INNOVATIVE EYEWEAR INC Management’s Discussion and Analysis of Financial Condition and Operating Results. (Form 10-Q)

The following discussion and analysis of our financial condition and results of
operations should be read together with our financial statements and the related
notes and the other financial information included elsewhere in this Quarterly
Report. This discussion contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those discussed below and elsewhere in this Quarterly Report.



Overview


We develop and sell smart eyeglasses and sunglasses, which are designed to allow
our customers to remain connected to their digital lives, while also offering
vision correction and protection. Our flagship product, Lucyd Lyte, enables the
wearer to listen to music, take and make calls, and use voice assistants to
perform many common smartphone tasks hands-free. Innovative Eyewear owns the
exclusive rights to the Lucyd brand and the Lyte product line.



Our mission is to Upgrade Your Eyewear. Our smart eyewear is a fusion of
headphones with glasses, bringing vision correction and protection together with
digital connectivity and clear audio, while also offering a 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 similar to traditional prescription eyewear.



After the full launch of Lucyd Lyte in January 2021, we had strong interest and
demand from customers in the U.S. and have since sold thousands of our smart
eyewear products. In order to meet the growing demand for our products, and in
an effort to expand our reach, we have engaged over 150 unique wholesale
accounts. All of our products are designed in Miami, manufactured in Asia, and
currently sold through two major sales channels:



(1) e-commerce, primarily through our website (Lucyd.co) and marketplaces such as

     Amazon, Bestbuy.com, and DicksSportingGoods.com.



(2) a growing network of independent eyewear stores.




We apply a manufacturer suggested retail price ("MSRP") of $149 (for our
standard frames) to $179 (for our titanium frames) for non-prescription,
polarized sunglass and blue light blocking glasses across all of our online
channels, with our wholesale pricing offering volume discounts to these prices.
Please refer to discussion in the Components of Results of Operations section
below for more details regarding our pricing structure.



We are gearing-up to expand these channels with national eyewear chains, big box
retail stores (electronics, sporting goods, general merchandise) and specialty
retail stores.



We view this business model as being more efficient with regards to the
deployment of capital, by electing not to build our own manufacturing facilities
and Company-owned retail distribution, but rather contract with existing sources
of production and consumer facing retail distribution.



In July 2022, the Company entered into a license agreement which grants the
Company the right to sell certain branded smart eyewear. The license agreement
requires the Company to pay royalties based on a percentage of net retail and
wholesale sales, as defined. The license agreement has a base term of 10 years
but is cancellable at the option of the Company during the fifth year. The
license agreement requires guaranteed minimum royalty payments totaling
approximately $1 million over the next five years, of which less than $25,000 is
due during the 2023 calendar year.



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Impact of COVID-19 on our business



On March 11, 2020, the World Health Organization officially declared the
outbreak of the COVID-19 virus a "pandemic." This contagious disease outbreak
has continued to spread across the globe and is impacting worldwide economic
activity and financial markets. In light of the uncertain and rapidly evolving
situation relating to the spread of COVID-19, we took precautionary measures
intended to minimize the risk of the virus to our employees, by following the
CDC guidelines. Specifically, we set up a system that enabled our employees to
work remotely when it was beneficial for them or when they felt ill.
Additionally, precautionary measures that have been adopted may negatively
affect our ability to sell our products. This includes, for example, reducing
the marketplace traction at trade shows, and retail store traffic for our
re-sellers, and the fulfilment of customer orders with customized lenses,
shipping delays and other operations of our suppliers and fulfilment partners.
Additionally, our product is manufactured in China and shipped from China on a
regular basis. We have not experienced substantial delays in manufacturing or
shipping due to COVID-19; however, we are exposed to such risk in the future as
a potential impact of COVID-19. More generally, the outbreak of COVID-19 could
adversely affect economies and financial markets globally, potentially leading
to an economic downturn, which could decrease consumer spending and adversely
affect demand for our products. It is not possible at this time to estimate the
impact that COVID-19 could have on our business, as the impact will depend on
future developments, which are highly uncertain and cannot be predicted.



