Attached files
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark
One)
☒ QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended: March 31, 2021
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
transition period from __________________ to
__________________
Commission
File Number: ______________
Laser Photonics Corporation
(Exact
name of registrant as specified in its charter)
Delaware
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84-3628771
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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1101 N.
Keller Road, Suite G
Orlando,
FL
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32810
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(Address
of Principal Executive Offices)
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Zip
Code
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(407) 804 1000
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Registrant’s Telephone Number, Including Area
Code
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Not
Applicable
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Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
COMMON STOCK, $0.001 PAR VALUE
Title of each class
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TradingSymbol(s)
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Name of each exchange on which registered
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Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90
days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒· No ●☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange
Act.
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Large
accelerated filer
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☒
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Smaller
reporting company
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☒
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Emerging
growth company
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☒
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)
Yes ☐ No ☒
As
of March 31, 2021, the registrant had 3,561,316 shares of common stock, par
value $.001 per share, issued and outstanding.
TABLE OF CONTENTS
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Page No.
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Certifications
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3
PART I –
FINANCIAL INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
LASER PHOTONICS CORPORATION
CONDENCED BALANCE SHEETS
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March 31,
2021
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December
31,
2020
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ASSETS
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Current Assets
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Cash and Cash Equivalents
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380,772
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326,713
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Accounts Receivable
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618,131
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756,095
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Inventory
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1,988,298
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2,169,627
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Total Current Assets
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2,987,201
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3,252,435
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Total Fixed Assets
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811,848
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849,027
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Intangible Assets
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3,187,275
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3,184,280
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Operating lease right-of-use
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153,166
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196,299
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TOTAL ASSETS
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7,139,490
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7,482,041
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LIABILITIES & EQUITY
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Liabilities
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Current Liabilities
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Accounts Payable
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18,263
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53,016
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Deferred Revenue
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196,833
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779,128
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Lease liability Current Portion
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138,066
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181,199
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Sales Tax Payable
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0
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12,665
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Total Current Liabilities
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353,162
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1,026,008
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Long Term Liabilities
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ICT Investments Loan
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876,309
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926,768
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Lease liability - less current
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43,855
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43,855
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PPP Loan
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397,500
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198,750
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Total Long Term Liabilities
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1,317,664
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1,169,373
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Total Liabilities
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1,670,826
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2,195,381
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Equity
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Total Capital Stock
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5,291,615
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5,291,615
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Retained Earnings
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(4,955)
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(15,636)
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Net Income
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182,003
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10,681
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Total Equity
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5,468,663
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5,286,660
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TOTAL LIABILITIES & EQUITY
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7,139,489
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7,482,041
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See
accompanying notes to financial statements
4
LASER PHOTONICS CORPORATION
STATEMENTS OF OPERATION
(UNAUDITED)
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Three months
ended
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March 31, 2021
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March 31, 2020
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Ordinary Income/Expense
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Income
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976,025
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177,925
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Cost of Goods Sold
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352,037
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57,320
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Gross Profit
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623,988
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120,605
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Expense
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Depreciation Expense
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39,930
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6,602
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G&A Expense
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105,295
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37,002
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Payroll Expenses
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253,560
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189,491
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Rent Expense
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43,133
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43,162
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Tax
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68
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0
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Total Expense
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441,986
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276,257
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Net Income
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182,002
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(155,652)
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Net income (loss) per share
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0
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(0)
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Weighted average shares
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29,270,502
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2,661,316
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EBITDA
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238,241
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(145,985)
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See
accompanying notes to financial statements
5
LASER PHOTONICS CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Jan - Mar 21
