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What changed in Laser Photonics Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Laser Photonics Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+271 added−248 removedSource: 10-K (2024-04-19) vs 10-K (2023-04-17)

Top changes in Laser Photonics Corp's 2023 10-K

271 paragraphs added · 248 removed · 191 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+16 added−7 removed93 unchanged
Biggest changeThese production line-capable systems are designed with automation control and automated materials-loading capabilities to allow for maximum throughput on assembly lines for high production, high precision environments. The CleanTech Titan Series Laser Blasting System is a high power, large format laser parts cleaning, rust removal, and surface conditioning system with up to 6′ x12′ working envelope.
Biggest changeClass I Laser Blasting Systems Our Mega Center and Titan lines of Class I Laser Blasting Systems are designed with mass production in mind. These production line-capable systems are designed with automation control and automated materials-loading capabilities to allow for maximum throughput on assembly lines for high production, high precision environments.
All of our Class I product enclosures are built and labeled to meet or exceed the guidelines established by the Food and Drug Administration’s (FDA) Center for Devices and Radiological Health (CDRH) that regulates the manufacture of radiation emitting electronic products. The CDRH does not issue certificates of compliance. Instead, the CDRH relies on a system of self-certification.
All our Class I product enclosures are built and labeled to meet or exceed the guidelines established by the Food and Drug Administration’s (FDA) Center for Devices and Radiological Health (CDRH) that regulates the manufacture of radiation emitting electronic products. The CDRH does not issue certificates of compliance. Instead, the CDRH relies on a system of self-certification.
We believe that we will be rewarded for this strategy through explosive growth of sales, together with the expansion of the market in accordance with the wide acceptance of the laser blasting as a new industry standard. Industry Background Conventional sandblasting processes have numerous shortcomings.
We believe that we will be rewarded for this strategy through explosive growth of sales, together with the expansion of the market in accordance with the wide acceptance of laser blasting as a new industry standard. Industry Background Conventional sandblasting processes have numerous shortcomings.
Accordingly, the use of “sand” blasting has declined over the years. Now, with OSHA’s new standard looming, those that are still relying on this technology are scrambling to find alternatives that meet these new particulate limits. Recently, Levi Strauss & Co. and H&M announced a global ban on sandblasting in all of their product lines, across all of their brands.
Accordingly, the use of “sand” blasting has declined over the years. Now, with OSHA’s new standard looming, those that are still relying on this technology are scrambling to find alternatives that meet these new particulate limits. Recently, Levi Strauss & Co. and H&M announced a global ban on sandblasting in all their product lines, across all of their brands.
Multi-market and Multi-product Approach We intend to develop and manufacture laser systems for a variety of markets to reduce the financial impact that a downturn in any one market would have with an emphasis developing standard systems applicable for variety of markets and applications.
Multi-market and Multi-product Approach We intend to develop and manufacture laser systems for a variety of markets to reduce the financial impact that a downturn in any one market would have with an emphasis developing standard systems applicable for a variety of markets and applications.
Each market has different group of competitors subject to rapidly changing technologies and materials, a customer base with continuously changing requirements and geographical outsourcing challenges. We believe that our future success is dependent on our flexibility to adapt to changes in the marketplace expanding our existing products and services targeting application specific systems for each industry we serve.
Each market has a different group of competitors subject to rapidly changing technologies and materials, a customer base with continuously changing requirements and geographical outsourcing challenges. We believe that our future success is dependent on our flexibility to adapt to changes in the marketplace, expanding our existing products and services targeting application specific systems for each industry we serve.
All of our research and development personnel will have to sign confidentiality and proprietary information agreements with us. These agreements address intellectual property protection issues and require our associates to assign to us all of the inventions, designs, and technologies they develop during the course of employment with us.
All our research and development personnel will have to sign confidentiality and proprietary information agreements with us. These agreements address intellectual property protection issues and require our associates to assign to us all the inventions, designs, and technologies they develop during the course of employment with us.
In January of 2020, we expanded the lease with ICT Investments to include the entire facility of 18,000 sf. In October of 2021, a direct lease was signed with the landlord for three years, terminating on October 31, 2024. The facility is currently equipped with three of our latest advanced laser cleaning demonstration models.
In January 2020, we expanded the lease with ICT Investments to include the entire facility of 18,000 sf. In October of 2021, a direct lease was signed with the landlord for three years, terminating on October 31, 2024. The facility is currently equipped with three of our latest advanced laser cleaning demonstration models.
To augment the reach of our distribution network, we intend to grow our direct sales efforts focused primarily on serving major accounts and expanding our footprint within Fortune 500 companies and government organizations worldwide. Broaden Our Diverse, Global Customer Base. We expect to develop a global diversified customer base and broaden customer relationships in a variety of industries.
To augment the reach of our distribution network, we intend to grow our direct sales efforts focused primarily on serving major accounts and expanding our footprint within Fortune 500 companies and government organizations worldwide. Broaden Our Diverse, Global Customer Base. We expect to develop a globally diversified customer base and broaden customer relationships in a variety of industries.
Such education is a critical component of our sales and marketing efforts. We believe businesses that are well-informed or that have firsthand experience of the benefits of our laser blasting solutions relative to conventional manufacturing are more likely to purchase and expand their use of our products and services over time.
Such an education is a critical component of our sales and marketing efforts. We believe businesses that are well-informed or that have firsthand experience of the benefits of our laser blasting solutions relative to conventional manufacturing are more likely to purchase and expand their use of our products and services over time.
As businesses increasingly embrace laser blasting over the next decade, we intend to educate the market on best practices for adoption of the technology across the entire product life cycle. Our leadership position provides a platform to deliver this education both for our existing customers and the market as a whole.
As businesses increasingly embrace laser blasting over the next decade, we intend to educate the market on best practices for adoption of the technology across the entire product life cycle. Our leadership position provides a platform to deliver this education both for our existing customers and the market.
Primary competitive factors in our markets include: · Price and value · Ability to design, manufacture, and deliver new products on a cost-effective and timely basis · Ability of our suppliers to produce and deliver components in a timely manner, in the quantity desired and at the budgeted prices · Product performance and reliability · Service support · Product mix · Ability to meet customer specifications · Ability to respond quickly to changes in market demand and technology developments 14 Table of Contents In the materials processing market, the competition is fragmented with a large number of competitors that are small or privately owned or compete with us on a limited geographic, industry, or application specific basis including Trumpf GmbH, Clean Laser GMBH, P-Laser.
Primary competitive factors in our markets include: · Price and value · Ability to design, manufacture, and deliver new products on a cost-effective and timely basis. · Ability of our suppliers to produce and deliver components in a timely manner, in the quantity desired and at the budgeted prices · Product performance and reliability · Service support. · Product mix · Ability to meet customer specifications. · Ability to respond quickly to changes in market demand and technology developments. 11 Table of Contents In the materials processing market, the competition is fragmented with a large number of competitors that are small or privately owned or compete with us on a limited geographic, industry, or application specific basis including Trumpf GmbH, Clean Laser GMBH, P-Laser.
Our announced laser blasting solutions are as follows: Handheld Laser Blasting™: We offer the widest line of Class IV handheld laser blasting equipment in the world, from 20W (watt) to 3000W system, including the world’s most powerful production Laser Blaster™ on the market—the Jobsite 2000—to the even more powerful JobSite 3000 which debuts at Aviation Week’s MRO Americas 21 trade show at the end of April 2021.
Our announced laser blasting solutions are as follows: Handheld Laser Blasting™: We offer the widest line of Class IV handheld laser blasting equipment in the world, from 20W (watt) to 3000W system, including the world’s most powerful production Laser Blaster™ on the market—the Jobsite 2000—to the even more powerful JobSite 3000 which debuted at Aviation Week’s MRO Americas 21 trade show at the end of April 2021.
Exposure to crystalline forms of silica is associated with a number of health effects, including silicosis derived from the use of abrasive sand blasting are severely curtailing media blasting activities. They are quick to levy hefty fines for non-compliance. Crystalline Silica dust has been identified by the EPA as a human lung carcinogen.
Exposure to crystalline forms of silica is associated with several health effects, including silicosis derived from the use of abrasive sand blasting are severely curtailing media blasting activities. They are quick to levy hefty fines for non-compliance. Crystalline Silica dust has been identified by the EPA as a human lung carcinogen.
The U.S. military is proving to be not only a receptive early adopter of the technology, but also as a proving ground and showcase for our products. This arises from the need to continually maintain, repair and overhaul equipment (MRO) while eliminating maintenance delays that effect force readiness.
The U.S. military is proving to be not only a receptive early adopter of the technology, but also as a proving ground and showcase for our products. This arises from the need to continually maintain, repair and overhaul equipment (MRO) while eliminating maintenance delays that affect force readiness.
Government may terminate any of our government contracts and subcontracts either at its convenience or for default based on our performance. If a contract is terminated for convenience, we generally are protected by provisions covering reimbursement for costs incurred on the contract and profit on those costs.
The U.S. Government may terminate any of our government contracts and subcontracts either at its convenience or for default based on our performance. If a contract is terminated for convenience, we generally are protected by provisions covering reimbursement for costs incurred on the contract and profit on those costs.
We also compete with end-users who produce laser technology, as well as with manufacturers of non-laser methods and tools, such as traditional abrasives blasting (referred to as sandblasting), non-laser welding, cutting dies, mechanical cutters, and plasma cutters in the materials processing market.
We also compete with end-users that produce laser technology, as well as with manufacturers of non-laser methods and tools, such as traditional abrasives blasting (referred to as sandblasting), non-laser welding, cutting dies, mechanical cutters, and plasma cutters in the materials processing market.
Below is the description of abbreviations and definitions used in Laser Photonics Laser Blaster products qualification chart: · Roughing-Rough surface condition for thick material · Mid-Range-Normal level below roughest surface condition for medium material thickness · Finishing-Least amount of roughness on a surface for thin materials · Gauge-indication of a measurement of industrial materials · Grit-indication of roughness to apply to a surface for preparation prior to coating · CAML-grade of abrasive media used for the sandblasting industry · DPI-Dots per inch · LPI-Lines per inch · Laser Grade-Designated choice of laser for best results · Strip Rate in Ft Squared per hour is calculated as follow: 2X (laser power in KW) / (coating thickness in mils, where one mill= .001), X 60 minutes.
Below is the description of abbreviations and definitions used in Laser Photonics Laser Blaster products qualification chart: 9 Table of Contents · Roughing-Rough surface condition for thick material · Mid-Range-Normal level below roughest surface condition for medium material thickness · Finishing-Least amount of roughness on a surface for thin materials · Gauge-indication of a measurement of industrial materials. · Grit-indication of roughness to apply to a surface for preparation prior to coating. · CAML-grade of abrasive media used for the sandblasting industry. · DPI-Dots per inch · LPI-Lines per inch · Laser Grade-Designated choice of laser for best results · Strip Rate in Ft Squared per hour is calculated as follows: 2X (laser power in KW) / (coating thickness in mils, where one mill= .001), X 60 minutes.
Laser Blasting Cabinet The laser blasting cabinet is configured as a fully enclosed Class 1 work space designed to replace sandblasting enclosures, along with their noise, dust, media storage, replenishment and clean-up requirements. The Blasting Cabinet is intended to serve companies of any size that use abrasive blasting or chemical baths to clean parts or prepare materials.
Laser Blasting Cabinet The laser blasting cabinet is configured as a fully enclosed Class 1 workspace designed to replace sandblasting enclosures, along with their noise, dust, media storage, replenishment, and clean-up requirements. The Blasting Cabinet is intended to serve companies of any size that use abrasive blasting or chemical baths to clean parts or prepare materials.
We intend to add distributers based on geographic coverage and sales capacity, as well as to develop industry-specific expertise to drive penetration in vertical markets such as automotive, aerospace, defense, energy and manufacturing.
We intend to add distributors based on geographic coverage and sales capacity, as well as to develop industry-specific expertise to drive penetration in vertical markets such as automotive, aerospace, defense, energy and manufacturing.
The CleanTech™ Laser Blaster Cabinet is a self-contained, industrial-grade laser cleaning machine. This system is the only laser cleaning machine in the world that incorporates the exclusive power of a fiber laser with a handheld laser-blasting head inside a fully enclosed 30” x 26” work space. This system is designed for speed, precision, safety and flexibility.
The CleanTech™ Laser Blaster Cabinet is a self-contained, industrial-grade laser cleaning machine. This system is the only laser cleaning machine in the world that incorporates the exclusive power of a fiber laser with a handheld laser-blasting head inside a fully enclosed 30” x 26” workspace. This system is designed for speed, precision, safety, and flexibility.
We believe that the laser cleaning equipment market has even a greater potential for growth in light of the size of the $10 billion abrasive cleaning market, and the ancillary $1 billion sandblasting media market, which are being pressured into obsolescence from regulatory agencies and the demands of labor tasked with cleaning industrial equipment.