Key Factors Affecting Performance

Expansion of retail outlets



Our future depends in large part on our ability to place Lucyd Lyte in optical
stores as well as sporting goods stores and other specialty stores. To address
this, we assembled a team with decades of experience in the eyewear industry and
are offering a strong co-op marketing program and re-ordering incentives
program. We currently have 16 different styles available and plans to
continuously increase this number over time.



Retail store customer retention and replenishment



Our ability to sustain and increase revenue depends in large part on 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 digital try-on kiosk for our resellers
to help educate their in-store customers about Lucyd Lyte and enable customers
to try them on in a contact-less manner, to mitigate customer contact with
viral
pathogens.



Investing in business growth



We believe that people care about what they wear on their faces, and because we
understand that customers have diverse preferences about the shape, size, and
design of their eyewear, we aim to continuously invest in the design and
development of new models in an effort to provide the consumer with a wide
selection of styles, colors, and finishes.



We also intend to invest in co-op marketing with retail stores and expand our
sales and marketing team (including influencers) to broaden our brand awareness
and online presence. We will also increase our general and administrative
expenses in the foreseeable future to cover the additional costs for finance,
compliance, supply chain, quality assurance, and investor relations as we grow
as a public company.



Key Performance Indicators



Store Count (B2B)


We believe that one of the key indicators of our business is the number of retail stores onboarded to sell Lucyd Lyte. We started integrating our first retail stores in June 2021. Currently we have over 250 retail stores selling Lucyd Lyte mainly in United States and Canada.



Based on the existing demand for our products, current distribution, and
recently consummated supply agreements, we anticipate that our products will be
available in a significant number of new third-party retail locations for the
remainder of 2022 and 2023.



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Re-order ratio (B2B)



Many of the retail stores that placed initial stocking orders, either directly
or through our wholesale distributors, have also placed follow-on orders in the
few short months since launching our wholesale business in June 2021. As of
September 30, 2022, 27.7% of stores have re-ordered our product. We expect this
number to gradually increase as we roll out our co-op marketing program and
introduce more of our virtual try-on kiosks into retail stores, to facilitate
customer education and product sell-through.



Number of online orders (B2C)



For our e-commerce business, we track the number of online orders as an
indicator of the success of our online marketing efforts. As of September 30,
2022, we received a total of over 10,435 orders from customers online. We
believe that the addition of new styles, as well as further investment in brand
awareness, product ambassadors, and influencer campaigns, will enable continued
growth of online orders in the foreseeable future. We expect to allocate a
significant portion of our advertising expenditures towards influencer marketing
programs.


Components of operating results


Net Revenue


Our revenue is generated from the sales of prescription and non-prescription optical glasses, sunglasses, and the shipping costs, which are charged to the customer, associated with these purchases. We sell products through our resellers, distributors and on our own website Lucyd.co and on Amazon.



We apply a manufacturer suggested retail price ("MSRP") of $149 (for our
standard frames) to $179 (for our titanium frames) for non-prescription,
polarized sunglass and blue light blocking glasses across all of our online
channels. U.S. consumers enjoy free USPS first class postage, with faster
delivery options available for extra cost, for sales processed through our
website and on Amazon. For Amazon sales, shipping is free for U.S consumers
while international customers pay shipping charges. Any costs associated with
fees charged by the online platforms (Shopify for Lucyd.co website and Amazon)
are not recharged to customers. We charge applicable state sales taxes in
addition to the MSRP for both online channels and all other marketplaces on
which sell.



Our wholesale pricing for eyewear sold to retail store partners and distributors
includes volume discounts to the MSRP, due to the nature of large quantity
orders. The pricing includes shipping charges, while excluding any state sales
tax charges applicable. Due to the nature of wholesale retail orders, no
e-commerce fees are applicable.



Our prescription lens prices range from $35 for a basic clear single vision
lens, up to $415 for a Transitions® progressive signature colorized lens, which
is charged in addition to the MSRP. Glasses with prescription lenses are only
available through our website Lucyd.co, while our sales through Amazon and to
our retail partners only include non-prescription glasses.



Cost of Goods Sold


Cost of goods sold includes costs incurred to acquire materials, assemble and sell our finished products.



For retail sales placed on one of our e-commerce channels, these costs include
(i) product costs held at the lesser of cost and net realizable value and
inclusive of inventory reserves, (ii) freight, import, and inspection costs,
(iii) optical laboratory costs for RX glasses, (iv) merchant fees, (v) fees paid
to third-party e-commerce platforms, and (vi) cost of shipping the product
to
the consumer.


