Laser Photonics (LASE) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed accounting notes Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Laser Photonics Corporation, including balance sheets, statements of profit and loss, cash flows, and shareholders' equity, along with detailed notes on business operations, significant accounting policies, related party transactions, commitments, and subsequent events for the periods ended June 30, 2025, and December 31, 2024 Consolidated Condensed Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates Consolidated Condensed Balance Sheet Highlights (Unaudited) | Metric | As of June 30, 2025 | As of December 31, 2024 | | :-------------------------------- | :------------------ | :-------------------- | | Assets | | | | Total Current Assets | $3,345,902 | $4,664,460 | | Total Assets | $14,940,851 | $17,152,147 | | Liabilities & Stockholders' Equity | | | | Total Current Liabilities | $6,341,823 | $2,573,435 | | Total Liabilities | $10,603,884 | $6,939,854 | | Total Stockholders' Equity | $4,336,967 | $10,212,293 | | Total Liabilities & Stockholders' Equity | $14,940,851 | $17,152,147 | - Total assets decreased by approximately $2.21 million (12.89%) from $17,152,147 as of December 31, 2024, to $14,940,851 as of June 30, 2025[10] - Total current liabilities significantly increased by approximately $3.77 million (146.49%) from $2,573,435 as of December 31, 2024, to $6,341,823 as of June 30, 2025[10] - Total stockholders' equity decreased by approximately $5.88 million (57.56%) from $10,212,293 as of December 31, 2024, to $4,336,967 as of June 30, 2025[10] Consolidated Statements of Profit and Loss This section details the company's financial performance over specific periods, including net sales, gross profit, operating income, and net income Consolidated Statements of Profit and Loss Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales | $2,598,975 | $623,435 | $4,889,257 | $1,366,426 | | Gross Profit | $1,390,104 | $315,354 | $2,529,870 | $701,222 | | Operating Income (Loss) | $(962,688) | $(931,533) | $(2,535,213) | $(1,480,002) | | Net Income (Loss) | $(1,773,902) | $(934,256) | $(3,454,625) | $(1,479,965) | | Basic and Diluted EPS | $(0.12) | $(0.09) | $(0.24) | $(0.15) | - Net sales for the three months ended June 30, 2025, increased by 317% to $2,598,975 compared to $623,435 in the same period of 2024[12][100][108] - Gross profit for the three months ended June 30, 2025, increased to $1,390,104 (53.5% gross margin) from $315,354 (50.6% gross margin) in the prior year period[12][100] - Net loss for the three months ended June 30, 2025, widened to $(1,773,902) from $(934,256) in the same period of 2024[12][109] - Net loss for the six months ended June 30, 2025, widened to $(3,454,625) from $(1,479,965) in the same period of 2024[12][110] Consolidated Statements of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows Highlights (Unaudited) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Used in Operating Activities | $(2,192,704) | $(3,253,756) | | Net Cash Used in Investing Activities | $(22,560) | $(199,748) | | Net Cash Provided by Financing Activities | $1,759,915 | $0 | | Net Cash Flow for Period | $(455,349) | $(3,453,504) | | Cash and Cash Equivalents - End of Period | $78,522 | $2,747,633 | - Net cash used in operating activities decreased to $(2,192,704) for the six months ended June 30, 2025, from $(3,253,756) in the prior year period[15][104] - Net cash provided by financing activities was $1,759,915 for the six months ended June 30, 2025, compared to $0 in the prior year, primarily due to borrowings on debt and short-term loans from affiliates[15][104] - Cash and cash equivalents at the end of the period significantly decreased to $78,522 as of June 30, 2025, from $2,747,633 as of June 30, 2024[15][104] Statements of Shareholders' Equity (Deficit) This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Shareholders' Equity (Deficit) Highlights (Unaudited) | Metric | As of June 30, 2025 | As of December 31, 2024 | | :-------------------------------- | :------------------ | :-------------------- | | Common Stock (Amount) | $14,276 | $14,257 | | Additional Paid-in Capital | $15,565,439 | $17,886,159 | | Accumulated Gain (Deficit) | $(11,208,938) | $(7,754,313) | | Total Stockholders' Equity (Deficit) | $4,336,967 | $10,212,293 | - Total stockholders' equity decreased from $10,212,293 as of December 31, 2024, to $4,336,967 as of June 30, 2025, primarily due to net losses and distributions to affiliates[17] - Net loss for the six months ended June 30, 2025, was $(3,454,625), contributing to the accumulated deficit[12][17] - Distributions to affiliates totaled $(1,683,865) for the six months ended March 31, 2025, and $(736,836) for the three months ended June 30, 2025[17][67] NOTE 1 – BUSINESS This note describes the company's core business, vertical integration strategy, and the assessment of its going concern status - Laser Photonics Corporation is a vertically integrated manufacturing