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Jan - Mar 20
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OPERATING ACTIVITIES
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Net Income
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182,003.21
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-155,650.99
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Adjustments to reconcile Net Income
to net cash provided by operations:
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Accounts Receivable
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137,963.75
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-201,835.00
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Equipment Parts Inventory
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-18,508.14
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-314,035.40
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Finished Goods Inventory
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71,883.00
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Sales Demo Inventory
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184,900.00
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Work in process Inventory
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-56,946.00
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-86,530.46
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Accounts Payable
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-34,752.75
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37,602.11
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Deferred Revenue
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-582,295.05
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356,725.00
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Lease liability Current Portion
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-43,133.00
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Sales Tax Payable
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-12,665.38
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Net cash provided by Operating Activities
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-171,550.36
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-363,724.74
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INVESTING ACTIVITIES
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Accumulated Depreciation
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39,929.73
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6,602.34
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Equipment and Furniture: Machinery & Equipment: CNC
Mill
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-2,750.00
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Equipment and Furniture: Machinery & Equipment
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0.00
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-158,456.00
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Intangible Assets: Operational Software & Website
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-2,995.00
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Operating lease right-of-use
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43,133.00
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Net cash provided by Investing Activities
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77,317.73
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-151,853.66
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FINANCING ACTIVITIES
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ICT Investments Loan: Note 2
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-50,245.00
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ICT Investments Loan: Note1
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-213.87
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399,347.21
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Capital Stock
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158,456.00
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PPP Loan
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198,750.00
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Net cash provided by Financing Activities
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148,291.13
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557,803.21
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Net cash increase for period
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54,058.50
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42,224.81
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Cash at beginning of period
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326,713.39
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0.00
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Cash at end of period
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380,771.89
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42,224.81
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See
accompanying notes to financial statements
6
LASER PHOTONICS CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
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Common Stock
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Additional
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Accumulated
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Stockholders'
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Shares
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Amount
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Paid-In Capital
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(Deficit/Income)
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Equity
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BALANCE
JANUARY 1ST 2020
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-
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-
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$-
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$-
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$489,870
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Shares
issued for cash
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$2,661,316
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$26,613
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$478,893
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Net
loss for year ended December 31, 2019
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$(15,636)
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January 1 - December 31st, 2020
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-
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-
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$-
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$-
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Shares
issued for cash
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$26,609,186
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$266,092
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$4,520,018
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Income for period ended December 31st,
2020
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$10,681
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BALANCE
DECEMBER 31st, 2020
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$29,270,502
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$292,705
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$4,998,911
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$(4,955)
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$5,286,661
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January 1 - March 31st, 2021
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-
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-
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$-
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$-
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Shares
issued for cash
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$-
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$-
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$-
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Income for period ended March 31st,
2021
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$182,003
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BALANCE
DECEMBER 31st, 2020
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$29,270,502
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$292,705
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$4,998,911
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$177,048
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$5,468,664
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See
accompanying notes to financial statements
7
LASER PHOTONICS CORPORATION
NOTES
TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Laser
Photonics Corporation was formed under the laws of Wyoming on
November 8, 2019. We changed our domicile to Delaware on March 5,
2021. We are a vertically integrated manufacturing company for
photonics based industrial products and solutions, primarily
disruptive laser cleaning technologies. Our vertically integrated
operations allow us to reduce development and advanced laser
equipment manufacturing time, offer better prices, control quality
and protect our proprietary knowhow and technology compared to
other laser cleaning companies and companies with competing
technologies.
The
Company’s accounting year end is December 31.
Basis of Presentation
These
financial statements are presented in United States dollars and
have been prepared in accordance with United States generally
accepted accounting principles.
Impact of the Novel Coronavirus
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. In March
2020, the WHO classified the COVID-19 outbreak as a pandemic, based
on the rapid increase in exposure globally.
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.
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 2021.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent liabilities at dates of the financial statements and the
reported amounts of revenue and expenses during the periods. Actual
results could differ from these estimates. Our significant
estimates and assumptions include depreciation and the fair value
of our stock, stock-based compensation, debt discount and the
valuation allowance relating to the Company’s deferred tax
assets.
Cash and Cash Equivalents
Cash
and cash equivalents consist of highly liquid investments with an
original maturity of three months or less at the date of
purchase. Cash and cash equivalents are carried at cost,
which approximates fair value.
As of
March 31, 2021, the Company had $380,772 of cash.
