LCD retail fixtures to our resellers to provide an immersive virtual try-on experience along with detailed product info and videos for prospective customers. Notable among our independent optical partners is NFM Optical, a Berkshire Hathaway business unit doing approximately $1 billion in revenue, which demonstrates the potential for successful integration of smart eyewear into traditional optical retail environments. 2. National Eyewear Chains Thanks to aggressive promotion from competing glasses, retailers are now more open to introducing smart eyewear in their stores and on their e-commerce platforms. As key examples of this, in 2024, we expanded to start selling on Target.com, and recently onboarded all Micro Center locations. Based on our current discussion with several major optical businesses (by store size), we believe at least one additional major optical chain or national optical buying group will onboard our product line in 2025. However, there can be no assurances that any of these retailers and distributors will sell our products. 3. Big Box Retail Stores (Electronics, sporting goods, general merchandise) In addition to mainstream optical channels, we distribute our Lucyd eyewear through leading big box stores, such as Best Buy and Dick’s Sporting Goods, through either their eyewear or electronics departments. We have recently expanded our electronics retail presence through partnerships with specialized electronics retailers such as Micro Center, further strengthening our position in the consumer electronics segment. 4. License Agreements and Specialty Retail Stores We are leaving no stone unturned in our mission to bring smart eyewear mainstream. We have licensed three leading fashion brands – Nautica, Eddie Bauer, and Reebok – to produce new Powered by Lucyd cobranded frames. We launched the Nautica ® Powered by Lucyd smart eyewear collection and the Eddie Bauer ® Powered by Lucyd smart eyewear collection in January 2024 and April 2024, respectively, and plan to launch Reebok ® Powered by Lucyd sport and optical collections in the second quarter and fourth quarter of 2025, respectively. In addition to the above channels, with the recent launch of Lucyd Armor Safety Smart Eyewear, featuring ANSI Z87.1 Certification and Canadian Safety Certification, we are expanding into the safety eyewear market. Our distribution strategy targets major home improvement retailers including Home Depot, Lowe’s, Ace Hardware, and Canadian Tire, as well as leading industrial PPE (personal protective equipment) distributors such as Grainger and Fastenal. This certification-backed entry into the safety market represents a significant expansion of our addressable market. 8 Manufacturing and Supply Chain Our products are designed in the United States and subsequently manufactured in China. The products are designed in-house, and 3-D Computer-Aided Design (CAD) files are produced with product renderings. We then subject these rendered images to focus group review, to determine which designs we should move to the prototype development stage. Pre-production prototypes are developed by our factories in China, to our specifications. Our factories source components for the smart eyewear in China, including plastic and titanium for the frames, electronic components, speakers, microphones, and batteries. All packaging is designed in Miami and fabricated in China. Once completed, our products are tested in the United States, to assess functionality, fit, and finish. Production orders are placed and fabricated in China based on anticipated demand, whereupon they undergo a rigorous thirteen-point third-party product inspection process. This inspection is conducted on 100% of our manufactured products. Inspections include testing procedures to help ensure our customers receive only functional, high-quality products. For large bulk orders from clients, we are able to order this inventory on demand, due to the expected lead times in the traditional frame sourcing business. Recently, the U.S. government increased tariffs on goods imported from China to 20%. The Company has researched alternate manufacturing solutions outside of China and believes it may be possible to shift production elsewhere if necessary; however, there remains to be uncertainty as to whether there will be any other changes to U.S. government trade policy. All of our frames are manufactured with prefabricated, ready-to-wear sunglass or blue light lenses, and are directly shipped to the customer in this state if the customer declines to purchase custom lens upgrades. If a customer orders with prescription or specialty lenses, then the smart eyewear frames are sent to an optical contractor laboratory in Miami, Florida, to have the lenses cut, ground, and