For wholesale sales, these costs include (i) product costs stated at the lower of cost and net realizable value and including inventory reserves, (ii) freight, import and inspection, and (iii) credit card charges.

When consumers place orders directly from our online store, our cost of goods sold on a unit basis is approximately 8% lower than when consumers place orders directly from third-party platforms.


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We expect our cost of goods sold to fluctuate as a percentage of net sales primarily due to product mix, customer preferences and resulting demand, customer shipping costs and the management of our stocks and the range of goods.



Over time we expect our total cost of goods sold on a per unit basis to decrease
as a result of an increase in scale. Increase in scale is achieved as a result
of increase in volumes from both business to consumer and business to business
(retail store) orders. We continue to expand our products with line extensions
and new models and broaden our presence in retail stores carrying our products.



Gross profit and gross margin



We define gross profit as net revenues less cost of goods sold. Gross margin is
gross profit expressed as a percentage of net revenues. Our gross margin may
fluctuate in the future based on a number of factors, including the cost at
which we can obtain, transport, and assemble our inventory, the rate at our
vendor network expands, and how effective we can be at controlling costs, in any
given period.


We expect our cost of goods sold, on a unit basis, to decrease with scale, which will likely have a positive impact on our gross margins.


Operating Expenses


Our operating expenses mainly consist of:

? general and administrative expenses which mainly include consulting services and payroll

expenses, IT and software, legal fees, stock compensation costs, postage and

shipping of non-customer products and other administrative costs;

? sales and marketing costs, including the cost of online and television advertising,

marketing agency fees, influencers, trade shows and other initiatives;

? related party management fees for a range of back-office services provided by

   Lucyd Ltd.;



? research and development expenses related to (i) the development of new styles and

features of our smart glasses, (ii) the development and improvement of our

e-commerce website, and (iii) development of our social media application Vyrb for

   wearables.



Interest and other income, net

Interest and other income, net, mainly includes interest expense paid on the convertible note loan due to the parent company.


Provision for Income Taxes


Provision for income taxes consists of income taxes related to foreign and
domestic federal and state jurisdictions in which we conduct business, adjusted
for allowable credits, deductions, and valuation allowance against deferred
tax
assets.



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Results of Operations


Three months completed September 30, 2022 and 2021

The following table summarizes our operating results for the three months ended September 30, 2022 and 2021:


                                                                                                           Change between the
                                        Three months ended                Three months ended               three months ended
                                          September 30,                     September 30,                     September 30,
                                               2022                              2021                         2022 and 2021
Revenues, net                          $            151,957     100 %    $            171,033     100 %    $           (19,076 )    -11 %
Less: Cost of Goods Sold                           (129,092 )    85 %                (130,223 )    76 %                  1,131       -1 %
Gross profit/(loss)                                  22,865      15 %                  40,810      24 %                (17,945 )    -44 %

Operating Expenses:
General and administrative                         (479,983 )   316 %                (584,927 )   342 %                104,944      -18 %
Sales and marketing                                (568,901 )   374 %                (512,937 )   300 %                (55,964 )     11 %
Research & development                             (304,691 )   201 %                  (9,224 )     5 %               (295,467 )   3203 %
Related party management fee                        (35,000 )    23 %                 (25,000 )    15 %                (10,000 )     40 %
Total Operating Expenses                         (1,388,575 )   914 %              (1,132,088 )   662 %               (256,487 )     23 %

Other Income                                           (735 )                               -                             (735 )
Interest Expense                                    (37,876 )    25 %                  (9,502 )     6 %                (28,374 )    299 %
Total Other (Expense)                               (38,611 )    25 %                  (9,502 )     6 %                (29,109 )    306 %

Net Loss                               $         (1,404,321 )   924 %    $         (1,100,780 )   644 %    $          (303,541 )     28 %




Revenue



Our revenues for the three months ended September 30, 2022, were $151,957 as
compared to revenues of $171,033 during the three months ended September 30,
2021. Our revenue is generated entirely from sales of eyewear products, namely
smart frames, lenses, and accessories. The decrease in revenue was due to
several factors, including the Company focusing more efforts on product line
improvements, licensing deals and team expansion during the period, increases in
digital advertising costs, and changes in consumer spending habits due to an
uncertain economic climate.