8
Accounts Receivable
Trade
accounts receivable are recorded net of allowance for expected
uncollectible accounts. The Company extends credit to its customers
in the normal course of business and performs on-going credit
evaluations of its customers. All accounts, or portions thereof,
that are deemed uncollectible are written off to bad debt expense,
as incurred. In addition, most sales orders are not accepted
without a substantial deposit. As of March 31, 2021, our ledger had
$618,131 as an allowance/ provision for collectible
accounts.
Inventory
Inventories
are stated at the lower of cost or net realizable value using the
first-in first-out (FIFO) method. We have four principal categories
of inventory:
Sales demonstration inventory -Sales demonstration
inventory represents completed product used to support our sales
force for demonstrations and held for sale. Sales demonstration
inventory is held in our demo facilities or by our sales
representatives for up to three years, at which time it would
be refurbished and transferred to finished goods as used equipment,
stated at the lower of cost or net realizable value. We expect
these refurbished units to remain in finished goods inventory and
sold within 12 months at prices that produce reduced
gross margins.
Equipment parts inventory - This inventory represents
components and raw materials that are currently in the process of
being converted to a certifiable lot of saleable product through
the manufacturing and/or equipment assembly process. Inventories
include parts and components that may be specialized in nature and
subject to rapid obsolescence. The Company periodically reviews the
quantities and carrying values of inventories to assess whether the
inventories are recoverable. Because of the Company's vertical
integration, a significant or sudden decrease in sales activity
could result in a significant change in the estimates of excess or
obsolete inventory valuation. The costs associated with provisions
for excess quantities, technological obsolescence, or component
rejections are charged to cost of sales as incurred.
Work in process inventory - Work in process inventory
consists of inventory that is partially manufactured or not fully
assembled as of the date of these financial
statements. This equipment, machines, parts, frames,
lasers and assemblies are items not ready for use or
resale. Costs are accumulated as work in process until
sales ready items are compete when it is moved to finished goods
inventory. Amounts in this account represent items at
various stages of completion at the date of these financial
statements.
Finished goods inventory - Finished goods
inventory consists of purchased inventory that were fully
manufactured, assembled or in salable condition. Finished
goods inventory is comprised of items that are complete and
ready for commercial application without further cost other that
delivery and setup. Finished goods inventory includes demo and
other equipment, lasers, software, machines, parts or
assemblies.
At
March 31, 2021 and March 31, 2020, respectively, our inventory
consisted of the following:
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March 31,
2021
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March 31,
2020
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Inventory
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Equipment Parts Inventory
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705,877
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314,035
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Finished Goods Inventory
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109,570
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0
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Sales Demo Inventory
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1,096,664
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495,150
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Work in process Inventory
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76,187
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86,530
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Total Inventory
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1,988,298
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1,139,776
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Fixed Assets - Plant Machinery and Equipment
Property
and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized and minor replacements,
maintenance, and repairs are charged to expense as incurred. When
property and equipment are retired or otherwise disposed of, the
cost and accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in the results of operations
for the respective period.
9
Machinery and Equipment
Depreciation
is provided over the estimated useful lives of the related assets
using the straight-line method for financial statement purposes.
The Company uses other depreciation methods (generally accelerated)
for tax purposes where appropriate. The estimated useful lives for
significant property and equipment categories are as
follows:
Category
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Economic
Useful Life
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Office
furniture and fixtures
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3-5 years
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Machinery
and equipment
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5-7 years
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Intangible
Assets
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7-12
years
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March 31,
2021
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March 31,
2020
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Capital
Assets
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Equipment
and Furniture
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Accumulated
Depreciation
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(66,339)
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(6,602)
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Machinery
& Equipment
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797,695
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158,456
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Office
and Computer Equipment
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8,420
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Office
Furniture
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31,029
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0
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R&D
Equipment
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31,053
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0
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Vehicles
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9,989
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0
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Total
Capital Assets
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811,868
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151,854
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As of
March 31, 2021, we recorded $811,868 of capital assets net of
depreciation. Fixed assets as of March 31, 2020, were recorded at
$151,854.
