Harrison Gross, the CEO of Innovative Eyewear. The format for today will be a management presentation for the first 20 or so minutes, followed by Q&A. We will have a total of 30 minutes. For those of you in the audience who would like to ask a question, please type your question into the Q&A box at the bottom of the Zoom screen and I'll read the questions out loud. With no further delay, Harrison, the floor is yours.
Thanks so much, Anthony, and welcome everyone. I'm excited to share our mission today to upgrade the world's eyewear. Let me pull up a couple slides, and I'll take you guys through everything that we're doing. Our mission is to upgrade the world's eyewear by adding useful technology features to comfortable prescription-ready glasses. We're making the world's most important wearable better by allowing you to use it to stay safely and seamlessly connected to your digital life. We have a significant amount of experience in smart glass R&D. We've actually been developing smart eyewear products all the way back to 2017 in our incubator. Since then, we've launched dozens and dozens of styles of smart glasses, more than any other U.S. company.
We've also got some significant retail partnerships I'll talk through in just a second, and we built one of the largest IP portfolios in smart glasses out there today. We have 110 patents and applications, 70 of those developed by me and my team, and 40 of them licensed from other partners. This is really one of the highest barriers of entry to the smart eyewear market. You need a strong IP position. We have significant retail traction that's picked up in the last two years quite a bit. We're sold through Best Buy and target.com. We're going into 500 new retail doors this quarter, with FYidoctors, the largest eyewear chain in Canada, putting us in 375 stores. We have a new major big box store test coming in October as well. It's going to run through Q4, putting us in another 180 shops.
We have quite a bit of retail traction starting up right now. Historically, we've been very e-commerce heavy, but we're now significantly diversifying our revenues into more brick-and-mortar locations. Which is great because brick-and-mortar is kind of where consumers usually get to try their first smart eyewear, either in their local eye doctor or at a local Walmart or a Costco. That moment of trying smart eyewear is usually the moment of conversion for a lot of people because they immediately see the value and the benefit of what our product does. Let me get into that for a second. Traditional glasses just correct your vision. Our glasses allow you to connect to AI, to speak to Google Gemini, to talk to ChatGPT and Claude as well. We have the first multi-AI smart glasses, something totally unique to us that we really pioneered.
Our glasses are also great for taking phone calls. We have a walkie-talkie feature as well, which is used on tons of job sites around the U.S. already. We also have really powerful translation features, which are excellent for workforce enterprise applications. One interesting thing about our translation feature is it actually works with no internet, so it is really good for travel. We have a lot of exciting features built into the frame, and what makes our products highly disruptive is that they cost the same as regular eyewear. All of our glasses cost between $150 and $250. We are really in the sweet spot of what consumers are already used to paying for traditional frames that do nothing but correct their vision. We are getting a lot of extra value to the customer, at no additional cost.
One interesting thing about smart eyewear is this unique product category that sits at the intersection of fashion accessories, wearable technology, AI platforms, and Bluetooth audio, and it really brings all of these together into one product that is highly functional. We see smart glasses are now emerging as sort of the centerpiece of Internet of Things, and we see smart glasses as kind of like a remote control for all of the other devices and AIs in our lives, and it is really kind of starting to fill that role, especially as voice-based AI agents become more powerful, our glasses become more powerful along with them. We were the first company to pioneer AI access on smart glasses.
Six months after ChatGPT came out in October of 2022, we developed the first voice interface for it that made it more mobile friendly and accessible through our glasses and other wearables. The rest of the smart glass space proceeded to follow us into that concept that smart glasses are really ideally used as an on-ramp into AI platforms. There is something unique about eyewear in that it is always on your face and it is close to your senses, that makes it sort of always available and always at the ready in a way that other technology devices simply are not. Smart glasses are always positioned to be able to hear your voice and to be able to give you audio feedback. That is something that is very unique about them and makes them great for work.