mounted in the frames, whereupon they are directly shipped to customers. Marketing We employ a 360-degree marketing strategy that encompasses both brand and user-generated content syndication across earned, owned, and paid platforms. As the first smart eyewear manufacturer developing tailored products for specific use cases, our marketing approach uniquely addresses distinct segments through our All-Day Wear, Sun, Sports, and Safety product lines. This segmented strategy enables us to deliver targeted messaging to professional users seeking AI-enabled daily eyewear, active individuals requiring high-performance features, and industrial users needing certified protective equipment with smart capabilities. Long form and video content generation are key focus points for the brand, as they allow us to better leverage both emerging and critical smart eyewear narratives through persistent search engine optimization (SEO), increasing our organic brand awareness across the board, in addition to strategic loyalty, influencer, and affiliate marketing campaigns. Our online marketing strategy is primarily driven by pay-per-click advertisements on mainstream search engines, social media apps, and Amazon and other marketplaces. In addition, we support our primary efforts with influencer created and promoted “UGC” (user-generated content), email automations and newsletters, and website push notifications. In 2025, we plan to scale up our affiliate and email marketing efforts to augment our core social ads campaigns. We believe we are trendsetters in creating relevant, omni-channel touchpoints that derive meaningful experiences and products designed for our customers’ specific use cases and environments. Our wholesale marketing strategy is primarily focused on traditional sales email and call outreach, national and regional optical trade shows, and optical, athletic, and safety trade advertisements. We have also deployed B2B mailer and digital mailer campaigns to inform optical businesses about our new releases. Strategically offering stylish optical smart eyewear, coupled with expansive end-user customization, plus our ChatGPT app, has the potential to rapidly expand our brand awareness and revenue. At Innovative Eyewear, we strive to lead and own critical narratives within the smart eyewear space, and have demonstrated our pioneering leadership and proficiency via the filing of dozens of patents on smart eyewear design and functionalities. We seek to create memorable experiences and products that resonate with our customers, coupled with premium content and campaigns designed to expand our brand presence and market share across all our target segments. We also attend major regional eyewear, sporting goods, and safety equipment trade shows to build awareness among our potential retail partners. 9 Our influencers To accelerate brand awareness and product sales, we are embarking on an influencer strategy to engage leading figures in sports and the arts, who like and enjoy wearing Lucyd Lyte ® . Our influencers promote our products on social media, provide us with product placement opportunities at sporting events and other cultural events, and have granted us contractual rights to use their names and likenesses in connection with the advertisement and sale of our products. We have engaged UK football legend and Olympic athlete Micah Richards as our lead brand ambassador. In addition, we have onboarded Chris Clark, a pro golfer; Monique Billings, a WNBA basketball player; Emmanuel Ogbah, an NFL football player; and Hadar Adora, an up-and-coming musical artist. We plan to add additional influencers to enhance awareness and sell-through for a number of key demographics. Influencers are a key part of our marketing strategy, as they help our products relate to large, variable audiences. Lucyd Lyte is a perfect fit for the fitness tech and audio product spaces, so athletes and musicians are a natural fit for our brand and the active lifestyles that Lucyd products promote. Intellectual Property We license from Lucyd Ltd., a subsidiary of one of our largest stockholders, an intellectual property portfolio designed to protect our unique eyewear designs and certain technological features in current and anticipated future products. Since 2021, the Company has begun filing patents under its own name. We have licensed and filed numerous patents covering all of our current product designs and certain advanced features such as replaceable front frames and multi-channel Bluetooth connectivity. The Company will seek to file new intellectual property to protect new styles and features of its smart eyewear as they are introduced. In January 2024, we entered into a multi-year licensing agreement with a third party (IngenioSpec, LLC) for multiple smart eyewear patents, bringing our overall portfolio of owned and licensed intellectual property to 115 patents and applications. Our current U.S. and foreign patent portfolio is as listed below. Pending and Registered Patent Applications Licensed from Lucyd Ltd. App/Patent Number Title Country Filing Date Status Grant Date 10,908,419 Smartglasses and Methods and Systems for Using Artificial Intelligence to Control Mobile Devices Used for Displaying and Presenting Tasks and Applications and Enhancing Presentation and Display of Augmented Reality Information U.S. June 28, 2018 Issued February 2, 2021 D899,493 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D900,203 Smart Glasses U.S. March 22, 2019 Issued October 27, 2020 D899,494 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D899,495 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D899,496 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D900,204 Smart Glasses U.S. March 22, 2019 Issued October 27, 2020 D900,205 Smart Glasses U.S. March 22, 2019 Issued October 27, 2020 10 D900,920 Smart Glasses U.S. March 22, 2019 Issued November 3, 2020 D900,206 Smart Glasses U.S. March 22, 2019 Issued October 27, 2020 D899,497 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D899,498 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D899,499 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D899,500 Smart Glasses U.S. March 22, 2019 Issued October 20, 2020 D954,135 Round Smartglasses Having Flat Connector Hinges U.S. December 12, 2019 Issued June 7, 2022 D958,234 Round Smartglasses Having Pivot Connector Hinges U.S. December 12, 2019 Issued July 19, 2022 D955,467 Sport Smartglasses Having Flat Connector Hinges U.S. December 12, 2019 Issued June 21, 2022 D954,136 Smartglasses Having Pivot Connector Hinges U.S. December 12, 2019 Issued June 7, 2022 62/941,466 Wireless Smartglasses with Quick Connect Front Frames U.S. November 27, 2019 Non-Provisional Application filed on November 25, 2020; U.S. App. No. 17/104,849 n/a D954,137 Flat Connector Hinges for Smartglasses Temples U.S. December 19, 2019 Issued June 7, 2022 D974,456 Pivot Hinges and Smartglasses Temples U.S. December 19, 2019 Issued January 3, 2023 11,282,523 Voice Assistant Management U.S. March 25, 2020 Issued March 22, 2022 D1,010,718 Wayfarer Smartglasses U.S. July 20, 2020 Issued January 9, 2024 D951,334 Round Smartglasses U.S. July 20, 2020 Issued May 10, 2022 12,216,341 Wireless Smartglasses with Quick Connect Front Frames U.S. November 25, 2020 Issued February 4, 2025 D1,013,765 Smartglasses U.S. September 1, 2021 Issued February 6, 2024 D1,030,851 Smartglasses U.S. September 1, 2021 Issued June 11, 2024 D1,030,852 Smartglasses U.S. September 1, 2021 Issued June 11, 2024 D1,030,853 Smartglasses U.S. September 1, 2021 Issued June 11, 2024 207516 Smartglasses Canada October 29, 2021 Issued May 23, 2023 207517 Smartglasses Canada October 29, 2021 Issued May 23, 2023 207518 Smartglasses Canada October 29, 2021 Issued May 23, 2023 207519 Smartglasses Canada October 29, 2021 Issued May 23, 2023 29/814,016 Safety Smartglasses U.S. November 2, 2021 Pending n/a 29/814,017 Safety Shields U.S. November 2, 2021 Issued November 19, 2024 11 63/274,920 Safety Glasses U.S. November 2, 2021 Non-Provisional Application filed on October 21, 2022; U.S. App. No. 18/048,715 n/a 207956 Safety Smartglasses Canada November 17, 2021 Issued May 23, 2023 207957 Safety Shields Canada November 17, 2021 Issued May 30, 2023 2021307950576 Safety Smartglasses China December 2, 2021 Issued March 26, 2024 ZL 2021307955902 Safety Shields China December 2, 2021 Issued May 3, 2022 18/048,715 Safety Glasses U.S. October 21, 2022 Pending n/a 3180624 Safety Glasses Canada November 1, 2022 Pending n/a 202211367067X Safety Glasses China November 2, 2022 Pending n/a 42023078694.9 Safety Glasses Hong Kong September 5, 2023 Pending n/a Pending and Registered Patent Applications Owned by Innovative Eyewear, Inc. App/Patent Number Title Country Filing Date Status Grant Date D1,051,829 Charging Cradle U.S. November 10, 2021 Issued November 19, 2024 63/297,056 Charging Cradle for Smartglasses U.S. January 6, 2022 Non-Provisional Application filed on December 29, 2022; U.S. App. No. 18/147,002 n/a 212589 Charging Cradle Canada May 9, 2022 Issued February 27, 2024 ZL 2022302715131 Charging Cradle China May 10, 2022 Issued October 21, 2022 18/147,002 Charging Cradle for Smartglasses U.S. December 27, 2022 Pending n/a D1,020,849 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,019,750 Smartglasses U.S. February 9, 2023 Issued March 26, 2024 D1,020,850 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,019,746 Smartglasses U.S. February 9, 2023 Issued March 26, 2024 D1,020,851 