Intangible Assets
Intangible
assets consist primarily of capitalized equipment design
documentation, software costs for equipment manufactured for sale,
research and development, as well as certain patent, trademark and
license costs. Capitalized software and equipment design
documentation development costs are recorded in accordance with
Statement of Financial Accounting Standards (“SFAS”)
No. 86, “Accounting for the Costs of Computer Software to Be
Sold, Leased, or Otherwise Marketed,” with costs amortized
using the straight-line method over a ten-year period. Patent,
trademark and license costs are amortized using the straight-line
method over their estimated useful lives of 12 years. On an ongoing
basis, management reviews the valuation of intangible assets to
determine if there has been impairment by comparing the related
assets’ carrying value to the undiscounted estimated future
cash flows and/or operating income from related
operations.
Intangible Assets
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December
2020
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December
2019
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Customer
Relationships
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211,000
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0.00
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Equipment Design
Documentation
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2,675,000.00
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0.00
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Operational
Software & Website
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298,280
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0.00
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Total Intangible
Assets
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3,184,280
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0.00
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As of
December 31, 2020, the Company had $3,184,279 of intangible
property.
Long-Lived
Assets
Long-lived
assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value may not be
recoverable. 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.
10
Liabilities
Our
liabilities consist of current liabilities.
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March 31,
2021
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December 31,
2019
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Current Liability
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622,738
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5,280
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Long Term Liability
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746,162
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0
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Total Liabilities
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1,368,900
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5,280
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As of
March 31, 2021, and December 31, 2019, our total liabilities were
recorded at $1,349,783 and $5,280, respectively.
Current Liabilities
Our
current liabilities consist of accounts payable and deferred
revenue.
Sales Tax Liability
Sales
tax liability is created when Company sells equipment and services
to another entity located in the State of Florida. Currently the
sales tax rate in the Company’s County place of business is
6.5%. As of March 31, 2021, our sales tax liability was recorded at
$12,566 compared to $0 recorded at December 31, 2019.
Long Term Liabilities
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March 31,
2021
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March 31,
2020
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(Unaudited)
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Long Term Liabilities
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PPP Loan
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397,500
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0
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Lease Liability less Current
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43,855
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0
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Notes
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876,309
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399,347
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Total Long Term Liabilities
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1,317,664
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399,347
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Our
long term liabilities include PPP loans from Axiom Bank, promissory
notes to ICT Investments, and long term lease liability. The notes
to ICT may be prepaid in whole or in part. As of March 31, 2021,
the unpaid principal amount of the notes was $876,309.
Accounts Payable
As of
March 31, 2021, and March 31, 2020, our Account Payables were
recorded at $18,263 and $42,882, respectively.
Deferred Revenue
The
Company requires deposits on most sales orders. These deposits are
recorded as deferred revenue until such time as the revenue
recognition criteria for that project are order is completed. As of
March 31, 2021, our deferred revenue was recorded at $196,833 in
comparison to $356,725 recorded at March 31, 2020.
11
Liquidity and Capital Resources
For the
three months ended March 31, 2021, the Company’s liquidity
needs were met through the financing activity.
The
following is a summary of the Company’s cash flows provided
by (used in) operating, investing and financing
activities:
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For three
Months ending March 31,
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2021
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2020
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Net cash
provided by Operating Activities
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(171,550)
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(363,725)
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Net cash
provided by Investing Activities
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(77,317)
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(151,853)
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Net cash
provided by Financing Activities
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148,291
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557,803
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As of
March 31, 2021, the Company had $380,772 in
cash, $2,606,429 in current assets
(without cash and cash equivalents) and $353,162 in current
liabilities.
As a
result, on March 31, 2021, the Company had $3,014,811 in total
working capital, comparing to $2,553,140 of total working capital
for the same period of 2020.
