As filed with the U.S. Securities and Exchange Commission on October 4, 2023.

Registration No. 333-273872

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 4 to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

SIX15 TECHNOLOGIES HOLDING CORP.

(Exact name of registrant as specified in its charter)

336 Summit Point Drive

Henrietta, New York 14467

(585) 500-4625

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive offices)

Mr. Richard Ryan

President and Chief Executive Officer

Six15 Technologies Holding Corp.

336 Summit Point Drive

Henrietta, New York 14467

(585) 500-4625

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.

The information contained in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

2,000,000 Shares
Common Stock

Six15 Technologies Holding Corp. 

This is a firm commitment initial public offering of 2,000,000 shares of common stock of Six15 Technologies Holding Corp. Prior to this offering, there has been no public market for our common stock. We anticipate that the initial public offering price of our shares will be $5.00 per share (being reflected on a post-reverse split basis as discussed below).

We have applied to have our common stock listed on the NYSE American LLC (“NYSE American”) under the symbol “SXV,” which listing is a condition to this offering.

We are an “emerging growth company” and a “smaller reporting company” under the federal securities laws and have elected to comply with certain reduced public company reporting requirements.

Unless otherwise noted, the share and per share information in this prospectus reflects a reverse stock split of the outstanding common stock of the Company at a ratio of 1-for-3.9226675, which was approved by our Board of Directors (“Board”) and our stockholders, and which reverse stock split will be completed prior to the effectiveness of the registration statement of which this prospectus forms a part (the “Split”).

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 13. Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We have granted a 45-day option to the representative of the underwriters to purchase up to 300,000 additional shares of common stock solely to cover over-allotments, if any.

The underwriters expect to deliver the shares of common stock against payment on or about                , 2023.

ThinkEquity

The date of this prospectus is              , 2023.

Table of Contents

Through and including _____________, 2023 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus or any prospectus supplement or amendment. Neither we nor the underwriters, have authorized any other person to provide you with information that is different from or adds to, that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the underwriters take responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. You should assume that the information contained in this prospectus, or any free writing prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date. We are not making an offer of any securities in any jurisdiction in which such an offer is unlawful.

No action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this public offering and the distribution of this prospectus applicable to that jurisdiction.

ABOUT THIS PROSPECTUS

Throughout this prospectus, unless otherwise designated or the context suggests otherwise,

MARKET AND INDUSTRY DATA

Market data and certain industry data and forecasts used throughout this prospectus were obtained from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information are not guaranteed. To our knowledge, certain third-party industry data that includes projections for future periods does not take into account the effects of the worldwide coronavirus pandemic. Accordingly, those third-party projections may be overstated and should not be given undue weight. Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not necessarily know what assumptions regarding general economic growth were used in preparing the forecasts we cite. Statements as to our market position are based on the most currently available data. While we are not aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.

TRADEMARKS

Solely for convenience, our trademarks and tradenames referred to in this registration statement may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames. All other trademarks, service marks and trade names included or incorporated by reference into this prospectus, or the accompanying prospectus are the property of their respective owners.

GLOSSARY OF SELECTED TERMS

The following are definitions of certain terms that are commonly used in the wearables industry and in this prospectus:

“AR” means augmented reality, an interactive experience of a real-world environment where the objects that reside in the real world are enhanced by computer-generated perceptual information, sometimes across multiple sensory modes, including visual, auditory, haptic, somatosensory, and olfactory.

“HMD” means head-mounted display worn on the head or as part of a helmet, which has a small display optic in front of one (monocular HMD) or each eye (binocular HMD).

“LCD” means liquid crystal display, which is a flat-panel display or other electronically modulated optical device that uses the light-modulating properties of liquid crystals combined with polarizers.

“LED” means light emitting diode, which is a semiconductor light source that emits light when current flows through it.

“NED” means near-eye displays, also known as head-mounted displays (HMD) or wearable displays, which create a virtual image in the field of view of one or both eyes.

“OEM” means original equipment manufacturer, and is generally perceived as a company that produces parts and equipment that may be marketed by another manufacturer.

“OLED” means organic light emitting diode (organic LED), also known as organic electroluminescent (organic EL) diode, which is a light emitting diode (LED) in which the emissive electroluminescent layer is a film of organic compound that emits light in response to an electric current.

“HUD” means heads-up-display a display device, worn on the head or as part of a helmet, which has a small display optic in front of one (monocular HMD) or each eye (binocular HMD). 

RISK FACTORS

Our business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occur, our business and financial performance could be adversely affected, our actual results could differ materially from our expectations, and the price of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may adversely affect our business and financial performance. You should carefully consider the risks described below, together with all other information included in this prospectus including our financial statements and related notes, before making an investment decision. The statements contained in this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and investors in our securities may lose all or part of their investment.

Risks Related to Our Company

Our financial statements have been prepared on a going concern basis and our continued operations are in doubt.

At June 30, 2023, we had $407,792 in cash on hand, compared to $44,534 at June 30, 2022. For the six months ended June 30, 2023 and 2022, we have incurred net losses of $1,494,382 and $2,098,746, respectively and we have negative cash flows from operations in both quarters. At December 31, 2022, we had $180,191 in cash on hand, compared to $252,039 at December 31, 2021. In addition, we incurred annual net losses of $3,092,825 for the year ended December 31, 2022 and $2,407,886 for the year ended December 31, 2021, and have negative cash flows from operations for the years ended December 31, 2022 and 2021. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements for the fiscal years ended, December 31, 2022 and 2021, describing the existence of substantial doubt about our ability to continue as a going concern under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. Our future operations are dependent upon the identification and successful completion of equity or debt financing and the achievement of profitable operations at an indeterminate time in the future. There can be no assurances that we will be successful in completing an equity or debt financing or in achieving profitability. If we are unable to raise additional capital or generate sufficient cash from operations to adequately fund our operations, we will need to curtail planned activities to reduce costs, which will likely harm our ability to execute on our business plan and continue operations.

We have incurred net losses since our inception and if we continue to incur net losses in the foreseeable future the market price of our common stock may decline.

Since our inception, we have not been profitable. At June 30, 2023, we had a net loss of $1,494,382 and an accumulated shareholders’ deficit of $30,650,277. At December 31, 2022, we had a net loss of $3,092,825 and an accumulated total shareholders’ deficit of $29,155,895. We expect that our expenses relating to sales and marketing and product development and support, as well as our general and administrative costs, will increase, requiring us to increase sales in order to achieve and maintain profitability. If we do not achieve and maintain profitability, our financial condition will be materially and adversely affected. We would eventually be unable to continue our operations unless we were able to raise additional capital. We may not be able to raise any necessary capital on commercially reasonable terms or at all. If we fail to achieve or maintain profitability on a quarterly or annual basis within the timeframe expected by investors, the market price of our common stock may decline.

Because we have a limited operating history in the enterprise HUD industry, there is a limited amount of experience upon which to evaluate our business and prospects.

Our operating subsidiary, TDG Acquisition Company, LLC (dba Six15 Technologies) was formed in June 2012 to acquire non-consumer intellectual property assets of Vuzix Corp. on June 15, 2022 and to develop and sell defense and enterprise display technology and products. Since our inception, the majority of our sales have been derived from the sale of Tac-Eye and other head mounted displays to the U.S. government and others. Accordingly, there is a limited amount of enterprise HUD-related experience upon which to evaluate our business and prospects, and a potential investor should consider the challenges, expenses, delays and other difficulties involved in the development of our business, including the continued development of our technology and the achievement of market acceptance for products using our technology. We are therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and other resources and lack of revenues.

If we fail to raise capital when needed it will have a material adverse effect on our business, financial condition and results of operations.

We will need additional capital in addition to this offering to execute our full business plan. We can give no assurance that additional financing can be obtained, or if obtainable, that the terms will be satisfactory to us, or that such financing would not result in a substantial dilution of stockholder’s interest. A failure to raise capital when needed would have a material adverse effect on our business, financial condition and results of operations. It could involve the sale of one or more series of preferred stock having voting and liquidation rights senior to the common stock, subject to any rules of the NYSE American or any other exchange on which we are listed. Also, a debt financing could involve a pledge of assets and may be senior to the interests of equity holders. A future equity or debt financing could also involve restrictive covenants relating to capital raising activities and other financial and operational matters, which could limit or may make it more difficult for us to obtain additional capital or to pursue business opportunities, including potential acquisitions. Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

If adequate funds are not obtained, we may be required to reduce, curtail or discontinue operations.

We have issued a promissory note that is secured by our non-intellectual property assets, and if we are unable to make the required monthly installments, the holder of the note may require the sale of some or all of our non-intellectual property assets, which may have a material adverse effect on our business, operating results and financial condition.

In September 2020, we issued a promissory note to SQN Venture Income Fund II, LP, which is payable in equal monthly installments of $77,969 until maturity in September 2023. The SQN Note is secured by substantially all of our non-intellectual property assets, and is subject to prepayment premium. If we are unable to make the required monthly installments, SQN Venture Income Fund II, LP may require the sale of some or all of our non-intellectual property assets in order to fulfill our debt obligations, which may have a material adverse effect on our business, operating results and financial condition. In May 2022, the maturity date of this promissory note was extended to July 2025. In August 2023, we entered into a Letter Agreement with SQN Venture Income Fund II, LP (the “SQN Letter Agreement”), of which provides that upon the occurrence of this offering, (i) $665,000 of the total outstanding balance of the SQN Note shall be paid from a portion of the net proceeds of this offering, and (ii) $794,577, which represents the remainder of the total outstanding balance of the SQN Note shall convert into shares of our common stock at a 35% discount to the offering price of the shares of common stock sold in this offering.

In July 2022, we issued a Promissory Note in the principal amount of $629,666 to Rossiter & Cummaro Enterprise LLC (the “RCE Note”). The RCE Note bears interest at 16% per annum and is due on June 1, 2025. The RCE Note may be prepaid at any time after January 1, 2023, and from time to time, without penalty.

In October 2022, we issued a Promissory Note in the principal amount of $50,000 to Rossiter & Cummaro Enterprise LLC (the “RCE Note No. 2”). The RCE Note No. 2 bears interest at 16% annum and is due on June 1, 2025. The RCE Note No. 2 may be prepaid at any time after April 1, 2023, and from time to time, without penalty. 

In April 2023, we issued a Promissory Note in the principal amount of $220,334 to Rossiter & Cummaro Enterprise LLC (the “RCE Note No. 3”). The RCE Note No. 3 bears interest at 16% annum and is due on June 1, 2025. The RCE Note No. 3 may be prepaid up to 50% upon a triggering event, which is defined by a partial or full sale of the company, via privately or a public offering of shares. 

We may lose the services of key management personnel and may not be able to attract and retain other necessary personnel.

Changes in our management could have an adverse effect on our business. This is especially an issue while our staff is small. We are dependent upon the active participation of several key management personnel, including Richard Ryan, our President and Chief Executive Officer. We do not carry key person life insurance on any of our senior management or other key personnel other than our Chief Executive Officer. While we have some life insurance coverage on our Chief Executive Officer, we do not believe it would be sufficient to completely protect us against losses we may suffer if his services were to become unavailable to us in the future.

We must hire highly skilled technical personnel as employees and as independent contractors in order to develop our products. As of the date of this prospectus we have 15 full-time employees. The competition for highly skilled technical, managerial and other personnel is intense and we may not be able to retain or recruit such personnel. Our recruiting and retention success is substantially dependent on our ability to offer competitive salaries and benefits to our employees. We must compete with companies that possess greater financial and other resources than we do and that may be more attractive to potential employees and contractors. To be competitive, we may have to increase the compensation, bonuses, stock options and other fringe benefits offered to employees in order to attract and retain such personnel. The costs of retaining or attracting new personnel may have a material adverse effect on our business and operating results. If we fail to attract and retain the technical and managerial personnel, we need to be successful, our business, operating results and financial condition could be materially adversely affected.

Our financial condition and results of operations may be adversely affected by COVID-19.

A significant outbreak, epidemic or pandemic of contagious diseases in any geographic area in which we operate or plan to operate could result in a health crisis adversely affecting the economies, financial markets and overall demand for our services in such areas. In addition, any preventative or protective actions that governments implement or that we take in response to a health crisis, such as travel restrictions, quarantines, or site closures, may interfere with the ability of our employees, suppliers and customers to perform their responsibilities. Such results could have a material adverse effect on our business.

COVID-19 has created significant volatility, uncertainty and economic disruption. To date, COVID-19 has affected nearly all regions around the world. In the United States, businesses as well as federal, state and local governments implemented significant actions to mitigate this public health crisis. While we cannot predict the duration or scope of COVID-19, it may negatively impact our business and such impact could be material to our financial results, condition and outlook related to:

To the extent the COVID-19 or a similar public health threat has an impact on our business, it is likely to also have the effect of heightening many of the other risks described in this “Risk Factors” section.

We generally do not have long term contracts with our customers, which makes forecasting our revenues and operating results difficult.