One other thing that is kind of unique about us is we are the first house of brands in smart eyewear. We have global multi-year licenses to several leading fashion brands, Reebok, Nautica, and Eddie Bauer. We have also developed our own Lucyd brand in-house, and this has really helped enable a much more diverse product selection in smart eyewear. We are the only company serving all four major categories of eyewear with a smart eyewear solution. Those four categories are ready-to-wear sunglasses, optical eyeglasses, safety glasses, and sport glasses. Again, we are the only one really delivering a smart solution for every glasses wearer within that. The eyewear market is actually much bigger than you might expect. Just in the U.S., it is about a $68 billion market as eyewear and managed vision care together. Right now, smart glasses only represent maybe 3% of that market.
There's a huge amount of growth ahead of us. We're in the very early days. We're sort of in the iPhone 2, iPhone 3 moment right now, where it's going from concept product to the global standard in eyewear, and that's where we really see it heading in the next few years. One thing I always compare it to is the smartwatch revolution, and the smartwatch revolution. It happened very quickly after the Apple Watch was introduced in 2015. Only five years later, the entire global watch market was flipped, and now the global watch market became the smartwatch market. It had a digital transformation. As of 2020, more smartwatches are sold worldwide than regular watches. That same digital transformation is coming for eyewear.
We've gotten into these form factors that really match what consumers expect out of traditional eyewear, while adding all of this additional utility at no extra cost. This is Lucyd Armor. This is our OSHA-compliant smart safety glass. It's currently our number one product, doing about two-thirds of all of our revenue, and that's because it's addressing serious needs in various workforces. We have EMS teams using them for communication in ambulances. We have oil and gas teams using them for translation across multilingual workforces. A lot of really interesting use cases have emerged in industrial sectors for these glasses, and it's a true power tool upgrade for them. It's like going from a screwdriver to a power drill.
Just going from a regular safety glass to this product that enhances your intelligence with AI, bridges all these communication gaps on your team across languages and across time and space, and really allows teams to work more closely together in a hands-free, heads-up format where they're not touching their walkie all the time or pulling out their phone all the time, but being able to talk to each other freely through their safety glasses. To support that, we have some of the best translation and walkie-talkie features in the game to really bring this product to the next level and make it a true workforce solution. There's a lot coming behind this as well. We're expanding Lucyd Armor. We're going to be adding a camera version for logistics and for inspections.
We're going to be adding a whole enterprise dashboard behind this product in the next year, which is going to allow company management to really control a fleet of smart glasses very closely. For example, if you want to disable the ability to listen to music on them for safety reasons, you'll be able to do that. If you want to be able to collect all of the photos captured on a fleet of glasses in a central repository for inspection or verification, we'll be able to do that, and that's going to be associated with a per-user monthly cost. We're going to go way beyond the original sale of the safety glass and really turn it into a SaaS as well, where we offer all these AI utilities and enterprise utilities on the glasses for a low monthly fee per user.
We are seeing this really cool combined business strategy emerge where we have the original high-margin sale of the smart eyewear frame at about a 65% margin, then incremental revenue from the sale of software utilities on those safety glasses on a monthly subscription. It is a really strong model, and it is very diverse. As part of our overall strategy to divert a little bit from, we have been very e-commerce and direct-to-consumer heavy. We are trying to diversify the business, and offer more solutions for the enterprise sector, and really move more into brick-and-mortar retail as well. We have a really strong, diverse sources of revenue. Moving on to, here are some of our Reebok frames. These have our best audio because we have a little bit of a bigger temple there you can see that allows us to put in much larger speakers.
These frames actually have audio that is better than AirPods, so it sounds more immersive, but it is also open ear. While you are running or cycling or playing golf, you can hear everything around you. It is a really important advantage of our product over traditional earbuds. There are a couple of other advantages as well. Many people do not like to wear earbuds.
They find them uncomfortable. I know after I wear AirPods for a couple of hours, I start to feel it. Also, earbuds are now known to cause advanced hearing loss because it is projecting sound directly into your eardrum. That is something that our product avoids because the speakers are a couple inches outside your ear. This is a really exciting product we have coming out in October called Lucyd Aero. It is going to be the lightest smart eyewear on the market, weighs 24 g.