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Three
Months ended March 31,
|
|
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2021
|
2020
|
Cash and Cash
Equivalents
|
380,772
|
326,713
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Working Capital
(excluding cash and cash equivalents)
|
2,634,039
|
2,226,427
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Total Working
Capital
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3,014,811
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2,553,140
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Net Loss per Share
Basic
loss per share is calculated by dividing the loss attributable to
stockholders by the weighted-average number of shares outstanding
for the period. 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 the
earnings (loss) of the Company. Diluted loss per share is computed
by dividing the loss available to stockholders by the weighted
average number of shares outstanding for the period and dilutive
potential shares outstanding unless such dilutive potential shares
would result in anti-dilution.
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. 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. 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. 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. 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. Payments received by customers prior to our satisfying the
above criteria are recorded as unearned income in the combined
balance sheets.
All
revenues were reported net of any sales discounts or
taxes.
Promissory Notes
In
January 2020, the Company issued a promissory note to ICT in the
principal amount of $439,990 bearing 6% annual interest with a
maturity date of January 31, 2023. This note may be prepaid in
whole or in part. As of December 31st, 2020, the unpaid principal
amount of the Note was $236,627.
In
October 2020, the Company issued a promissory note 2 to ICT in the
principal amount of $745,438 bearing 6% annual interest with a
maturity date of December 31, 2023. This Note may be prepaid in
whole or in part. As of December 31st, 2020, the unpaid principal
amount of the Note was $639,682.
12
Fair Value of Financial Instruments
The
Company applies the accounting guidance under Financial Accounting
Standards Board (“FASB”) ASC 820-10, “Fair Value
Measurements”, as well as certain related FASB staff
positions. This guidance defines fair value as the price that would
be received from m selling an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. When determining the fair value measurements for
assets and liabilities required to be recorded at fair value, the
Company considers the principal or most advantageous market in
which it would transact business and considers assumptions that
marketplace participants would use when pricing the asset or
liability, such as inherent risk, transfer restrictions, and risk
of nonperformance.
The
guidance also establishes a fair value hierarchy for measurements
of fair value as follows:
|
☐
|
Level 1
- quoted market prices in active markets for identical assets or
liabilities.
|
|
|
|
|
☐
|
Level 2
- inputs other than Level 1 that are observable, either directly or
indirectly, such as quoted prices in active markets for similar
assets or liabilities, quoted prices for identical or similar
assets or liabilities in markets that are not active, or other
inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities.
|
|
|
|
|
☐
|
Level 3
- unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities.
|
The
carrying amount of the Company's financial instruments approximates
their fair value as of March 31, 2020, due to the short-term nature
of these instruments.
Tax Loss Carryforwards
The
Company recognizes deferred tax assets and liabilities for the tax
effects of differences between the financial statement and tax
basis of assets and liabilities. A valuation allowance is
established to reduce the deferred tax assets if it is more likely
than not that a deferred tax asset will not be
realized.
Off-Balance Sheet Arrangements
During
the quarter ended March 31, 2021, we did not engage in any
off-balance sheet arrangements as defined in item 303(a)(4) of
the SEC’s Regulation S-K.
We do
not have 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 that are material to investors.
Recent Accounting Pronouncements
In
June 2014, FASB issued Accounting Standards Update
(“ASU”) No. 2014-10, “Development Stage
Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements, Including an Amendment to Variable Interest
Entities Guidance in Topic 810, Consolidation”. The update
removes all incremental financial reporting requirements from GAAP
for development stage entities, including the removal of Topic 915
from the FASB Accounting Standards Codification. In addition, the
update adds an example disclosure in Risks and Uncertainties (Topic
275) to illustrate one way that an entity that has not begun
planned principal operations could provide information about the
risks and uncertainties related to the company’s current
activities. Furthermore, the update removes an exception provided
to development stage entities in Consolidations (Topic 810) for
determining whether an entity is a variable interest entity-which
may change the consolidation analysis, consolidation decision, and
disclosure requirements for a company that has an interest in a
company in the development stage. The update is effective for the
annual reporting periods beginning after December 15, 2014,
including interim periods therein. Early application with the first
annual reporting period or interim period for which the
entity’s financial statements have not yet been issued
(Public business entities) or made available for issuance (other
entities). The Company adopted this pronouncement for the year
ended December 31, 2014.