We believe that the laser cleaning equipment market has even a greater potential for growth considering the size of the $10 billion abrasive cleaning market, and the ancillary $1 billion sandblasting media market, which are being pressured into obsolescence from regulatory agencies and the demands of labor tasked with cleaning industrial equipment.
Advanced Laser Technology, Anilox Roll Cleaning Systems, General Lasertronics, IPG Photonics, Laserax, and White Lion Dry Ice & Laser Cleaning Technology. We believe that none of our competitors compete in all the industries, applications, and geographical markets which we serve and that our products compete favorably with respect to their laser cleaning equipment.
Advanced Laser Technology, Anilox Roll Cleaning Systems, General Lasertronics, IPGPhotonics, Laserax, and White Lion Dry Ice & Laser Cleaning Technology. We believe that none of our competitors compete in all the industries, applications, and geographical markets which we serve and that our products compete favorably with respect to their laser cleaning equipment.
Government controlled unclassified information and restrict the use and dissemination of information classified for national security purposes and the export of certain products, services and technical data; and compliance with cyber security regulations by our supply chain; and · require the review and approval of contractor business systems, defined in the regulations as: (i) Accounting System; (ii) Estimating System; (iii) Earned Value Management System, for managing cost and schedule performance on certain complex programs; (iv) Purchasing System; (v) Material Management and Accounting System, for planning, controlling and accounting for the acquisition, use, issuing and disposition of material; and (vi) Property Management System. 15 Table of Contents The U.S.
Government controlled unclassified information and restrict the use and dissemination of information classified for national security purposes and the export of certain products, services and technical data; and compliance with cyber security regulations by our supply chain; and · require the review and approval of contractor business systems, defined in the regulations as: (i) Accounting System; (ii) Estimating System; (iii) Earned Value Management System, for managing cost and schedule performance on certain complex programs; (iv) Purchasing System; (v) Material Management and Accounting System, for planning, controlling and accounting for the acquisition, use, issuing and disposition of material; and (vi) Property Management System.
Government’s right to terminate our contracts and government contracting laws and regulations, see “Risk Factors”. Radiation Control for Health and Safety Act We are subject to the laser radiation safety regulations of the Radiation Control for Health and Safety Act administered by the National Center for Devices and Radiological Health, a branch of the United States Food and Drug Administration.
Government’s right to terminate our contracts and government contracting laws and regulations, see “Risk Factors”. 12 Table of Contents Radiation Control for Health and Safety Act We are subject to the laser radiation safety regulations of the Radiation Control for Health and Safety Act administered by the National Center for Devices and Radiological Health, a branch of the United States Food and Drug Administration.
The Blasting Cabinet is ideal for companies of any size that use abrasive blasting or chemical baths to clean parts or prepare materials. 4 Table of Contents Class I Laser Blasting Systems: Our Mega Center and Titan lines of Class I Laser Blasting Systems are designed with mass production in mind.
The Blasting Cabinet is ideal for companies of any size that use abrasive blasting or chemical baths to clean parts or prepare materials. Class I Laser Blasting Systems: Our Mega Center and Titan lines of Class I Laser Blasting Systems are designed with mass production in mind.
We also intend to develop global centers of excellence, leveraging our own headquarters in conjunction with our distribution network’s presences, to serve as showrooms, learning facilities and focal points for laser blasting-focused professional services. 8 Table of Contents Pursue Strategic Acquisitions and Partnerships.
We also intend to develop global centers of excellence, leveraging our own headquarters in conjunction with our distribution network’s presences, to serve as showrooms, learning facilities and focal points for laser blasting-focused professional services. Pursue Strategic Acquisitions and Partnerships.
Our warranties are automatically transferred from the original purchaser of our laser cleaning equipment and optical components to subsequent purchasers upon delivery of our finished laser systems. 13 Table of Contents In general, our products carry a warranty against defects, depending on the product type and customer negotiations.
Our warranties are automatically transferred from the original purchaser of our laser cleaning equipment and optical components to subsequent purchasers upon delivery of our finished laser systems. In general, our products carry a warranty against defects, depending on the product type and customer negotiations.
Government Contracts and Regulations Our U.S Government business is heavily regulated. We contract with a number of U.S. Government agencies and entities, principally all branches of the U.S. military. We must comply with, and are affected by, laws and regulations relating to the formation, administration and performance of U.S. Government contracts.
Government Contracts and Regulations Our U.S Government business is heavily regulated. We contract with several U.S. Government agencies and entities, principally all branches of the U.S. military. We must comply with, and are affected by, laws and regulations relating to the formation, administration, and performance of U.S. Government contracts.
To our knowledge, only Laser Photonics designs, manufactures, sells, and services industrial laser cleaning onshore in the United States. On January 25, 2021, President Biden signed an executive order to further his “Buy American” agenda which aims to bolster U.S. manufacturing through the federal procurement process.
To our knowledge, only Laser Photonics designs, manufactures, sells, and services industrial laser cleaning onshore in the United States. 8 Table of Contents On January 25, 2021, President Biden signed an executive order to further his “Buy American” agenda which aims to bolster U.S. manufacturing through the federal procurement process.
In addition, some countries, such as the United Kingdom, and major cities, including Victoria, Canada and Queensland, Australia, have banned abrasive sandblasting. 7 Table of Contents For centuries, the techniques and equipment used for surface cleaning or renewal in industrial applications have remained the same. The demand for improvements, however, has grown dramatically in recent years.
In addition, some countries, such as the United Kingdom, and major cities, including Victoria, Canada and Queensland, Australia, have banned abrasive sandblasting. For centuries, the techniques and equipment used for surface cleaning or renewal in industrial applications have remained the same. The demand for improvements, however, has grown dramatically in recent years.
In light of the regulatory pressures on media blasting and the higher costs of both media blasting and dry ice blasting, we believe that efficient laser cleaning or laser blasting will disrupt the blast cleaning market and emerge as the clean, efficient and low-cost alternative blast cleaning method.
Considering the regulatory pressures on media blasting and the higher costs of both media blasting and dry ice blasting, we believe that efficient laser cleaning or laser blasting will disrupt the blast cleaning market and emerge as the clean, efficient and low-cost alternative blast cleaning method.
Some of our competitors are increasing the output powers of their fiber lasers to compete with our high-powered, industrial grade products.
Some of our competitors are increasing the output power of their fiber lasers to compete with our high-powered, industrial grade products.
Our principal executive offices are located at 1101 N. Keller Rd., Suite G, Orlando, Florida 32810, and our telephone number is (407) 804-1000. 5 Table of Contents Our Market Our market encompasses the industrial de-painting, surface preparation, coating and corrosion control space. This includes media blasting or sandblasting, dry ice blasting and laser cleaning or laser blasting.
Our principal executive offices are located at 1101 N. Keller Rd., Suite G, Orlando, Florida 32810, and our telephone number is (407) 804-1000. Our Market Our market encompasses industrial de-painting, surface preparation, coating and corrosion control space. This includes media blasting or sandblasting, dry ice blasting and laser cleaning or laser blasting.
The monthly rent for this facility is currently $15,549. 16 Table of Contents In December of 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearby the main facility, for our growing sales and marketing program. The monthly rent for this space is currently $14,805.
In December 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearby the main facility, for our growing sales and marketing program. The monthly rent for this space is currently $14,805.
We market our products globally through our direct sales force located in the United States and a few sales representatives located in Europe, Japan and South Asia. We have an exclusive license agreement with ICT Investments.
We market our products globally through our direct sales force located in the United States and a few sales representatives located in Europe, Japan and South Asia. 4 Table of Contents We have an exclusive license agreement with ICT Investments.
OSHA’s focus was on the issues related to the inhalation of respirable dust, which is generally defined as particles that are capable of reaching the pulmonary region of the lung (i.e., particles less than 10 microns (µm) in aerodynamic diameter), in the form of either quartz or cristobalite.
OSHA’s focus was on the issues related to the inhalation of respirable dust, which is generally defined as particles that can reach the pulmonary region of the lung (i.e., particles less than 10 microns (µm) in aerodynamic diameter), in the form of either quartz or cristobalite.
We expect to increase sales through an industry recognized expertise in clearly defined markets with substantial sales demand such as rust removal equipment for the shipbuilding industry, laser de-contamination equipment for the nuclear industry and laser blasting cabinets for the general manufacturing industry. Extend Our Distribution Channels and Reach.
We expect to increase sales through an industry recognized expertise in clearly defined markets with substantial sales demand such as rust removal equipment for the shipbuilding industry, laser de-contamination equipment for the nuclear industry and laser blasting cabinets for the general manufacturing industry.
These laws and regulations, among other things: · require certification and disclosure of all cost or pricing data in connection with certain types of contract negotiations; · impose specific and unique cost accounting practices that may differ from U.S. generally accepted accounting principles (GAAP); · impose acquisition regulations, which may change or be replaced over time, that define which costs can be charged to the U.S.
These laws and regulations, among other things: · require certification and disclosure of all cost or pricing data in connection with certain types of contract negotiations; · impose acquisition regulations, which may change or be replaced over time, that define which costs can be charged to the U.S.
We have an inside sales force actively marketing in the Americas (North, Central and South America). In addition, we have a network of outside sales reps in North America, as well as international representation in Europe (based in Czech Republic), Asia (based in Japan), and the Middle East and North Africa (based in UAE).
In addition, we have a network of outside sales reps in North America, as well as international representation in Europe (based in Czech Republic), Asia (based in Japan), and the Middle East and North Africa (based in UAE).
Track Record of World Class Product Development and Commercialization Through their combined engineering and operational experience in the laser photonics industry, our C-level management team and board members have accumulated decades of relevant and practical industrial laser equipment development experience.
Track Record of World Class Product Development and Commercialization Through their combined engineering and operational experience in the laser photonics industry, our C-level management team and board members have accumulated decades of relevant and practical industrial laser equipment development experience. They have developed and advanced several materials processing technologies applicable to the laser photonics industry and our vertical markets.
Our Competitive Strengths We are an early pioneer in the laser blasting industry with a mission to make the technology accessible to all material processing manufacturers and maintenance and repair facilities in both commercial and military applications.
We intend to further develop the SPN to enhance our Equipment Demo and Training capabilities throughout the Nation. Our Competitive Strengths We are an early pioneer in the laser blasting industry with a mission to make the technology accessible to all material processing manufacturers and maintenance and repair facilities in both commercial and military applications.
Line workers can quickly and easily program these precision robots to complete complex and repetitive tasks in high throughput production environments. We initiated our sales effort in December 2019. By December 31, 2022, we had gross sales of $5,078,539 and net sales of $4,954,689.
Line workers can quickly and easily program these precision robots to complete complex and repetitive tasks in high throughput production environments. We initiated our sales effort in December 2019. By December 31, 2023, we had gross sales of $ 4,520,892 and net sales of $ 3,939,473.
We also require our customers and business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our modules, technology, or business plans. Employees and Human Capital As of February 15, 2022, we had 23 full time employees and one part-time employee.
We also require our customers and business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our modules, technology, or business plans. Employees and Human Capital As of March 1st, 2024, we had 56 full time employees and no part-time employees.
A Recognized Pioneer and Leading Developer of Fiber Laser Material Processing Technology As a pioneer and technology leader in laser material processing, combined with our deep knowledge of material properties, we are able to develop laser cleaning products that reduce its operating costs for our customers and drive the proliferation of lasers to address existing and new applications.
Corrosion and the lack of spare parts are among the most significant maintenance issues for the Pentagon. 7 Table of Contents A Recognized Pioneer and Leading Developer of Fiber Laser Material Processing Technology As a pioneer and technology leader in laser material processing, combined with our deep knowledge of material properties, we can develop laser cleaning products that reduce its operating costs for our customers and drive the proliferation of lasers to address existing and new applications.
We believe that we possess the design documentation for the largest array of laser-based systems for material processing in North America. Core Technologies Underlying Each Product Fiber laser cleaning technology or laser ablation which we market under the Laser Blasting™ brand, is a proven, state-of-the-art, 21st Century replacement for hazardous 19th century abrasives blasting (or sandblasting).
Core Technologies Underlying Each Product Fiber laser cleaning technology or laser ablation which we market under the Laser Blasting™ brand, is a proven, state-of-the-art, 21st Century replacement for hazardous 19th century abrasives blasting (or sandblasting).
Annual Pentagon spending on corrosion control alone is forecast to be $22 billion. The North America MRO distribution market size was valued at $142.65 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 2.9% from 2021 to 2028 according to a report by Grand View Research, Inc.
The North America MRO distribution market size was valued at $142.65 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 2.9% from 2021 to 2028 according to a report by Grand View Research, Inc. Various initiatives by manufacturers to attain optimum efficiency are expected to drive market growth over the forecast period.
