Press release·08/12/2024 22:44:59

Overview

Our mission is to Upgrade Your Eyewear®. We develop and sell cutting-edge smart eyeglasses and sunglasses, which are designed to allow our customers to remain connected to their digital lives, while also offering vision correction and protection. 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.

Products and History

In January 2020, we introduced our first beta product and began market testing. 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.

Over the next few years, we continued to expand our product lineup, introducing new styles and features. In 2023, we launched version 2.0 of our Lucyd Lyte eyewear with 15 different styles, incorporating several key breakthroughs for the smart eyewear product category. We also launched co-branded collections with Nautica and Eddie Bauer.

We anticipate launching the Reebok® Powered by Lucyd smart eyewear collection later in 2024, followed by a Reebok® Optical Smart Eyewear collection in 2025. Our current product offering consists of 33 different models, offering a similar amount of style variety as many traditional eyewear collections.

Software and Apps

In April 2023, we introduced a major software upgrade 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. 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.

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. We have also developed interactive LCD retail fixtures, featuring a new proprietary kiosk app, to provide an immersive onboarding experience for prospective customers in retail stores.

Key Factors Affecting Performance

Expansion of retail points of purchase: 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. We have partnered with Windsor Eyes as our premier distributor for the optical market.

Retail store client retention and re-orders: Our ability to sustain and increase revenue is correlated positively with our ability to receive re-orders from stores. We offer a strong co-op marketing program and consistently incorporate retail partner feedback into our frames.

Investing in business growth: We aim to continuously invest in the design and development of new models to provide consumers with a wide selection of styles, colors, and finishes. We are also expanding our sales, marketing, and brand ambassador teams to broaden our brand awareness and online presence.

Key Performance Indicators

Store Count (B2B): We currently have over 350 retail stores selling Lucyd Lyte primarily in the US and Canada, and expect to expand this significantly in 2024.

Customer Ratings (B2C): The Lucyd Lyte version 2.0 product is receiving higher ratings online compared to our previous products, indicating positive customer feedback.

Number of online orders (B2C): As of June 30, 2024, we had over 20,000 cumulative total orders from customers online since inception.

Components of Results of Operations

Revenues: Our revenue is generated from the sales of prescription and non-prescription optical glasses and sunglasses, and shipping charges. We sell products through our retail store resellers, distributors, our website Lucyd.co, and on Amazon.com.

Cost of Goods Sold: Cost of goods sold includes the costs to acquire materials, assemble, and sell our finished products. This includes product costs, freight, optical laboratory costs, merchant fees, and shipping costs.

Gross Profit and Gross Margin: Gross profit is net revenue less cost of goods sold. Gross margin is gross profit expressed as a percentage of net revenue. We expect gross margins to improve over time as we increase scale and optimize our product mix.

Operating Expenses: Our operating expenses consist primarily of general and administrative, sales and marketing, research and development, and related party management fees.

Interest and Other Income, Net: This includes interest, dividends, and investment returns from our cash and cash equivalents.

Results of Operations – Quarterly

Revenues for the three months ended June 30, 2024 were $308,682, up 82% from $169,929 in the prior year quarter. This was driven by significant growth in e-commerce sales, partially offset by a decrease in wholesale revenue.

Cost of goods sold increased 27% to $253,506, resulting in a gross profit of $55,176 (18% gross margin) compared to a gross deficit of $(29,816) (-18% gross margin) in the prior year quarter. The improvement was due to reduced period costs and inventory adjustments.

Operating expenses increased 56% to $2,029,534, primarily due to higher general and administrative, sales and marketing, and research and development costs. This included a $325,000 release payment to a shareholder.

Net loss for the quarter was $1,948,399 compared to $1,287,802 in the prior year quarter.

Results of Operations – Year to Date

Revenues for the six months ended June 30, 2024 were $692,153, up 120% from $314,850 in the prior year period. This was driven by strong e-commerce growth, partially offset by lower wholesale revenue.

Cost of goods sold increased 88% to $630,026, resulting in a gross profit of $62,127 (9% gross margin) compared to a gross deficit of $(19,525) (-6% gross margin) in the prior year period. The improvement was due to reduced period costs and higher sales volumes.

Operating expenses increased 48% to $4,051,076, primarily due to higher general and administrative, sales and marketing, and research and development costs.

Net loss for the six months was $3,919,710 compared to $2,718,612 in the prior year period.

Liquidity and Capital Resources

As of June 30, 2024, we had $5.9 million in cash and cash equivalents, and $6.8 million in working capital. During the first half of 2024, we raised approximately $5.1 million through at-the-market and registered direct equity offerings to fund our operations and growth initiatives.

We believe our existing cash, plus availability to borrow from a related party, will be sufficient to fund our operations for at least the next 12 months. However, our future capital requirements will depend on the pace of our business growth, and we may need to seek additional financing if current sources prove insufficient.

Subsequent Events – Change in Capital Structure

On July 16, 2024, the company effected a 1-for-20 reverse stock split, reducing the outstanding shares from 28,029,462 to 1,534,858.