company specializing in photonics-based industrial products and solutions, expanding into the pharmaceutical manufacturing vertical through the acquisition of Control Micro Systems, Inc. assets[19] - The company's vertically integrated operations aim to reduce development time, offer better prices, control quality, and protect proprietary technology[20] - The company has sustained operating losses and its continuation as a going concern is dependent on generating additional cash flow or obtaining further financing, indicating substantial doubt about its ability to continue as a going concern[22] NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & USE OF ESTIMATES This note outlines the key accounting principles and estimates used in preparing the financial statements, covering various financial statement line items - The unaudited condensed financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial information, and should be read in conjunction with the 2024 Form 10-K[23] - The company operates as a single segment, located in Orlando, FL, developing industrial laser cleaning, cutting, welding, marking, and wire stripping products[26] - Management makes estimates and assumptions affecting reported amounts, including depreciation, fair value of stock, stock-based compensation, debt discount, and deferred tax assets valuation allowance[28] Cash and Cash Equivalents This section details the company's cash and cash equivalents balance at specific reporting dates Cash and Cash Equivalents | Date | Amount | | :--- | :------- | | June 30, 2025 | $78,522 | | December 31, 2024 | $533,871 | - Cash and cash equivalents decreased by 85.3% from $533,871 at December 31, 2024, to $78,522 at June 30, 2025[30] Accounts Receivable This section presents the net accounts receivable balance and identifies significant customer concentrations Accounts Receivable, Net | Date | Amount | | :--- | :------- | | June 30, 2025 | $877,522 | | December 31, 2024 | $973,605 | - Accounts receivable, net, decreased by 9.9% from $973,605 at December 31, 2024, to $877,522 at June 30, 2025[10][31] - As of June 30, 2025, Hydro Flask c/o Helen of Troy (15.9%) and RS Integrated Supply Puerto Rico LLC (22.9%) accounted for over 10% of total A/R[32] Advertising Expenses This section outlines the company's accounting policy for marketing and advertising expenditures - Marketing, advertising, and promotion expenditures are expensed in the annual period incurred[33] Research & Development Expenses This section describes the company's accounting policy for research and development expenditures - Research & Development expenditures are expensed in the annual period incurred[34] Stock Based Compensation This section explains the accounting treatment for stock-based payments to employees and non-employees - The company accounts for stock-based payments in accordance with ASC 718, recognizing fair values net of estimated forfeitures over the requisite service period[35] - Stock-based compensation awards issued to non-employees are accounted for at the fair value of services rendered or instruments issued[36] Lease Accounting This section details the company's accounting policy for operating lease agreements for its facilities - The company leases office space and production facilities under operating lease agreements, recognizing lease expense on a straight-line basis[37] Revenue Recognition This section outlines the company's policy for recognizing revenue from product sales and custom projects - Revenue is recognized under Topic 606 when the customer obtains control of promised goods or services, reflecting the expected consideration[38] - For products, revenue is generally recognized upon shipment or customer pickup, transferring title and risk of loss to the customer[39][111] - For custom projects from CMS with obligations of six months or more, revenue is recognized on a percentage of completion basis[40] Contract Assets and Liabilities | Date | Contract Assets | Contract Liabilities | | :--- | :-------------- | :------------------- | | June 30, 2025 | $657,103 | $1,577,417 | | December 31, 2024 | $759,658 | $1,042,090 | Current Liabilities This section details the composition and changes in the company's key current liabilities, including accounts payable and short-term loans Key Current Liabilities | Metric | As of June 30, 2025 | As of December 31, 2024 | | :-------------------- | :------------------ | :-------------------- | | Accounts Payable | $1,484,062 | $531,268 | | Deferred Revenue | $319,872 | $55,383 | | Short term loan | $1,210,923 | $0 | | Short term loan - affiliates/ RP | $620,000 | $0 | - Accounts payable increased by 179.3% from $531,268 at December 31, 2024, to $1,484,062 at June 30, 2025[10][46] - Deferred revenue increased by 477.6% from $55,383 at December 31, 2024, to $319,872 at June 30, 2025[10][47] - The company secured multiple short-term loans in 2025, including $620,000 from ICT Investments (an affiliate) and $1,050,000 and $1,500,000 from Agile Capital