Integration of our application and research and development groups with our manufacturing capability provides our customers with a competitive edge in achieving their manufacturing goals using our laser material processing systems. 9 Table of Contents Accumulated Diversified Expertise We have extensive know-how in mathematical and physical processes of materials behavior and equipment modeling, industrial electronics, laser systems, materials and computer science which enables us to make our market-specific laser material processing equipment, machine operating software, motion and vision systems and other critical assemblies, subassemblies and components.
Accumulated Diversified Expertise We have extensive know-how in mathematical and physical processes of materials behavior and equipment modeling, industrial electronics, laser systems, materials and computer science which enables us to make our market-specific laser material processing equipment, machine operating software, motion and vision systems and other critical assemblies, subassemblies and components.
This includes submitting required reports to CDRH, including Annual Reports summarizing required records, including product names, model numbers, and lasers medium or wavelengths.
This includes submitting required reports to CDRH, including Annual Reports summarizing required records, including product names, model numbers, and lasers medium or wavelengths. In compliance with CDRH guidelines, we maintain records of each product produced and sold.
It includes a materials stock room, a ramp and high dock, loading and moving equipment, a machine shop, an electronics room, and an equipment assembly area.
It includes a materials stock room, a ramp and high dock, loading and moving equipment, a machine shop, an electronics room, and an equipment assembly area. The monthly rent for this facility is currently $15,549.
Of the anticipated $178.85 billion MRO market in North America in 2028, $46 billion is spent on corrosion control using media blasting and chemical processes that are under regulatory and market pressures to be phased out because of their known harmful effects on workers and the environment.
Industries, where supply activities have little direct accountability, might be driven by stock-outs rather than to any overarching supply chain plan. 5 Table of Contents Of the anticipated $178.85 billion MRO market in North America in 2028, $46 billion is spent on corrosion control using media blasting and chemical processes that are under regulatory and market pressures to be phased out because of their known harmful effects on workers and the environment.
CleanTech™ Laser Cleaning Robot with AI With our user programmable AI (UPAI) incorporated in our C-Robots, factory line workers can quickly and easily program these precision robots to complete complex and repetitive tasks in high throughput production environments. The CleanTech™ Laser Cleaning Robot is the first commercially available collaborative, easily programmable, AI-capable laser cleaning system in the United States.
The CleanTech Systems offer CE Certified Class 1 enclosure for the Class 4 lasers. CleanTech™ Laser Cleaning Robot with AI With our user programmable AI (UPAI) incorporated in our C-Robots, factory line workers can quickly and easily program these precision robots to complete complex and repetitive tasks in high throughput production environments.
Various initiatives by manufacturers to attain optimum efficiency are expected to drive market growth over the forecast period. MRO distribution is one of the critical components of the industry, which is necessary to eliminate downtime. As a result, industries initiate multiple scheduled and preventive maintenance processes.
MRO distribution is one of the critical components of the industry, which is necessary to eliminate downtime. As a result, industries initiate multiple scheduled and preventive maintenance processes.
In resolving claims under both the defects and performance warranties, we have the option of either repairing or replacing the covered laser cleaning equipment.
We also warrant the owners of our custom laser systems that they are designed and manufactured in accordance with agreed-upon specifications. In resolving claims under both the defects and performance warranties, we have the option of either repairing or replacing the covered laser cleaning equipment.
Since our founding in 2019, we have developed an extensive portfolio of proprietary equipment and technologies that formed the base for our broad product offering, starting from relatively simple handheld devices to fully automatic and operated by AI robotic systems. 11 Table of Contents Our diverse lines of laser cleaning equipment are used in a variety of industries to improve and promote programs to address significant concerns about the exposure of employees to toxic airborne materials to reduce the risk of lung cancer and silicosis triggered by inhalation of crystalline silica dust released from abrasive blasting.
Our diverse lines of laser cleaning equipment are used in a variety of industries to improve and promote programs to address significant concerns about the exposure of employees to toxic airborne materials to reduce the risk of lung cancer and silicosis triggered by inhalation of crystalline silica dust released from abrasive blasting.
They have developed and advanced a number of materials processing technologies applicable to the laser photonics industry and our vertical markets. Vertically Integrated Application Center, Equipment Development and Manufacturing We develop and manufacture most of our critical assemblies, subassemblies and components, including motion systems, integrated lasers, specialty components, frames, cabinets and proprietary optical assemblies.
Vertically Integrated Application Center, Equipment Development and Manufacturing We develop and manufacture most of our critical assemblies, subassemblies, and components, including motion systems, integrated lasers, specialty components, frames, cabinets and proprietary optical assemblies. We also develop our software for use with our laser systems.
As the only industrial laser cleaning equipment manufacturer currently meeting the “Buy American” requirement, we expect to benefit from preferential consideration over the few other companies competing in the laser cleaning systems market. 10 Table of Contents Diversified and Proprietary Technology Platform and Knowhow We were able to secure through our affiliation with ICT Investments a diverse portfolio of knowhow, trade secrets and proprietary technologies.
As the only industrial laser cleaning equipment manufacturer currently meeting the “Buy American” requirement, we expect to benefit from preferential consideration over the few other companies competing in the laser cleaning systems market.
Product Warranty and Support We offer for sale with our equipment a two-year limited warranty against defects in materials and workmanship under normal use and service conditions following delivery of our equipment to our customers. We also warrant to the owners of our custom laser systems that they are designed and manufactured in accordance with agreed-upon specifications.
We have a marketing and sales budget equal to 10% of our gross sales, and a new product promotional budget of $1.2M for 2024. Product Warranty and Support We offer for sale with our equipment a two-year limited warranty against defects in materials and workmanship under normal use and service conditions following delivery of our equipment to our customers.
Customers Our intent is to establish additional relationships with Fortune 1000 customers primarily within the United States and with select Fortune 1000 customers around the globe and represent a broad array of industries, including automotive, aerospace, healthcare, consumer products, heavy industry, machine design, research, and others.
It also reduces concerns over safety for the factory line workers since the robot can perform multiple tasks at the same time when equipped with AI module, 3D scanner and visualizer, vision system and Class 1 Safety shroud or enclosure. 10 Table of Contents Customers Our intent is to establish additional relationships with Fortune 1000 customers primarily within the United States and with select Fortune 1000 customers around the globe and represent a broad array of industries, including automotive, aerospace, healthcare, consumer products, heavy industry, machine design, research, and others.
With the CleanTech™ Laser Blaster Cabinet, companies can eliminate harmful dust, noise, hazardous chemicals and contaminants caused by use of abrasive blasting or chemical baths. 12 Table of Contents Class I Laser Blasting Systems Our Mega Center and Titan lines of Class I Laser Blasting Systems are designed with mass production in mind.
It is the only laser-blasting cabinet manufactured in compliance with CDRH FDA and OSHA regulatory compliance. With the CleanTech™ Laser Blaster Cabinet, companies can eliminate harmful dust, noise, hazardous chemicals, and contaminants caused by use of abrasive blasting or chemical baths.
In compliance with CDRH guidelines, we maintain records of each product produced and sold. 6 Table of Contents Our Market Opportunity Just one of the global markets, the MRO industry, has a total market value of $150.64 billion as of 2021, with forecast revenue of $178.85 billion for 2028.
Our Market Opportunity Just one of the global markets, the MRO industry, has a total market value of $150.64 billion as of 2021, with forecast revenue of $178.85 billion for 2028. Annual Pentagon spending on corrosion control alone is forecast to be $22 billion.
Designed for precise positioning and tight focusing of the laser beam, laser cleaning processes are optimized to operate on much lower laser powers than those used by handheld laser cleaners. This allows for dramatic cost reduction of laser cleaning, making it affordable for the majority of industrial companies.
The CleanTech™ Laser Cleaning Robot is the first commercially available collaborative, easily programmable, AI-capable laser cleaning system in the United States. Designed for precise positioning and tight focusing of the laser beam, laser cleaning processes are optimized to operate on much lower laser powers than those used by handheld laser cleaners.
We also develop our software for use with our laser systems. We have our own engineering, procurement, manufacturing and assembly operations as a part of our vertically integrated manufacturing process.
We have our own engineering, procurement, manufacturing, and assembly operations as a part of our vertically integrated manufacturing process. The integration of our application and research and development groups with our manufacturing capability provides our customers with a competitive edge in achieving their manufacturing goals using our laser material processing systems.
These pressures, driven by health, safety and environmental concerns, are accelerating the replacement of abrasive blasting and laser cleaning is emerging as the safe, clean, efficient and affordable alternative. Our business is disruptive and in the very beginning of its lifespan and expansion.
These pressures, driven by health, safety, and environmental concerns, are accelerating the replacement of abrasive blasting and laser cleaning is emerging as the safe, clean, efficient, and affordable alternative. The company started the Service Partners Network, (or SPN), as a program to mobilize demonstration units as an outreach to better connect the customers with the technology and product.
The industrial, turn-key laser cleaning system operates as a standalone unit or can be easily integrated into a production line environment. Included in the CleanTech product line are the CleanTech Titan Express, CleanTech MegaCenter and the portable CleanTech Handheld which is useful in the field or on the factory floor.
Included in the CleanTech product line are the CleanTech Titan Express, CleanTech MegaCenter and the portable CleanTech Handheld which is useful in the field or on the factory floor. The CleanTech Systems operate in full compliance with OSHA, FDA and CDRH staconforming to “Push a Button” laser safety industrial operation.
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Industries, where supply activities have little direct accountability, might be driven by stock-outs rather than to any overarching supply chain plan.
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In efforts to help those interested in starting a mobile laser cleaning service or rental service as a member of our Service Partners Network. This would also generate equipment sales and at the same time show the capabilities of the product and technology.
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Corrosion and the lack of spare parts are among the most significant maintenance issues for the Pentagon.
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As being part of the Service Partners Network, Laser Photonics Corp Marketing arm would provide leads to these members at a fee to also help generate long-term revenue opportunity. Our business is disruptive and in the very beginning of its lifespan and expansion.
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It is the only laser-blasting cabinet manufactured in compliance with CDRH FDA and OSHA regulatory compliance.
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Extend Our Distribution Channels and Reach. 6 Table of Contents We have an inside sales force actively marketing in the Americas (North, Central and South America).
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The CleanTech Systems operate in full compliance with OSHA, FDA and CDRH staconforming to “Push a Button” laser safety industrial operation. The CleanTech Systems offer CE Certified Class 1 enclosure for the Class 4 lasers.
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Service Partner Network The company started the Service Partners Network, (or SPN), as a program to mobilize demonstration units as an outreach to better connect the customers with the technology and product. In efforts to help those interested in starting a mobile laser cleaning service or rental service as a member of our Service Partners Network.
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It also reduces concerns over safety for the factory line workers since the robot can perform multiple tasks at the same time when equipped with AI module, 3D scanner and visualizer, vision system and Class 1 Safety shroud or enclosure.
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This would also generate equipment sales and at the same time show the capabilities of the product and technology. As being part of the Service Partners Network, Laser Photonics Corp Marketing arm would provide leads to these members at a fee to also help generate long-term revenue opportunity.
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Marketing and Sales For the year ended December 31, 2022, we achieved sales of $4,954,689 and employed four salesmen. We have a marketing and sales budget equal to 10% of our gross sales, and a new product promotional budget of $1,000,000 for 2023.
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Diversified and Proprietary Technology Platform and Knowhow We were able to secure through our affiliation with ICT Investments a diverse portfolio of knowhow, trade secrets and proprietary technologies. We believe that we possess the design documentation for the largest array of laser-based systems for material processing in North America.
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Our facility is currently equipped with three of our latest advanced laser cleaning demonstration models. 17 Table of Contents Laser Blaster Systems
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Since our founding in 2019, we have developed an extensive portfolio of proprietary equipment and technologies that formed the base for our broad product offering, starting from relatively simple handheld devices to fully automatic and operated by AI robotic systems.
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The CleanTech Titan Series Laser Blasting System is a high power, large format laser parts cleaning, rust removal, and surface conditioning system with up to 6′ x12′ working envelope. The industrial, turn-key laser cleaning system operates as a standalone unit or can be easily integrated into a production line environment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIt is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. 18 Table of Contents · If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation could harm our business. · Some provisions of our certificate of incorporation and bylaws may deter takeover attempts, which may inhibit a takeover that stockholders consider favorable and limit the opportunity of our stockholders to sell their shares at a favorable price. · Our indemnification of our officers and directors may cause us to use corporate resources to the detriment of our stockholders. · Provisions in our certificate of incorporation and bylaws and Delaware law may have the effect of discouraging lawsuits against our directors and officers. · If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.
Biggest changeIt is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable aspects of inventions made during development and commercialization activities before it is too late to obtain patent protection on them. 14 Table of Contents If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation could harm our business.
We cannot be certain that funding will be available on acceptable terms or at all. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct business or return capital to investors.
We cannot be certain that funding will be available on acceptable terms or at all. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any debt financing, if available, may involve restrictive covenants that may impact on our ability to conduct business or return capital to investors.