It looks and feels exactly like normal eyeglasses, and it costs $149, so it costs the same as any normal pair of glasses. What we have done with this collection is we have really, for the first time, eliminated all cost of switching from traditional eyewear to smart eyewear for the consumer. They are truly getting additional value, additional utility at no extra cost, and without compromising the aesthetics or the form factor of the frame. That is why this collection is really the culmination of our last 9 years and $25 million of R&D. We are really excited about this collection. We have already got a couple of partners lined up for it. The optical industry is really excited about it because they love standard earpieces on smart glasses, and they love that the frame is so light and thin, you can really wear it all day.
That has been a big part of our mission, is really making smart eyewear that can truly replace your regular glasses. We are really one of the first to do it, and we are doing it in more styles and sizes than anyone else right now, which is really necessitated by the needs of the optical market.
The Lucyd App is our app for iOS and Android. It is very powerful. It is where all of our smart features lie. We use our app to be able to add new features to the glasses without requiring any firmware updates or any cumbersome upgrades like that. We are able to immediately push new features to all of our users through our app, so it is very powerful. On Android, it is even stronger. On Android, we have immediate flipping between different AI models through the glasses, with their special Android widget that we have developed.
On iPhone, you are also able to switch between different models. Basically, we were the first smart glasses that actually allow you to access multiple AIs. This is something that is really unique about our product, because most of the other smart glasses out there, they want you to use their AI, their walled garden, their little system that they have made that they want you living in. We are meeting the user where they are with whatever tools and whatever platforms and whatever devices they use, and making them easier to access with our glasses. Our glasses, think of them as like an audio interface layer that can sit on top of any system that has Bluetooth capability. That is something that is really unique about what we are doing. Super flexible, super agnostic, allowing our technology to essentially help basically any user.
We do not need you to change to a different AI. You can use the AI you already like. We are just making it easier to access. We have a couple of industry firsts as well, just really speaking to our effort to normalizing smart eyewear. We were actually the first to ever ship a prescription smart glass to a consumer all the way back in 2018. We introduced some of the first smart eyewear for women in youth, first titanium smart glasses, some of the first social app utilities specifically for wearables. All this just speaks to our legacy of innovation in smart eyewear. We also have a couple of community initiatives. We are sustainably minded. All of our frames use 99% post-consumer recycled packaging. We also use 100% carbon neutral shipments.
We are researching the use of bio resins in smart glasses, and we think we may be the first company to produce a bio resin smart glass next year. We also have a couple of initiatives within the company to uplift and empower our employees. All of our full-time staff are shareholders in the company, and that is easy to do when you are a smaller company like us. We are only about 16 full-time people. That has led to zero turnover, extremely dedicated staff. We are all here living every day to make the best possible smart eyewear that we can. This initiative has just led to a very different sort of a company where the employees are really committed to what we are doing. They all really believe in the product. One thing unique about us also is we have built a very diverse team.
Smart glasses are a really unique discipline. It is really its own discipline. It is not just regular eyewear design, it is not just regular Bluetooth design. It is really tying together a lot of different areas of research and expertise to make these products. We have a very unique team that is built of traditional optical professionals and designers, audio and electrical engineers, AI systems integration engineers, and then a really strong marketing team as well, kind of tying it all together and packaging it for the consumer. This is just, again, speaking to the very high barriers of entry to making good smart glasses. You need IP, you need optical people, you need audio people, you need AI people. You just need a very, very strong and diverse team to make market-leading smart glasses, and we built that.
That's why as a small company, we're able to make products that compete with billion-dollar tech giants. We've also gotten a number of press hits. We're in the news pretty often. We've been on Colbert, we've been on the Today Show. Men's Health rated us best smart glasses recently. We were recently, I think in Wired, we were rated a top AI smart glass. So we get a lot of positive coverage on our products, culminating in the Red Dot design award that we received a few months ago on Lucyd Armor. It's the most globally recognized design award, and very proud of my team for having gotten that. Just some quick financial highlights. Things are going fast. Q2 over Q2 is up about 75%. Overall, year-over-year, we're looking at a similar growth trajectory. We did a little under $3 million last year.