We generally do not enter into long term agreements with our customers obligating them to purchase our products. Our business is characterized by short term purchase orders with shipment schedules within one year and we generally permit orders to be canceled or rescheduled before shipment without significant penalty. As a result, our customers may cease purchasing our products at any time, which makes forecasting our revenues difficult. In addition, due to the absence of a substantial non-cancelable backlog that can only be canceled with a penalty, we typically plan our production and inventory levels based on internal forecasts of customer demand, which are highly unpredictable and can fluctuate substantially. The uncertainty of product orders makes it difficult for us to forecast our sales and allocate our resources in a manner consistent with our actual sales. Large supply line commitments and large inventories of various components will be required to support our business and provide reasonable order fulfillment for customers. Moreover, our expense levels and the amounts we invest in capital equipment and new product development costs are based in part on our expectations of future sales and, if our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls, and our results of operations and financial condition could be materially adversely affected.

We may not generate the same level of revenues if we lose one or more of our main customers.

We sell products primarily to military contractors, and commercial industries in the United States. Three customers accounted for approximately 84% (L-3 Communications), 5% (Vuzix Corporation), and 4% (Simex Defense). We have not entered into any contracts with L-3 Communications with regard to the procurement of our products. L-3 Communications procures our products on a per purchase order basis rather than through a purchase agreement. Accounts receivable from these customers were $99,907, $0, and $0, respectively, at December 31, 2022. For the year ended December 31, 2021, we had three customers which accounted for approximately 44% (L-3 Communications), 25% (Applied Research Associates, Inc.), and 9% (Precision Technic A/S) of total revenues for the year ended December 31, 2021. Accounts receivable from these customers were $76,921, $0, and $0, respectively, at December 31, 2021. If we lose one or more of these customers, we may not be able to generate the same level of revenues and our results of operations and financial condition could be materially adversely affected.

Fluctuations in operating results make financial forecasting difficult and could adversely affect the price of our common stock.

Our operating results may fluctuate significantly for numerous reasons, including:

As a result of these and other factors, investors should not rely on our revenues and our operating results for any one quarter or year as an indication of our future revenues or operating results. If our quarterly revenues or results of operations fall below the expectations of investors or public market analysts, the price of our common stock could fall substantially.

Because our U.S. government defense contracts and subcontracts are subject to procurement laws and regulations, we may not receive all of the revenues we anticipate receiving under those contracts and subcontracts.

Generally, U.S. government contracts are subject to procurement laws and regulations. Some of our contracts are governed by the Federal Acquisition Regulation (FAR), which lays out uniform policies and procedures for acquiring goods and services by the U.S. government, and agency-specific acquisition regulations that implement or supplement the FAR. For example, the U.S. Department of Defense implements the FAR through the Defense Federal Acquisition Regulations (DFAR).

The FAR also contains guidelines and regulations for managing a contract after award, including conditions under which contracts may be terminated, in whole or in part, at the government’s convenience or for default. If a contract is terminated for the convenience of the government, a contractor is entitled to receive payments for its allowable costs and, in general, the proportionate share of fees or earnings for the work done. If a contract is terminated for default, the government generally pays for only the work it has accepted. These regulations also subject us to financial audits and other reviews by the government of our costs, performance, accounting and general business practices relating to our government contracts, which may result in an adjustment of our contract-related costs and fees.

Our U.S. government contract and subcontract orders are funded by government budgets that are proposed by the President of the United States and reviewed and approved by Congress. Funds allocated to government agencies are administered by the Executive Office of the President. There are two primary risks associated with this process. First, the process may be delayed or disrupted because of congressional schedules, negotiations over funding levels for programs or unforeseen national or world events. Second, funding for multi-year contracts can be changed in future appropriations. Either of these events could affect the allocation, timing, schedule and program content of our government contracts and subcontracts.

Our lack of long-term purchase orders and commitments from our customers may lead to a rapid decline in our sales and profitability.

All of our significant customers issue purchase orders solely at their own discretion, often only six to eight weeks before the requested date of shipment. Our customers are generally able to cancel orders (without penalty) or delay the delivery of products on relatively short notice. In addition, our customers may decide not to purchase products from us for any reason. Any of our current customers may stop purchasing our products in the future. If those customers do not continue to purchase our products, our sales volume and profitability could decline rapidly with little or no warning whatsoever.

We cannot rely on long term purchase orders or commitments to protect us from the negative financial effects of a decline in demand for our products. The limited certainty of product orders can make it difficult for us to forecast our sales and allocate our resources in a manner consistent with our actual sales. Moreover, our expense levels are based in part on our expectations of future sales and, if our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls. Furthermore, because we depend on a small number of customers for the vast majority of our sales, the ramifications of these risks are greater than if we had a greater number of customers. As a result of our lack of long-term purchase orders and purchase commitments, we may experience a rapid decline in our sales and profitability.

Our business is characterized by long periods for collection from our customers and short periods for payment to our suppliers, the combination of which may cause us to have liquidity problems.

We experience an average accounts settlement period ranging from one month to as high as three months from the time we deliver our products to the time we receive payment from our customers. In contrast, we typically need to place certain deposits and advances with our suppliers on a portion of the purchase price. Because our payment cycle is considerably shorter than our receivable collection cycle, we could experience working capital shortages. Working capital management, including prompt and diligent billing and collection, is an important factor in our results of operations and liquidity. System problems, industry trends, our customers’ liquidity problems or payment practices or other issues may extend our collection period, which would adversely impact our liquidity, our ability to pay our liabilities and to purchase inventory to sustain or expand our current sales volume, and adversely affect our ability to continue our business.

Our future growth and profitability may be adversely affected if our marketing initiatives are not effective in generating sufficient levels of brand awareness.

We are engaged in a variety of marketing initiatives intended to promote sales of our enterprise products. Our future growth and profitability from our enterprise products will depend in large part upon the effectiveness and efficiency of these marketing efforts, including our ability to:

Our planned marketing expenditures may not result in increased total sales or generate sufficient levels of product and brand name awareness. We may not be able to manage our marketing expenditures on a cost effective basis.

Geopolitical conditions, including direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial results.

Our operations could be disrupted by geopolitical conditions, political and social instability, acts of war, terrorist activity or other similar events. In February 2022, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should the conflict continue or worsen. It is not possible to predict the broader consequences of the conflict, including related geopolitical tensions, and the measures and retaliatory actions taken by the U.S. and other countries in respect thereof as well as any countermeasures or retaliatory actions by Russia or Belarus in response, including, for example, potential cyberattacks or the disruption of energy exports, is likely to cause regional instability, geopolitical shifts, and could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. The situation remains uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations. As of the date of this prospectus, our business, products, including critical components needed for our Six15 ST1® Head-Up Display and other products, lines of service, projects, and operations, had not been materially impacted by supply chain disruptions in light of the conflict between Russia and Ukraine.

The increase in commodity prices could negatively impact our profit margins.

Prices of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices in the component materials for the parts of our goods may impact the availability, the quality and the price of our products, as suppliers search for alternatives to existing materials and increase the prices they charge. We cannot ensure that we can recover all the increased costs through price increases, and our suppliers may not continue to provide the consistent quality of products as they may substitute lower-cost materials to maintain pricing levels, all of which may negatively impact our business and results of operations.

There is a global shortage of critical semiconductors and other raw materials.

It is important to understand that the failure to procure one semiconductor component can prevent the entire product from being manufactured and sold. We do not manufacture the integrated circuit chip sets that are used in our display products and our customers’ products. Instead, we rely on third-party independent vendors and subcontractors for these integrated circuit chip sets. We purchase critical raw materials such as special glasses, special silicon on insulator (“SOI”) wafers, light emitting diodes, adhesives, chemicals, lenses, backlights, printed circuit boards and other components from third-party suppliers. We sell a relatively small volume of defense products and therefore our purchase of raw materials for our defense business is also relatively small. Because our purchase of raw materials is relatively small, qualifying and buying components from multiple vendors is not economically possible. In addition, our defense products typically have long life cycles which means many of the raw materials are based on older technology. We periodically receive notices from suppliers of our critical raw materials regarding their plans to stop selling those raw materials. This requires us to identify another raw material and/or raw material supplier to replace the discontinued item/supplier, which would then require us to internally requalify the product with the new material as well as possibly requalify the product with our customer. The cost to requalify is expensive and time-consuming and may result in the suspension of production. If any of these third-party contractors or suppliers were unable or unwilling to supply these integrated circuit chip sets or critical raw materials to us, whether for business or regulatory reasons, we would be unable to manufacture and sell our display products until a replacement material could be found. We may not be able to find a replacement material or if we are able to find a replacement material, we may be unable to sell our products until they have been qualified both internally and with the customer. Lower volume purchases may make it uneconomical for some of our suppliers to provide the raw materials we need. We cannot assure that a replacement third-party contractor or supplier could be found on reasonable terms or in a timely manner. Any interruption in our ability to manufacture and distribute our display products could cause our display business to be unsuccessful and the price of our common stock may decline.

Continued uncertain economic conditions, including inflation and the risk of a global recession could impair our ability to forecast and may harm our business, operating results, including our revenue growth and profitability, financial condition and cash flows.

The U.S. economy is experiencing the highest rates of inflation since the 1980s. Historically, we have not experienced significant inflation risk in our business. However, our ability to raise our product prices depends on market conditions and there may be periods during which we are unable to fully recover increases in our costs. In addition, the global economy suffers from slowing growth and rising interest rates, and many economists believe that a global recession may begin in the near future. If the global economy slows, our business would likely be adversely affected.

Our results of operations could be negatively impacted by inflationary or deflationary economic conditions which could affect the ability to obtain goods from our suppliers in a timely and cost-effective manner.

Our profitability may be negatively impacted if we are unable to mitigate any inflationary increases through various customer pricing actions and cost reduction initiatives. Conversely, in the event there is deflation, we may experience pressure from our customers to reduce prices, and there can be no assurance that we would be able to reduce our cost base (through negotiations with suppliers or other measures) to offset any such price concessions which could adversely impact results of operations and cash flows.

We currently, and may in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation, the loss of such assets would have a severe negative affect on our operations and liquidity.

We may maintain our cash assets at certain financial institutions in the U.S. in amounts that may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $250,000. In the event of a failure of any financial institutions where we maintain our deposits or other assets, we may incur a loss to the extent such loss exceeds the FDIC insurance limitation, which could have a material adverse effect upon our liquidity, financial condition and our results of operations.

Our video eyewear products require ongoing research and development, and we may experience technical problems or delays and may not have the funds necessary to continue their development which could lead our business to fail.

Our research and development efforts remain subject to all of the risks associated with the development of new products based on emerging and innovative technologies, including, for example, unexpected technical problems or the possible insufficiency of funds for completing development of these products. If we experience technical problems or delays, further improvements in our products and the introduction of future products could be delayed, and we could incur significant additional expenses and our business may fail.

We anticipate that we will require additional funds to maintain our current levels of expenditure for research and development of new products and technologies and to obtain and maintain patents and other intellectual property rights in these technologies, the timing and amount of which are difficult to forecast. Our cash on hand after the successful completion of this offering coupled with the possibility of further negative cash flow from operations may not be sufficient to meet all of our future needs. We have no commitment for additional funds. Any funds we need may not be available on commercially reasonable terms or at all. If we cannot obtain any necessary additional capital when needed, we might be forced to reduce our research and development efforts which would materially and adversely affect our business. If we attempt to raise capital in an offering of shares of our common stock, preferred stock, convertible securities or warrants, or if we engage in acquisitions involving the issuance of such securities, our then-existing stockholders’ interests will be diluted.

We depend on advances in technology by other companies and if those advances do not materialize, some of our products may not be successfully commercialized and our anticipated new products could be delayed or canceled.

We rely on and will continue to rely on technologies (including microdisplays, mobile computing electronics and operating systems) that are developed and produced by other companies. The commercial success of certain of our planned future products will depend in part on advances in these and other technologies by other companies. We may, from time to time, contract with and support companies developing key technologies in order to accelerate the development of them for our specific uses. Such activities might not result in useful technologies or components for us. We are attempting to mitigate this risk by exploring ways to develop our own microdisplay technologies using LED, micro LED and laser scanning displays, but there can be no assurance that we will be successful in doing so.

If we fail to develop new products and adapt to new technologies, our business and results of operations may be materially adversely affected.

The market for our products is characterized by rapid changes in products, designs and manufacturing process technologies. Our success depends to a large extent on our ability to develop and manufacture new products and technologies to match the varying requirements of different customers and groups in order to establish a competitive position and become profitable. Furthermore, we must adapt our products and processes to technological changes and emerging industry standards and practices on a cost-effective and timely basis. Our failure to accomplish any of the above could harm our business and operating results.

As enterprise customers look to scale deployments, we anticipate price reduction pressures while those volumes may not result in similar cost reductions. This may result in downward margin pressure. If we fail to accurately anticipate the introduction of new technologies, we may possess significant amounts of obsolete inventory that can only be sold at substantially lower prices and gross margins than we anticipated. In addition, if we fail to accurately anticipate the introduction of new technologies, we may be unable to compete effectively due to our failure to offer products most demanded by the marketplace. If any of these failures occur, our sales, profit margins and profitability will be adversely affected.

There are several competing providers of microdisplay-based personal display technology, and we may fail to capture a substantial portion of the personal display market.