Our products may suffer defects. Our products may suffer defects that may lead to substantial product liability, damage, or warranty claims. Given the complexity of the platforms and systems inside our products, the potential for errors and defects is heightened.
Our products may suffer defects that may lead to substantial product liability, damage, or warranty claims. Given the complexity of the platforms and systems inside our products, the potential for errors and defects is heightened.
For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which we refer to as the Sarbanes-Oxley Act, (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which we refer to as the Sarbanes-Oxley Act, (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For example: · we might not have been the first to invent or the first to file the inventions covered by each of our pending patent applications and issued patents; · others may be able to make, use, sell, offer to sell or import products that are similar to our products or product candidates but that are not covered by the claims of our patents; others may independently develop similar or alternative technologies or duplicate any of our technologies; · the proprietary rights of others may have an adverse effect on our business; · any proprietary rights we do obtain may not encompass commercially viable products, may not provide us with any competitive advantages or may be challenged by third parties; · any patents we obtain, or our in-licensed issued patents, may not be valid or enforceable; or · we may not develop additional technologies or products that are patentable or suitable to maintain as trade secrets. 29 Table of Contents If we or our current licensors or licensees, or any future licensors or licensees, fail to prosecute, maintain and enforce patent protection for our product candidates, our ability to develop and commercialize our product candidates could be harmed and we might not be able to prevent competitors from making, using and selling competing products.
For example: · we might not have been the first to invent or the first to file the inventions covered by each of our pending patent applications and issued patents; · others may be able to make, use, sell, offer to sell or import products that are similar to our products or product candidates but that are not covered by the claims of our patents; others may independently develop similar or alternative technologies or duplicate any of our technologies; · the proprietary rights of others may have an adverse effect on our business; · any proprietary rights we do obtain may not encompass commercially viable products, may not provide us with any competitive advantages or may be challenged by third parties; 22 Table of Contents · any patents we obtain, or our in-licensed issued patents, may not be valid or enforceable; or · we may not develop additional technologies or products that are patentable or suitable to maintain as trade secrets. · If we or our current licensors or licensees, or any future licensors or licensees, fail to prosecute, maintain and enforce patent protection for our product candidates, our ability to develop and commercialize our product candidates could be harmed and we might not be able to prevent competitors from making, using and selling competing products.
Such inability may also force us to increase our hiring of independent contractors, which may increase our costs and reduce our profitability on client engagements. We must also devote substantial managerial and financial resources to monitoring and managing our workforce. Our future success will depend on our ability to manage the levels and related costs of our workforce.
Such an inability may also force us to increase our hiring of independent contractors, which may increase our costs and reduce our profitability on client engagements. We must also devote substantial managerial and financial resources to monitoring and managing our workforce. Our future success will depend on our ability to manage the levels and related costs of our workforce.
Our failure to comply with applicable laws or regulations or misconduct by any of our employees, subcontractors, agents or business partners could damage our reputation and subject us to fines and penalties, restitution or other damages, loss of security clearance, loss of current and future customer contracts and suspension or debarment from contracting with federal, state or local government agencies, any of which would adversely affect our business, reputation and our future results. 25 Table of Contents We may fail to obtain and maintain necessary security clearances, which may adversely affect our ability to perform on certain anticipated U.S. government contracts and depress our potential revenues.
Our failure to comply with applicable laws or regulations or misconduct by any of our employees, subcontractors, agents or business partners could damage our reputation and subject us to fines and penalties, restitution or other damages, loss of security clearance, loss of current and future customer contracts and suspension or debarment from contracting with federal, state or local government agencies, any of which would adversely affect our business, reputation and our future results. 19 Table of Contents We may fail to obtain and maintain necessary security clearances, which may adversely affect our ability to perform on certain anticipated U.S. government contracts and depress our potential revenues.
Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies. 33 Table of Contents Our largest stockholder beneficially owns a significant number of shares of our common stock.
Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies. 25 Table of Contents Our largest stockholder beneficially owns a significant number of shares of our common stock.
Competitive factors in this market are all related to product performance, price, customer service, training platforms, reputation, and sales and marketing effectiveness, all of which are factors upon which we believe we can compete successfully but will need greater financial resources to do so. Future acquisitions may be unsuccessful and may negatively affect operations and financial condition .
Competitive factors in this market are all related to product performance, price, customer service, training platforms, reputation, and sales and marketing effectiveness, all of which are factors upon which we believe we can compete successfully but will need greater financial resources to do so. 15 Table of Contents Future acquisitions may be unsuccessful and may negatively affect operations and financial condition.
Government, and changes in government defense spending could have adverse consequences on our financial position, results of operations and business. Less than 5% of our U.S. revenues in 2022 were from sales and services rendered directly or indirectly to the U.S. Government; however, we expect to grow that to 25% in the next 12 months to two years.
Government, and changes in government defense spending could have adverse consequences on our financial position, results of operations and business. Less than _% of our U.S. revenues in 2023 were from sales and services rendered directly or indirectly to the U.S. Government; however, we expect to grow that to 25% in the next 12 months to two years.
Significant expenses arising from product liability or warranty claims could have a material adverse effect on our business, financial condition, and operating results. We need to increase the size and scale of our organization, and we may experience difficulties in managing such growth, which might impair our financial performance.
Significant expenses arising from product liability or warranty claims could have a material adverse effect on our business, financial condition, and operating results. 16 Table of Contents We need to increase the size and scale of our organization, and we may experience difficulties in managing such growth, which might impair our financial performance.
Occurrence of any of these security threats could expose us to claims, contract terminations and damages and could adversely affect our reputation, ability to work on sensitive U.S. Government contracts, business operations and financial results. 27 Table of Contents Difficult conditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations.
Occurrence of any of these security threats could expose us to claims, contract terminations and damages and could adversely affect our reputation, ability to work on sensitive U.S. Government contracts, business operations and financial results. Difficult conditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations.
In addition, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements. We anticipate that these costs will materially increase our selling, general and administrative expenses. 35 Table of Contents Public company compliance may make it more difficult to attract and retain officers and directors.
In addition, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements. We anticipate that these costs will materially increase our selling, general and administrative expenses. Public company compliance may make it more difficult to attract and retain officers and directors.
As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock. If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock. 28 Table of Contents If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
Government is subject to complex laws and regulations, which may serve as an impediment to our ability to attract such talent. 20 Table of Contents Our business is labor intensive and our success depends on our ability to attract, retain, train and motivate highly skilled employees, including employees who may become part of our organization in connection with our acquisitions.
Government is subject to complex laws and regulations, which may serve as an impediment to our ability to attract such talent. Our business is labor intensive, and our success depends on our ability to attract, retain, train, and motivate highly skilled employees, including employees who may become part of our organization in connection with our acquisitions.
The termination of any of our significant Government contracts or the imposition of fines, damages, suspensions or debarment would adversely affect our business and financial condition. 24 Table of Contents The U.S. Government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time.
The termination of any of our significant Government contracts or the imposition of fines, damages, suspensions or debarment would adversely affect our business and financial condition. The U.S. Government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time.
Moreover, we expect our future revenues and operating results to fluctuate due to a number of factors, including the following: · the timing of sales of our products; · unexpected delays in the introduction of new products; · increased expenses, whether related to sales and marketing, or administration; and · costs related to anticipated acquisitions of complementary businesses.
Moreover, we expect our future revenues and operating results to fluctuate due to a number of factors, including the following: the timing of sales of our products. unexpected delays in the introduction of new products. increased expenses, whether related to sales and marketing, or administration; and costs related to anticipated acquisitions of complementary businesses. Our products may suffer defects.
Any significant impairment of our ability to sell products outside of the U.S. could negatively impact our results of operations and financial condition. 26 Table of Contents Our international sales are also subject to local government laws, regulations and procurement policies and practices which may differ from U.S.
Any significant impairment of our ability to sell products outside of the U.S. could negatively impact our results of operations and financial condition. Our international sales are also subject to local government laws, regulations and procurement policies and practices which may differ from U.S.
In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements. 36 Table of Contents Our stock price may be volatile.
In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements. Our stock price may be volatile.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares. 37 Table of Contents FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares. FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
In the event of extreme prolonged adverse market events, such as a global credit crisis, we could incur significant losses. Inflation has been on the rise and continues to destabilize the global economy.
In the event of extreme prolonged adverse market events, such as a global credit crisis, we could incur significant losses. 21 Table of Contents Inflation has been on the rise and continues to destabilize the global economy.
Furthermore, while we intend to protect our intellectual property rights in major markets for our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our products.
Furthermore, while we intend to protect our intellectual property rights in major markets for our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our products. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming.
Competitors may infringe our intellectual property. As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming.
Any substantial sale of stock by existing stockholders could depress the market value of our stock, thereby devaluing the market price and causing investors to risk losing all or part of their investment. ICT Investments holds a large number of our outstanding shares.
Any substantial sale of stock by existing stockholders could depress the market value of our stock, thereby devaluing the market price and causing investors to risk losing all or part of their investment. ICT Investments through its ownership of Fonon Corporation, holds a large number of our outstanding shares.
We have a substantial amount of intangible assets, representing approximately 15% of our total assets as of December 31, 2022. While we amortize our intangible assets, they may be subject to impairment testing.
We have a substantial amount of intangible assets, representing approximately 28% of our total assets as of December 31, 2023. While we amortize our intangible assets, they may be subject to impairment testing.
Our certificate of incorporation requires us to indemnify our directors and officers to the fullest extent permitted by Delaware law, including in circumstances in which indemnification is otherwise discretionary under Delaware law. 34 Table of Contents Under Delaware law, we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant or respondent in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person: · conducted himself or herself in good faith, reasonably believed, in the case of conduct in his or her official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed to our best interests; and · in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.
Under Delaware law, we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant or respondent in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person: conducted himself or herself in good faith, reasonably believed, in the case of conduct in his or her official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed to our best interests; and in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.
We continue to evaluate steps to remediate our material weaknesses. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. Any failure to maintain effective internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis.
These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects. 27 Table of Contents Any failure to maintain effective internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis.
These activities involve risks and uncertainties, including the risk of the joint venture or applicable entity failing to satisfy its obligations, which may result in certain liabilities to us for guarantees and other commitments, the challenges in achieving strategic objectives and expected benefits of the business arrangement, the risk of conflicts arising between us and our partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring such business arrangements. 22 Table of Contents Our business and operations expose us to numerous legal and regulatory requirements and any violation of these requirements could harm our business.
These activities involve risks and uncertainties, including the risk of the joint venture or applicable entity failing to satisfy its obligations, which may result in certain liabilities to us for guarantees and other commitments, the challenges in achieving strategic objectives and expected benefits of the business arrangement, the risk of conflicts arising between us and our partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring such business arrangements.
A termination arising out of our default could expose us to liability and have a negative impact on our ability to obtain future contracts and orders. Furthermore, on contracts for which we are a subcontractor and not the prime contractor, the U.S. Government could terminate the prime contract for convenience or otherwise, irrespective of our performance as a subcontractor.
A termination arising out of our default could expose us to liability and have a negative impact on our ability to obtain future contracts and orders. Furthermore, on contracts for which we are a subcontractor and not the prime contractor, the U.S.
That stockholder’s interests may conflict with other stockholders, who may be unable to influence management and exercise control over our business . Our largest stockholder, ICT Investments, owns approximately 60% of our shares of common stock.
That stockholder’s interests may conflict with other stockholders, who may be unable to influence management and exercise control over our business. Our largest stockholder, Fonon Corporation, that is owned by ICT Investments, owns 51% of our shares of common stock.
All of these measures will require significant expenditures and will demand the attention of management. If we fail to continue making enhancements to our operational and financial controls in support of the growth in our business, we could develop operating and reporting inefficiencies that could increase our costs more than we had planned, as well as impair our competitive position.
If we fail to continue making enhancements to our operational and financial controls in support of the growth in our business, we could develop operating and reporting inefficiencies that could increase our costs more than we had planned, as well as impair our competitive position.
We must comply with laws and regulations relating to the formation, administration and performance of our one existing and anticipated future U.S. Government contracts, which affect how we do business with our customers and may impose added costs on our business. U.S.
Government contracts and suspension or debarment from U.S. Government contracting that could adversely affect our financial condition. We must comply with laws and regulations relating to the formation, administration and performance of our one existing and anticipated future U.S. Government contracts, which affect how we do business with our customers and may impose added costs on our business. U.S.
Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. 32 Table of Contents Risks Related to Investing in Our Common Stock We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
Risks Related to Investing in Our Common Stock We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed.
There exist material weaknesses in our internal controls as of December 31, 2023 If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed.
Enforcing a claim that a third party is engaged in the unlawful use of our trade secrets is expensive, difficult and time consuming, and the outcome is unpredictable.