We're looking at doing probably about $6 million this year. Smart glass sales are improving. Our acquisition costs are cut in half from a year ago as consumers are now much more aware of the category. We're just seeing a lot of brick and mortar uptake. Just a lot of things that were very, very challenging to impossible to get in earlier years in the smart glass industry and are now kind of becoming more routine, as we see the wider optical and electronics retail industries seriously getting behind the product category in the last two years. We're seeing just a lot of improvement on that side. Smart glasses were really seen as an early adopter niche product until very recently.
I firmly believe that in the next few years, it's going to go mainstream to the point that most people, when they go to buy a new pair of glasses, are going to buy a pair that's enhanced with some form of technology. So that's where we see that market flip coming in the next few years. I think by 2030, 2032, we're going to see that market flip, and most people are going to be buying smart eyewear. So it's a very exciting time in the space. AI is kind of really what kicked off the whole thing, bringing it way beyond just another audio device into really a wearable that augments your capabilities as a person. Literally glasses that, not just smart glasses, but glasses that make you smarter. That's really what we're delivering today. We're shipping thousands of units a month.
We have a lot of dedicated customers that buy six, seven, eight pairs from us and refuse to go back to normal eyewear because they see the value in what we're doing. Thank you so much for listening to the presentation. Exciting times ahead in smart eyewear, and I hope you'll consider joining us on this journey. We'll take any questions you have now.
Thank you very much, Harrison, for sharing the Innovative Eyewear story. Certainly pretty exciting. For those of you in the audience, if you have a question, please type it into the Q&A box and I will read the questions out loud. We already have a few questions here in the queue. I will start with those that we have. I guess looking at your financials, operating expenses are running close to $2 million a quarter. How are you thinking about the path to break even?
Most of those operating expenses are straight inventory costs now because of the amount of styles of smart glasses that we make, and that is consolidating a little bit because we are kind of gathering the wagons around the Lucyd Armor safety glass and this upcoming Aero line. We are consolidating to about 10 to 12 SKUs that are going to drive the vast majority of the business. That is going to reduce our inventory constraints a little bit. Right now, we are at this sort of $6 million run rate. We believe we still have a ways to go to profitability, but about two years, I think, is a reasonable target. We need to get to about $12 million-$15 million revenue to start going into the profitable area.
We have a little bit of growth to go, but at the current growth trajectory and the way that the market for smart eyewear is exploding right now, I think it is a very achievable sales target, and I think profitability is definitely on the horizon, especially as we introduce this enterprise platform that is going to allow all of these post-frame purchase sales of data and AI utilities to the consumer. Very optimistic about our prospects to continue to reduce the burn, increase sales, and get to profitability.
Yeah. As we look at your sales channel distribution, you have talked about wholesale being your biggest long-term opportunity. But as it stands now, looks like it is still small slice of the overall revenue picture now.
Yeah
What needs to happen for that channel to really scale up?
This is changing dramatically right now with the two major store launches that are underway. We have the big box store launch into 180 locations. We haven't named which retailer yet, but it's coming. That's starting in October. Then the FYidoctors launch into 375 unified opticians starting this month.
We're really on the cusp of our first major wholesale traction that we've had. I think we're going to understand a lot more in a couple of months, what that's going to look like, what that growth is like. We're expecting a lot more optical partners to come on board with the Lucyd Aero product because it's just so undeniably better for optical wear than most other smart eyewear. We already have Kaiser Permanente, for example. They're really interested in that product, and they want to bring it out. We have a dramatically different set of prospects in wholesale than we did a year ago. Even Costco is evaluating our frames right now. Home Depot and Lowe's are looking at the safety glass. We have a lot of other interesting big box opportunities on the horizon.
