Innovative Eyewear Inc
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
LUCY$0.83+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001829126-24-003302
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001829126-24-005415
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 100 previous paragraphs and 152 current paragraphs.
57 unchanged; 30 reworded; 54 added; 13 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (54)
Current report
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.
Current report
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.
Current report
Software and Apps
Current report
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.
Current report
In July 2024, we launched a new feature called “Walkie” for the Lucyd app, which enables thousands of users to join each other on walkie-talkie style communication channels. This feature was designed with the upcoming smart safety glass product in mind, to enable coworking teams to communicate freely on smart eyewear. We plan to launch more new features for the Lucyd app in the future, such as an audio equalizer enabling the user to optimize sound output for different types of content such as calls and podcasts, a “Find My Glasses” feature, and touch control customizations.
Current report
We believe these developments make our Lucyd eyewear perhaps thesmartest smartglasses available today, and represent a significant marketing opportunity for our core smartglass products.
Current report
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.
Current report
Results of Operations – Quarterly
Current report
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).
Current report
For the three months ended June 30, 2023, approximately 32% of sales were processed on our online store (Lucyd.co), 36% on Amazon, and 32% with reseller partners. For the three months ended June 30, 2023, we generated $139,144 of revenue from sales of non-prescription frames and accessories, and $30,784 from sales of frames with prescription lenses. All of the $62,212 in sales generated on Amazon.com during the 2023 period were for non-prescription frames and accessories as we only offer prescription lenses through our website. Of the $52,389 in online sales generated through Lucyd.co, $30,784 was related to frames with prescription lenses and $21,605 was related to glasses with non-prescription lenses.
Current report
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.
Current report
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.
Current report
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; commissions, affiliate referral fees, and e-commerce platform fees of $27,205; shipping and logistics costs of $24,754; and inventory adjustment credits of $(13,990). Out of our total cost of goods sold for the current quarter of $253,506, $54,714 related to orders with prescription lenses, while $198,792 pertained to non-prescription orders. We anticipate that our cost of goods sold will improve in future periods as new products (i.e., Lucyd Armor and Reebok® Powered by Lucyd) from a new supplier are launched in the fourth quarter of 2024, as the frames for these product lines are designed for shorter wear periods, and accordingly have fewer components, thus reducing their price. We estimate that the unit cost of these new product lines will be at least 30% lower than our Lucyd Lyte models.
Current report
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.
Current report
Gross Profit (Deficit)
Current report
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).
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
From a long-term perspective, while we expect that sales and marketing expenses will scale up to some degree as our revenue increases, we anticipate that such increases in sales and marketing expenses will be mitigated somewhat by our planned focus on growing the wholesale optical channel, which, due to the nature of that channel, inherently does not require costly marketing campaigns to acquire each customer and as a result typically carries a lower marketing cost per unit sold. Additionally, we generally expect that a retailer who is successful with our products will reorder in large quantities, also without significant marketing expenditure.
Current report
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.
Current report
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.
Current report
Results of Operations – Year to Date
Current report
Revenues
Current report
For the six months ended June 30, 2024, approximately 63% of sales were processed on our online store (Lucyd.co), 28% on Amazon.com, and 9% with reseller partners. This sales channel mix positively impacted our revenue for the current six months as compared with the prior year six months, due to the fact we charge an additional $35 to $275 for our prescription lenses available only on Lucyd.co. For the six months ended June 30, 2024, we generated an aggregate of $500,287 of revenue from sales of non-prescription frames and accessories, and $191,866 from sale of frames with prescription lenses. All of the $190,260 in sales generated on Amazon.com during the current six months were for non-prescription frames and accessories, as we only offer prescription lenses through our website. Of the $438,441 in online sales generated through Lucyd.co, $191,866 was related to frames with prescription lenses and $246,575 was related to glasses with non-prescription lenses. E-commerce sales remain to be the most material portion of our sales to date; however, out of all of our sales channels, we believe that the wholesale optical channel represents the most promising opportunity for growth. 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.