Enforcing a claim that a third party is engaged in the unlawful use of our trade secrets is expensive, difficult and time consuming, and the outcome is unpredictable. In addition, recognition of rights in trade secrets and a willingness to enforce trade secrets differs in certain jurisdictions.
We may not be able to enforce our intellectual property rights throughout the world. Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly in developing countries.
Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.
We are also subject to a number of other risks including: · the absence in some jurisdictions of effective laws to protect our intellectual property rights; · multiple and possibly overlapping and conflicting tax laws; · restrictions on movement of cash; · the burdens of complying with a variety of national and local laws; · political instability; · currency fluctuations; · longer payment cycles; · restrictions on the import and export of certain technologies; · price controls or restrictions on exchange of foreign currencies; and · trade barriers.
As a result of these factors, we could experience award and funding delays on international programs and could incur losses on such programs, which could negatively impact our results of operations and financial condition. 20 Table of Contents We are also subject to a number of other risks including: · The absence in some jurisdictions of effective laws to protect our intellectual property rights; · Multiple and possibly overlapping and conflicting tax laws; · Restrictions on movement of cash; · The burdens of complying with a variety of national and local laws; · Political instability; · Currency fluctuations; · Longer payment cycles; · Restrictions on the import and export of certain technologies; · Price controls or restrictions on exchange of foreign currencies; and · Trade barriers.
Litigation may be necessary to: · protect and enforce our patents and any future patents issuing on our patent applications; · enforce or clarify the terms of the licenses we have granted or may be granted in the future; · protect and enforce trade secrets, know-how and other proprietary rights that we own or have licensed, or may license in the future; or · determine the enforceability, scope and validity of the proprietary rights of third parties and defend against alleged patent infringement. 31 Table of Contents Competitors may infringe our intellectual property.
As a result, such proceedings may be costly and time-consuming to pursue, and their outcome is uncertain. · Litigation may be necessary to: · protect and enforce our patents and any future patents issuing on our patent applications; · enforce or clarify the terms of the licenses we have granted or may be granted in the future; · protect and enforce trade secrets, know-how and other proprietary rights that we own or have licensed, or may license in the future; or · determine the enforceability, scope and validity of the proprietary rights of third parties and defend against alleged patent infringement.
Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, our future results could be adversely affected.
Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur because of any system or operational failure or disruption and, as a result, our future results could be adversely affected. Our financial performance could be adversely affected by decreases in spending on technology products and services by our public sector customers.
Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations.
Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations. 17 Table of Contents As a manufacturer of laser cleaning equipment our future success depends on our ability to effectively balance manufacturing production with market demand and reducing our manufacturing cost per watt.
Such risks include, but are not limited to: · We have a limited operating history so there is a lack of historical data on which to determine whether we can be a commercially viable company. · We are competing in highly competitive market and to compete effectively we must be able to adapt to technology changes and to implement innovative technology applications. · ICT Investments owns a majority of our outstanding shares and exerts significant control over business decisions as well as matters subject to stockholder approval. · We depend on the U.S.
We are competing in a highly competitive market and to compete effectively we must be able to adapt to technology changes and to implement innovative technology applications. ICT Investments owns a majority of our outstanding shares and exerts significant control over business decisions as well as matters subject to stockholder approval. We depend on the U.S.
The defense and prosecution of contractual or intellectual property lawsuits, USPTO interference or derivation proceedings, European Patent Office oppositions and related legal and administrative proceedings in the United States, Europe and other countries, involve complex legal and factual questions. As a result, such proceedings may be costly and time-consuming to pursue, and their outcome is uncertain.
The defense and prosecution of contractual or intellectual property lawsuits, USPTO interference or derivation proceedings, European Patent Office oppositions and related legal and administrative proceedings in the United States, Europe and other countries, involve complex legal and factual questions.
Our future financial performance and our ability to commercialize our products will depend, in part, on our ability to manage any future growth effectively. 21 Table of Contents In order to manage our future growth, we will need to continue to effect improvements in our managerial, operational, and accounting controls.
Our future financial performance and our ability to commercialize our products will depend, in part, on our ability to manage any future growth effectively. To manage our future growth, we will need to continue to effect improvements in our managerial, operational, and accounting controls. All of these measures will require significant expenditure and will demand the attention of management.
Moreover, we may face patent infringement claims from non-practicing entities that have no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect. In the future, we may agree to indemnify our manufacturing partners against certain intellectual property claims brought by third parties.
Moreover, we may face patent infringement claims from non-practicing entities that have no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect.
As a manufacturer of laser cleaning equipment our future success depends on our ability to effectively balance manufacturing production with market demand and reducing our manufacturing cost per watt. Our ability to generate the profits we expect to achieve will depend, in part, on our ability to respond to market demand and add new manufacturing capacity in a cost-effective manner.
Our ability to generate the profits we expect to achieve will depend, in part, on our ability to respond to market demand and add new manufacturing capacity in a cost-effective manner.
Our failure to comply with a variety of complex procurement rules and regulations could result in our being liable for penalties, including termination of our current and anticipated U.S. Government contracts, disqualification from bidding on future U.S. Government contracts and suspension or debarment from U.S. Government contracting that could adversely affect our financial condition .
Government could terminate the prime contract for convenience or otherwise, irrespective of our performance as a subcontractor. 18 Table of Contents Our failure to comply with a variety of complex procurement rules and regulations could result in our being liable for penalties, including termination of our current and anticipated U.S. Government contracts, disqualification from bidding on future U.S.
Insofar as indemnification for liabilities under the Securities Act of 1933, as amended – the “Securities Act” – may be permitted to directors, officers or persons controlling us under the above provisions, 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.
Insofar as indemnification for liabilities under the Securities Act of 1933, as amended – the “Securities Act” – may be permitted to directors, officers or persons controlling us under the above provisions, 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. 26 Table of Contents Our bylaws include a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us, remove current management or to be acquired by a third party.
Any non-confidential disclosure to or misappropriation by third parties of our confidential or proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market. 28 Table of Contents The patent application process, also known as patent prosecution, is expensive and time-consuming, and we and our current or future licensors and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
The patent application process, also known as patent prosecution, is expensive and time-consuming, and we and our current or future licensors and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
Our financial performance could be adversely affected by decreases in spending on technology products and services by our public sector customers. Our sales to our public sector customers are impacted by government spending policies, budget priorities and revenue levels.
Our sales to our public sector customers are impacted by government spending policies, budget priorities and revenue levels.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. There exist material weaknesses in our internal controls as of December 31, 2022.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
Government for a portion of our business, which we expect to increase, and changes in government defense spending could have adverse consequences on our financial position, results of operations and business. · As a U.S. defense contractor, we are vulnerable to security threats and other disruptions that could negatively impact our business. · Our international business exposes us to geo-political and economic factors, regulatory requirements and other risks associated with doing business in foreign countries. · Our success may depend on our ability to obtain and protect the proprietary information on which we base our laser-based cleaning equipment.
Government for a portion of our business, which we expect to increase, and changes in government defense spending could have adverse consequences on our financial position, results of operations and business. As a U.S. defense contractor, we are vulnerable to security threats and other disruptions that could negatively impact our business.
Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States.
For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States.
Some of our competitors may be able to sustain the costs of patent-related disputes, including patent litigation, more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.
Some of our competitors may be able to sustain the costs of patent-related disputes, including patent litigation, more effectively than we can because they have substantially greater resources.
Given the potential impasse over raising the debt ceiling, we are not able to predict the impact of budget policy on our company or our financial results.
With the BCA expired, an opportunity now exists to substantially increase funding for NDD spending, without a concomitant increase in defense spending, necessarily. Given the potential impasse over raising the debt ceiling, we are not able to predict the impact of budget policy on our company or our financial results.
Numerous U.S. and foreign issued patents and pending patent applications owned by third parties, exist in the fields in which we are developing our product candidates.
Our own technologies we acquire or develop may infringe, violate or misappropriate the patents or other proprietary rights of third parties, or we may be subject to third-party claims of such infringement. Numerous U.S. and foreign issued patents and pending patent applications owned by third parties, exist in the fields in which we are developing our product candidates.
If we experience any significant impairment to our intangible assets, it may have a material adverse effect on our reported financial results for the period in which the charge is taken and could result in a decrease in the market price of our common stock. 19 Table of Contents The Coronavirus pandemic could delay or eliminate current and future purchase orders for our laser-based cleaning equipment that could prevent us from achieving our business plan.
If we experience any significant impairment to our intangible assets, it may have a material adverse effect on our reported financial results for the period in which the charge is taken and could result in a decrease in the market price of our common stock. We may be unable to respond to rapid technological changes and innovative products.
Intellectual property litigation involves many risks and uncertainties, and there is no assurance that we will prevail in any lawsuit brought against us.
In the future, we may agree to indemnify our manufacturing partners against certain intellectual property claims brought by third parties. 23 Table of Contents Intellectual property litigation involves many risks and uncertainties, and there is no assurance that we will prevail in any lawsuit brought against us.
Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property rights.
Additionally, laws of some countries outside of the United States do not afford intellectual property protection to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.
In addition, recognition of rights in trade secrets and a willingness to enforce trade secrets differs in certain jurisdictions. 30 Table of Contents If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation could harm our business.
If we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in that litigation could harm our business. Our commercial success depends significantly on our ability to operate without infringing, violating or misappropriating the patents and other proprietary rights of third parties.
Such factors include priorities of the presidential administration and the Congress, and the overall health of the U.S. and world economies and the state of governmental finances. 23 Table of Contents The Budget Control Act of 2011, along with five subsequent budget agreements, established spending caps for discretionary defense spending and nondefense discretionary (NDD) spending for ten fiscal years, from FY2012-FY2021, which led to a decade of relative austerity.
The Budget Control Act of 2011, along with five subsequent budget agreements, established spending caps for discretionary defense spending and nondefense discretionary (NDD) spending for ten fiscal years, from FY2012-FY2021, which led to a decade of relative austerity. These spending caps operated under what was called a “principle of parity,” requiring equivalent cuts to defense and nondefense programs.
This could make it difficult for us to stop the infringement of our patents or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties.
The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property rights. This could make it difficult for us to stop the infringement of our patents or the misappropriation of our other intellectual property rights.
In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks include, but are not limited to: We have a limited operating history so there is a lack of historical data on which to determine whether we can be a commercially viable company.
This limitation does not affect the availability of equitable remedies, such as injunctive relief or rescission.
This limitation does not affect the availability of equitable remedies, such as injunctive relief or rescission. Our certificate of incorporation requires us to indemnify our directors and officers to the fullest extent permitted by Delaware law, including in circumstances in which indemnification is otherwise discretionary under Delaware law.
Removed
As the Covid-19 outbreak and the associated global response continue to evolve, our financial condition, liquidity, and operational results could be jeopardized.
Added
Our international business exposes us to geo-political and economic factors, regulatory requirements and other risks associated with doing business in foreign countries. Our success may depend on our ability to obtain and protect the proprietary information on which we base our laser-based cleaning equipment.
Removed
Our operations entail the soliciting of additional purchase orders from new and existing customers alike; meanwhile, the Covid-19 outbreak could reduce or eliminate the demand for our equipment as a result of factory closures or slowdowns on the part of our customers, disrupt supply lines, cause employee absences, precipitate travel restrictions, and otherwise impair the demand for our equipment.
Added
Some provisions of our certificate of incorporation and bylaws may deter takeover attempts, which may inhibit a takeover that stockholders consider favorable and limit the opportunity of our stockholders to sell their shares at a favorable price. Our indemnification of our officers and directors may cause us to use corporate resources to the detriment of our stockholders.
Removed
As a consequence, our sales pipeline could shrink and our business outlook might deteriorate if we are unable to adjust to a reduction in cash flow and raise more capital on acceptable terms. We may be unable to respond to rapid technology changes and innovative products.
Added
Provisions in our certificate of incorporation and bylaws and Delaware law may have the effect of discouraging lawsuits against our directors and officers. If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.
Removed
These spending caps operated under what was called a “principle of parity,” requiring equivalent cuts to defense and nondefense programs. With the BCA expired, an opportunity now exists to substantially increase funding for NDD spending, without a concomitant increase in defense spending, necessarily.
Added
Our business and operations expose us to numerous legal and regulatory requirements and any violation of these requirements could harm our business.
Removed
As a result of these factors, we could experience award and funding delays on international programs and could incur losses on such programs, which could negatively impact our results of operations and financial condition.
Added
Such factors include priorities of the presidential administration and the Congress, and the overall health of the U.S. and world economies and the state of governmental finances.
Removed
Our commercial success depends significantly on our ability to operate without infringing, violating or misappropriating the patents and other proprietary rights of third parties. Our own technologies we acquire or develop may infringe, violate or misappropriate the patents or other proprietary rights of third parties, or we may be subject to third-party claims of such infringement.
Added
Any non-confidential disclosure to or misappropriation by third parties of our confidential or proprietary information could enable competitors to quickly duplicate or surpass our technological achievements, thus eroding our competitive position in our market.