In addition to competing with direct view displays, we also compete with microdisplay-based personal display technologies that have been developed by other companies. Our primary personal display competitors are or have included Vuzix, Inc, Carl Zeiss, Inc., Sony, Epson, Alphabet (Google), Brother International, 5DT Inc., eMagin Corporation, Meta/Facebook (Oculus), Avegant, Kopin Corporation, Magic Leap, Lenovo, Microsoft, HTC, MicroVision, Inc., Lumus Ltd., Kaiser Electro Optics Inc., Garmin, Optinvent, HTC Valve, LGE, N-Real, Epson, Zebra and Accupix of Korea. Numerous other start-up companies have announced their intentions to offer smart wearable display products and developer kits in the near future. Further, industry blogs have speculated that companies such as Apple may offer AR glasses in the near future.

Most of our competitors have greater financial, marketing, distribution and technical resources than we do. Moreover, our competitors may succeed in developing new microdisplay-based personal display technologies and near-eye products that are more affordable or have more desirable features than our technology. If our products are unable to capture a reasonable portion of the smart wearable display market, our business strategy may fail.

Product quality issues and a higher-than-expected number of warranty claims or returns could harm our business and operating results.

The products that we sell could contain defects in design or manufacture. Defects could also occur in the products or components that are supplied to us. There can be no assurance we will be able to detect and remedy all defects in the hardware and software we sell, which could result in product recalls, product redesign efforts, loss of revenue, reputational damage and significant warranty and other remediation expenses. Similar to other mobile and consumer electronics, our products have a risk of overheating in the course of usage or upon malfunction. Any such defect could result in harm to property or in personal injury. If we determine that a product does not meet product quality standards or may contain a defect, the launch of such product could be delayed until we remedy the quality issue or defect. The costs associated with any protracted delay necessary to remedy a quality issue or defect in a new product could be substantial.

We generally provide a 1-year warranty on all of our products. The occurrence of any material defects in our products could expose us to liability for damages and warranty claims in excess of our current reserves, and we could incur significant costs to correct any defects, warranty claims or other problems. In addition, if any of our product designs are defective or are alleged to be defective, we may be required to participate in a recall campaign. In part due to the terms of our warranty policy, any failure rate of our products that exceeds our expectations may result in unanticipated losses. Any negative publicity related to the perceived quality of our products could affect our brand image and decrease distributor and consumer confidence and demand, which could adversely affect our operating results and financial condition. Further, accidental damage coverage and extended warranties are regulated in the United States at the state level and are treated differently within each state. Additionally, outside of the United States, regulations for extended warranties and accidental damage vary from country to country. Changes in the interpretation of the regulations concerning extended warranties and accidental damage coverage on a federal, state, local or international level may cause us to incur costs or have additional regulatory requirements to meet in the future in order to continue to offer our support services. Our failure to comply with past, present and future similar laws could result in reduced sales of our products, reputational damage, penalties and other sanctions, which could harm our business and financial condition.

Our business and products are subject to government regulation, and we may incur additional compliance costs or, if we fail to comply with applicable regulations, may incur fines or be forced to suspend or cease operations.

Our products must comply with certain requirements of the U.S. Federal Communications Commission (FCC) regulating electromagnetic radiation in order to be sold in the U.S. and with comparable requirements of the regulatory authorities of the European Union (EU) and other jurisdictions in order to be sold in those jurisdictions. We are also subject to various governmental regulations related to toxic, volatile, and other hazardous chemicals used in connection with parts of our manufacturing process, including the Restriction of Certain Hazardous Substances Directive (RoHS) issued by the EU effective July 1, 2006. This directive restricts the distribution of products within the EU that exceed very low maximum concentration values of certain substances, including lead.

We believe that all our current enterprise products comply with the regulations of the jurisdictions in which they are sold. Our failure to comply with these regulations in the future could result in the imposition of fines or in the suspension or cessation of our operations in the applicable jurisdictions. Additional regulations applicable to our business may be enacted in the United States or other jurisdictions in the future. Compliance with regulations enacted in the future could substantially increase our cost of doing business or otherwise have a material adverse effect on our results of operations and our business.

Disruptions in our production could adversely affect our operating results.

If we were to experience any significant disruption in the operation of our facilities, we would be unable to supply our products to our customers. Many of our sales contracts include financial penalties for late delivery. In the past, we have experienced power outages at our facilities, which ranged in duration from one to four days. Additionally, as we introduce new equipment into our manufacturing processes, our display products could be subject to especially wide variations in manufacturing yields and efficiency. We may experience manufacturing problems that would result in delays in product introduction and delivery or yield fluctuations.

If our information technology security systems were infiltrated and confidential and/or proprietary information were taken, we could be subject to fines, lawsuits and loss of customers.

Significantly larger organizations with much greater resources than us have been the victim of cybercrimes. We rely on our electronic information systems to perform routine transactions to run our business. We transact business over the internet with customers, vendors and our subsidiaries and have implemented security measures to protect unauthorized access to this information. We have also implemented security policies that limit access via the internet from the Company to the outside world based on the individual’s position in the Company. We routinely receive security patches from software providers for the software we use. Our primary concerns are inappropriate access to personnel information, information covered under the International Traffic in Arms Regulation, product designs and manufacturing information, financial information and our intellectual property, trade secrets and know-how.

If we fail to keep pace with changing technologies, we may lose customers.

Rapidly changing customer requirements, evolving technologies and industry standards characterize our industries. To achieve our goals, we need to enhance our existing products and develop and market new products that keep pace with continuing changes in industry standards, requirements and customer preferences. We may be unable to bring to market technologies and products that are attractive to our customers, and as a result, our business, financial condition and results of operations may be materially adversely affected.

Customer demands and new regulations related to conflict-free minerals may adversely affect us.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) imposes disclosure requirements regarding the use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries in products, whether or not these products are manufactured by third parties. These requirements could affect the pricing, sourcing and availability of minerals used in the manufacture of semiconductor devices (including our products). Our supply chain is complex, and we may be unable to verify the origins for all metals used in our products. We purchase materials from foreign sources that may not cooperate and provide us with the necessary information to allow us to comply with the Dodd-Frank Act. This may require us to find alternative sources, which could delay product shipments. We may also encounter challenges with our customers and stockholders if we are unable to certify that our products are conflict-free.

Our products could likely experience declining unit prices and we may not be able to offset that decline with production cost decreases or higher unit sales.

In the markets in which we compete, prices of established consumer electronics displays, personal computers, and mobile products tend to decline significantly over time or as new enhanced versions are introduced, frequently every 12 to 24 months. In order to maintain adequate product profit margins over the long term, we believe that we will need to continuously develop product enhancements and new technologies that will either slow price declines of our products or reduce the cost of producing and delivering our products. While we anticipate many opportunities to reduce production costs over time, we may not be able to reduce our component costs. We expect to attempt to offset the anticipated decrease in our average selling price by introducing new products, increasing our sales volumes or adjusting our product mix. If we fail to do so, our results of operations will be materially and adversely affected.

Our business and results of operations may suffer if there are, or if users claim there are, negative effects on eyesight from the long term use of our products.

The personal display products that we currently market or may introduce and market in the future are fairly new and utilize fairly new technology. While virtual display technology has been in use over the past 35 years, sales to the enterprise customers have been limited. Extensive and continual viewing of any display, including standard computer monitors, for hours each day, has the potential to negatively affect eyesight. Accordingly, it is possible that prolonged use of our products may adversely affect a user’s eyesight. We design our products with these considerations in mind to attempt to minimize any potential negative impact. We warn users that extensive daily use without appropriate rest periods may cause eye fatigue that could result in temporary or permanent damage (in much the same way that computer monitor manufacturers now warn users about long-term computer use). Despite our efforts, we may be unable to overcome this risk and such risk could result in claims against us by users of our products. Any such claims, whether or not we are ultimately held liable for them, could diminish the value of our brand, competitive advantages or goodwill and may result in decreased sales and we could incur significant expenses in defending against any such claims. In addition, if we are ultimately held liable for any such claims, the resulting liabilities may have a material adverse effect on our business, financial condition and results of operations.

Product liability claims, whether or not we are ultimately held liable for them, could have a material adverse effect on our business and results of operations.

Our business may expose us to product liability claims. Although no such claims have been brought against us to date, and to our knowledge no such claim is threatened or likely, we may face liability to product users for damages resulting from the design or manufacture of our products. Any such claims, whether or not we are ultimately held liable for them, could diminish the value of our brand, competitive advantages or goodwill and result in decreased sales and we could incur significant expenses in defending against any such claims. While we plan to obtain and maintain product liability insurance coverage, product liability claims made against us may exceed coverage limits or fall outside the scope of such coverage. Also, insurance may not be available at commercially reasonable rates or at all. We do not have any such product liability insurance in effect.

Our failure to effectively manage growth could harm our business.

We have rapidly and significantly expanded the number and types of products we sell, and we will endeavor to further expand our product portfolio. We must regularly introduce new products and technologies, enhance existing products, and effectively stimulate customer demand for new products and upgraded versions of our existing products.

This expansion of our products places a significant strain on our management, operations and engineering resources. Specifically, the areas that are strained most by our growth include the following:

If our customers are not satisfied with our technical support, firmware or software updates on some of our products, they may choose not to purchase our products, which would adversely impact our business and operating results.

Our business relies, in part, on our customers’ satisfaction with the technical support, firmware, software and security updates we provide to support our products. If we fail to provide technical support services and necessary updates that are responsive, satisfy our customers’ expectations and resolve issues that they encounter with our products, customers may choose not to purchase additional products and we may face brand and reputational harm, which could adversely affect our operating results.

We are subject to governmental export and import controls and economic sanctions laws that could subject us to liability and impair our ability to compete in international markets.

The U.S. and various foreign governments have imposed controls, export license requirements and restrictions on the import or export of some technologies. Our products are subject to U.S. export controls, including the Commerce Department’s Export Administration Regulations and various economic and trade sanctions regulations established by the Treasury Department’s Office of Foreign Assets Controls, and exports of our products must be made in compliance with these laws. Furthermore, U.S. export control laws and economic sanctions prohibit the provision of products and services to countries, governments, and persons targeted by U.S. sanctions. Even though we take precautions to prevent our products from being provided to targets of U.S. sanctions, our products, including our firmware updates, could be provided to those targets or provided by our customers despite such precautions. Any such provision could have negative consequences, including government investigations, penalties and reputational harm. Our failure to obtain the required import or export approval for our products could harm our international and domestic sales and adversely affect our revenue.

Our facilities and information systems and those of our key suppliers could be damaged as a result of disasters, terrorism or unpredictable events, which could have an adverse effect on our business operations.

We operate the majority of our business from one location in Henrietta, New York (a suburb of Rochester). We also rely on third-party manufacturing plants and third-party logistics, sales and marketing facilities in the U.S. and in other parts of the world to provide key components for our products and services. If major disasters such as earthquakes, pandemics, fires, floods, wars, computer viruses, transportation disasters or other events occur in any of these locations, or our information systems or communications network or those of any of our key component suppliers breaks down or operates improperly as a result of such events, our facilities or those of our key suppliers may be seriously damaged, and we may have to stop or delay production and shipment of our products. We may also incur expenses relating to such damages. If production or shipment of our products or components is stopped or delayed or if we incur any increased expenses as a result of damage to our facilities, our business, operating results and financial condition could be materially adversely affected.

In addition, terrorist acts or acts of war may cause damage or disruption to our facilities, information systems, vendors, employees and customers, which could significantly harm our sales and results of operations. In the future, fears of war or additional acts of terrorism may have a negative effect on customer spending, as well as have an adverse effect on the economy in general.

We do not control our component suppliers, service providers and contract manufacturers or currently require them to comply with a formal code of conduct, and actions that they might take could harm our reputation and sales.

We do not control our component suppliers, service providers and contract manufacturers, including their labor, environmental or other practices, or require them to comply with a formal code of conduct. Though we conduct periodic visits to some of our contract manufacturers and suppliers, these visits are not frequent or thorough enough to detect noncompliance with applicable laws and good industry practices. A violation of labor, environmental or other laws by our contract manufacturers or suppliers, or a failure of these parties to follow ethical business practices, could lead to negative publicity and harm our reputation. In addition, we may choose to seek alternative manufacturers or suppliers if these violations or failures were to occur. Identifying and qualifying new manufacturers or suppliers can be time consuming and we might not be able to substitute suitable alternatives in a timely manner or at an acceptable cost. Other consumer products companies have faced significant criticism for the actions of their manufacturers and suppliers, and we could face such criticism ourselves. Any of these events could adversely affect our brand, harm our reputation, reduce demand for our products and harm our ability to meet demand if we need to identify alternative manufacturers or suppliers.

The requirements of being a public company.

As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results. We may need to hire more employees in the future to comply with these requirements, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board and qualified executive officers.

As a result of the disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in increased threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.

Risks Associated with Intellectual Property

If we are unable to obtain software license relationships or other relationships relating to the intellectual property we may use, our ability to grow revenue and achieve profitability and positive cash flow may be negatively affected.