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,024,177 Smartglasses U.S. February 9, 2023 Issued April 23, 2024 D1,020,863 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,020,852 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,020,853 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,020,854 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,020,855 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,020,856 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,020,857 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 12 D1,020,858 Smartglasses U.S. February 9, 2023 Issued April 2, 2024 D1,023,123 Smartglasses Temples U.S. February 13, 2023 Issued April 16, 2024 18/189,547 System, Apparatus, and Method For Using a Chatbot U.S. March 24, 2023 Pending n/a 18/463,465 Spring-loaded Hinges For Smartglasses U.S. September 8, 2023 Pending n/a 29/930,655 SAFETY EYEWEAR U.S. March 1, 2024 Pending n/a 18/605,092 SMART EYEWEAR HAVING ACCESSIBLE TACTILE CONTROLS U.S. March 14, 2024 Pending n/a PCT/US24/20715 SYSTEM, APPARATUS, AND METHOD FOR USING A CHATBOT U.S. March 20, 2024 Pending n/a Registered Patent Applications Licensed from Ingeniospec, LLC App/Patent Number Title Country 7,192,136 Tethered Electrical Components for Eyeglasses U.S. 7,255,437 Eyeglasses with Activity Monitoring U.S. 7,380,936 Eyeglasses with a Clock or Other Electrical Component U.S. 7,401,918 Eyeglasses with Activity Monitoring U.S. 7,438,410 Tethered Electrical Components for Eyeglasses U.S. 7,481,531 Eyeglasses with User Monitoring U.S. 7,500,746 Eyewear with Radiation Detection System U.S. 7,500,747 Eyeglasses with Electrical Components U.S. 7,581,833 Eyewear Supporting After-Market Electrical Components U.S. 7,621,634 Tethered Electrical Components for Eyeglasses U.S. 7,677,723 Eyeglasses with a Heart Rate Monitor U.S. 7,771,046 Eyewear with Monitoring Capability U.S. 7,792,552 Eyeglasses for Wireless Communications U.S. 8,109,629 Eyewear Supporting Electrical Components and Apparatus Therefor U.S. 8,337,013 Eyeglasses with RFID Tags or with a Strap U.S. 8,430,507 Eyewear with Touch-Sensitive Input Surface U.S. 8,434,863 Eyeglasses with a Printed Circuit Board U.S. 8,465,151 Eyewear with Multi-Part Temple for Supporting One or More Electrical Components U.S. 8,500,271 Eyewear Supporting After-Market Electrical Components U.S. 8,770,742 Eyewear with Radiation Detection System U.S. 8,905,542 Eyewear Supporting Bone Conducting Speaker U.S. 9,033,493 Eyewear Supporting Electrical Components and Apparatus Therefor U.S. 13 9,488,520 Eyewear with Radiation Detection System U.S. 9,547,184 Eyewear Supporting Embedded Electronic Components U.S. 9,690,121 Eyewear Supporting One or More Electrical Components U.S. 10,060,790 Eyewear with Radiation Detection System U.S. 10,061,144 Eyewear Supporting Embedded Electronic Components U.S. 10,310,296 Eyewear with Printed Circuit Board U.S. 10,330,956 Eyewear Supporting Electrical Components and Apparatus Therefor U.S. 10,345,625 Eyewear with Touch-Sensitive Input Surface U.S. 10,359,311 Eyewear with Radiation Detection System U.S. 10,539,459 Eyewear with Detection System U.S. 11,086,147 Eyewear Supporting Electrical Components and Apparatus Therefor U.S. 11,204,512 Eyewear Supporting Embedded and Tethered Electronic Components U.S. 11,243,416 Eyewear Supporting Embedded Electronic Components U.S. 11,326,941 Eyewear with Detection System U.S. 11,513,371 Eyewear with Printed Circuit Board Supporting Messages U.S. 11,536,988 Eyewear Supporting Embedded Electronic Components for Audio Support U.S. 11,630,331 Eyewear with Touch-Sensitive Input Surface U.S. 11,644,361 Eyewear with Detection System U.S. 11,644,693 Wearable Audio System Supporting Enhanced Hearing Support U.S. 11,733,549 Eyewear Having Removable Temples That Support Electrical Components U.S. 11,762,224 Eyewear Having Extended Endpieces to Support Electrical Components U.S. 11,803,069 Eyewear with Connection Region U.S. 11,829,518 Head-worn Device with Connection Region U.S. ZL200510067143.5 Radiation Detection System for Eyewear and Other Products China Additionally, we have acquired the exclusive rights to 11 registered trademarks and applications as follows: Trademark Trademark Number Status Jurisdiction LUCYD UK00003258030 Registered UK Lucyd Lens UK00003258093 Registered UK Lucyd Loud UK00003400531 Registered UK Upgrade your eyewear UK00003400579 Registered UK GaaS UK00003451728 Registered UK Vyrb UK00003477240 Registered UK Lyte UK00003526151 Registered UK Upgrade your eyewear 90407646 Registered US LUCYD 90407723 Registered US Lyte 90381051 Registered US Vyrb 90820713 Pending US LUCYD LOUD 18845889 Pending EU LUCYD 18846419 Examination EU LUCYD UK00003886937 Registered UK LUCYD International