Overall, up until now, consumers have largely discovered smart eyewear online, and they've done most of their smart eyewear shopping online because there are very few, if any, stores that have more than one or two SKUs of smart eyewear. That's just been kind of the nature of the space up until now, but I think it's dramatically shifting as people go into their trusted optician and are now seeing smart eyewear on the wall for the first time and getting the chance to try it before they buy it. That's what's really exciting us about brick-and-mortar because we know that our products convert when consumers try them. They put it on their face, they listen to a Beatles song through their glasses for the first time. They love it. They want the product. It's kind of a no-brainer at that point.
That's where we really see the wider opportunity in brick-and-mortar. Even these brick-and-mortar retailers are telling us, "We're expecting 30% of the sales to come from our website." It's all kind of one omnichannel ecosystem in a way now. We really are leaning in the ability of people to be able to try the glasses. It is really going to help grow the wholesale revenue in that side of the business. It's really three businesses in one right now. You have the direct consumer, which is very high margin. Our acquisition costs have gone way down. Now the consumers are more aware of smart eyewear, and we have the add-on benefit of our custom lens business, which is extremely profitable and has almost no overhead, basically.
We have our wholesale to optical retailers and electronics retailers that want to resell our products. You have this whole other segment of the business, which is this B2B enterprise segment built on the safety glass, which has its own kind of set of prospects and potential to be like a workforce solution that's dropped into thousands of people in one company at a time. We have a lot of interesting things cooking right now, I guess you could say. We can move to the next one.
Sure. No problem. A couple of product-related questions here, I guess. As we look at the Armor glasses do they provide any heads-up display features to enhance utility in certain use cases?
We haven't launched any AR products yet, augmented reality products. That was actually where we cut our teeth in the space, and we started in AR research all the way back almost 10 years ago. But we quickly pivoted to Bluetooth audio format as our main format of smart eyewear because it's much more mass market than AR. AR is like a niche within a niche right now, so it's very hard to build up a consumer base that can actually. There's no AR product that's even close to being profitable or a project or company focused in augmented reality that's anywhere close to the amount of traction we have, the amount of units that we're shipping, the kind of retail partnerships that we're developing. And the reason for that is not because AR hasn't had value.
It does have value, but it's still highly specialized and fairly low utility, low reliability compared to other, the camera glasses and the audio glasses that are in use by millions of people already. I see AR as a later step in our trajectory. Once the market is a little bit more mature, we think there will be a sizable enough segment of it that wants AR glasses, that at that point we'll develop a product. I would put it around 2028, 2029 as when that will be more feasible for us to do. We do have already the tech partners that can do it, so it's not a question of capability. It's a question really of market fit right now. And we believe the audio eyewear and the camera eyewear is kind of the current moment that we're in.
The AR moment will come later, and we'll play in it when it's appropriate for us to do so.
Okay. Are the products made in the U.S. or elsewhere?
97% of all glasses, smart or otherwise, are made in China, for a lot of reasons. It is not just because of the labor there, but it is really the supply chain for eyewear and smart eyewear both live in China. Our glasses are made of a couple of hundred sub-components that all also happen to be made in China. It is very difficult to remove the supply chain from China. However, during the tariff scramble last year, we did a lot of research and digging, and we have identified alternatives to China if they ever become necessary. We do have options for manufacturing the glasses, in Taiwan, in Japan, if it becomes necessary to do so.
Japan would actually be really relevant for if we want to make frames for the military, it would have to come from Japan or South Korea or another country that we have that certain alliance with. There is a lot of considerations when it comes to it all. To make the smart eyewear, it is not even about the cost. It is really about that sub-component supply chain that makes it so hard to move out of China. We have actually our own team on the ground there. We have three different factories that we use. I go there myself. I am studying Mandarin. We are very well integrated with the Chinese now, and they are doing a lot for us.
Really, there is something unique about the synergy of American ingenuity and engineering combined with Chinese manufacturing that results in uniquely, powerful and uniquely commercially capable products, that is very difficult to do elsewhere. While we have those alternatives, if we need to move out of China, we do not need to now. Ironically, this is a really interesting data point. Because of the electronics carve-out on the tariffs that Apple got, smart eyewear is imported into the U.S. at less than half of the tariff rate of traditional eyewear right now. Traditional eyewear is still at about a 40% tariff out of China, but smart eyewear is only 15%. We are going to see even more price compression in the gap between smart eyewear and regular eyewear over the next year, which is going to be really advantageous for us.