While we do not currently license any software from third parties, we may find it advantageous to do so in the future. If so, we would be responsible to comply with the terms of a license, or our license could be canceled. Companies may decide to stop supporting the software we license, or new versions of the software may not be compatible with our software, which would require us to rewrite our software, which we may not be able to do. In that case, if we are reliant on software licensed from third parties and unable to rewrite any incompatible software licensed from them, our ability to grow revenue and achieve profitability and positive cash flow may be negatively affected.

We may incur substantial costs or lose important rights as a result of litigation or other proceedings relating to our products, patents and other intellectual property rights.

In recent years, there has been significant litigation involving patents and other intellectual property rights in many technology-related industries. As a result, there may be U.S. patent applications pending of which we are unaware that may be infringed by the use of our technology or a part thereof, thus substantially interfering with the future conduct of our business. In addition, there may be issued patents in the United States or other countries that are pertinent to our business of which we are not aware. We and our customers could be sued by other parties for patent infringement in the future. Such lawsuits could subject us and them to liability for damages or require us to obtain additional licenses that could increase the cost of our products, which might have an adverse effect on our sales.

In addition, in the future, we may assert our intellectual property rights by instituting legal proceedings against others. We may not be able to successfully enforce our patents in any lawsuits we may commence. Defendants in any litigation we may commence enforcing our patents may attempt to establish that our patents are invalid or are unenforceable. Any patent litigation could lead to a determination that one or more of our patents are invalid or unenforceable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with the prosecution of the patent withheld relevant information from the United States Patent and Trademark Office (“USPTO”), or made a misleading statement, during prosecution. Third parties may raise claims challenging the validity or enforceability of a patent before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include reexamination, post-grant review, inter partes review, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation of, cancellation of, or amendment to our patents in such a way that they no longer cover our products, any future product candidates or other proprietary technologies we may develop. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we or our licensing partners and the patent examiner were unaware during prosecution. If a third party were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on the Six15 ST1^® Head-Up Display or our other products, any future product candidates or other proprietary technologies we may develop.

There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patents do not cover the invention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products. Our ability to derive sales from products or technologies covered by these patents could be adversely affected.

Whether we are defending the assertion of third-party intellectual property rights against our business as a result of the use of our technology, or we are asserting our intellectual property rights against others, such litigation can be complex, costly, protracted and highly disruptive to our business operations by diverting the attention and energies of management and key technical personnel. As a result, the pendency or adverse outcome of any intellectual property litigation to which we are subject could disrupt business operations, require the incurrence of substantial costs and subject us to significant liabilities, each of which could severely harm our business.

Plaintiffs in intellectual property cases often seek injunctive relief. Any intellectual property litigation commenced against us could force us to take actions that could be harmful to our business and thus to our sales, including the following:

If we are forced to take any of the foregoing actions, we may be unable to manufacture and sell products that incorporate our technology at a profit, if at all. Furthermore, the measure of damages in intellectual property litigation can be complex and is often subjective or uncertain. If we were to be found liable for infringement of proprietary rights of a third party, the amount of damages we might have to pay could be substantial and is difficult to predict. Decreased sales of our products incorporating our technology would adversely affect our sales. Any necessity to procure rights to the third party technology might cause us to negotiate the royalty terms of the third party license which could increase our cost of production or, in certain cases, terminate our ability to build some of our products entirely.

We may become involved in lawsuits to protect or enforce our other intellectual property rights, which could be expensive, time consuming and unsuccessful.

In addition to patents, as addressed above, competitors may infringe our trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of our management and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, trademarks, copyrights or other intellectual property. If we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks.

In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating or successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could negatively impact our ability to compete in the marketplace.

The process of seeking patent protection can be time consuming and expensive and we cannot be certain that patents will be issued from currently pending or future patent applications. We cannot be certain that domestic or foreign intellectual property laws will allow protection of our intellectual property rights or that others will not independently develop similar products, duplicate our products or design around any patents issued or licensed to us.

We may be subject to or may initiate contested patent or patent application proceedings in the United States Patent and Trademark Office, foreign patent offices or the courts, which can demand significant financial and management resources. Patent applications in the U.S. typically are maintained in secrecy until they are published about 18 months after their earliest claim to priority. As the publication of discoveries in the scientific and patent literature lags behind actual discoveries, we cannot be certain that we were the first to conceive of inventions covered by our pending patent applications or the first to file patent applications on such inventions. We also cannot be certain that our pending patent applications or those of our licensors will result in issued patents or that any issued patents will provide adequate protection against a competitor. In addition, we cannot be certain that others will not obtain patents that we would need to license or could force us to retool or cease manufacturing and sales of products covered by these patents, nor can we be sure that licenses, if needed, would be available to us on favorable terms, if at all.

If we cannot obtain and maintain appropriate patent and other intellectual property rights protection for our technology, our business will suffer.

The value of our personal display and related technologies is dependent, in part, on our ability to secure and maintain appropriate patent and other intellectual property rights protection. We intend to continue to aggressively pursue additional patent protection for our new products and technology. Although we own many patents covering our technology that have already been issued, we may not be able to obtain additional patents that we apply for, or that any of these patents, once issued, will give us commercially significant protection for our technology, or will be found valid if challenged. Moreover, we have not obtained patent protection for some of our technology in all foreign countries in which our products might be manufactured or sold. In any event, the patent laws and enforcement regimes of other countries may differ from those of the United States as to the patentability of our personal display and related technologies and the degree of protection afforded.

Any patent or trademark registration owned by us may be challenged and invalidated or circumvented. Patents may not issue from any of our pending or future patent applications. Any claims and issued patents or pending patent applications may not be broad or strong enough and may not be issued in all countries where our products can be sold, or our technologies can be licensed to provide meaningful protection against any commercial damage to us. Further, others may develop technologies that are similar or superior to our technologies, duplicate our technologies or design around the patents owned by us. Effective intellectual property protection may be unavailable or limited in certain foreign countries. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise use aspects of our processes and devices that we regard as proprietary. Policing unauthorized use of our proprietary information and technology is difficult and our efforts to do so may not prevent the misappropriation of our technologies. In the event that our intellectual property protection is insufficient to protect our intellectual property rights, we could face increased competition in the market for our products and technologies, which could have a material adverse effect on our business, financial condition and results of operations.

We may become engaged in litigation to protect or enforce our patent and other intellectual property rights or in International Trade Commission proceedings to abate the importation of goods that would compete unfairly with our products. In addition, we may have to participate in interference or reexamination proceedings before the United States Patent and Trademark Office, or in opposition, nullification or other proceedings before foreign patent offices, with respect to our patents or patent applications. All of these actions would place our patents and other intellectual property rights at risk and may result in substantial costs to us as well as a diversion of management attention. Moreover, if successful, these actions could result in the loss of patent or other intellectual property rights protection for the key technologies on which our business strategy depends.

Despite our efforts to protect our intellectual property rights, intellectual property laws afford us only limited protection. A third party could copy or otherwise obtain information from us without authorization. Accordingly, we may not be able to prevent the misappropriation of our intellectual property or deter others from developing similar products or services. Further, monitoring the unauthorized use of our intellectual property is difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources may result in counterclaims or other claims against us and could significantly harm our results of operations. In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as do the laws of the United States.

As is commonplace in technology companies, we employ individuals who were previously employed at other technology companies. To the extent our employees are involved in research areas that are similar to those areas in which they were involved at their former employers, we may be subject to claims that such employees or we have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of the former employers. Litigation may be necessary to defend against such claims. Litigation of this type could result in substantial costs to us and divert our resources.

We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States. In some cases, we may not be able to obtain patent protection for certain technology outside the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States, even in jurisdictions where we do pursue patent protection. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, even in jurisdictions where we do pursue patent protection or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents if pursued and obtained, or marketing of competing products in violation of our proprietary rights generally. In addition, some jurisdictions, such as Europe, Japan and China, may have a higher standard for patentability than the United States, including, for example, the requirement of claims having literal support in the original patent filing and the limitation on using supporting data that is not in the original patent filing. Under those heightened patentability requirements, we may not be able to obtain or maintain sufficient patent protection in certain jurisdictions even though the same or similar patent protection can be secured in the United States and other jurisdictions.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Additionally, such proceedings could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties for any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.

Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.

With the growth of mobile devices and personal voice assistants, cloud services and AI, the number of supporting platforms has grown, and with it the complexity and increased need for us to have business and contractual relationships with the platform owners in order to produce products compatible with these platforms and enable access to and use of these platforms with our products. Our product strategy includes current and future products designed for use with third-party platforms or software. Our business in these categories relies on our access to the platforms of third parties, some of whom are our competitors. Platform owners that are competitors may limit or decline access to their platforms, and in any case, have a competitive advantage in designing products for their own platforms and may produce products that work better, or are perceived to work better, than our products in connection with those platforms. As we expand the number of platforms and software applications with which our products are compatible, we may not be successful in launching products for those platforms or software applications and/or we may not be successful in establishing strong relationships with the new platform or software owners, which could negatively impact our ability to develop and produce high-quality products on a timely basis for those platforms and software applications. We may otherwise fail to navigate various new relationships, which could adversely affect our relationships with existing platform or software owners.

Our access to third-party platforms may also require paying a subscription, access, royalty or licensing fee, which lowers our product margins or may otherwise be on terms that are not acceptable to us. In addition, the third-party platforms or technologies used to interact with our product portfolio can be delayed in production or can change without prior notice to us, which can result in our having excess inventory, lower margins, or customer support issues.

If we are unable to access third-party platforms or technologies, or if our access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies are delayed or change without notice to us, our business and operating results could be adversely affected.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We engage reputable law firms and other professionals to help us comply with such requirements. In addition, periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and/or applications will have to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned patents and/or applications and any patent rights we may own or license in the future. We rely on outside counsel and third parties to pay these fees payable to such patent agencies. We engage reputable law firms and other professionals to help us comply. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to maintain the patents and patent applications covering our products or technologies, we may not be able to stop a competitor from marketing products that are the same as or similar to the Six15 ST1^® Head-Up Display, our other products or any future product candidates, which would have a material adverse effect on our business. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which noncompliance can result in irretrievable abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market and this circumstance could harm our business.

Intellectual property rights do not necessarily address all potential threats to our business.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business. The following examples are illustrative:

Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.

If we are unable to protect the confidentiality of our proprietary information, our business and competitive position would be harmed.

In addition to seeking patent and trademark protection for Six15 Technologies, we also rely on confidentiality agreements to protect our unpatented know-how, technology and other proprietary information, to maintain our competitive position. Trade secrets and know-how can be difficult to document and protect. In particular, the trade secrets and know-how in connection with our development programs and other proprietary technology we may develop may over time be available within the industry through independent development.

We seek to protect our proprietary information, in part, by entering into nondisclosure and confidentiality agreements with parties who have access to it, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information. Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective. In addition, we may not be able to obtain adequate remedies for any such breaches. Enforcing a claim that a party illegally disclosed or misappropriated proprietary information is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are unwilling to protect trade secrets.

We may be subject to claims that third parties have an ownership interest in our trade secrets. For example, we may have disputes arise from conflicting obligations of our employees, consultants or others who are involved in developing the Six15 ST1^® Head-Up Display, our other products or any future product candidate. Litigation may be necessary to defend against these and other claims challenging ownership or the proprietary nature of our trade secrets. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable trade secret rights, such as exclusive ownership of or right to use trade secrets that are important to the Six15 ST1^® Head-Up Display, our other products or any future product candidates or other proprietary technologies we may develop. Such an outcome could have a materially adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our management and other employees.

Moreover, our competitors may independently develop knowledge, methods and know-how equivalent to our proprietary information. Competitors could purchase our products and replicate some or all of the competitive advantages we derive from our development efforts for technologies on which we do not have patent protection. If any of our proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our proprietary information were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

We also seek to preserve the integrity and confidentiality of our data and other confidential information by maintaining the physical security of our premises and physical, electronic and data security of our information technology systems. While we have confidence in these individuals, organizations, products, services and systems, agreements or security measures may be breached and detecting the disclosure or misappropriation of confidential information and enforcing a claim that a party illegally disclosed or misappropriated confidential information is difficult, expensive and time consuming, and the outcome is unpredictable. Further, we may not be able to obtain adequate remedies for any breach. In addition, our confidential information may otherwise become known or be independently discovered by competitors, in which case we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could negatively impact the success of our business.

Our commercial success depends, in part, upon our ability and the ability of future collaborators, if any, to develop, manufacture, market and sell the Six15 ST1^® Head-Up Display, our other products or any future product candidates and use our proprietary technologies without infringing the proprietary rights and intellectual property of third parties. We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to the Six15 ST1^® Head-Up Display, our other products or any future product candidates and technology, including interference proceedings, post-grant review and inter partes review before the USPTO. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. There is a risk that third parties may choose to engage in litigation with us to enforce or otherwise assert their patent rights against us. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could negatively impact our ability to commercialize our current Six15 ST1^® Head-Up Display, our other products and any future product candidates. In order to successfully challenge the validity of any such U.S. patent in a federal district court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to infringe a third party’s valid and enforceable intellectual property rights, we could be required to obtain a license from such third party to continue developing, manufacturing and marketing our product candidate(s) and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or product candidate. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. A finding of infringement could prevent us from manufacturing and commercializing the Six15 ST1^® Head-Up Display, our other products or any future product candidates or force us to cease some or all of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, financial condition, results of operations and prospects.