Removed
Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. Additionally, laws of some countries outside of the United States do not afford intellectual property protection to the same extent as the laws of the United States.
Added
In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations. 24 Table of Contents We may not be able to enforce our intellectual property rights throughout the world.
Removed
Our bylaws include a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us, remove current management or to be acquired by a third party .
Added
We continue to evaluate steps to remediate our material weaknesses.

Item 2. Properties

Properties — owned and leased real estate

1 edited+1 added−1 removed1 unchanged
Biggest changeIn December of 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearby the main facility, for our growing sales and marketing program. The monthly rent for this space is currently $14,805. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. MINE SAFETY DISCLOSURES None. 38 Table of Contents PART II
Biggest changeIn October 2021, we signed a direct lease with the landlord for three years, terminating on October 31, 2024. The monthly rent for this facility is currently $15,549. In December 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearby the main facility, for our growing sales and marketing program.
Removed
In October 2021, we signed a direct lease with the landlord for three years, terminating on October 31, 2024. The monthly rent for this facility is currently $15,549.
Added
The monthly rent for this space is currently $14,805.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+6 added−0 removed3 unchanged
Biggest changeIn accordance with the contract we will issue to TraDigital in 2023 350,000 Shares of Common stock in full satisfaction of the balance due on our agreement, reflected in Accrued Expenses at December 31, 2022 in the amount of $829,500 ($2.37 per share, the company’s closing stock price on the contract date). 39 Table of Contents The offer, sale and issuance of the securities described in the paragraphs above were deemed to be exempt from registration under the Securities Act in reliance on Rule 506 of Regulation D in that the issuance of securities to the accredited investors did not involve a public offering.
Biggest changeIn accordance with the contract we will issue to TraDigital in 2023 350,000 shares of our common stock in full satisfaction of the balance due on our agreement, reflected in Accrued Expenses at December 31, 2022 in the amount of $829,500 ($2.37 per share, the company’s closing stock price on the contract date).
The following table provides information about the common stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans as of December 31, 2021.
The following table provides information about the common stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans as of December 31, 2023.
Recent Sales of Unregistered Securities. Set forth below is information regarding shares of common stock issued, and options granted, from January 1, 2022 to January 15, 2023: On July 24, 2022: 25,000 Incentive Stock Options (‘ISOs’) were issued to Tim Schick, CFA. The options vest over four (4) years and are exercisable at $5.00 per share.
Set forth below is information regarding shares of common stock issued, and options granted, from January 1, 2022, to March 15, 2024: On July 24, 2022: 25,000 Incentive Stock Options (‘ISOs’) were issued to Tim Schick, CFA. The options vest over four (4) years and are exercisable at $5.00 per share.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights ($) Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 0 None 10,000,000 (1) In December 2019 our Board of Directors and a majority of our shareholders approved a 2019 Stock Incentive Plan and authorized the issuance of up to 10,000,000 shares under this plan.
Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, warrants and rights Weighted- Average Exercise Price of Outstanding Options, warrants and rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column) Equity compensation plans approved by security holders Equity compensation plans not approved by security holders — 10,000,000 Total 10,000,000 (1) In December 2019 our Board of Directors and a majority of our shareholders approved a 2019 Stock Incentive Plan and authorized the issuance of up to 10,000,000 shares under this plan.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market Information . Our common stock is traded on the NASDAQ with the ticker symbol “LASE”. (b) Stockholders . As of January 15, 2023, there were 2,685 holders of our common stock. (c) Dividends .
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Market Information. Our common stock is traded on the NASDAQ with the ticker symbol “LASE”. (b) Stockholders. As of April 10, 2024, there were five registered holders of our common stock. (c) Dividends.
On December 12, 2022: 180,000 warrants were issued to the following members of Alexander Capital, the Underwriter of the IPO.
These were recorded at a fair value based on the market price of the Company’s stock on the date of the agreement. On December 12, 2022: 180,000 warrants were issued to the following members of Alexander Capital, the Underwriter of the IPO.
The warrants are exercisable at $6.00 per share, between March 28, 2023 and September 29, 2027: Christopher Carlin - 72,250 Jonathan Gazdak - 55,250 Rocco Guidicipietro - 21,250 Joseph Amato - 21,250 Matt Rista - 10,000 On October 4 th 2022 we entered into a marketing agreement with TraDigital Marketing Group.
The warrants are exercisable at $6.00 per share, between March 28, 2023, and September 29, 2027: On February 2 nd 2024 17,000 Shares of Common stock were issued to Jade Barnwell, the former Laser Photonics CFO, under the terms of employment. 31 Table of Contents On October 4, 2022, we entered into a marketing agreement with TraDigital Marketing Group.
Added
Use of Proceeds On October 4, 2022, the Company closed on an IPO in which it issued 3,000,000 additional shares of common stock at an offer price of $5.00 per share.
Added
The shares trade on the NASDAQ under the ticker symbol, “LASE.” Including this issuance, there were 7,878,419 shares outstanding as of December 31, 2022.The number of outstanding shares as of December 31, 2023 was 9,253,419 The remaining planned use of proceeds has not changed since the initial public offering. Recent Sales of Unregistered Securities.
Added
These options were cancelled when Tim Schick was terminated as our CFO on March 27, 2023. As part of the his 2023 termination 25,000 shares of common stock were issued as compensation for services to Company former Vice President of Finance Tim Schick in April 2023.
Added
During the year ended December 31, 2023, the Company paid $ 350,000 totaling shares of 1,000,000 to Fonon Technologies, Inc.
Added
(“FTI”), a company controlled by ICT Investments, for a worldwide, exclusive license for all commercial and noncommercial applications of FTI’s know-how and trade secrets for High Power Turbo Piercing (“Cold Cutting”) laser cutting equipment and technology under the terms of a License Agreement dated October 18, 2023.
Added
The offer, sale and issuance of the securities described in the paragraphs above were deemed to be exempt from registration under the Securities Act in reliance on Rule 506 of Regulation D in that the issuance of securities to the accredited investors did not involve a public offering.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

5 edited+1 added−2 removed12 unchanged
Biggest changeDecember 31, Balance sheet data: 2022 2021 Cash $ 12,181,799 $ 615,749 Total Assets $ 19,694,592 $ 6,860,350 Current Liabilities $ 1,715,897 $ 392,431 Total Liabilities $ 2,203,459 $ 1,299,444 Year Ended December 31, 2022 2021 Cash flows data: Net cash provided by (used in) operating activities $ (736,971 ) $ 1,375,287 Net cash provided by (used in) investing activities (45,655 ) (229,465 ) Net cash provided by (used in) financing activities 12,348,676 (856,786 ) Net change in cash and cash equivalents $ 11,566,050 $ 289,036 40 Table of Contents Year Ended December 31, 2022 2021 Other financial data (unaudited): EBITDA (1) $ (627,744 $ 1,030,060 Adjusted EBITDA (2) $ 1,244,375 $ 1,030,060 Summary Financial Information (continued): In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide the following additional financial metrics that are not prepared in accordance with GAAP (non-GAAP): EBITDA and adjusted EBITDA.
Biggest changeStatement of Operations Data: Year Ended December 31, 2023 2022 Statement of operations data: Net Sales $ 3,939,473 $ 3,894,901 Cost of Sales $ 1,489,458 $ 1,954,328 Gross Profit $ 2,450,015 $ 1,940,573 Operating Expenses $ 6,246,011 $ 4,017,379 Income (Loss) from Operations $ (3,795,996 ) $ (2,076,807 ) Interest Expense $ - $ 24,426 Other (Income) Expense 30,063 7,169 Income Tax Provision $ - $ - Net Income (Loss) $ (3,765,933 ) $ (2,094,064 ) Income (Loss) per Common Share $ (0.45 ) $ (0.37 ) Balance sheet data: December 31, Balance sheet data: 2023 2022 Cash $ 6,201,137 $ 12,181,799 Total Assets 15,164,447 18,583,377 Current Liabilities $ 1,519,964 $ 964,326 Total Liabilities $ 1,682,955 $ 1,451,888 Cash flow data: 2023 2022 Cash flows data: Net cash provided by (used in) operating activities $ -5,470,618 $ -63,376 Net cash provided by (used in) investing activities $ -484,805 $ -689,250 Net cash provided by (used in) financing activities $ -25,240 $ 12,318,676 Net change in cash and cash equivalents $ -5,980,663 $ 11,566,050 32 Table of Contents Other financial data (unaudited) Year Ended December 31, 2023 2022 Other financial data (unaudited): EBITDA(1) $ (3,242,553 ) $ (1,631,806 ) Adjusted EBITDA(2) $ (3,242,553 ) $ 240,313 In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide the following additional financial metrics that are not prepared in accordance with GAAP (non-GAAP): EBITDA and adjusted EBITDA.
ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with, and is qualified by reference to, our consolidated financial statements and related notes and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with, and is qualified by reference to, our conslidated financial statements and related notes and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K.
The data for the years ended December 31, 2022 and 2021, is derived from our audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results for any future period.
The data for the years ended December 31, 2023 and 2022, is derived from our audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results for any future period.
Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).
Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time costs associated with our IPO and non-cash costs.
We also exclude certain one-time costs associated with our IPO and non-cash costs. 41 Table of Contents We believe EBITDA and Adjusted EBITDA are helpful for investors to better understand our underlying business operations. The following table adjusts Net Income (Loss) to EBITDA and Adjusted EBITDA years ended December 31, 2022 and 2021.
(3) We believe EBITDA and Adjusted EBITDA are helpful for investors to better understand our underlying business operations.
Removed
Statement of Operations Data: Year Ended December 31, 2022 2021 Statement of operations data: Net Sales $ 4,954,689 $ 4,190,709 Cost of Sales 2,087,703 2,059,298 Gross Profit 2,866,987 2,131,411 Operating Expenses 3,846,909 1,520,279 Income (Loss) from Operations (979,922 611,132 Interest Expense 24,426 49,351 Other (Income) Expense (6,887 ) (22,682 ) Income Tax Provision 0 68 Net Income (Loss) $ (997,461 ) $ 584,394 Income (Loss) per Common Share (1) $ (.18 ) $ .12 (1) Reflective of a 1-for-6 reverse stock split of common stock that occurred in December 2021.
Added
The following table adjusts Net Income (Loss) to EBITDA and Adjusted EBITDA years ended December 31, 2023 and 2022. 33 Table of Contents Year Ended December 31, 2023 2022 Reconciliation of EBITDA: Net Income (Loss) $ (3,765,933 ) $ (2,094,064 ) Add (deduct): $ $ Interest expense $ $ 24,426 Taxes $ $ Other $ $ Depreciation & Amortization $ 523,380 $ 437,832 EBITDA(1) $ (3,242,553 ) $ (1,631,806 ) Other adjustments $ $ 1,872,119 Adjusted EBITDA(2) $ (3,242,553 ) $ 240,313 Reconciliation of Adjusted EITDA 34 Table of Contents
Removed
Year Ended December 31, 2022 2021 Reconciliation of EBITDA: Net Income (Loss) $ (997,461 ) $ 584,394 Add (deduct): Interest expense 24,426 49,351 Taxes 0 68 Other - - Depreciation & Amortization 345,291 396,247 EBITDA (1) $ (627,744 ) $ 1,030,060 Other adjustments 1,872,119 - Adjusted EBITDA (2) $ 1,244,375 ) $ 1,030,060 Reconciliation of Adjusted EITDA Year Ended December 31, 2022 2021 Reconciliation of EBITDA: EBITDA (1) $ (627,744 ) $ 1,030,060 Post IPO Marketing Contract 1,279,500 - IPO Costs not included in Net Proceeds 195,119 Officer IPO Bonus 280,000 Employee IPO Bonus 117,500 Total IPO Costs not included in Net Proceeds 1,872,119 Adjusted EBITDA (2) $ 1,244,375 $ 1,030,060

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

49 edited+48 added−39 removed39 unchanged
Biggest changeResults of Operations Summary of Statements of Operations for the Years Ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Statement of operations data: Net Sales $ 4,954,689 $ 4,190,709 Cost of Sales 2,087,703 2,059,298 Gross Profit 2,866,987 2,131,411 Operating Expenses 3,846,909 1,520,279 Income (Loss) from Operations (979,922 ) 611,132 Interest Expense 24,426 49,351 Other (Income) Expense (6,887 ) (22,682 Income Tax Provision 0 68 Net Income (Loss) $ (997,461 $ 584,394 Income (Loss) per Common Share (1) $ (.18 ) $ .12 (1) Reflective of a 1-for-6 reverse stock split of common stock that occurred in December 2021. 46 Table of Contents Revenue Revenue was $4,954,689 for the year ended December 31, 2022, as compared to $4,190,709 for the comparable year ended December 31, 2020, representing an increase of $763,981.