Current report
Cost of Goods Sold
Current report
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.
Current report
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.
Current report
Cost of goods sold for the six months ended June 30, 2024 notably included, but was not limited to, the cost of frames of $345,001; cost of prescription lenses incurred with our third-party vendor of $157,782; commissions, affiliate referral fees, and e-commerce platform fees of $70,031; shipping and logistics costs of $40,668; and product certification costs of $29,100. Out of our total cost of goods sold for the current six months of $630,026, $157,782 related to orders with prescription lenses, while $472,244 pertained to non-prescription orders. We anticipate that our cost of goods sold will improve in future periods as new products (i.e., Lucyd Armor and Reebok® Powered by Lucyd) from a new supplier are launched in the fourth quarter of 2024, as the frames for these product lines are designed for shorter wear periods, and accordingly have fewer components, thus reducing their price. We estimate that the unit cost of these new product lines will be at least 30% lower than our Lucyd Lyte models.
Current report
Gross Profit (Deficit)
Current report
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.
Current report
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.
Current report
Operating Expenses
Current report
General and administrative expenses
Current report
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.
Current report
Sales and marketing expenses
Current report
Our sales and marketing expenses increased by 204% to $1,103,728 for the six months ended June 30, 2024, as compared to $362,940 for the six months ended June 30, 2023. This year-over-year increase is primarily attributable to the combination of the following main drivers:
Current report
From a long-term perspective, while we expect that sales and marketing expenses will scale up to some degree as our revenue increases, we anticipate that such increases in sales and marketing expenses will be mitigated somewhat by our planned focus on growing the wholesale optical channel, which, due to the nature of that channel, inherently does not require costly marketing campaigns to acquire each customer and as a result typically carries a lower marketing cost per unit sold. Additionally, we generally expect that a retailer who is successful with our products will reorder in large quantities, also without significant marketing expenditure
Current report
Research and development costs
Showing the first 40 of 54 passages. Open the source sections for the rest.
Removed paragraphs (13)
Previous report
Apps
Previous report
The Vyrb app launched in open beta on iOS and Android app stores in 2021, as the Company’s first social media platform.
Previous report
In 2022, we introduced key features in the Vyrb app, including live broadcasts for up to 100 users in one digital “room,” and the ability to upload external audio content into Vyrb, enabling longstanding content creators to import their existing libraries swiftly into the platform.
Previous report
In the first quarter of 2023, we introduced several new features for the Vyrb app, including market-leading audio accessibility features for social media, such as the ability to create and listen to a feed of audio content completely hands-free, using unique voice assistant commands created for the app. We plan to continue to develop the expansive Vyrb platform into a feature-rich social toolbox for customers. This includes the introduction of revenue-generating features such as native ads and in-app upgrades, as well as gamification features such as a points and rewards system.
Previous report
Additional new features for the Vyrb app are planned to launch in 2024, including a fully upgraded user interface. Once this update to the interface is completed, the app will be considered officially launched, and the Company will begin to promote it and capitalize on it in earnest.
Previous report
Results of Operations
Previous report
Cost of goods sold for the three months ended March 31, 2023 included the cost of frames of $73,798; cost of prescription lenses incurred with our third-party vendor of $22,123; commissions, affiliate referral fees, and e-commerce platform fees of $18,696; shipping and logistics costs of $8,313; and quality assurance costs related to our products sold of $11,700. Out of $134,630 of our total cost of goods sold for the three months ended March 31, 2023, $22,123 related to orders with prescription lenses, while $112,507 pertained to non-prescription orders. Also, during the current quarter we incurred approximately $29,000 of product certification costs to support the expansion of our product sales in jurisdictions outside the U.S.
Previous report
Gross Profit
Previous report
Also, during the current quarter we incurred approximately $29,000 of product certification costs to support the expansion of our product sales in jurisdictions outside the U.S.