We may in the future pursue invalidity proceedings with respect to third-party patents. The outcome following legal assertions of invalidity is unpredictable. Even if resolved in our favor, these legal proceedings may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. Such proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such proceedings adequately. Some of these third parties may be able to sustain the costs of such proceedings more effectively than we can because of their greater financial resources. If we do not prevail in the patent proceedings, third parties may assert a claim of patent infringement directed at the Six15 ST1^® Head-Up Display, our other products or any future product candidates.

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We may be subject to claims that one or more former employees, collaborators or other third parties have an interest in our patent rights, trade secrets, or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting ownership or assignment obligations of consultants or others who are involved in developing the Six15 ST1^® Head-Up Display, our other products or any future product candidates or other proprietary technologies we may develop. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership of our patent rights, trade secrets or other intellectual property. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to any future product candidates or other proprietary technologies we may develop. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.

Many of our employees, consultants or advisors are currently, or were previously, employed at other companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual or his or her current or former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, we may in the future be subject to claims by our former employees or consultants asserting an ownership right in our patents or patent applications, as a result of the work they performed on our behalf. Although it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own, and we cannot be certain that our agreements with such parties will be upheld in the face of a potential challenge or that they will not be breached, for which we may not have an adequate remedy. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be forced to bring claims against third parties or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims are likely to be expensive to pursue and there can be no assurance that we would prevail in any event. Failure to secure ownership of intellectual property could have a material adverse effect on our business, financial conditions, results of operations and prospects.

Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our future product candidates.

The United States enacted and implemented wide-ranging patent reform legislation in 2013. The Supreme Court of the United States has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value, validity and coverage of patents generally, including patents already obtained. Depending on actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce patents that we have licensed or that we might obtain in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions, changes in the governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we have licensed or that we may obtain in the future.

If we fail to renew, register or otherwise protect our trademarks, the value of our brand names may decline, and we may be unable to use those names in certain geographical areas.

We believe our copyrights and trademarks are critical to our success. We rely on trademark, copyright and other intellectual property laws to protect our proprietary rights. If we fail to properly register and otherwise protect our trademarks, service marks and copyrights, we may lose our rights, or our exclusive rights, to them. In that case, our ability to effectively market and sell our products and services could suffer, which could harm our business.

Risks Related to Manufacturing

We depend on small number of third parties to provide integrated circuit chip sets and other critical components for use in our products.

We do not manufacture the integrated circuit chip sets, microprocessors, wireless chips, optics, microdisplays, backlights, projection engines, printed circuit boards or other electronic components which are used in our products. Instead, we purchase them from a small number of third-party suppliers or rely on third-party independent contractors for these integrated circuit chip sets and other critical components, some of which are customized or custom made for us. We had three vendors which accounted for approximately 17%, 12% and 10% of total purchases for the year ended December 31, 2022 and three vendors which accounted for approximately 23%, 17% and 6% of total purchases for the year ended December 31, 2021.

We also may use third parties to assemble all or portions of our products. Some of these third-party contractors and suppliers are small companies with limited financial resources. In addition, any partial or full government-mandated shutdowns resulting from COVID-19 may cause supply chain disruptions. If any of these third-party contractors or suppliers were unable or unwilling to supply these integrated circuit chip sets or other critical components to us, we would be unable to manufacture and sell our products until a suitable replacement supplier could be found. We may be unable to find, if and when needed, a replacement third-party contractor or supplier on reasonable terms or in a timely manner. Any interruption in our ability to manufacture and distribute our products could cause our business to be unsuccessful.

The consumer electronics industry is subject to significant fluctuations in the availability of components. If we do not properly anticipate the need for critical components, we may be unable to meet the demands of our customers and end users.

The availability of certain of the components that we require to produce our products may decrease. As the availability of components decreases, the cost of acquiring those components ordinarily increases. High growth product categories have experienced chronic shortages of components during periods of exceptionally high demand. If we do not properly anticipate the need for or procure critical components, we may pay higher prices for those components, our gross margins may decrease and we may be unable to meet the demands of our customers and end users, which could reduce our competitiveness, cause a decline in our market share and have a material adverse effect on our results of operations.

Unanticipated disruptions in our operations or slowdowns by our suppliers, distributors and shipping companies could adversely affect our ability to deliver our products and service our customers.

Our ability to provide high-quality customer service, process and fulfill orders and manage inventory depends on the efficient, timely and uninterrupted performance of our manufacturing and distribution facilities and our management information systems and the facilities and systems of our third-party suppliers, distributors and shipping companies.

Any material disruption or slowdown in the operation of our manufacturing and distribution facilities or our management information systems, or comparable disruptions or slowdowns suffered by our principal suppliers, distributors or shippers could cause delays in our ability to receive, process and fulfill customer orders and may cause orders to be canceled, lost or delivered late, goods to be returned or receipt of goods to be refused. If any of these events occur, our sales and operating results could be materially and adversely affected.

If we acquire any companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value or have an adverse effect on our results of operations.

We intend to expand our business primarily through internal growth, but from time to time we may consider strategic acquisitions. Any future acquisition would involve numerous risks including:

Additionally, to finance an acquisition we may incur substantial amounts of indebtedness, which would affect our balance sheet and results of operations, or we may issue a substantial number of shares of our common stock, which may be dilutive to our stockholders. If we make acquisitions in the future, acquisition-related accounting charges may affect our balance sheet and results of operations. We may not be successful in addressing these risks or any other problems encountered in connection with any acquisitions.

Risks Related to this Offering

Our management will have broad discretion over the use of any net proceeds from this offering and you may not agree with how we use the proceeds, and the proceeds may not be invested successfully.

Our management will have broad discretion as to the use of any net proceeds from this offering and could use them for purposes other than those contemplated at the time of this offering and in ways that do not necessarily improve our results of operations or enhance the value of our common stock, including, without limitation, redeeming our Series A Preferred Units which have a redemption date of December 31, 2023. Accordingly, you will be relying on the judgment of our management with regard to the use of any proceeds from this offering and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for you.

Investors in this offering will experience immediate and substantial dilution in net tangible book value.

The initial public offering price per share is substantially higher than the pro forma, as adjusted, net tangible book value per share of our outstanding shares of common stock. As a result, investors in this offering will incur immediate dilution of $3.91 per share, based on the public offering price of $5.00 per share. Investors in this offering will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. See “Dilution” for a more complete description of how the value of your investment will be diluted upon the completion of this offering.

If we issue shares of preferred stock your rights as a holder of our common stock or warrants may be materially adversely affected.

As of the date of this prospectus, we are authorized to issue up to 10,000,000 shares of “blank check” preferred stock, of which none are issued and outstanding. The designations, rights and preferences of our preferred stock may be determined from time to time by our Board. Accordingly, our Board is empowered, without stockholder approval, to issue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of the holders of our common stock. For example, an issuance of shares of preferred stock could:

Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.

Sales of a substantial number of shares of our common stock in the public markets could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock would have on the market price of our common stock.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Several analysts may cover our stock. If one or more of those analysts downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Risks Related to Ownership of Our Securities

There has been no public market for our common stock prior to this offering, and an active market in which investors can resell their shares may not develop or be sustained.

Prior to this offering, there has been no public market for our common stock. All investments in securities involve the risk of loss of capital. No guarantee or representation is made that an investor will receive a return of its capital. The value of our common stock can be adversely affected by a variety of factors, including development problems, regulatory issues, technical issues, commercial challenges, competition, legislation, government intervention, industry developments and trends, and general business and economic conditions. We cannot predict the extent to which an active market for our common stock will develop or be sustained after this offering, or how the development of such a market might affect the market price of our common stock.

The public price of our common stock may be volatile, and could, following a sale decline significantly and rapidly.

The initial public offering price for the shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in the offering, or at all. Following this offering, the public price of our common stock in the secondary market will be determined by private buy and sell transaction orders collected from broker-dealers.

In addition, the stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to operating performance of individual companies, particularly following an initial public offering of a company with a small public float. There is the potential for rapid and substantial price volatility of our common stock following this offering. These broad market factors may seriously harm the market price of our common stock, regardless of our actual or expected operating performance and financial condition or prospects, which may make it difficult for investors to assess the rapidly changing value of our common stock. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A class action suit against us could result in significant liabilities and, regardless of the outcome, could result in substantial costs and the diversion of our management’s resources and attention.

We may not be able to satisfy the continued listing requirements of the NYSE American to maintain a listing of our common stock.

If our common stock is listed on the NYSE American, we must meet certain financial and liquidity criteria to maintain listing on such exchange. If we violate the maintenance requirements for continued listing of our common stock, our common stock may be delisted. In addition, our Board may determine that the cost of maintaining our listing on a securities exchange outweighs the benefits of such listing. A delisting of our common stock from the NYSE American may materially impair our stockholders’ ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. In addition, the delisting of our common stock could significantly impair our ability to raise capital.

Substantial amounts of our outstanding shares may be sold into the market when lock-up or market standoff periods end. If there are substantial sales of shares of our common stock, the price of our common stock could decline.

All of our outstanding shares of common stock held by our directors, executive officers and stockholders are subject to contractual lock-up restrictions on resale as more fully described in the section titled “Underwriting” in this prospectus. If these stockholders sell or indicate an intent to sell, substantial amounts of our common stock in the public market after the expiration of the applicable lock-up period, the trading price of our common stock could decline significantly and could decline below the public offering price.

Our failure to maintain effective internal controls over financial reporting could have an adverse impact on us.

Once we become a reporting company, we will be required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal controls over financial reporting, disclosure of management’s assessment of our internal controls over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be relative to their costs. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Further, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and may not be detected.

If we fail to comply with the rules and regulations under the Sarbanes-Oxley Act, our operating results, our ability to operate our business and investors’ views of us may be harmed.

Section 404 of the Sarbanes-Oxley Act requires public companies to conduct an annual review and evaluation of their internal controls. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that will need to be evaluated frequently. Our failure to maintain the effectiveness of our internal controls in accordance with the requirements of the Sarbanes-Oxley Act could have a material adverse effect on our business. We could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the price of our common stock. In addition, our efforts to comply with the rules and regulations under Sarbanes-Oxley or new or changed laws, regulations, and standards may differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice. Regulatory authorities may investigate transactions disclosed in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and if legal proceedings are initiated against us, it may harm our business.

If we engage in future acquisitions or strategic collaborations, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks.

From time to time, we may evaluate various acquisitions and strategic collaborations, including licensing or acquiring complementary intellectual property rights, technologies or businesses, as deemed appropriate to carry out our business plan. Any potential acquisition or strategic partnership may entail numerous risks, including:

In addition, if we engage in future acquisitions or strategic partnerships, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable acquisition opportunities, and this inability could impair our ability to grow or obtain access to technology that may be important to the development of our business.

If research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our share price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or financial analysts publish about us or our business. We do not have any control over the analysts or the content and opinions included in their reports. The price of our shares could decline if one or more equity research analysts downgrade our shares or issue other unfavorable commentary or research about us. If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our shares could decrease, which in turn could cause the trading price or trading volume of our common stock to decline.

Our status as an “emerging growth company” under the JOBS Act and a “smaller reporting company,” and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common shares less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, and we intend to take advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies, including:

In addition, as an “emerging growth company” the JOBS Act allows us to delay the adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies unless we later elect not to avail ourselves of this exemption. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make a comparison of our financials to those of other public companies more difficult. We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year (1) following the fifth anniversary of the completion of this offering, (2) in which we have total annual gross revenue of at least $1.235 billion or (3) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements in our Annual Report on Form 10-K, and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. To the extent we take advantage of such reduced disclosure obligations, it may also make a comparison of our financial statements with other public companies difficult or impossible. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common shares held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common shares held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter.

Investors may find our common stock less attractive to the extent we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

We have broad discretion in the use of our cash and cash equivalents, including the net proceeds from this offering, and may use them ineffectively, in ways in which you do not agree or in ways that do not increase the value of your investment.

Our management will have broad discretion in the application of our cash and cash equivalents, including the net proceeds from this offering, and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply our cash and cash equivalents effectively could result in financial losses that could negatively impact our business and cause the price of our common stock to decline. Pending their use, we may invest our cash and cash equivalents, including the net proceeds from this offering, in a manner that does not produce income or that loses value. See the section titled “Use of Proceeds” for additional information.

We have agreed to indemnify our officers and directors against lawsuits to the fullest extent of the law.

Delaware law permits the indemnification of officers and directors against expenses incurred in successfully defending against a claim. Delaware law also authorizes Delaware corporations to indemnify their officers and directors against expenses and liabilities incurred because of their being or having been an officer or director. Our organizational documents provide for this indemnification to the fullest extent permitted by Delaware law.

Prior to, and in no event not later than, the closing of the offering, we will obtain director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us. There is no guarantee that such insurance coverage will protect us from any damages or loss claims filed against it.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to directors, officers or persons controlling the Company pursuant to provisions of the State of Delaware, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control, which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management.

Our certificate of incorporation authorizes 10,000,000 shares of “blank check” preferred stock, par value $0.0001 per share, of which none are designated or outstanding. The Board may provide for the issue of any or all of the unissued and undesignated shares of the preferred stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board providing for the issuance of such shares and as may be permitted by law, without stockholder approval.