Funding, LLC, with a balance of $1,169,327 as of June 30, 2025[10][48][49][50][51] Inventories This section describes the company's inventory valuation method and the composition of its inventory balances - Inventories are stated at the lower of cost or net realizable value using the FIFO method, categorized into equipment parts, work in process, and finished goods[53][54][55] Inventory Composition | Inventory Category | As of June 30, 2025 | As of December 31, 2024 | | :----------------------- | :------------------ | :-------------------- | | Equipment Parts Inventory | $1,614,061 | $1,820,347 | | Finished Goods Inventory | $550,324 | $999,100 | | Work in process Inventory | $88,890 | $295,950 | | Inventory Reserve | $(776,638) | $(776,638) | | Total Inventory | $1,476,637 | $2,338,759 | - Total inventory decreased by 36.9% from $2,338,759 at December 31, 2024, to $1,476,637 at June 30, 2025[10][56] Fixed Assets - Plant Machinery and Equipment This section outlines the accounting policies for property and equipment, including capitalization and depreciation methods - Property and equipment are recorded at cost, with major additions capitalized and minor replacements expensed[57] - Depreciation is provided over estimated useful lives using the straight-line method for financial statements[58] Total Fixed Assets, Net | Date | Amount | | :--- | :------- | | June 30, 2025 | $1,652,952 | | December 31, 2024 | $1,872,034 | - Total fixed assets, net, decreased by 11.7% from $1,872,034 at December 31, 2024, to $1,652,952 at June 30, 2025[10][59] Intangible Assets This section describes the types of intangible assets, their amortization methods, and sources of acquisition - Intangible assets include capitalized equipment design documentation, software costs, patents, trademarks, and licenses, amortized using the straight-line method over 10-15 years[60] - Intangible assets were received from related parties (ICT Investments, FONON Technologies Inc.) and booked at historical cost, with additional assets obtained from the CMS acquisition[62] Total Intangible Assets, Net | Date | Amount | | :--- | :------- | | June 30, 2025 | $5,138,861 | | December 31, 2024 | $5,458,522 | - Total intangible assets, net, decreased by 5.8% from $5,458,522 at December 31, 2024, to $5,138,861 at June 30, 2025[10][63] Long-Lived Assets This section outlines the company's policy for reviewing long-lived assets for impairment - Long-lived assets are reviewed for impairment when circumstances indicate carrying value may not be recoverable, measured by comparing carrying value to undiscounted estimated future cash flows[64] Net Earnings/Loss per Share This section explains the calculation methods for basic and diluted earnings per share - Basic EPS is calculated by dividing earnings/loss attributable to stockholders by the weighted-average number of shares outstanding[66] - Diluted EPS reflects potential dilution from securities convertible into common stock, unless anti-dilutive[66] NOTE 3 – STOCKHOLDERS' EQUITY/DEFICIT This note provides details on the company's common stock, share issuances, and distributions affecting stockholders' equity - As of June 30, 2025, the company had 14,301,087 shares of common stock issued and 14,276,150 shares outstanding[5][10][70] - In January 2025, 18,692 shares of common stock were issued as part of the payment for the acquisition of Control Micro System (CMS Laser) assets[68] - Distributions to affiliate company Fonon Corporation totaled $736,836 in the second quarter of 2025, covering shared sales, marketing, payroll, and other costs[67] Warrants Outstanding | Date | Exercise Price | Number of Warrants | Total Value | | :--- | :------------- | :----------------- | :---------- | | June 30, 2025 | $4.34 | 1,050,000 | $4,557,000 | | December 31, 2024 | $4.34 | 1,050,000 | $4,557,000 | NOTE 4 – RELATED PARTY TRANSACTIONS This note discloses transactions with related parties, including services provided and loans received from affiliates - ICT Investments, which controls 58.55% of the company's outstanding shares, provides accounting and management services, with payables of $35,760 for accounting and $83,073 for other services as of June 30, 2025[71][72] - ICT Investments provided unsecured loans totaling $620,000 to Laser Photonics in April and June 2025 to cover expenses, including payroll[48][73] - On June 27, 2025, FONON Technologies Inc. provided a temporary $30,000 unsecured, non-interest bearing advance for short-term liquidity, which was repaid in the subsequent month[74] NOTE 5 – COMMITMENTS AND CONTINGENCIES This note details the company's lease agreements, lease termination fees, and related balance sheet liabilities - The company has multiple lease agreements for office and production facilities, including an extended lease for 26,000 SF until December 2025 with a combined monthly expense of $25,832[76] - A lease termination agreement for 8,000 SF of additional office space was signed in February 2025, with a termination fee of $14,912 for