Previous report
Our sales and marketing expenses increased by 155% to $661,295 for the three months ended March 31, 2024, as compared to $259,297 for the three months ended March 31, 2023. This year-over-year increase is primarily attributable to the restructuring of our e-commerce business during the prior year quarter, during which we temporarily paused and postponed our marketing spending, and management made a tactical decision to preserve a significant portion of our marketing budget for later in the year, in order to better align the timing of marketing spending with major new product launches and thus maximize impact. In the latter portion of 2023 and continuing through the current quarter, we have significantly increased our advertising and marketing efforts, particularly in the areas of spending on paid ads on websites and social media platforms, in order to drive growth in our revenues and market share.
Previous report
Total other income (expense), net in the three months ended March 31, 2023 was $(1,863), and was primarily comprised of interest expense on financing from a related party in the form of borrowings under a convertible note, which was repaid in full during the prior year quarter.
Previous report
Net cash flows used in financing activities for the three months ended March 31, 2024 are mainly driven by the payment to Tekcapital and affiliates for services provided under related party agreements.
Previous report
Registered Direct Offering
Reworded paragraphs (30)
Previous wording
tem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Current wording
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous wording
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.
Current wording
Our flagship product, Lucyd Lyte®, enables the wearer to listen to music, take and make calls, and use voice assistants and ChatGPT to perform many common smartphone tasks hands-free. Notably, by the end of 2024 the Company anticipates completing its mission to introduce a smart upgrade for all four of the major types of eyewear: prescription eyeglasses, ready-to-wear sunglasses, safety glasses, and sport glasses. We believe this will expand our customer base significantly by having a large eyeglass and sunglass offering that better aligns with the needs of optical retailers. To date, most Lucyd products have been designed for sunglass use, so adding styles designed specifically for indoor eyeglass use has the opportunity to attract a much larger customer base and more optical retail partners. Additionally, the Lucyd Armor and Reebok® Powered by Lucyd frames will align with the style and performance needs of safety and sport eyewear users respectively, for which we have not previously had a suitable product offering.
Previous wording
In January 2021, we officially launched our first commercial product, Lucyd Lyte. This initial product offering embodied our goal of creating smart eyewear for all day wear that looks like and is priced similarly to designer eyewear, but is also lightweight and comfortable, and enables the wearer to remain connected to their digital lives. The product was initially launched with six styles, and in September 2021, an additional six styles were added.
Current wording
In January 2021, we officially launched our first commercial product, Lucyd Lyte. This initial product offering embodied our goal of creating smart eyewear for all-day wear that looks like and is priced similarly to designer eyewear, but is also lightweight and comfortable, and enables the wearer to remain connected to their digital lives. The product was initially launched with six styles, and in September 2021, an additional six styles were added, including the Company’s first titanium-front smart eyewear. A final four styles were added to this collection in 2022, including the Company’s first matte finish and tortoise style models, along with improvements to hinge design.
Previous wording
In January 2024, we launched the Nautica® Powered by Lucyd smart eyewear collection in eight different styles, along with various branded accessories including a power brick, cleaning cloth, and a slipcase adorned with the iconic Nautica sail logo. We anticipate launching the Eddie Bauer® Powered by Lucyd and Reebok® Powered by Lucyd smart eyewear collections later in 2024.
Current wording
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.
Previous wording
Our current product offering consists of 29 different models, which offers a similar amount of style variety as many traditional eyewear collections. All styles are each available with 80+ different lens types, resulting in thousands of variations of products currently available. The Company currently has over 100 licensed patents and applications.
Current wording
Our current product offering consists of 33 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. All styles are available with 80+ different lens types, resulting in thousands of variations of products currently available. The Company currently has over 100 licensed patents and applications.