Reg. No. 1738602 Examination Mexico LUCYD International Reg. No. 1738602 Examination Canada LUCYD International Reg. No. 1738602 Examination Japan 14 Material Agreements License Agreement between Innovative Eyewear, Inc. and Lucyd Ltd. On April 1, 2020, we entered into an exclusive, worldwide license agreement with Lucyd Ltd. for all fields of use of the Lucyd ® brand, and the associated intellectual property and assets (the “License Agreement”). We were founded by Lucyd Ltd., the inventor and licensor of the technology that our products are based upon, which is a portfolio company of Tekcapital, one of our largest stockholders. The License Agreement is a royalty-free, fully paid up, perpetual license, for the exclusive use of the following assets: 1. All Lucyd intellectual property, including, all patents, patent applications and any continuations of such. 2. All Lucyd trademarks. 3. All Lucyd collateral material, artwork, subscriber lists, eyeglass model and frame shots and renders, as well as 3D models. 4. All Lucyd logos such as, but not limited to: Lucyd ® word mark, Lucyd Hexagon, Upgrade Your Eyewear ® slogan and the Vyrb ® trademark. 5. All Lucyd company developed software and any new software developed by Innovative Eyewear, utilizing the Lucyd software, will be owned by Innovative Eyewear. 6. Lucyd Store portals through Shopify, Amazon and Walmart. 7. Relevant websites domain names including Lucyd.co, Lucyd.net, Lucyd.eu. 8. All supply and endorsement agreements. 9. All current inventory as of the execution date of license. 10. All social media accounts under the Lucyd name, including, but not limited to: Twitter, Facebook and Instagram. 11. All advertising material and trade show displays, brochures and related materials. Under the terms of the License Agreement, we have the exclusive right to effectuate sublicenses, either exclusively or non-exclusively, to any or all of our licensed intellectual property, at its sole discretion. Upon execution of the License Agreement, we paid Lucyd Ltd. £1 for the life of the licensed assets, and the License Agreement shall continue in perpetuity, unless terminated according to the terms of the agreement. Additionally, we issued 3,750,000 shares of our common stock (187,500 shares on a post-reverse-split basis) to Lucyd Ltd. as compensation for entering into the License Agreement and for the contribution of certain other assets. Lucyd Ltd. may terminate the license with immediate effect by providing written notice to us if, among other things: we commit a material breach, as such is defined by the terms of the agreement; or, if we suspend, or threaten to suspend, payment of our debts or are unable to pay our debts. The License Agreement requires us to indemnify Lucyd against all liabilities, costs, expenses, damages, and losses (including but not limited to any direct, indirect or consequential losses, loss of profit, loss of reputation and all interest, penalties, and legal costs (calculated on a full indemnity basis) and all other reasonable professional costs and expenses) suffered or incurred by Lucyd Ltd. arising out of or in connection with actual or alleged infringement of third party intellectual property rights; our breach or non-performance of or the enforcement of License Agreement. We have the right to sublicense any of our rights under the License Agreement, provided that any sublicense also shall enter into a supplemental agreement satisfactory to Lucyd Ltd. On October 5, 2021, the parties to the License Agreement executed an Addendum, to the exclusive license agreement, which clarified that Innovative Eyewear shall commercialize, continue with any on-going intellectual property prosecutions and pay all maintenance or other patent fees (the “Addendum”). For all new intellectual property, Innovative Eyewear will own and control it and be responsible for all prosecution and maintenance costs. The Addendum also confirms that Innovative Eyewear issued Lucyd Ltd. 3,750,000 shares of its common stock (187,500 shares on a post-reverse-split basis) as consideration for the license. 