Very interesting. Okay. Got it. We have a question here. As far as the glasses, do they require any special lenses for prescriptions? How do you
No, one unique thing about our products, this is the Aero model. This is actually a true wireless frame. There's no technology in the front plate. It's actually a normal eyewear front plate. Everything lives in the temples. That allows us to use traditional prescription lenses with nothing special about them. Going back to our lens business, really, really awesome because it's pure additive revenue. There's no overhead. Basically, when a customer orders a prescription lens from us or a custom lens, our lab cuts it to order with their existing lens inventory, and then they bill us the cost of goods at the end of the month. So it's pure margin upside whenever we sell a lens with no inventory costs or labor costs. It's great.
It's a really fantastic part of the business and drives some of our cart sizes up to, we have a $250 frame at the top of our line. A lot of customers will put in a $300-$400 transition lens, and now they're at almost a $700 AOV on a lot of these orders. So the lenses are a great high margin business, increases order value, and allows people to customize their frames to their individual needs. It's a total win-win.
Okay, I guess lastly, we're almost out of time here, but last question I'll ask here is, how do you compete from a marketing perspective against much larger competitors with big budgets and the popular influencers that are out there?
To put it simply, we have a better product at half the price. I mean, our frames are just simply more wearable because they're lighter than the Meta. I do not want to point out Meta too specifically. Our frames are lighter and more comfortable than most other smart eyewear, and they're also more affordable. Our frames are between $150 and $250. We're really at price parity with traditional eyewear. That really goes back to our goal of eliminating all costs of switching from regular glasses to smart glasses. So we made it very, very smooth and easy. Part of that also, I think is the fact that we do not have cameras. It really makes the frame more normal, looks a lot more normal.
Since it's a simple audio interface, we have customers all the way up to 90 years old that use our glasses, and they're very easy to use. Our newest frame, the Reebok Optical, when you open the temples, they turn on and pair to your phone. So you do not even have to press a button on the frame. So we made it really idiot-proof, and I think that has really helped. Meta is spending very heavily on improving smart glass awareness, and that has a carry-on effect for us, in that way more consumers are just aware of the category, period. There's a great stat to point to that. In 2024, only 4% of U.S. adults have ever even tried smart glasses. That rose to 17% last year. I would wager this year it's probably closer to 30%, 40%.
So we're seeing there's significantly increased awareness and just experience with this product category. I think that is attributable to the marketing dollars that Meta is putting into it. What we're also seeing is people are finding out about smart glasses through the Meta campaigns, but they do not want to spend the price of the Meta, or they do not want cameras, or they want a specific style that Meta does not offer. Then they look for other smart eyewear, and that's when they come across us, and we get that sale for free, basically. So there's a lot of follow-on benefits because not everyone that learns about smart glasses wants a Facebook product or wants cameras on their face 24/7. But they like the idea of smart glasses that do more for you.
They kind of like, "Look, what are my other options?" Then we're the alternative that comes up. Because we've been at it for nine years, we have really strong SEO. We have a long history of delivering high-quality smart eyewear products, that has kind of put us in, although we're an underdog for sure, it's put us in, I think, an enviable market position in smart eyewear. Because of our experience, because of our budding retail partnerships, and because of our IP portfolio, I do think we're well-positioned to be a prime mover in the smart glass market going forward. I think that wraps up our questions. Thank you all so much for coming on today.
Yeah. Thank you very much. We are already a little bit over our allotted time, but I wanted to thank you again, Harrison, for sharing the Innovative Eyewear story. And thank you also everyone participating and asking thoughtful questions as well. With that, we will wrap it up and I hope everyone has a productive day at the conference. Thank you very again.
Thanks all, everyone. I hope you consider coming on the mission with us to upgrade the world's eyewear. All right. Take care.
All right. Take care. Thank you. Bye-bye. Thanks.
All right.