Previous wording
Since the launch of Lucyd Lyte, we have witnessed interest and demand from customers throughout the United States and have sold thousands of our smart glasses. Within six months of the launch of Lucyd Lyte, several optical stores in the United States and Canada have on-boarded the product and we have had discussions with several other large eyewear chains regarding on-boarding our product. 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.
Current wording
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 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.
Previous wording
In April 2023, we introduced another major software upgrade for our glasses with the launch of the Lucyd app for iOS and Android. This free application enables the user to converse with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful AI assistants in a hands-free ergonomic interface. The app deploys a powerful and unique Siri integration with the Open AI API for ChatGPT, developed internally by the Company. The Company has filed a patent application related to this software upgrade. We believe this development makes our Lucyd eyewear perhaps the smartest smartglasses available today, and represents a significant marketing opportunity for the Company’s core smartglass product. In addition, the Company plans to launch new features for the Lucyd app in 2024, including a paid “Pro” version of the app, which will provide another potential incremental revenue stream for the Company from glasses customers.
Current wording
In April 2023, we introduced a major software upgrade for our glasses with the launch of the Lucyd app for iOS and Android. This free application enables the user to converse with the extremely popular ChatGPT AI language model on our glasses, to instantly gain the benefit of one of the world’s most powerful AI assistants in a hands-free ergonomic interface. The app deploys a powerful and unique Siri integration with the Open AI API for ChatGPT, developed internally by the Company. The Company has filed a patent application related to this software.
Previous wording
In addition to sustained growth of our e-commerce business, our future revenues are correlated positively with our placement of Lucyd glasses in optical stores, as well as sporting goods stores and other specialty stores. To address this, we have assembled a team with decades of experience in the eyewear industry and are offering a strong co-op marketing program and reordering incentives program. We currently offer an expansive line of 29 different styles and several accessories, and are in the process of expanding our product offerings to include cobranded eyewear with well-known brands like Nautica, Eddie Bauer, and Reebok. In total, the Company expects to offer 38 total smart eyewear SKUs across these brands and Lucyd by the end of 2024.
Current wording
In addition to sustained growth of our e-commerce business, we believe our future revenues are correlated positively with our placement of Lucyd glasses in optical stores, as well as sporting goods stores and other specialty stores. To support this growth, we have partnered with Windsor Eyes as our premier distributor for the optical market. Windsor Eyes brings decades of experience in the eyewear industry and a team of experienced, professional eyewear sales reps. In July 2024, they have just started to market our frames, and have already introduced our frames into three new eyewear retailers. We currently offer an expansive line of 33 different styles and several accessories (including our co-branded product offerings with Nautica and Eddie Bauer), and are in the process of expanding our product offerings to include co-branded eyewear with other well-known brands like Reebok. In total, the Company expects to offer 38 total smart eyewear models by the end of 2024.
Previous wording
Our ability to sustain and increase revenue is correlated positively with our ability to receive re-orders from stores, either directly or through our wholesale distributors. To support our sales to retail stores directly, we offer a strong co-op marketing program that includes free and paid store display materials. As part of this strategy, we have launched a new modular display system with engaging video screens and audio testing capabilities for our resellers to help educate their in-store customers about Lucyd Lyte and enable customers to try them on. This proprietary display system is central to our efforts to introduce traditional retail customers to Lucyd eyewear, and we are planning further enhancements to our merchandising displays to enable more immersive experiences. Additionally, we consistently incorporate retail partner feedback directly into our frames to better serve our end users. As of March 31, 2024, 45 display systems have been deployed so far to retailers.
Current wording
As part of this strategy, we have launched a new modular display system with engaging video screens and audio testing capabilities for our resellers to help educate their in-store customers about Lucyd Lyte and enable customers to try them on. This proprietary display system is central to our efforts to introduce traditional retail customers to Lucyd eyewear, and we are planning further enhancements to our merchandising displays to enable more immersive experiences. 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.