15 Cobranded License Agreements On September 28, 2022, we entered into a multi-year global licensing agreement with Nautica Apparel, Inc., which became effective July 1, 2022. Pursuant to this agreement, we received a license to utilize the global lifestyle brand Nautica ® for our smart eyewear products. We launched the first line of cobranded Nautica ® Powered by Lucyd sport lifestyle audio glasses in January 2024. On December 23, 2022, we entered into a multi-year global licensing agreement with Authentic Brands Group, which became effective October 1, 2022. Pursuant to this agreement, we received a license to utilize the outdoor brand Eddie Bauer ® for our smart eyewear products. We launched the first line of cobranded line of Eddie Bauer ® Powered by Lucyd smartglasses in April 2024. On June 12, 2023, we entered into a multi-year global licensing agreement with Authentic Brands Group, which became effective April 1, 2023. Pursuant to this agreement, we received a license to utilize received a license to utilize the iconic athletic brand Reebok ® for our smart eyewear products. We plan to launch a cobranded line of Reebok ® Powered by Lucyd sport smartglasses in the second quarter of 2025. The aforementioned agreements require us to pay royalties based on a percentage of net retail and wholesale sales, and also require guaranteed minimum royalty payments. The agreements have base terms of 10 years but are cancellable at our option during the fifth year. Sales Representation Agreement On March 4, 2021, we entered into a commission-only, sale representation agreement with D. Landstrom Associates, Inc. for prospecting wholesale relationships with Walmart, Target, and Best Buy stores in the United States. This agreement provides for D. Landstrom to act as our commission-based manufacturer’s representative, with the exclusive right to solicit offers on behalf of us to purchase our products in the United States, for the named big box stores. The term of the agreement is five years, and the contract may be terminated for “good cause” with 90 days’ notice by either party. Upon termination, commissions of orders procured will extend 180 days beyond the termination date. Thus far, this representation agreement has resulted in a successful launch of the Company’s products on BestBuy.com. Distribution Agreement On April 1, 2024, we entered into a distribution agreement with Windsor Eyes Inc., which granted Windsor Eyes the non-exclusive right to distribute our products to optical retail chains in the United States. The term of the agreement is one year, and the Company intends to renew the relationship, as we are working together on securing major retail distribution. The pricing structure and payment for any products sold under this agreement shall be mutually agreed upon by Windsor Eyes and the Company prior to commencement of any specific order. Proprietary Software Sharpens our Competitive Edge In April 2023, we introduced a major software upgrade for our glasses with the launch of the Lucyd app for iOS and Android. This free application enables the user to converse with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful AI assistants in a hands-free ergonomic interface. The app deploys unique Siri integration with the Open AI API for ChatGPT, which was developed internally by the Company and for which we have filed a patent application related to this software. The Lucyd app is a simple and powerful app that provides significant new AI functionality to our glasses at no additional cost to the user, differentiating our products from other smart eyewear. The app also sports a powerful visual interface for interacting with ChatGPT in a variety of ways. In July 2024, we launched a new feature called “Walkie” for the Lucyd app, which enables thousands of users to join each other on walkie-talkie style communication channels. This feature was designed with our recently-launched Lucyd Armor smart safety glass product in mind, to enable coworking teams to communicate freely on smart eyewear. We plan to launch more new features for the Lucyd app in the future, such as an audio equalizer enabling the user to optimize sound output for different types of content such as calls and podcasts, a “Find My Glasses” feature, and touch control customizations. 16 Although we plan to continue to provide the app for free to glasses customers, during the second quarter of 2024 we also added a “Pro” version of the app, which provides unlimited ChatGPT interactions and priority tech support for a modest monthly or annual fee. This is a new revenue stream for our business, and represents our first diversification in product revenue from frames and lenses. We believe this may also potentially allow us to capture revenue from users of other hearables such as Apple Airpods that want an audio interface for ChatGPT. Employees As of December 31, 2024, we had 11 full time employees, spread over business development, marketing, finance, sales, app design, support, and frame design. Our employees are supported by numerous consultants, contractors, independent sales representatives, and third-party service providers. Other Information Our official Internet website is www.lucyd.co, through which we make available free of charge our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission (the “SEC”). Alternatively, you may also access our reports at the SEC’s website at www.sec.gov.