Biggest changeResults of Operations 41 Table of Contents Summary of Statements of Operations for the Years Ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Statement of operations data: Net Sales $ 3,939,473 $ 3,894,901 Cost of Sales $ 1,489,458 $ 1,954,328 Gross Profit $ 2,450,015 $ 1,940,573 Operating Expenses $ 6,246,011 $ 4,017,379 Income (Loss) from Operations $ (3,795,996 ) $ (2,076,807 ) Interest Expense $ - $ 24,426 Other (Income) Expense 30,063 7,169 Income Tax Provision $ - $ - Net Income (Loss) $ (3,765,933 ) $ (2,094,064 ) Income (Loss) per Common Share $ (0.45 ) $ (0.37 ) Revenue Jan - Dec 23 Jan - Dec 22 % Change Sales Product Sales $ 4,520,892 $ 3,860,922 17.09 % Sales Discounts $ (581,419 ) $ (123,850 ) 369.46 % Net Sales $ 3,939,473 $ 3,737,073 5.42 % Gross Product Sales was $4,520,892 for the year ended December 31, 2023 as compared to $3,860,922 for the comparable year ended December 31, 2022, representing a 17.09% increase.
To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct.
At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis of the results of operations and financial condition of the Company for the years ended December 31, 2022 and 2021 should be read in conjunction with our audited consolidated financial statements and related notes and the description of our business and properties included elsewhere herein.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis of the results of operations and financial condition of the Company for the years ended December 31, 2023 and 2022 should be read in conjunction with our audited consolidated financial statements and related notes and the description of our business and properties included elsewhere herein.
Legal Proceedings We expect from time to time to be the subject of various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. As of the date of this report we were not subject to any legal threats, proceedings or lawsuits of any nature.
Legal Proceedings We expect from time to time to be the subject of various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. As of the date of this report we have not subject to any legal threats, proceedings or lawsuits of any nature.
Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in our earnings (loss).
Diluted earnings/(loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings/(loss) of the Company.
Gross margin is affected by numerous factors, including our module average selling prices, foreign exchange rates, the existence and effectiveness of subsidies and other economic incentives, competitive pressures, market demand, market mix, our manufacturing costs, product development costs, the effective utilization of our production facilities, and the ramp of production on new products. Research and development expenses.
Gross margin is affected by numerous factors, including our module average selling prices, foreign exchange rates, the existence and effectiveness of subsidies and other economic incentives, competitive pressures, market demand, market mix, our manufacturing costs, product development costs, the effective utilization of our production facilities, and the ramp of production on new products. 37 Table of Contents Research and development expenses.
These estimates are based on management’s historical industry experience and not our historical experience. 50 Table of Contents Revenue Recognition- Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
These estimates are based on management’s historical industry experience and not our historical experience. Revenue Recognition- Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
We capitalize interest expense into our property, plant and equipment, project assets, and deferred project costs when such costs qualify for interest capitalization. 44 Table of Contents Factors and Trends That Affect Our Operations and Financial Results In reading our financial statements, you should be aware of the following factors and trends that our management believes are important in understanding our financial performance.
We capitalize interest expense into our property, plant and equipment, project assets, and deferred project costs when such costs qualify for interest capitalization. Factors and Trends That Affect Our Operations and Financial Results In reading our financial statements, you should be aware of the following factors and trends that our management believes are important in understanding our financial performance.
While doing so, we expect to break even in 2023, and return to profitability in 2024. Therefore, we anticipate minimal long-term liquidity needs to support our organic growth, which we expect to achieve using the proceeds of our recent IPO, exclusively. We must fulfill all of the financial disclosure and reporting requirements of a publicly reporting company.
While doing so, we expect to return to profitability in 2024. Therefore, we anticipate minimal long-term liquidity needs to support our organic growth, which we expect to achieve using the proceeds of our recent IPO, exclusively. We must fulfill all of the financial disclosure and reporting requirements of a publicly reporting company.
Sales of our products are generally recognized upon shipment, provided that no obligations remain and collection of the receivable is reasonably assured. 43 Table of Contents Our sales typically are made on a purchase order basis rather than through long-term purchase commitments.
Sales of our products are generally recognized upon shipment, provided that no obligations remain and collection of the receivable is reasonably assured. Our sales typically are made on a purchase order basis rather than through long-term purchase commitments.
We only apply the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.
Early adoption of this standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively.
The guidance is effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption of this standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. 45 Table of Contents We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
While we would expect to depend on current customers for a large percentage of our annual net sales, the composition of this group can change from year to year. Net sales derived from our current customers as a percentage of our annual net sales were 29% in 2022. New customers accounted for 71% of our net sales in 2022.
Major customers. While we would expect to depend on current customers for a large percentage of our annual net sales, the composition of this group can change from year to year. Net sales derived from our current customers as a percentage of our annual net sales were 21.54% in 2023.
Overall, we expect our cost of sales to continue to decrease over the next several years due to an increase in worldwide capacity in fiber laser parts and components, and availability of optical generators, an increase in unit output per production line, and more efficient absorption of fixed costs driven by economies of scale.
Cost of sales does not include depreciation of manufacturing plant and equipment and facility-related expenses. 42 Table of Contents Overall, we expect our cost of sales to continue to decrease over the next several years due to an increase in worldwide capacity in fiber laser parts and components, and availability of optical generators, an increase in unit output per production line, and more efficient absorption of fixed costs driven by economies of scale.
In December of 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearby the main facility, for our growing sales and marketing program.
The combined expense monthly expense is $25,109 In December 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearby the main facility, for our growing sales and marketing program. The monthly rent for this space is currently $14,805.
Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis.
Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses.
Our major products are based upon a common technology platform. We continually enhance these and other products by improving their components and developing new product designs.
We develop our products to standard specifications and use a common set of components within our product architectures. Our major products are based upon a common technology platform. We continually enhance these and other products by improving their components and developing new product designs.
Revenue Recognition -- Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
These estimates are based on management’s historical industry experience and not the company’s historical experience. Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
The revenue increase was due to increased sales for newly developed hi-power laser blasting system. We derive net sales primarily from the growth was driven by increasing demand for our products, partially offset by declines in average sales prices, the introduction of new products, including laser blasting systems and the development of new applications for our products.
Description of Our Gross Sales, Costs and Expenses Gross sales. We derive net sales primarily from the growth was driven by increasing demand for our products, partially offset by declines in average sales prices, the introduction of new products, including laser blasting systems and the development of new applications for our products.
In general, management’s estimates are based on historical experience, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. These estimates are based on management’s historical industry experience and not the company’s historical experience.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
This expected decrease in cost for laser technology would be partially offset during periods in which we underutilize manufacturing capacity. Operating Expenses Operating expenses for the year ended December 31, 2022 were $3,846,909 as compared to $1,520,279 for the year ended December 31, 2021, representing an increase of $2,326,630.
This expected decrease in cost for laser technology would be partially offset during periods in which we underutilize manufacturing capacity. Operating Expenses Operating expenses for the year ended December 31, 2023, were $ 6246,011 as compared to $ $4,017,379 for the year ended December 31, 2022, representing an increase of $ 2,228,632.
The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those years. 51 Table of Contents We adopted ASU 2016-02 effective as of January 1, 2020 utilizing the cumulative-effect adjustment transition method of adoption, which resulted in the recognition on our balance sheet of $282,565 of right-of-use assets for operating leases.
We adopted ASU 2016-02 effective as of January 1, 2020 utilizing the cumulative-effect adjustment transition method of adoption, which resulted in the recognition on our balance sheet of $282,565 of right-of-use assets for operating leases.
ASU No. 2018-11, Leases (Topic 842): Targeted Improvements was issued by the FASB in July 2018 and allows for a cumulative-effect adjustment transition method of adoption.
ASU No. 2018-11, Leases (Topic 842): Targeted Improvements was issued by the FASB in July 2018 and allows for a cumulative-effect adjustment transition method of adoption. The new guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those years.
We expect selling expenses to increase in the near term to support the planned growth of our business as we expand our sales and marketing efforts. Research and development expenses . Research and development expenses consist primarily of salaries and personnel-related costs, the cost of products, materials, and outside services used in our process and product research and development activities.
Selling, general and administrative expenses consist primarily of salaries and other personnel-related costs, professional fees, insurance costs, travel expenses and other selling expenses. We expect selling expenses to increase in the near term to support the planned growth of our business as we expand our sales and marketing efforts. Research and development expenses.
As a result, we are developing a group of standardized laser cleaning equipment that we have named the CleanTech™ laser blaster family of equipment that we believe represents a new generation of high-power laser cleaning and rust removal systems that will be affordable to more than a million small and mid-size companies.
As a result, we are developing a group of standardized laser cleaning equipment that we have named the CleanTech™ laser blaster family of equipment that we believe represents a new generation of high- power laser cleaning and rust removal systems that will be affordable to more than a million small and mid-size companies. 35 Table of Contents Our vertically integrated operations allow us to reduce manufacturing costs, control quality, rapidly develop and integrate advanced products and protect our proprietary technology.
Our total gross margin in any period can be significantly affected by total net sales in any period, by competitive factors such as product mix, and by other factors, some of which are not under our control. For instance, the gross margin for certain specialty products may be higher because there are fewer or sometimes no equivalent competing products.
Gross margin. Our total gross margin in any period can be significantly affected by total net sales in any period, by competitive factors such as product mix, and by other factors, some of which are not under our control.
We perform our annual goodwill impairment review as of the first day of our fourth quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than the carrying amount.
We perform our annual goodwill impairment review as of the first day of our fourth quarter, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than the carrying amount. 45 Table of Contents Recent Accounting Pronouncements The Company evaluates all Accounting Standard Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”) for consideration of their applicability.
Lease Liability In October 2021, a lease on 18,000 SF facility was signed with the landlord for three years, terminating on October 31, 2024. The monthly rent for this facility is currently $15,549.
In October 2021, a lease on 18,000 SF facility was signed with the landlord for three years, terminating on October 31, 2024. The monthly rent for this facility is currently $15,109. The Company entered into a lease for additional 8000 SF of office space adjacent to the original facility for an additional $10,000/ month in October 2023.
The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others. The guidance is effective for interim and annual reporting periods beginning after December 15, 2020.
The guidance removes certain exceptions for recognizing deferred taxes for equity method investments, performing intra period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others.
In instances where impairment is determined to exist, the Company will write down the asset to its fair value based on the present value of estimated future cash flows. Major customers .
Impairment is measured by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets and their ultimate disposition. In instances where impairment is determined to exist, the Company will write down the asset to its fair value based on the present value of estimated future cash flows.
Year Ended December 31, 2022 2021 Cash and Cash Equivalents $ 12,181,799 $ 615,749 Working Capital (excluding cash and cash equivalents) 1,325,408 1,482,886 Total Working Capital 13,507,297 2,098,635 We anticipate spending an additional $4MM over the next two years, to increase our sales and marketing efforts, as well as to increase our manufacturing capacity.
Year Ended December 31 2023 2022 Cash And Cash Equivalents $ 6,201,137 $ 12,181,799 Working Capital (excluding cash and cash equivalents) $ 1,613,406 $ 575,383 Total Working Capital $ 7,814,543 $ 12,757,182 We anticipate spending an additional $3M over the next 2 years, to increase our sales and marketing efforts, as well as to increase our manufacturing capacity.
In the future, we expect selling, general, and administrative expense to decline as a percentage of net sales, as our net sales grow beyond the fixed costs of the business.
In the future, we expect selling, general, and administrative expense to decline as a percentage of net sales, as our net sales grow beyond the fixed costs of the business. Net Loss (Income) Earnings/(Loss) per Share Basic earnings/(loss) per share is calculated by dividing the earnings/(loss) attributable to stockholders by the weighted-average number of shares outstanding for the period.
We derive net sales primarily from the growth was driven by increasing demand for our products, partially offset by declines in average sales prices, the introduction of new products, including laser blasting systems and the development of new applications for our products. We develop our products to standard specifications and use a common set of components within our product architectures.
We derive gross sales primarily from the growth was driven by increasing demand for our products, partially offset by declines in average sales prices, the introduction of new products, including laser blasting systems and the development of new applications for our products. Our sales typically are made on a purchase order basis rather than through long-term purchase commitments.
We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Refunds and returns, which are minimal, are recorded as a reduction of revenue.
The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Revenue is then recognized for the transaction price allocated to each respective performance obligation when (or as) the performance obligation is satisfied.
Recent Accounting Pronouncements The Company evaluates all Accounting Standard Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements.
ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.
Further, we expect that some new technologies, products and systems will have returns above our cost of capital but may have gross margins below our corporate average. Selling, general, and administrative expenses. Selling, general and administrative expenses consist primarily of salaries and other personnel-related costs, professional fees, insurance costs, travel expenses and other selling expenses.
For instance, the gross margin for certain specialty products may be higher because there are fewer or sometimes no equivalent competing products. Further, we expect that some new technologies, products and systems will have returns above our cost of capital but may have gross margins below our corporate average. Selling, general, and administrative expenses.