Previous wording
Our newest flagship Lucyd Lyte XL brand frames are priced at $179 on acetate models and $199 on titanium models for non-prescription glasses across all of our online channels. When adding a prescription lens upgrade to our glasses on the Lucyd.co website, the price can increase from between $40 for a basic clear prescription lens, all the way up to $449 for our proprietary Blueshift transitional blue light lenses in a progressive high index (ultra-thin) format. Glasses with prescription lenses are provided by the Company through our website Lucyd.co, while our sales through Amazon and to our e-commerce partners only include non-prescription glasses (with rare exceptions, such as a reseller ordering a customized unit for display purposes).
Current wording
When adding a prescription lens upgrade to our glasses on the Lucyd.co website, the price can increase from between $40 for a basic clear prescription lens, all the way up to $449 for our proprietary Blueshift transitional blue light lenses in a progressive high index (ultra-thin) format. Glasses with prescription lenses are provided by the Company through our website Lucyd.co, while our sales through Amazon and to our retail partners only include non-prescription glasses (with rare exceptions, such as a reseller ordering a customized unit for display purposes). Lens customizations remain an important product differentiator and upselling opportunity.
Previous wording
Wholesale revenue decreased approximately 72% from the prior year quarter, largely driven by a change in our focus from small, independent retailers to major national retailers, the latter of which have slower product approval and purchasing cycles. However, we believe that focusing on introducing our product in major national retailers will have a significant positive impact on the Company’s revenues in the next 6-24 months.
Current wording
Wholesale revenue decreased approximately 8% from the prior year quarter, largely driven by a change in our focus from small, independent retailers to major national retailers, the latter of which have slower product approval and purchasing cycles. However, we believe that focusing on introducing our product in major national retailers will have a significant positive impact on the Company’s revenues in the next 3 to 21 months.
Previous wording
For the three months ended March 31, 2024, approximately 67% of sales were processed on our online store (Lucyd.co), 29% on Amazon.com, and 4% with reseller partners. 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 March 31, 2024, we generated an aggregate of $272,742 of revenue from sales of non-prescription frames and accessories, and $110,729 from sale of frames with prescription lenses. All of the $113,619 in sales generated on Amazon.com during the current quarter were for non-prescription frames and accessories, as we only offer prescription lenses through our website. Of the $255,920 in online sales generated through Lucyd.co, $110,729 was related to frames with prescription lenses and $145,191 was related to glasses with non-prescription lenses. E-commerce sales remain to be the most material portion of our sales to date.
Current wording
For the three months ended June 30, 2024, approximately 59% of sales were processed on our online store (Lucyd.co), 25% on Amazon.com, and 16% with reseller partners. This sales channel mix positively impacted our revenue for the current quarter as compared with the prior year quarter, due to the fact we charge an additional $35 to $275 for our prescription lenses available only on Lucyd.co. For the three months ended June 30, 2024, we generated an aggregate of $227,545 of revenue from sales of non-prescription frames and accessories, and $81,137 from sale of frames with prescription lenses. All of the $76,641 in sales generated on Amazon.com during the current quarter were for non-prescription frames and accessories, as we only offer prescription lenses through our website. Of the $182,521 in online sales generated through Lucyd.co, $81,137 was related to frames with prescription lenses and $101,384 was related to glasses with non-prescription lenses. E-commerce sales remain to be the most material portion of our sales to date; however, out of all of our sales channels, we believe that the wholesale optical channel represents the most promising opportunity for growth. We anticipate that as smart eyewear becomes more normalized for prescription wear, major national eye care providers will begin to onboard smart eyewear products, and we believe we are the value leader in that sector.
Previous wording
Our total cost of goods sold increased to $376,520 for the three months ended March 31, 2024, as compared to $134,630 for the prior year quarter. This year-over-year increase of 180% was primarily driven by higher sales volumes during the current quarter as compared with the prior year quarter. Cost of frames increased by approximately 150% from the prior year quarter, which was generally in-line with (although slightly lower than) the increase in net sales from the prior year quarter, both proportionally and on an absolute dollar basis.