The issuance of preferred stock could adversely affect, among other things, the voting power of holders of common stock and the likelihood that stockholders will receive dividend payments and payments upon our liquidation, dissolution or winding up. The issuance of preferred stock could also have the effect of delaying, deferring or preventing a change in control of the Company which could suppress the market price of our common stock.

In addition, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, or DGCL, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These anti-takeover provisions and other provisions in our certificate of incorporation and bylaws could make it more difficult for stockholders or potential acquirers to obtain control of our Board or initiate actions that are opposed by the then-current Board and could also delay or impede a merger, tender offer or proxy contest involving our Company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our Board could cause the market price of our common stock to decline.

We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.

We have never paid cash dividends on our common stock. We currently intend to retain any future earnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board after taking into account various factors, including, but not limited to, our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our common stock may be limited by Delaware state law. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements.” Forward-looking statements reflect the current view about future events. When used in this prospectus, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include but are not limited to, statements contained in this prospectus relating to our business strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation:

Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $8.3 million (or approximately $9.7 million if the underwriters fully exercise the Over-Allotment Option) from the sale of the shares of common stock offered by us in this offering, based on an assumed public offering price of $5.00 per share, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase or decrease in the assumed initial public offering price of $5.00 per share would increase or decrease, as applicable, the net proceeds that we receive from this offering by approximately $1,840,000, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 400,000 shares of our common stock offered by us would increase or decrease, as applicable, the net proceeds that we receive from this offering by approximately $1,840,000, assuming the initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to increase our capitalization and financial flexibility, increase our visibility in the marketplace and create a public market for our common stock. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from this offering. However, we currently intend to use the net proceeds to us from this offering for general corporate purposes, including working capital, and the debt repayment of (i) the SQN Note in the amount of $665,000, which consists of principal and accrued interest and (ii) the Promissory Notes issued to Rossiter & Cummaro Enterprise LLC (the “RCE Notes”) in the amount of $332,499.91, which consists of principal and accrued interest. The SQN Note bears interest at 14% per annum since June 1, 2022 and has a maturity date of July 1, 2025. The RCE Notes bear interest at 16% per annum and have a maturity date of June 1, 2025.

The table below sets forth the manner in which we expect to use the net proceeds we receive from this offering. All amounts included in the table below are estimates.

The foregoing information is an estimate based on our current business plan. We may find it necessary or advisable to re-allocate portions of the net proceeds reserved for one category to another, and we will have broad discretion in doing so.

This expected use of net proceeds from this offering represents our intentions based on our current plans and business conditions, which could change in the future as our plans and business conditions evolve. We may also use a portion of the net proceeds to in-license, acquire or invest in additional businesses, technologies, products or assets. We cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering or the amounts that we will actually spend on the uses set forth above. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term and intermediate-term, investment-grade, interest-bearing instruments and U.S. government securities.

DIVIDEND POLICY

We have not declared any cash dividends since inception, and we do not anticipate paying any dividends in the foreseeable future. Instead, we anticipate that all of our earnings will be used to provide working capital, to support our operations, and to finance the growth and development of our business. The payment of dividends is within the discretion of the Board and will depend on our earnings, capital requirements, financial condition, prospects, applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits, and other factors our Board might deem relevant. There are no restrictions that currently limit our ability to pay dividends on our common stock other than those generally imposed by applicable state law.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Prior to this offering, our common stock has not been listed on any stock exchange or quoted on any over-the-counter market or quotation system and there has been no public market for our common stock. We have applied to have our common stock listed on the NYSE American under the symbol “SXV,” which listing is a condition to this offering. There can be no assurance that our listing application will be approved. For more information see the section “Risk Factors.”

As of October 4, 2023, 4,000,000 shares of our common stock were issued and outstanding and were held by 36 stockholders of record.

CAPITALIZATION

The following table sets forth our consolidated cash and capitalization, as of June 30, 2023. Such information is set forth on the following basis:

You should read the following table in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included in this prospectus.

The pro forma as adjusted information set forth below is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

DILUTION

Purchasers of our common stock in this offering will experience an immediate and substantial dilution in the as adjusted net tangible book value of their shares of common stock. Dilution in as adjusted net tangible book value represents the difference between the public offering price per share and the as adjusted net tangible book value per share of our common stock immediately after the offering.

The historical net tangible book value of our common stock as of June 30, 2023, was $(4,433,945) or $(1.13) per share.  Historical net tangible book value per share of our common stock represents our total tangible assets (total assets less intangible assets) less total liabilities divided by the number of shares of common stock outstanding as of that date. After giving effect to the issuance of (i) 60,674 shares of common stock after June 30, 2023 and prior to the date of this prospectus, (ii) 702,162 shares of common stock upon the conversion of the Convertible Notes and (iii) 292,920 shares of common stock issuable upon the automatic conversion of a portion of the outstanding principal amount of the SQN Note, our pro forma net tangible book value as of June 30, 2023 would have been $(649,078) or approximately $(0.13) per share of our common stock.

After giving effect to the pro forma adjustments set forth above and the issuance of 2,000,000 shares in this offering at an assumed initial public offering price of $5.00 per share and payment of $997,499.91 of indebtedness for net proceeds of $7,302,500, our pro forma as adjusted net tangible book value as June 30, 2023 would have been $7,650,922 or approximately $1.09 per share of our common stock. This represents an immediate increase in pro forma net tangible book value per share of $1.22 to the existing stockholders and an immediate dilution in pro forma net tangible book value per share of $3.91. The following table illustrates this per share dilution to new investors:

Each $1.00 increase or decrease in the assumed initial public offering price of $5.00 per share would increase or decrease, as applicable, our pro forma as adjusted net tangible book value per share to new investors by $0.29, and would increase or decrease, as applicable, dilution per share to new investors in this offering by $0.71, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of 400,000 shares of our common stock offered by us would increase or decrease, as applicable, our pro forma as adjusted net tangible book value by approximately $0.22 per share and increase or decrease, as applicable, the dilution to new investors by $(0.22) per share, assuming the initial public offering price of $5.00 remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

After completion of this offering, our existing stockholders would own approximately 57% and our new investors would own approximately 43% of the total number of shares of our common stock outstanding after this offering.

If the underwriters’ option to purchase additional shares of our common stock from us is exercised in full, the pro forma as adjusted net tangible book value per share of our common stock, as adjusted to give effect to this offering, would be $1.08 per share, and the dilution in pro forma net tangible book value per share to new investors in this offering would be $3.92 per share.

To the extent that outstanding options or warrants, if any, are exercised, you will experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities may result in further dilution to our stockholders.

Capitalization Table

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the information presented in “Selected Historical Consolidated Financial Data” and our historical consolidated financial statements and the related notes included elsewhere in this prospectus. In addition to historical information, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources, which involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described in “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Unaudited Condensed Consolidated Financial Information.” We assume no obligation to update any of these forward-looking statements.

Overview

We are engaged in the design, manufacture, marketing, and sale of wearable displays and computing devices that are worn like eyeglasses and feature built-in video screens that enable the user to view video and digital content, such as video, computer data, images and AR content. Our wearable display products, known commercially as HUDs, smart glasses, wearable displays, video glasses, personal viewers, near-eye virtual displays, and near-eye displays or NEDs contain micro video displays that offer users a portable high-quality viewing experience. Our HUD products provide virtual screens, allowing the user to have instant access to information throughout their operation, workflow or experience. Our products and technology span the scope of augmented reality within the U.S. Department of Defense to include video, virtual reality, and augmented reality in which the wearer is either immersed in a computer-generated world or has their real-world view augmented with computer-generated information or graphics. We produce both monocular and binocular HUDs and as well as rugged optical components that drive OEM devices. HUD products are designed to work with mobile electronic devices, such as cell phones, laptop computers, and tablets.

Historically, we have focused on the defense market, providing thousands of systems to U.S. and NATO soldiers operating in the most demanding environments. Approximately 51% of our revenue for the six months ended June 30, 2023 was from the U.S. military. From this background in defense, we designed and developed our enterprise HUD solution to address the growing demand for AR in industrial applications. Working with leading industrial OEMs, we focused on providing improved efficiency, and reduced training time by utilizing AR in the workplace. We partnered with Zebra Technologies to ensure we met the demands of industrial customers. In the second quarter of 2022, we began marketing the ST1^® Head-Up Display to enterprise customers and software providers.

The use of mobile devices like tablets, laptops, smartphones, and “host” device computers among enterprise customers has grown precipitously as demands force them to provide better and more accurate service. Commensurately, these same growing demands on industry force companies to continuously advance, and as such, the demand for HUD in enterprises is growing as we prove the tangible benefits. We believe that both defense and enterprise customers will continue to demand HUD solutions specifically targeted to their use case while requiring the robustness to withstand their work environments without fail.

Our HUD solutions are designed to enable companies to take advantage of the benefits of AR while limiting risk, cost, and time to implement. Our products deliver solutions across the range of AR uses, from delivering video content to overlaying data on the real world. With our recent launch into the industrial market, focused on warehousing, logistics, manufacturing and remote workers, we developed our hardware/software solution that delivers tangible results with ease. With millions of host devices currently being used, our goal is to “AR-enable” our customers’ current equipment, allowing for a solution that requires minimal integration, little to no infrastructure requirements, and the reduction of security issues by eliminating the need to install a new piece of hardware into their IT environment. With established software platform providers, we provide a true plug-and-play solution to enterprise customers across multiple uses. Our solution has demonstrated significant performance improvements to our end users while maintaining safety and reducing training time. Initial deployments and testing have shown average training times reduced by 90% while improving day-to-day picking efficiency by 25% on average. By reducing the cognitive load of a worker, and providing information “floating” in front of their field of view, we accomplish both the objective of providing information hands-free, while simultaneously providing simple graphical representations of workflow steps. We believe the simplicity and efficacy of this solution will create substantial growth in the adoption and implementation of AR in the workplace.

Key Factors Affecting our Performance

As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.

Known Trends and Uncertainties

Impact of COVID-19 on Our Operations

The future impact that COVID-19 may have on our results of operations is uncertain. To date, we have not experienced any material reduction in the available supply of products and our outlook and business goals have not been materially affected by the supply chain disruptions. We will continue to evaluate the nature and extent of COVID-19’s impact to our business, results of operations, financial condition and liquidity. Our results presented herein are not necessarily indicative of the results to be expected for future periods in 2023 or the full fiscal year.

Management cannot predict the full impact of COVID-19 on our sourcing, manufacturing and distribution of our products or to economic conditions generally. The ultimate extent of the effects of COVID-19 on us is highly uncertain and will depend on future developments.

Our business could be adversely affected by the effects of COVID-19 or other future health epidemics or pandemics in regions where we or third parties on which we rely have significant business operations.

Seasonality

Our business could be affected by seasonal variations. For instance, we expect to experience lower sales in the winter months and higher sales in the last quarter of the fiscal year. However, taken as a whole, seasonality does not have a material impact on our financial results.

Inflation

Prices of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices in the component materials for the parts of our goods may impact the availability, the quality and the price of our products, as suppliers search for alternatives to existing materials and increase the prices they charge. Our suppliers may also fail to provide consistent quality of products as they may substitute lower-cost materials to maintain pricing levels. Rapid and significant changes in commodity prices may negatively affect our profit margins if we are unable to mitigate any inflationary increases through various customer pricing actions and cost reduction initiatives. To offset increased prices charged by our manufacturers and increased shipping rates, we continue to review our pricing to customers to adjust for increased costs.

Supply Chain

Current global supply chain issues may disrupt operations. While we have mitigated current supply chain challenges, new issues can present disruptions to our business. We have increased our ability to source component replacements on several key products to mitigate the risk of manufacturing disruptions due to supply chain constraints. Regardless of this increased replacement, the risk remains that supply chain constraints could negatively impact our ability to produce product.

Revenue

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, recognizing revenue on fixed price products/goods at a point in time. Revenue is generated through the sales of products and shipping charges, engineering services and commissions.

Cost of Goods Sold, Gross Profit, and Gross Margin

Cost of goods sold includes the costs incurred to acquire materials, assemble, and sell our finished products. We expect our cost of goods sold to fluctuate as a percentage of net revenue due to product and sales channel mix.

We define gross profit as net revenue less the cost of goods sold. Gross margin is gross profit expressed as a percentage of net revenues.

Operating Expenses

Our operating expenses since inception have consisted primarily of research and development expenses and general and administrative costs.

Research and Development Expenses

Our research and development expenses consist primarily of costs incurred for the development of our product candidates, which include:

Costs to develop new prototypes are expensed as incurred and included in general and administrative expenses in the accompanying statements of operations and members’ deficit. Research and development expenses were $987,389 and $1,098,247 and for the years ended December 31, 2022 and December 31, 2021, respectively.

We expense all research and development costs in the periods in which they are incurred. Costs for certain research and development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, including investments in conducting clinical trials, manufacturing and otherwise advancing our programs.

Because of the numerous risks and uncertainties associated with product development and the current stage of development of our product candidates and programs, we cannot reasonably estimate or know the nature, timing and estimated costs necessary to complete the remainder of the development of our product candidates or programs.