March-July 2025, of which March-May fees have been paid[77] - As of June 30, 2025, the balance sheet shows a Right-of-use asset for operating leases of $4,486,758, a current operating lease liability of $440,468, and a long-term lease liability of $4,262,061[10][79] Operating Lease Payments Schedule | Year | Operating Lease Payments | | :--- | :----------------------- | | 2025 | $561,737 | | 2026 | $641,052 | | 2027 | $660,284 | | 2028 | $680,092 | | 2029 | $700,495 | | 2030 | $721,510 | | 2031 | $743,155 | | 2032 | $765,450 | | 2033 | $788,413 | | 2034 | $812,065 | | 2035 | $418,214 | | Total Lease Payments | $7,492,467 | | Less: Imputed interest | $(2,789,938) | | Present Value of Lease Liability | $4,702,529 | NOTE 6 – SUBSEQUENT EVENTS This note reports on significant events occurring after the reporting period, including an asset acquisition from an affiliate - On August 5, 2025, Laser Photonics Corporation entered into an Asset Purchase Agreement with Fonon Quantum Technologies, Inc. (an affiliate of ICT Investments) to acquire the assets of Beamer Laser Marking Systems[83] - The acquisition of Beamer Laser Marking Systems, which manufactures IR fiber-laser marking systems, involved issuing 3,000,000 restricted shares of common stock as payment for its assets, including intellectual property and contracts, with no liabilities[83] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, highlighting key factors and trends affecting performance, including supply chain constraints, sales fluctuations, gross margin drivers, and increased operating expenses, particularly in sales and marketing Overview This section provides a high-level description of the company's business and strategic focus on laser cleaning technologies - Laser Photonics Corporation is a vertically integrated manufacturer of photonics-based industrial products, focusing on disruptive laser cleaning technologies for industries like pharmaceuticals[89] - The company aims to stay ahead technologically by investing in R&D to develop cutting-edge products, such as the CleanTech™ product line, for both large and small businesses[91][99] Factors and Trends That Affect Our Operations and Financial Results This section discusses external and internal factors influencing the company's financial performance, including supply chain, sales cycles, gross margin, and operating expenses - The company faces increased lead times for parts, especially electronic components, and ongoing supply chain and logistics constraints, including capacity, materials, and higher freight rates, which could impact product supply and customer demand[93] - Net sales historically fluctuate due to order timing, product shipment/acceptance, and qualification for new applications, with sales cycles ranging from weeks to over a year[94] - Gross margin is influenced by net sales, production volumes, competitive factors, and product mix, with higher power products generally yielding better margins[96][97] - Selling and Marketing expenses increased in Q1 2025 to support growth and market reach, with future investments influenced by cyclical trends in capital equipment manufacturing[98][102] - The company plans continued investment in R&D to improve existing laser blasting technology and develop new products, aiming to maintain industry leadership and address new markets[99] Results of Operations This section analyzes the company's operational performance, focusing on revenue, gross profit, and operating expenses for the reported periods Key Financial Results (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | | Revenue | $2,598,975 | $623,435 | 317% | | Gross Profit | $1,390,104 | $315,354 | 340.8% | | Gross Margin | 53.5% | 50.6% | +2.9 pp | | Total Operating Expenses | $2,352,792 | $1,246,887 | 88.7% | | SG&A Expenses | $697,265 | $435,776 | 60% | - The significant increase in SG&A expenses is attributed to the ramp-up of costs for strategic market reach and sales force expansion, higher personnel costs, professional service fees, and SEC compliance costs[102] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term obligations, including cash flow and working capital Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Net cash provided by Operating Activities | $(2,192,704) | $(3,253,756) | | Net cash provided by Investing Activities | $(22,560) | $(199,748) | | Net cash provided by Financing Activities | $1,759,915 | $0 | | Net cash increase for period | $(455,349) | $(3,453,504) | | Cash at end of period | $78,522 | $2,747,633 | - As of June 30, 2025, the company had a working capital deficit of $2,995,921, a significant decrease from a total working capital of $5,084,680 on June 30, 2024[104][105] - The company's management anticipates increased time spent on compliance with public reporting requirements, including Section 404 of the Sarbanes-Oxley Act, which may impact business plan implementation and growth[106] Revenues This section provides a detailed breakdown of the company's revenue performance and recognition