Current wording
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.
Previous wording
Our gross profit for the current quarter was $6,951, as compared to $10,291 for the prior year quarter. Our gross margin was 2% and 7% in the current quarter and prior year quarter, respectively.
Current wording
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.
Previous wording
Our operating expenses increased by 40% to $2,021,542 for the three months ended March 31, 2024, as compared to $1,439,238 for the three months ended March 31, 2023. 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:
Current wording
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:
Previous wording
Our related party management fee was $35,000 for each of the three months ended March 31, 2024 and 2023, based on the terms of the management services agreement between us and Tekcapital.
Current wording
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.
Previous wording
Our revenues for the three months ended March 31, 2024 were $383,471, representing an increase of 165% as compared to revenues of $144,921 during the three months ended March 31, 2023. The increase in revenue was primarily attributable to significant growth in the e-commerce channel, largely driven by our significant investments in advertising and marketing initiatives during the latter portion of 2023 and through the current quarter, combined with recent new product launches (including the Lyte XL and Nautica® Powered by Lucyd collections). Net sales through our Lucyd.co website and Amazon.com grew by more than 400% and over 150%, respectively, from the prior year quarter. This growth in e-commerce sales was partially offset by significant price discounts granted in the current quarter, in order to respond to aggressive discounts offered by key competing products, and to support our continued market share growth.
Current wording
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).
Previous wording
For the three months ended March 31, 2023, approximately 35% of sales were processed on our online store (Lucyd.co), 31% on Amazon.com, and 34% with reseller partners. For the three months ended March 31, 2023, we generated $33,350 of revenue from sales of non-prescription frames and accessories and $16,918 was generated from sales of frames with prescription lenses. All of the $45,045 in sales generated on Amazon.com during the period were for non-prescription frames and accessories as we only offer prescription lenses through our website. Of the $50,268 in online sales generated through Lucyd.co, $16,918 related to frames with prescription lenses and $33,350 of glasses sold were with non-prescription lenses.
Current wording
For the six months ended June 30, 2023, approximately 33% of sales were processed on our online store (Lucyd.co), 34% on Amazon, and 33% with reseller partners. For the six months ended June 30, 2023, we generated $265,689 of revenue from sales of non-prescription frames and accessories, and $47,702 from sales of frames with prescription lenses. All of the $107,257 in sales generated on Amazon.com during the period were for non-prescription frames and accessories as we only offer prescription lenses through our website. Of the $102,657 in online sales generated through Lucyd.co, $47,702 was related to frames with prescription lenses and $54,955 was related to glasses with non-prescription lenses.
Previous wording
Cost of lenses increased by more than 300% from the prior year quarter, mainly driven by the combination of (i) the introduction of our new proprietary Blueshift premium lenses in August 2023, which are more expensive than other lenses to produce, and (ii) sales channel mix, as a higher relative proportion of our sales in the current quarter were through our online store (Lucyd.co), and the cost of prescription lenses attributable to this channel increased our cost of goods sold while not impacting cost of goods sold for sales realized through Amazon or retail store partners.
Current wording
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.
Previous wording
Cost of goods sold for the three months ended March 31, 2024 included but was not limited to the cost of frames of $184,978; cost of prescription lenses incurred with our third-party vendor of $103,069; commissions, affiliate referral fees, and e-commerce platform fees of $42,826; shipping and logistics costs of $15,914; and quality assurance costs related to our products sold of $4,238. Out of $376,520 of our total cost of goods sold for the current quarter, $103,069 related to orders with prescription lenses, while $273,451 pertained to non-prescription orders.
Current wording
Cost of goods sold for the six months ended June 30, 2023 notably included, but was not limited to, the cost of frames of $136,303; cost of prescription lenses incurred with our third-party vendor of $55,215; commissions, affiliate referral fees, and e-commerce platform fees of $67,382; custom duties and importation fees of $44,295; and quality assurance costs related to our products sold of $11,700. Out of $334,375 of our total cost of goods sold for the six months ended June 30, 2023, $55,215 related to orders with prescription lenses, while $279,159 pertained to non-prescription orders.