Gross Profit For the year ended December 31, 2022, we reported gross profit in the amount of $2,866,987, or 58% of net sales, as compared to $2,131,411, or 51% net sales, in the year ended December 31, 2021. Gross profit increased due to higher sales for periods ended December 31, 2022 compared to period ended December 31, 2021.
Gross Profit For the year ended December 31, 2023, we reported gross profit in the amount of $2,480,015, or 62.19% of net sales, as compared to $1,947,741 or 50% net sales, in the year ended December 31, 2022.
As of December 31, 2022, current liabilities totaled $1,715,897 as compared to $392,431 at December 31, 2021. As a result, as of December 31, 2022, the Company had $13,507,297 in total working capital as compared to $2,098,635 at December 31, 2021.
As of December 31, 2023, current liabilities totaled $ 1,519,964 as compared to $ 964,326 as of December 31, 2022. As a result, as of December 31, 2023, the Company had $ 7,814,543 in total working capital as compared to $ 12,757,182 at December 31, 2022.
We acquire equipment for general use in further process developments and record the depreciation of this equipment as research and development expense. We maintain a number of programs and activities to improve our technology and processes to enhance the performance and reduce the costs of our cleaning laser modules. Goodwill and long-lived assets impairments .
We maintain a number of programs and activities to improve our technology and processes to enhance the performance and reduce the costs of our cleaning laser modules. Goodwill and long-lived assets impairments. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
If future sales differ from these forecasts, the valuation of excess and obsolete inventory may change, and additional inventory provisions may be required. Because of our vertical integration, a significant or sudden decrease in sales could result in a significant change in the estimates of excess or obsolete inventory valuation.
Inventories are written off and charged to the cost of goods sold when identified as excess or obsolete. If future sales differ from these forecasts, the valuation of excess and obsolete inventory may change, and additional inventory provisions may be required.
Off-Balance Sheet Arrangements As of December 31, 2022, we have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
The weighted average discount rate used for these leases was 6%. imputed interest on the leasing transactions was less immaterial and the remaining cash payments approximate the recorded liabilities due to the short term nature of the remaining lease term and nature of base rent increases 44 Table of Contents The maturity amounts of our lease liabilities are as follows: Year ending December 31, Operating Leases 2024 $ 434,153 2025 $ 162,990 Total $ 597,143 Off-Balance Sheet Arrangements As of December 31, 2032, we have not entered any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
Our sales typically are made on a purchase order basis rather than through long-term purchase commitments. We entered into laser equipment sales agreements with customers for specific equipment based on purchase orders and our standard terms and conditions of sale.
We entered into laser equipment sales agreements with customers for specific equipment based on purchase orders and our standard terms and conditions of sale. Our largest sales were to USSO COM in the amount of $316,000 for the year ended December 31, 2023.
The following table summarizes the significant changes in operating expenses for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Operating Expenses: Sales & Marketing $ 1,677,975 $ 410,693 General & Administrative 1,823,643 713,339 Depreciation & Amortization 345,291 396,247 Total Operating Expenses 3,846,909 1,520,279 47 Table of Contents We expect recurring selling expenses to increase in the near term to support the planned growth of our business as we expand our sales and marketing efforts.
The following table summarizes the significant changes in operating expenses for the years ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Operating Expenses: Sales & Marketing $ 1,996,363 $ 1,677,976 General & Administrative 1,902,760 894,521 Depreciation & Amortization 523,380 437,832 Payroll Expenses 1,400,951 887,852 Other Expense 220,298 18,397 Research and Development Cost $ 202,259 $ 100,801 Total Operating Expenses $ 6,246,011 $ 4,017,379 We expect recurring selling expenses to increase in the near term to support the planned growth of our business as we expand our sales and marketing efforts.
Inventory includes parts and components that may be specialized in nature and subject to rapid obsolescence. We maintain a reserve for excess or obsolete inventory items. Inventories are written off and charged to cost of goods sold when identified as excess or obsolete.
On December 31, 2023, and December 31, 2022, respectively, the Company’s inventory consisted of the following: Inventory is stated at the lower of cost (first-in, first-out method) or market value. Inventory includes parts and components that may be specialized in nature and subject to rapid obsolescence. Company maintains a reserve for excess or obsolete inventory items.
On December 31, 2022, we recorded an adjustment of $101,698 for obsolescence. Warranty — We maintain an accrual for warranty claims for units sold that are subject to warranty.
It was determined there was no further reserve required for the year ended December 31 2022. Warranty. We maintain an accrual for warranty claims for units sold that are subject to warranty. 40 Income Taxes and Deferred Taxes.
We review our intangible assets and property, plant and equipment for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually.
The Company’s intangible assets are deemed to have indefinite lives and, accordingly, are not amortized, but are evaluated for impairment at least annually, but more often whenever changes in facts and circumstances occur which may indicate that the carrying value may not be recoverable.
Liquidity and Capital Resources The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Net cash provided by (used in) operating activities $ (736,971 ) $ 1,375,287 Net cash provided by (used in) investing activities (45,655 ) (229,465 ) Net cash provided by (used in) financing activities 12,348,676 (856,786 ) Net change in cash and cash equivalents 11,566,050 $ 289,036 Cash at end of period 12,181,799 615,749 48 Table of Contents As of December 31, 2022, the Company had $15,223,104 in current assets, comprised of $12,181,799 in cash, $1,347,494 in accounts receivable, and $1,693,810 in inventory, as compared to $2,491,066 in current assets, comprised of $615,749 in cash, $84,365 in accounts receivable, and $1,790,952 in inventory, at December 31, 2021.
Year Ended December 31, 2023 2022 Net Income/(Loss) $ (3,765,932.00 ) $ (2,094,064.37 ) Net Income/(Loss) per Share $ (0.45 ) $ (0.37 ) Weighted Average Shares Outstanding, Basic 8,394,035 5,687,049 43 Table of Contents Liquidity and Capital Resources The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the years ended December 31, 2023 and 2022: Year ended December 31 2023 2022 Net cash provided by Operating Activities $ (5,470,618 ) $ (63,376 ) Net cash provided by Investing Activities (484,805 ) (689,250 ) Net cash provided by Financing Activities $ (25,240 ) $ 12,318,676 Net cash increase for period $ (5,980,663 ) $ 11,566,050 Cash at the beginning of period $ 12,181,799 $ 615,749 Cash at end of period $ 6,201,136 $ 12,181,799 As of December 31, 2023, the Company had $ 9,334,504 in current assets, comprised of $ 6,201,137 in cash, $ 816,364 in accounts receivable, and $ 2,277,816 in inventory, as compared to $ 13,721,708 in current assets, comprised of $ 12,181,799 in cash, $ 421,362 in accounts receivable, and $ 1,046,020 in inventory, at December 31, 2022.
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Our vertically integrated operations allow us to reduce manufacturing costs, control quality, rapidly develop and integrate advanced products and protect our proprietary technology.
Added
Our customers do not have extended payment terms or rights of return under these contracts. Our sales channels We generate Sales through Direct Sales Personnel, Distributors and Representatives, and Service Partner Network. Direct Sales. Distributors and Reps. All orders are received on a revolving bases in accordance with the Company’s standard Terms and Conditions of Sale. Orders are not cancelable.
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COVID-19 On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin.
Added
Orders typically consist of multiple units. Payment terms ate typically net 120 days from transferring the ownership of equipment to the distributor. Revenue is recognized on a “piece by piece” equipment basis after the appropriate transfer of the equipment’s ownership to the distributor.
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In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. 42 Table of Contents The full impact of the COVID-19 outbreak continues to evolve as of the date of this Form 10-K.
Added
Payments are made by the distributor to the Company when the distributor collects funds from its regional customers or when they have funds available to reduce the outstanding balance. The Company allocates payments in accordance with its accounting practices.
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As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.
Added
Detailed aging is accounted for in the Company’s MRP system – DBA Manufacturing keeping records of all equipment units ever manufactured with coordinating serial numbers. Higher level account related data with payment history is recorded in the Company’s QuickBooks accounting software. 36 Table of Contents Service Partner Network.
Removed
Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for fiscal year 2023.
Added
The Company started its Service Partners Network (SPN), as a program to mobilize demonstration units to better connect the customers with the technology and product and to help those interested in starting a mobile laser cleaning service or rental service.
Removed
Some of our suppliers from China are likely to decrease production due to factory closures or reduced operating hours in those facilities. While these disruptions may be temporary, continued disruption in the supply chain may lead to our delayed receipt of necessary raw materials, component inventory, and negatively impact sales in fiscal year 2023 and our overall liquidity.
Added
The Company believes that the SPN will generate equipment sales and also demonstrate the capabilities of the product and the technology. As part of the SPN, the Company’s Marketing group provides leads to the SPN members at a fee that also helps generate long-term revenue opportunities for both the Company and the other SPN members. Cost of Sales.
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We are dependent on our workforce to deliver our products. Developments such as social distancing and shelter-in-place directives will impact our ability to deploy our workforce effectively. While expected to be temporary, prolonged workforce disruptions may negatively impact sales in fiscal year 2022 and our overall liquidity.
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Research and development expenses consist primarily of salaries and personnel-related costs, the cost of products, materials, and outside services used in our process and product research and development activities. We acquire equipment for general use in further process developments and record the depreciation of this equipment as research and development expense.
Removed
The adverse economic effects of the COVID-19 outbreak are expected not to materially decrease demand for our products based on the restrictions in place by governments trying to curb the outbreak and changes in consumer behavior. However, this may lead to our not achieving our sales goals in fiscal year 2022 and our overall liquidity.
Added
New customers accounted for 78.46% of our net sales in 2023. We seek to add new customers and to expand our relationships with existing customers. Relationship with distributors. All orders received on revolving bases in accordance with LPC standard Terms and Conditions of Sale. Orders are not cancelable.
Removed
The Covid 19 outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown, which is expected to depress our asset values, including long-lived assets, intangible assets, etc.
Added
Payments are made by Distributor to The Company when Distributor collects funds from their regional customers, or then they have funds availability to reduce the outstanding balance. Company allocates payments in accordance with LPC Accounting practices. Detailed aging is accounted in MRP system – DBA Manufacturing keeping records of all equipment units ever manufactured with coordinating serial numbers.
Removed
Although we cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on our results of future operations, financial position, and liquidity in fiscal year 2023. Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, the U.S.
Added
Higher level account related data with payment history is recorded in Company’s Quick Books Accounting software. Distributor Discounts. Distributors and representatives earn various rebates and discounts based on purchase volume commitments and the achievement of certain performance KPIs. The company estimates the amount of discounts based on historical volumes, geographical market, end customer buying potential, and the ordered equipment amount.
Removed
Government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act includes various income and payroll tax provisions.
Added
The company also utilizes various programs to offer volume cash discounts, first customer discounts, or reimburse distributors for certain expenses, mainly associated with warranty, transportation costs, and inventory interest costs incurred by the distributor for limited periods of time, generally up to eighteen months. 38 Table of Contents Repurchase policy.
Removed
On April 27, 2020, the Company received a First Draw loan in the amount of $198,750 pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act, and on March 26, 2021, the Company received a Second Draw loan in the amount of $198,750 pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act.
Added
LPC Operational Management regular conducts evaluation of unsold equipment in Distributors possession and determined what particular units cannot be sold anymore because of the moral aging. However after the manufacturing upgrade it can be added back to the finished goods inventory and sold as a current model.
Removed
The total aggregate amount of PPP Loans received by the Company by March 31, 2022 was $397,500. Under the terms of the PPP, PPP loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.
Added
Company can elect to purchase back the above unit at 75% of its value, upgrade hardware and software, and add equipment to the Finished Goods Inventory available for sale. Repurchase records can be viewed in Repurchase History Records folder.
Removed
We were not approved for forgiveness in the full amount, and have completely repaid the balance due as of December 31, 2022. Description of Our Gross Sales, Costs and Expenses Gross sales.
Added
For our products, revenue is generally recognized upon shipment or pickup by the customer. At this stage, the title on the manufactured equipment is transferred to the customer, and the customer is responsible for transportation expenses, insurance, and any transport-related damage to the equipment in transit.
Removed
Our customers do not have extended payment terms or rights of return under these contracts. Cost of Sales.
Added
We do not hold any obligation to deliver beyond the collection warehouse, and it is the customers' contractual responsibility to ensure their goods reach their destination. Refunds and returns, which are minimal, are recorded as a reduction of revenue. Payments received from customers before satisfying the above criteria are recorded as unearned income on the combined balance sheets.
Removed
COVID-19 Update . Economic indicators show some improvement from the severe contraction experienced earlier in 2020, which has led to an improvement in the recent demand environment in the United States. Currently, our Orlando, FL production facility in the United States remains open and is operating normally.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOverall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations. 52 Table of Contents
Biggest changeOverall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations. 46 Table of Contents

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