For the three months ended September 30, 2022, approximately 48.9% of sales were
processed on our online store (Lucyd.co), 26.1% on Amazon and 25% with reseller
partners. This sales channel mix impacted our revenue for the period, due to the
fact we charge additional $35 to $275 for our prescription lenses available only
on Lucyd.co. For the three months ended September 30, 2022, we generated $91,661
of revenue from sales of non-prescription frames and accessories and $22,706 was
generated from sales of frames with prescription lenses. All of the $ 33,432 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
$80,934 in online sales generated through Lucyd.co, $22,706 related to frames
with prescription lenses and $58,228 of glasses sold were with non-prescription
lenses. E-commerce sales are the most material portion of our sales to date.



We expect the online portion of our sales to gradually decline as a percentage, but will remain an important component of our total sales as we integrate more retail stores. We continued to grow the retail store segment in the fiscal year ended 2021 and since the start of 2022, increasing our retail store presence to over 200 stores as of September 30, 2022.


Cost of goods sold



Our total cost of goods sold decreased to $129,092 for the three months ended
September 30, 2022, as compared to $130,222 for the three months ended September
30, 2021. The decrease being mainly attributable to a lower cost in frames.
These items included, but were not limited to, the cost of frames of $89,768,
cost of prescription lenses incurred with our third-party vendor of $15,482, and
affiliate referral fees, sales commission expense, and e-commerce platform fees
of $23,719 for the three months period ended September 30, 2022. Out of $129,092
of our total cost of goods sold for the three months ended September 30, 2022,
$15,482 related to orders with prescription lenses, while $113,610 pertained to
non-prescription orders.



                                       15




Over time, we expect third-party retail stores to become our primary sales
channel as we on-board additional stores. Consequently, we expect sales of
prescription lens, offered through our website, to decrease as our third-party
retail partners outfit our Lyte frames with more prescriptions. As a result,
over time we expect prescription lens costs to gradually decrease as a
percentage of our overall cost of goods sold.



We expect wholesale and e-commerce channel sales growth for the remainder of 2022 and into 2023, and we also expect corresponding growth in total cost of goods sold, primarily due to incremental product costs.


Gross profit


Our gross profit was $22,865 for the three months ended September 30, 2022, as
compared to $40,810 for the three months ended September 30, 2021. This decrease
was primarily due to a large number of products provided at promotional pricing
to consumers and retailers to encourage market share growth, as well as
increased shipping costs compared to previous years. We expect gross profit for
the fiscal year ending December 31, 2022, to improve slightly, primarily due to
economies of scale from large, anticipated orders. As we expect retail stores to
become our primary sales channel as we onboard new stores, we also expect our
overall gross margin to approximate that of the wholesale channel, where no
e-commerce platform fees or prescription lens cost apply, and volume-related
price discounts are included.



Operating expenses


Our operating expenses increased by $1,388,575 for the three months ended
September 30, 2022compared to $1,132,090 for the three months ended
September 30, 2021. This increase is mainly due to the expansion of our activities following the launch of Lucyd Lyte in January 2021 and including, but not limited to, the following:

General and administrative expenses

Our general and administrative expenses decreased to $479,983 for the three
months ended September 30, 2022, as compared to $584,927 for the three months
ended September 30, 2021. This decrease was primarily due to a reclass of
stock-based compensation in the amount of $209,849 to research and development
expenses. We also spent $56,000 on public & investor relations.



Sales and marketing expenses


Our sales and marketing expenses increased to $568,901 for the three months
ended September 30, 2022, as compared to $512,938 for the three months ended
September 30, 2021. The increase was primarily due to our multi-prong sales and
marketing approach, growing continuously over 2021 and in the first quarter of
2022 after the launch of the main product in 2021, including the costs of online
advertising of $217,108, influencer costs of $22,431 and trade shows of $48,680.
We also hired four sales & marketing staff and booked $87,009 in related stock
compensation expense for the period.



We anticipate these costs to further increase as we continue to invest in and
build our brand, expand the number of e-commerce platforms we sell our products
on and invest in retail store co-op marketing programs to help educate our
in-store customers about Lucyd Lytes, and increase our brand's physical presence
and role in the eyewear industry.