Previous wording
We anticipate further growth in sales in 2024. We also expect corresponding growth in total cost of goods sold, primarily from additional product related costs. As we continue to refine our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles. 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 been informed by key suppliers that significant price reductions over 10% are possible as we continue to scale our production quantities.
Current wording
We anticipate further growth in sales in 2024, along with corresponding growth in total cost of goods sold, primarily from additional product related costs. As we continue to refine our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles. We have also launched new Lucyd Shift and Lucyd Blueshift transitional lenses in place of branded third-party transitional lenses, offering similar functionality for a lower cost of goods, while also enabling a slightly lower cost to the customer. Additionally, we have recently engaged a new local lens supplier based in Miami, Florida, starting in July 2024, which should significantly reduce our cost of lens fulfilment costs across the board starting the third quarter of 2024, by as much as 40% per prescription order.
Previous wording
This decline in gross profit and gross margin was primarily attributable to the aforementioned increase in the cost of lenses. While we have started to realize some economies of scale in the cost of frames, and in the area of shipping and logistics, the cost of prescription lenses has grown disproportionately and significantly more than our revenue, which has had a significant negative impact on our gross profit margin. Prescription smart eyewear offered direct-to-consumer has been a key unique selling point used to attract new customers, bringing an important marketing benefit since it is not offered by most of our competitors. We are working with our current prescription lens provider to explore opportunities to reduce costs and we are also actively in discussions with alternative prescription lens suppliers whom we believe may help further lower our lens fulfilment costs. Ultimately, we believe that the majority of our business will come from frame sales to distributors and eyewear retailers, who will outfit lenses themselves for the final customer. We anticipate that the launches of more co-branded products later this year will help us progress towards our long-term goal of shifting our sale mix over time more towards the wholesale channel, which carries higher margins for us as such sales to our third-party retail store partners do not include the cost of prescription lenses.
Current wording
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.
Previous wording
Our general and administrative expenses increased by 12% to $1,108,946 for the three months ended March 31, 2024, as compared to $993,772 for the prior year quarter. This increase was largely driven by the combination of (i) additional team members, (ii) the cost of various licensing agreements we have entered into in order to support our co-branding initiatives and expand our patent portfolio, which are assessed annually in January, and (iii) higher legal expenses. We expect our general and administrative expenses to be lower in future quarters due to certain one-time fees this quarter.
Current wording
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.
Previous wording
Our research and development costs increased by 43% to $216,301 for the three months ended March 31, 2024, as compared to $151,169 for the three months ended March 31, 2023.
Current wording
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.
Previous wording
This increase was primarily attributable to additional resources added to the team for app development, and new mold costs associated with the creation of the safety and sport (Reebok) product format.
Current wording
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.
Previous wording
Total other income (expense), net in the three months ended March 31, 2024 was $43,280. 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.
Current wording
Total other income (expense), net in the six months ended June 30, 2024 was $69,239. This amount was primarily comprised of dividends from our investments in money market funds, and, to a lesser extent, interest income earned on a short-term loan to a related party.
Previous wording
Net cash flows used in operating activities for the three months ended March 31, 2024 are primarily reflective of our net loss for the period, resulting from our operating costs to support and grow our business, including employee-related costs, sales and marketing, and research and development.
Current wording
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.
Previous wording
Net cash flows used in investing activities for the three months ended March 31, 2024 are mainly related to the continuing growth and expansion of our patent portfolio.
Current wording
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.
Previous wording
On May 1, 2024, the Company closed on a registered direct offering of 4,200,822 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 4,200,822 shares of common stock at an exercise price of $0.244 per share, for a combined purchase price per share and warrant of $0.244. In exchange, the Company received approximately $1.0 million of gross proceeds, before deducting placement agent fees and expenses. In addition, the Company issued to the placement agent warrants to purchase up to 315,062 shares of common stock at an exercise price of $0.305 per share. The net proceeds received by the Company from this transaction amounted to approximately $732,000. We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.