policies Revenue (Three and Six Months Ended June 30) | Period | 2025 | 2024 | Change (%) | | :-------------------- | :--------- | :--------- | :--------- | | Three Months | $2,598,975 | $623,435 | 317% | | Six Months | $4,889,257 | $1,366,426 | 257.8% | - Revenue recognition occurs upon shipment, transferring title and risk of loss to the customer, with no extended payment terms or rights of return under standard contracts[111] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily through non-GAAP financial measures like EBITDA and Adjusted EBITDA, and confirms the absence of off-balance sheet arrangements and material exposure to interest rate or foreign currency fluctuations Summary Financial Information – Non-GAAP EBITDA This section presents non-GAAP financial measures, EBITDA and Adjusted EBITDA, used by management to evaluate operational performance - Management uses non-GAAP financial measures (EBITDA and Adjusted EBITDA) to understand and compare operating results, identify underlying business trends, and evaluate financial performance[113][114] - EBITDA is defined as Net Income (Loss) adjusted for interest expense, taxes, and depreciation & amortization[119] EBITDA and Adjusted EBITDA (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income (Loss) | $(1,773,902) | $(934,256) | $(3,454,625) | $(1,479,965) | | EBITDA | $(621,331) | $(675,733) | $(1,939,126) | $(1,036,126) | | Adjusted EBITDA | $(621,331) | $(675,733) | $(1,939,126) | $(1,036,126) | - EBITDA for the three months ended June 30, 2025, was $(621,331), an improvement from $(675,733) in the prior year period[112][117] - EBITDA for the six months ended June 30, 2025, was $(1,939,126), a decline from $(1,036,126) in the prior year period[112][117] Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of June 30, 2025, the company did not have any off-balance sheet arrangements[118] Market Risk Exposure This section assesses the company's exposure to interest rate and foreign currency risks - The company has not utilized derivative financial instruments and believes its exposure to interest rate risk and foreign currency exchange rate changes is not material, as it has no borrowings and operates solely within the United States[121] Item 4. Controls and Procedures This section addresses the effectiveness of the company's disclosure controls and procedures and reports on changes in internal controls over financial reporting Disclosures Control and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures - As of June 30, 2025, the company's CEO and CFO concluded that disclosure controls and procedures were not effective, with management implementing controls during 2025 to achieve effectiveness[122] Changes in Internal Controls over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting - There were no material changes in the company's internal control over financial reporting during the last fiscal quarter[123] PART II – OTHER INFORMATION This section includes legal proceedings, risk factors, equity sales, defaults, and other required disclosures Item 1. Legal Proceedings This section states that the company is not involved in any legal proceedings that would materially adversely affect its business, financial condition, or results of operations - The company is not involved in any legal proceedings, including routine litigation, that are expected to have a material adverse effect on its business, financial condition, or results of operations[126] Item 1A. Risk Factors This item is not applicable to the company as it qualifies as a smaller reporting company - Item 1A. Risk Factors is not applicable to Laser Photonics Corporation as it is a smaller reporting company[127] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities during the reported period - There were no sales of unregistered securities during the reported period[128] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities - There were no defaults upon senior securities[129] Item 4. Mine Safety Disclosures This item is not applicable to the company - Item 4. Mine Safety Disclosures is not applicable to the company[130] Item 5. Other Information This section states that there is no other information to report under this item - There is no other information to report under this item[131] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications and Inline XBRL data files - Exhibits include Rule 13(a)-14(a)/15(d)-14(a) Certifications of principal executive and financial officers, Section 1350 Certifications, and Inline XBRL data files of Financial Statements and Notes[133] Signatures This section contains the official certifications and signatures required for the financial report filing Signatures This section contains the required signatures from the principal executive officer and principal financial and accounting officer, certifying the filing of the report - The report is duly signed by Wayne Tupuola, President and Chief Executive Officer, and Carlos Sardinas, Chief Financial Officer, on August 15, 2025[136]