Related party management fee



Our related party management fee was $35,000 for the three months ended
September 30, 2022, as compared to $25,000 for the three months ended September
30, 2021. The increase was due to increased scope of assistances received under
the agreement, corresponding to continuous scale-up of Company's operations
after launch of its flagship product in the first quarter of 2021. The
management fees are related to the management services agreement between us
and
an affiliate of our Parent.


Research and development costs



Our research and development costs increased to $304,691 for the three months
ended September 30, 2022, as compared to $9,224 for the three months ended
September 30, 2021. This increase was primarily due to a reclass of stock-based
compensation in the amount of $209,849 from general and administrative expenses.
Also, the increased cost of new frame development by $81,485, as the Company
continued to expand its product line after the flagship product was launched in
the first quarter of 2021.



                                       16




Nine month period ended September 30, 2022 and 2021


                                                                                                          Change between the
                                        Nine months ended                Nine months ended                 six months ended
                                          September 30,                    September 30,                    September 30,
                                              2022                             2021                         2022 and 2021
Revenues, net                          $           592,720     100 %    $           415,185     100 %    $            177,535      43 %
Less: Cost of Goods Sold                          (452,218 )    76 %               (332,378 )    80 %                (119,840 )    29 %
Gross profit/(loss)                                140,502      24 %                 82,807      20 %                  57,695      14 %

Operating Expenses:
General and administrative                      (1,797,091 )   303 %               (883,356 )   213 %                (913,735 )   220 %
Sales and marketing                             (1,545,615 )   261 %               (903,795 )   218 %                (641,820 )   155 %
Research & development                            (393,058 )    66 %                (36,121 )     9 %                (356,937 )    86 %
Related party management fee                      (105,000 )    18 %       
        (84,975 )    20 %                 (20,025 )     5 %
Total Operating Expenses                        (3,840,764 )   648 %             (1,908,247 )   460 %              (1,932,517 )   465 %

Other Income                                        (3,293 )     1 %                      -                            (3,293 )     1 %
Interest Expense                                  (101,137 )    17 %                (33,654 )     8 %                 (67,483 )    16 %
Total Other (Expense)                             (104,430 )    18 %                (33,654 )     8 %                 (70,776 )    17 %

Net Loss                               $        (3,804,692 )   642 %    $        (1,859,094 )   448 %    $         (1,945,598 )   469 %




Revenue


Our revenues for the nine months ended September 30, 2022, were $592,720 as
compared to revenues of $415,185 during the nine months ended September 30,
2021. Our revenue is generated entirely from sales of eyewear products, namely
smart frames, lenses, and accessories. The increase in revenue was due to the
launch of Lucyd Lytes in January 2021, and subsequent scale-up of sales and
marketing activities leading up to more product awareness.



For the nine months ended September 30, 2022, approximately 33.6% of sales were
processed on our online store (Lucyd.co), 29.6% on Amazon, and 36.8% with
reseller partners. This sales channel mix impacted our revenue for the period,
due to the fact we charge an additional $35 to $275 for our prescription lenses
available only on Lucyd.co. For the nine months ended September 30, 2022, we
generated $460,073 of revenue from sales of non-prescription frames and
accessories and $95,057 was generated from sales of frames with prescription
lenses. All of the $175,269.2 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 $197,437 in online sales generated through
Lucyd.co, $95,058 related to frames with prescription lenses and $102,380 of
glasses sold were with non-prescription lenses. E-commerce sales are the most
material portion of our sales to date.



We expect that the online portion of our sales will gradually decrease on a
percentage basis but remain an important component of our total sales as we
onboard more retail stores. We pursued growth in retail store segment in the
year ended 2021 and during 2022, growing our retail store presence to over 200
stores as of September 30, 2022.



Cost of goods sold



Our total cost of goods sold increased to $452,218 for the nine months ended
September 30, 2022, as compared to $332,378 for the nine months ended September
30, 2021. This increase mirrors the increase in underlying sales discussed
above. These items included, but were not limited to, the cost of frames of
$285,586, cost of prescription lenses incurred with our third-party vendor of
$70,563, and affiliate referral fees, sales commission expense, and e-commerce
platform fees of $93,706 for the nine months ended September 30, 2022. Out of
$452,218 of our total cost of goods sold for the nine months ended September 30,
2022, $79,370 related to orders with prescription lenses, while $372,848
pertained to non-prescription orders.