Current wording
On May 1, 2024, the Company closed on a registered direct offering of 210,043 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 210,043 shares of common stock at an exercise price of $4.88 per share, for a combined purchase price per share and warrant of $4.88. In exchange, the Company received approximately $1.0 million of gross proceeds, before deducting underwriting discounts and offering expenses. In addition, the Company issued to the placement agent warrants to purchase up to 15,754 shares of common stock at an exercise price of $6.10 per share. The net proceeds received by the Company from this transaction amounted to approximately $0.8 million. We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.
Previous wording
We expect that operating losses could continue in the foreseeable future as we continue to invest in the expansion and development of our business. We believe our existing cash and cash equivalents (including the proceeds from the aforementioned May 2024 registered direct offering), plus planned future sales of our common stock through our at-the-market offering facility, and the availability to borrow funds through the March 2024 related party agreement with Lucyd Ltd., will be sufficient to fund our operations for at least the next twelve months.
Current wording
We expect that operating losses could continue in the foreseeable future as we continue to invest in the expansion and development of our business. We believe our existing cash and cash equivalents (including the proceeds from the equity offerings described above), plus the availability to borrow funds via the March 2024 related party agreement with Lucyd Ltd., will be sufficient to fund our operations for at least the next twelve months.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Our ability to sustain and increase revenue is correlated positively with our ability to receive re-orders from stores, either directly or through our wholesale distributors. To support our sales to retail stores directly, we offer a strong co-op marketing program that includes free and paid store display materials. Additionally, we consistently incorporate retail partner feedback directly into our frames to better serve our end users.
Current report — wording carried from elsewhere
Our flagship Lucyd Lyte XL brand frames are priced at $179 on acetate models and $199 on titanium models for non-prescription glasses across all of our online channels. Our co-branded Nautica® Powered by Lucyd and Eddie Bauer® Powered by Lucyd frames are priced at $199 – $219 and $249 – $299, respectively.
Current report — wording carried from elsewhere
We anticipate further growth in sales in 2024, along with corresponding growth in total cost of goods sold, primarily from additional product related costs. As we continue to refine our product mix with sales data, we anticipate reducing our unit costs by focusing only on the highest volume, market-tested styles. We have also launched new Lucyd Shift and Lucyd Blueshift transitional lenses in place of branded third-party transitional lenses, offering similar functionality for a lower cost of goods, while also enabling a slightly lower cost to the customer. Additionally, we have recently engaged a new local lens supplier based in Miami, Florida, starting in July 2024, which should significantly reduce our cost of lens fulfilment costs across the board starting in the third quarter of 2024, by as much as 40% per prescription order.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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”):
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Wholesale revenue decreased approximately 39% from the prior year six months, largely driven by a change in our focus from small, independent retailers to major national retailers, the latter of which have slower product approval and purchasing cycles. However, we believe that focusing on introducing our product in major national retailers will have a significant positive impact on the Company’s revenues in the next 3 to 21 months.
Current report — wording carried from elsewhere
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:
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
On May 29, 2024, the Company closed on a registered direct offering of 263,159 shares of its common stock and, in a concurrent private placement, warrants to purchase up to 263,159 shares of common stock at an exercise price of $9.50 per share, for a combined purchase price per share and warrant of $9.50. In exchange, the Company received approximately $2.5 million of gross proceeds, before deducting underwriting discounts and offering expenses. In addition, the Company issued to the placement agent warrants to purchase up to 19,737 shares of common stock at an exercise price of $11.876 per share. The net proceeds received by the Company from this transaction amounted to approximately $2.1 million. We intend to use the net proceeds of this offering primarily for working capital and general corporate purposes.