Research and development activities account for a significant portion of our operating expenses. We expect our research and development expenses to increase for the foreseeable future as we continue to implement our business strategy.

General and Administrative Expenses

Our general and administrative expenses consist primarily of personnel costs, depreciation expenses and other expenses for outside professional services, including legal fees relating to patent and corporate matters, human resources, audit and accounting services and facility-related fees not otherwise included in research and development expenses. Personnel costs consist of salaries, and benefits, for our personnel in executive, finance and accounting, business operations and other administrative functions. We expect our general and administrative expenses to increase over the next several years to support our continued research and development activities, manufacturing activities, and increased costs of expanding our operations and operating as a public company. These increases will likely include increases related to the hiring of additional personnel, fees to outside consultants, lawyers and accountants, and increased costs associated with being a public company such as expenses related to services associated with maintaining compliance with the listing rules of the NYSE American and SEC requirements, director and officer insurance premiums and investor relations costs.

Interest Expense

Interest expense consists of the interest on outstanding debt in accordance with the terms of the related debt agreements.

Other Income (Expense), Net

Our other expense, net is comprised of:

Results of Operations

The six months ended June 30, 2023, compared to the six months ended June 30, 2022

The following table sets forth our results of operations for the period presented:

The following table sets forth our results of operations as a percentage of revenue:

Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin 

Revenue

For the six months ended June 30, 2023, revenue was $277,071, an increase of $169,734, or 158.1%, from $107,337 in revenue for the six months ended June 30, 2022. This increase was primarily a result of increased revenue generated from military contractors for the six months ended June 30, 2023, compared to the same period in 2022.

Cost of Goods Sold, Gross Profit, and Gross Margin

For the six months ended June 30, 2023, the cost of goods sold was $197,145, an increase of $26,471, or 15.5%, from $170,674 for the six months ended June 30, 2022. This increase was directly tied to the increase in revenue during this same period.

The increase in gross margin percentage from (59.0)% for the six months ended June 30, 2022 to 28.8% for the six months ended June 30, 2023 is a direct result of revised selling prices in the Defense market to adjust for increased costs from our vendors.

Operating Expenses

Professional Fees Expenses

Professional fees were $17,605 for the six months ended June 30, 2023, compared to $53,728 for the six months ended June 30, 2022, a decrease of $36,123, or 67.2%. This decrease is primarily attributable to increased audit related expenses during the six months ended June 30, 2022, which included first year PCAOB audit expenses for years ended December 31, 2022 and 2021.

Research and Development Expenses

Research and development expenses were $527,221 for the six months ended June 30, 2023, compared to $489,417 for 2022, an increase of $37,804, or 7.7%. This increase is primarily attributed to increased salaries and wages directly related to research and development efforts during the six months ended June 30, 2023.

General and Administrative Expenses

General and administrative expenses were $351,053 and $231,039 for the six months ended June 30, 2023 and June 30, 2022, respectively, an increase of $120,014, or 51.9%. This increase is directly related to increased sales efforts during the six months ended June 30, 2023, resulting in increased expenses specifically within consulting fees and a website redesign.

Marketing Expenses

Marketing Expenses were $18,519 and $8,315 for the six months ended June 30, 2023 and June 30, 2022, respectively. These amounts are included in the General and Administrative expenses.

Interest and Other Income (Expense), Net

Interest Expense

Interest expenses were $292,787 for the six months ended June 30, 2023, compared to $887,957 for the six months ended June 30, 2022, a decrease of $595,170, or 67.0%. This decrease is the direct result of less interest bearing notes which were eliminated in June 2022 as part of the contribution agreement.

Other Income (Expense), Net

The increase in Other Income (Expense) relates primarily to additional expenses incurred in 2023 related to financing efforts.

The fiscal year ended December 31, 2022, compared to the fiscal year ended December 31, 2021

The following table sets forth our results of operations for the period presented:

The following table sets forth our results of operations as a percentage of revenue:

Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin 

Revenue

For the year ended December 31, 2022, revenue was $1,602,517, an increase of $432,478, or 37.0%, from $1,170,039 in revenue for the year ended December 31, 2021. This increase was primarily a result of the completion of a single large order for L-3 Communications during the year ended December 31, 2022.

Cost of Goods Sold, Gross Profit, and Gross Margin

For the year ended December 31, 2022, the cost of goods sold was $980,091, an increase of $246,027, or 33.5%, from $734,064 for the year ended December 31, 2021. This increase was directly tied to the increase in revenue during this same period.

The increase in gross margin percentage from 31.3% for the year ended December 31, 2021 to 38.8% for the year ended December 31, 2022 is a direct result of revised selling prices in the Defense market to adjust for increased costs from our vendors.

Operating Expenses

Research and Development Expenses

Research and development expenses were $987,389 for 2022 compared to $1,098,247 for 2021, a decrease of $110,858, or 10%.

Marketing Expenses

Marketing Expenses were $47,657 and $9,077 for the years ended December 31, 2022 or December 31, 2021, respectively. These amounts are included in the General and administrative expenses.

Interest and Other Income (Expense), Net

Interest Expense

Interest expense remained consistent between 2021 and 2022, due to the issuance of additional debt, accompanied by the elimination of several interest bearing notes as part of the contribution agreement signed in June 2022.

Other Income (Expense), Net

The decrease in Other Income (Expense) relates primarily to the forgiveness in full of PPP1 ($160,873) and PPP2 ($241,500) in 2021.

Liquidity and Capital Resources; Going Concern

We had net cash used in by operating activities of $1,101,846 for the six months ended June 30, 2023, and the cash balance was $407,792. We had net cash used in by operating activities of $1,466,551 for the fiscal year ended December 31, 2022 and the cash balance was $180,191 as of December 31, 2022. We evaluated our current cash position, historical results, forecasted cashflows and plans regarding liquidity. Considering all of these factors, we believe, absent this offering or some other form of financing, there is substantial doubt about our ability to continue as a going concern for the next 12 months. 

To date, we have funded our operations through revenues, loans from our officers, and the issuance of equity and debt securities. There is no written or verbal agreement between us and any of our officers which would obligate them to loan funds to the us in the future.

Financings

From September 2021 to December 2022, we issued a series of secured convertible promissory notes to nine investors in the aggregate principal amount of $1,955,088 (the “Convertible Notes”). The outstanding principal amount under the Convertible Notes bears interest at the rate of 12% per annum, and the Convertible Notes were originally to mature on the earlier of (i) December 31, 2022 or (ii) the closing date of this initial public offering. Subsequent to December 31, 2022, the investors agreed to extend the maturity date of the Convertible Notes to June 30, 2023 and then to November 5, 2023, and the Company received written agreements from all investors agreeing to these extensions. If necessary, we will ask the investors to extend the maturity date of the Convertible Notes to December 31, 2023. If this offering closes on or prior to November 5, 2023, then the principal outstanding amount of the Convertible Notes and accrued interest thereon will automatically be converted into shares of our common stock at a 35% discount to the offering price of the shares of common stock sold in this offering. As of June 30, 2023, the total outstanding principal amount of and accrued interest on the Convertible Notes was approximately $2,282,027. As of December 31, 2022, the total outstanding principal amount of and accrued interest on the Convertible Notes was $2,164,722. Based on an assumed offering price of $5.00 per share of common stock in this offering, we would issue an aggregate of 702,162 shares of common stock to the noteholders upon the conversion of the Convertible Notes. The conversion of the Convertible Notes into shares of our common stock will dilute your equity ownership in the Company and may affect the market value of your shares of common stock. If this offering closes after November 5, 2023, the outstanding principal amount and accrued interest on the Convertible Notes will become due and payable unless the investors agree to extend the maturity date of the Convertible Notes.

Paycheck Protection Program Loan

During May 2020, we obtained a Paycheck Protection Program loan (the “PPP loan”) from Customers Bank in the amount of $160,873. The PPP loan bears interest at 1% and is secured by the unconditional guarantee of the U.S. Small Business Administration (the “SBA”). The PPP loan provides for potential forgiveness of the debt, up to the total principal plus accrued interest, based on eligible uses of the PPP loan proceeds during the 8 or 24 week period after the proceeds were received. Principal and interest payments are deferred until the SBA remits the loan forgiveness amount to Customers Bank or until ten months after the end of the 8 or 24 week period. Any amounts that are not forgiven must be repaid prior to maturity in May 2022.

During April 2021, we received a second round Paycheck Protection Program loan (the “Second PPP Loan”) from Genesee Regional Bank in the amount of $241,500. The Second PPP Loan will be repaid in equal monthly installments, including interest at 1%, beginning ten months after the 24 week covered period which begins on the date the loan was received, through maturity in April 2026. The Second PPP Loan is secured by the unconditional guarantee of the SBA. The Second PPP Loan agreement provides for potential forgiveness of the debt, up to the total principal plus accrued interest, based on eligible uses of the Second PPP loan proceeds during the 24 week period after the proceeds were received.

In 2021, we received from the SBA notice that it received full forgiveness of the principal balance plus any accrued interest on its PPP and Second PPP Loans.

Cash Flows

The following table sets forth the primary sources and uses of our cash for six months ended June 30, 2023 and 2022:

Cash Used in Operating Activities

Cash used in operating activities for the six months ended June 30, 2023 and 2022 was $1,101,846, and $668,241, respectively. The increase in cash used in operating activities was primarily due to lower customer deposits received during the six months ended June 30, 2023 than the six months ended June 30, 2022.

Cash Used in Investing Activities

Cash used in investing activities for the six months ended June 30, 2023 and 2022 was $2,494 and $9,434, respectively, as purchases of property, plant and equipment remain minimal.

Cash Provided by Financing Activities

Cash provided by financing activities for the six months ended June 30, 2023 and 2022 was $1,331,941 and $(470,170), respectively. The increase in cash provided by financing activities was primarily due to the sale of common shares during the six months ended June 30, 2023 totaling $1,357,003.

The following table sets forth the primary sources and uses of our cash for each of the years ended December 31, 2022 and 2021:

Cash Used in Operating Activities

Cash used in operating activities for the twelve months ended December 31, 2022 and 2021 was $1,466,551 and $1,833,275, respectively. The decrease in operating cash outflows in 2022 was primarily due to lower operating losses in the current year.

Cash Used in Investing Activities

Cash used in investing activities for the twelve months ended December 31, 2022 and 2021 was $20,957 and $21,774, respectively, as purchases of property, plant and equipment remain minimal.

Cash Provided by Financing Activities

Cash provided by financing activities for the twelve months ended December 31, 2022 and 2021 was $1,415,660 and $630,325, respectively. 2022 is comprised of $1,709,754 in new debt, as well as $294,094 in repayments on debt. 2021 is comprised of $1,241,500 in new debt, as well as $611,175 in repayments on debt. 

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Income Taxes

TDG Acquisition Company, LLC is a limited liability company and has elected with federal and state taxing authorities to be treated as a partnership. As such, the taxable income or loss of the Company is reported on the members’ individual income tax returns.

Off-Balance Sheet Arrangements

During 2022 and 2021, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Seasonality

Our business could be affected by seasonal variations. For instance, we expect to experience lower sales in the winter months and higher sales in the last quarter of the fiscal year. However, taken as a whole, seasonality does not have a material impact on our financial results.

JOBS Act Accounting Election

In April 2012, the JOBS Act was enacted. Section 107(b) of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Recent Adopted Accounting Pronouncements

See Note 2 to our audited and unaudited consolidated financial statements included elsewhere in this prospectus.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Item 10 of Regulation S-K and are not required to provide the information otherwise required under this item.

BUSINESS

Corporate History

TDG Acquisition Company, LLC (“TDG”) d/b/a Six15 Technologies was founded in June 2012 in the State of Delaware. Six15 Technologies Holding Corp. (the “Corp.,” together with its wholly owned subsidiary, the “Company”) was incorporated in February 2022.

On June 30, 2022, Six15 Technologies Holding Corp. entered into a contribution agreement (the “Contribution Agreement”) with TDG Acquisition Company, LLC, a Delaware limited liability company (“TDG”), Thayer Longview TDG, LLC, a Delaware limited liability company (“TL”), and Six15 Funding, LLC, a Delaware limited liability company (“Six15 Funding,” and together with TDG and TL, the “LLCs”), and each of the members of the LLCs (the “Members”). Each Member held membership interests, or promissory notes, in one or more of the LLC (collectively, the “Interests”). Pursuant to the Contribution Agreement, each Member transferred their respective Interests in one or more of the LLCs to Six15 Technologies Holding Corp. in exchange for an aggregate of three million eight hundred twenty-three thousand nine hundred seventeen (3,823,917) shares of common stock (after giving effect to the occurrence of the Split) of Six15 Technologies Holding Corp. (the “Exchange”), resulting in the Members becoming owners of 100% of the outstanding capital stock of Six15 Technologies Holding Corp. and each LLC became a wholly-owned subsidiary of Six15 Technologies Holding Corp.

The Exchange was intended to qualify as a “tax-free reorganization” under Section 368(a) of the Revenue Code of 1986, as amended. For accounting purposes, after the Exchange, TDG (the legal acquiree) is treated as the continuing reporting entity that acquired Six15 Technologies Holding Corp. (the legal acquirer). Six15 Technologies Holding Corp. conducts all of its operations through TDG d/b/a Six15 Technologies.