For the nine months ended September 30, 2022, approximately 33.6% of sales were
processed on our online store (Lucyd.co), 29.6% on Amazon, and 36.8% from
reseller partners. This sales channel mix impacted our cost of goods sold, as
the cost of prescription lenses attributable to our Lucyd.co sales increased our
cost of goods sold through Lucyd.co while not impacting cost of goods sold for
sales realized through Amazon or retail store partners.



                                       17




Over time, we expect third-party retail stores to become our primary sales
channel as we onboard additional stores. Consequently, we expect sales of
prescription lens, offered through our website to decrease, as our third-party
retail partners outfit our Lyte frames with more prescriptions. As a result,
over time we expect prescription lens costs to gradually decrease as a
percentage of our overall cost of goods sold.



We expect wholesale and e-commerce channel sales growth for the remainder of 2022 and into 2023, and we also expect corresponding growth in total cost of goods sold, primarily due to incremental product costs.


Gross profit


Our gross profit increased to $140,502 for the nine months ended September 30,
2022, as compared to $82,807 for the nine months ended September 30, 2021. This
increase was due to the difference in the price of Lucyd Lytes versus products
available for sale in the third quarter of 2021, with new models introduced at
higher prices after the first quarter of 2021. We expect gross profit for the
fiscal year ending December 31, 2022, to improve slightly, primarily due to
economies of scale from large, anticipated orders. As we expect retail stores to
become our primary sales channel as we on board new stores, we also expect our
overall gross margin to approximate that of the wholesale channel, where no
e-commerce platform fees or prescription lens cost apply, and volume-related
price discounts are included.



Operating expenses


Our operating expenses increased by $3,840,764 for the nine months ended
September 30, 2022compared to $1,908,247 for the nine months ended
September 30, 2021. This increase is mainly due to the expansion of our activities following the launch of Lucyd Lyte in January 2021 and including, but not limited to, the following:

General and administrative expenses



Our general and administrative expenses increased to $1,797,091 for the nine
months ended September 30, 2022, as compared to $883,356 for the nine months
ended September 30, 2021. This increase was primarily due to an increase of
stock option awards issued in 2021, resulting from increase in our staffing of
$234,522. Also, as a result of Company's growth and increased used of
consultants, consulting fees increased from $209,330 to $345,560. Further, there
has been an increase Audit & Accountancy fees from $68,696 to $126,001 and we
spent $56,000 on public & investor relations.



Sales and marketing expenses



Our sales and marketing expenses increased to $1,545,615 for the nine months
ended September 30, 2022, as compared to $903,795 for the nine months ended
September 30, 2021. The increase was primarily due to our multi-prong sales and
marketing approach, growing continuously over 2021 and in the nine months of
2022 after the launch of our main product in 2021, including the costs of online
advertising of $1,019,916, influencer costs of $60,113 and trade shows of
$128,779. We also hired four sales & marketing staff and booked $281,953 in
related stock compensation expense for the period.



We anticipate these costs to further increase as we continue to invest in and
build our brand, expand the number of e-commerce platforms we sell our products
on, invest in retail store co-op marketing programs to help educate our
in-store customers about Lucyd Lytes, and increase our brand's physical presence
and role in the eyewear industry.



Related party management fee



Our related party management fee was $105,000 for the nine months ended
September 30, 2022, as compared to $84,975 for the nine months ended September
30, 2021. The increase was due to increased scope of assistances received under
the agreement, corresponding to continuous scale-up of Company's operations
after launch of its flagship product in the first quarter of 2021. The
management fees are related to the management services agreement between us
and
an affiliate of our Parent.


Research and development costs



Our research and development costs increased to $393,058 for the nine months
ended September 30, 2022, as compared to $36,121 for the nine months ended
September 30, 2021. The increase was primarily due to a reclass of stock-based
compensation in the amount of $209,849 from general and administrative expenses
in addition to the increased cost of new frame development as the Company
continued to expand its product line after the flagship product was launched in
the first quarter of 2021.



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