Company Overview

We are engaged in the design, manufacture, marketing and sale of wearable display and computing devices that are worn like eyeglasses and feature built-in video screens that enable the user to view video and digital content, such as video, computer data, images and AR content. Our wearable display products, known commercially as HUDs, AR wearables, smart glasses, wearable displays, video glasses, personal viewers, near-eye virtual displays, and near-eye displays or NEDs) contain micro video displays that offer users a portable high-quality viewing experience. Our HUD products provide virtual screens, allowing the user to have instant access to information throughout their operation, workflow or experience. Our products and technology span the scope of augmented reality within the U.S. Department of Defense to include video, virtual reality, and augmented reality, in which the wearer is either immersed in a computer-generated world or has their real-world view augmented with computer-generated information or graphics. We produce both monocular and binocular HUDs as well as rugged optical components that drive OEM devices. HUD products are designed to work with mobile electronic devices, such as cell phones, laptop computers, and tablets.

Historically, we have focused on the defense market, providing thousands of systems to U.S. and NATO soldiers operating in the most demanding environments. On June 15, 2012, TDG purchased non-consumer intellectual property assets of Vuzix Corporation (“Vuzix”) pursuant to an Asset Purchase Agreement by and between TDG and Vuzix, as amended on dated October 4, 2018 (the “TDG Purchase Agreement”). The acquired assets included certain of Vuzix’s intellectual property and seller contracts. Pursuant to the TDG Purchase Agreement, TDG sold products, directly and indirectly, to military organizations and defense organizations from Vuzix Corporation. From this background in defense, we designed and developed our enterprise HUD solution to address the growing demand for AR in industrial applications. Working with leading industrial OEMs, we focused on providing improved efficiency, and reduced training time by utilizing AR in the workplace. We partnered with Zebra Technologies to ensure we met the demands of industrial customers. In the second quarter of 2022, we began marketing the ST1^® Head-Up Display to enterprise customers and software providers.

The use of mobile devices like tablets, laptops, smartphones, and “host” device computers among enterprise customers has grown precipitously as demands force them to provide better and more accurate service. Commensurately, these same growing demands on the industry force companies to continuously advance, and as such, the demand for HUD in an enterprise is growing as we prove the tangible benefits. We believe that both defense and enterprise customers will continue to demand HUD solutions specifically targeted to their use case while requiring the robustness to withstand their work environments without fail.

Our HUD solutions are designed to enable companies to take advantage of the benefits of AR while limiting risk, cost, and time to implement. Our products deliver solutions across the range of AR uses, from delivering video content to overlaying data on the real world. With our recent launch into the industrial market, focused on warehousing, logistics, manufacturing and remote workers, we developed our hardware/software solution that delivers tangible results with ease. With millions of host devices currently being used, our goal is to “AR-enable” our customers’ current equipment, allowing for a solution that requires minimal integration, little to no infrastructure requirements, and the reduction of security issues by eliminating the need to install a new piece of hardware into their IT environment. With established software platform providers, we provide a true plug-and-play solution to enterprise customers across multiple uses. Our solution has demonstrated significant performance improvements to our end users while maintaining safety and reducing training time. Initial deployments and testing have shown average training times reduced by 90% while improving day-to-day picking efficiency by 25% on average. By reducing the cognitive load of a worker, and providing information “floating” in front of their field of view, we accomplish both the objective of providing information hands-free, while simultaneously providing simple graphical representations of workflow steps. We believe the simplicity and efficacy of this solution will create substantial growth in the adoption and implementation of AR in the workplace.

Overall Strategy

Our goal is to establish and maintain a leadership position as a worldwide supplier of video eyewear solutions. We intend to offer our products across major markets, platforms, and applications. We will strive to be an innovator in designing near-eye wearable display devices that can enable new mobile video viewing, AR applications, and future advances in enterprise productivity

To maintain and enhance our position as a leading provider of video eyewear, we intend to:

The Market

Current mobile display technology is almost universally based on direct view screens. These displays are designed to be small and make portability easy. At the same time, it is difficult for these displays to produce human-readable high-resolution content without magnification or large character fonts due to their small size. This results in very complex visual interfaces that slow user processing times. Our products are aimed at solving these problems by presenting specific information to the user’s field of view only as they need it. The user sees the information they need at the time they need it, in a hands-free, heads up modality.

The mobile communications and entertainment industries have evolved considerably, and continue to do so. The mobile phone, once simply a means to communicate by voice while “on the go,” has evolved into a ubiquitous, location-aware, smart mobile computing and entertainment device. Mobile products such as smartphones and tablet computers are becoming the leading computing platforms with an installed base surpassing that of PCs. Mobile technology is redefining the way organizations do business. We believe mobile devices and mobile internet access will have a more profound impact than the wired internet and that interactive AR content is expected to significantly change the way organizations address key challenges they face. As a result, we believe that we can expand on the benefits of mobile devices by providing AR capabilities as an additional feature of a company’s host device. By enabling companies to experience these benefits, while reducing the cost and risk associated with alternative options, companies will realize greater return on their technology investments.

Our business focuses on the defense, commercial, and industrial markets. The demand for wearable displays in these markets is being driven by such factors as:

Target Markets

Our target markets and applications by major sectors are the following:

Enterprise and Industrial

Our products are currently focused on the enterprise, industrial, defense and commercial markets. They are being used in diverse areas from field service to warehouse pick and pack applications.

Augmented Reality for all Markets

Our wearable displays enable the development and deployment of augmented reality applications. Our products enable the wearer to see computer-generated information, graphics or images projected into the real-world environment or upon an object that the user is observing. Thus, whether in the warehouse, the factory floor, a military training field users may access information stored locally on a host device, or in the cloud from that host device, that will assist them in completing a real-world task, while automatically attaching the digital information to their current surroundings and nearby objects.

We anticipate this powerful capability will enable applications areas including: 

Products

Binocular Video Eyewear Products

Monocular Video Eyewear Products

Augmented Reality Products

Custom Solutions and Engineering Solutions

Technology

We believe that it is important to make substantial investments in research and development to maintain our competitive advantage. The development and procurement of intellectual property rights relating to our technologies is a key aspect of our business strategy. In addition, we believe that we now provide a product that is both technologically proven for weight, ergonomics, optical performance, see-through capabilities, luminance, power efficiency, compactness, field of view and resolution to create the performance improvements desired by our enterprise customers. We believe that our technical and enterprise knowledge will combine to advance our technologies to meet future demands.

In six months ended June 30, 2023 and 2022, we spent $527,221 and $489,417, respectively, on research and development activities. In 2022 and 2021, we spent $987,389 and $1,098,247, respectively, on research and development activities. We expect to increase our research and development expenditures in the future as our revenues grow.

We believe that the range of our proprietary technologies gives us a significant competitive advantage. Our technologies relate to advanced optics systems including passive and active see-through imaging waveguides; micro-projection display engines; high-resolution scanning displays; motion tracking systems; and specialized software drivers and applications for video eyewear displays.

Our technologies enable us to provide low-cost, small form factor, high-resolution video eyewear products. To protect our technologies, we have developed a patent portfolio that currently consists of 21 issued U.S. and foreign patents and two pending U.S. and foreign patent applications. We also have several new invention disclosures, covering additional aspects of our waveguide technology and our virtual display technology that have been filed as design and utility patent applications. Our U.S. patents expire on various dates from July 14, 2023 until August 22, 2039. Our international patents expire on various dates from December 20, 2026 until May 30, 2030. In addition, in connection with our purchase of the TDG Assets, we granted to Vuzix Corporation a worldwide, royalty-free, assignable grant-back license to all the patents and other intellectual property sold for use in the manufacture and sale of our products in the consumer markets.

Major technologies that we employ in our products include:

Hardware Technology

Virtual and Augmented Display Technology (including Lens Technology and Optics Assemblies)

Microdisplay: Microdisplay optics represent a significant cost of goods for both us and our competitors. This cost is a function of the physical size of the microdisplay and the cost of the supporting optics. Leveraging the rapid advancement of microdisplay technology enables us to use both conventional optics to deliver a solution today, while building the foundation to incorporate advanced optics as they become commercially viable.

Conventional optics: By using the foundation of conventional optics to provide solutions that are available today, we believe in optimizing current optical and display technology to deliver solutions today. We do this by advancing conventional technologies to provide performance characteristics required by industrial customers through specific modifications unique to Six15. This allows us to deliver solutions today, while positioning ourselves for advanced technologies.

See through waveguides: Multiple technology companies, including a few competitors, continue to develop new see-through technologies including index modulated liquid crystal material to switch beam steering gratings into a thin glass window in front of a user’s eye. Others include holographic or other grating based systems that present opportunities to reduce size, and weight. Because these companies provide these systems as components, we believe we are in a unique position to remain agnostic and incorporate the best, most usable technology into our broader systems.

Software/Firmware Technology

We believe that our proprietary firmware, and our customized software enabling our products should provide us a competitive advantage. We have a base of embedded microprocessor and field-programmable gate array code related to microdisplay drive electronics. This firmware provides a baseline of low power, high performance capability. Additional software applications and add-on accessory hardware drivers can greatly increase customer value of our products.

Intellectual Property

Six15’s IP strategy for industrial products is to utilize conventional technology supported by patented hardware augmentations and a closed, software/firmware architecture specifically targeting industrial applications.

This approach provides a competitive advantage in the target space, while avoiding potential freedom-of-use pitfalls from overlap with extensive ongoing technology development in the consumer space.

Our general practice is to file patent applications for our technology in the United States, China, Japan, Europe and Canada. We file and prosecute our patent applications in pursuit of the most extensive fields of protection possible including, where appropriate, the application of the relevant technology to the broader display industry.

We believe that our intellectual property portfolio, coupled with our key supplier relationships and accumulated experience in the personal display field, gives us an advantage over potential competitors. We also believe our copyrights, trademarks, and patents are critical to our success, and we intend to maintain and protect these. We also rely on proprietary technology, trade secrets, and know-how, which are not patented. To protect our rights in these areas, we require all employees and, where appropriate, contractors, consultants, advisors and collaborators, to enter into confidentiality, invention assignment and non-competition agreements.

In addition to our various patents, we have three registered U.S. trademarks and six registered foreign trademark registrations.

Patents

U.S. Patents

There are three types of patents: utility, design, and plant. There are two types of utility and plant patent applications: provisional and nonprovisional.

A provisional application is a patent application, which establishes an official United States patent application filing date for the invention and permits the term “Patent Pending” to be applied in connection with the invention. A foreign application may claim priority to a provisional application. A provisional application automatically becomes abandoned when its pendency expires 12 months after the provisional application filing date by operation of law. This one year window is commonly referred to as a pendency period and cannot be extended. Therefore, applicants must file a nonprovisional application claiming the benefit of the earlier provisional application filing date in the USPTO before the provisional application pendency period expires in order to preserve any benefit from the provisional application filing. However, a nonprovisional application that was filed more than 12 months after the filing date of the provisional application, but within 14 months after the filing date of the provisional application, may have the benefit of the provisional application restored by filing a grantable petition (including a statement that the delay in filing the nonprovisional application was unintentional and the required petition fee) to restore the benefit under 37 C.F.R. § 1.78. Upon conversion, the application is then published (i.e., 18 months after the filing date) and examined by the patent office. A nonprovisional application is examined by a patent examiner and may be issued as a patent if all the requirements for patentability are met. The provisional patent application expires if it is not converted to a nonprovisional application and/or PCT application.

To maintain patent protections, an applicant needs to file a nonprovisional patent application before the pendency period has ended. An applicant can claim patent protections in two ways. The first way is for the applicant to file a nonprovisional patent application and claim the filing date of the provisional patent application. The second way is for an applicant to petition the USPTO that the applicant’s provisional patent application be converted to a full patent. While either option will convert a provisional patent application to a nonprovisional application, the length of the patent will differ. A nonprovisional patent is for 20 years; however, the term of a patent issuing from a nonprovisional application resulting from the conversion of a provisional application will be measured from the original filing date of the provisional application for a total of 20 years, whereas the filing of a provisional application first, and then filing a corresponding nonprovisional application that references the provisional application within the 12-month provisional application pendency period, a patent term endpoint may be extended by as much as 12 months for a total of 21 years.

International Patents

The Patent Cooperation Treaty (“PCT”) facilitates filing for patent recognition in multiple jurisdictions simultaneously using a single uniform patent application. 193 countries, including Canada and the United States, have ratified the PCT.

Ultimately, patents are still granted in each country individually. As such, the PCT procedure consists of two phases: filing of an international application, and national evaluation under the patent laws in force in each country where a patent is sought.

Within 12 months of filing a provisional patent application at the USPTO, we may elect to file a regular utility patent application in the United States in tandem with filing a PCT application with the World Intellectual Property Office, in each case claiming priority to the provisional patent application. Within 30 months of the provisional filing date, deadlines begin for a PCT application to enter the national phase in desired jurisdictions globally, such as Canada (30 months) and Europe (31 months), in each case claiming priority to the provisional patent application.

The table below sets forth information regarding our issued and pending patents.