In
June 2014, FASB issued Accounting Standards Update
(“ASU”) No. 2014-12, “Compensation –
Stock Compensation ( Topic 718 ); Accounting for Share-Based
Payments When the Terms of an Award Provide That a Performance
Target Could Be Achieved after the Requisite Service Period”.
The amendments in this ASU apply to all reporting entities that
grant their employees share-based payments in which the terms of
the award provide that a performance target that affects vesting
could be achieved after the requisite service period. The
amendments require that a performance target that affects vesting
and that could be achieved after the requisite service period be
treated as a performance condition. A reporting entity should apply
existing guidance in Topic 718 as it relates to awards with
performance conditions that affect vesting to account for such
awards. For all entities, the amendments in this ASU are effective
for annual periods and interim periods within those annual periods
beginning after December 15, 2015. Earlier adoption is
permitted. Entities may apply the amendments in this ASU either
(a) prospectively to all awards granted or modified after the
effective date or (b) retrospectively to all awards with
performance targets that are outstanding as of the beginning of the
earliest annual period presented in the financial statements and to
all new or modified awards thereafter. If retrospective transition
is adopted, the cumulative effect of applying this Update as of the
beginning of the earliest annual period presented in the financial
statements should be recognized as an adjustment to the opening
retained earnings balance at that date. Additionally, if
retrospective transition is adopted, an entity may use hindsight in
measuring and recognizing the compensation cost. This updated
guidance is not expected to have a material impact on our results
of operations, cash flows or financial condition. We are currently
reviewing the provisions of this ASU to determine if there will be
any impact on our results of operations, cash flows or financial
condition.
13
In
August 2014, the FASB issued Accounting Standards Update
“ASU” 2014-15 on “Presentation of Financial
Statements Going Concern (Subtopic 205-40) – Disclosure of
Uncertainties about an Entity’s Ability to Continue as a
Going Concern”. Currently, there is no guidance in U.S. GAAP
about management’s responsibility to evaluate whether there
is substantial doubt about an entity’s ability to continue as
a going concern or to provide related footnote disclosures. The
amendments in this Update provide that guidance. In doing so, the
amendments are intended to reduce diversity in the timing and
content of footnote disclosures. The amendments require management
to assess an entity’s ability to continue as a going concern
by incorporating and expanding upon certain principles that are
currently in U.S. auditing standards. Specifically, the amendments
(1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including
interim periods, (3) provide principles for considering the
mitigating effect of management’s plans, (4) require
certain disclosures when substantial doubt is alleviated as a
result of consideration of management’s plans,
(5) require an express statement and other disclosures when
substantial doubt is not alleviated, and (6) require an
assessment for a period of one year after the date that the
financial statements are issued (or available to be issued). We are
currently reviewing the provisions of this ASU to determine if
there will be any impact on our results of operations, cash flows
or financial condition.
All
other newly issued accounting pronouncements but not yet effective
have been deemed either immaterial or not applicable.
NOTE 3 – RELATED PARTY TRANSACTIONS
There
were no related party transactions recorded in three months ended
March 31 2021.
NOTE 4 – STOCKHOLDERS' DEFICIT
As of
March 31, 2021, the Company did not have a stockholder deficit.
Stockholder equity as of March 31, 2021, was $628,547.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The
Company has committed to ICT Investments to sublease 18,000 SF of
manufacturing space with the monthly cost of $14,377.50 per months.
The sub lease commitment expires on October 20, 2021.
NOTE 6 – ADVANCES
During
its operations in the quarter ended March 31, 2021, the Company did
not accrue any costs which were not paid through the cash proceeds
or the sale of capital stock.
NOTE 7 – SUBSEQUENT EVENTS
None.
14
ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with our unaudited
financial statements and the notes to those financial statements
appearing elsewhere in this Report.
Certain statements in this Report constitute forward-looking
statements. These forward-looking statements include statements,
which involve risks and uncertainties, regarding, among other
things, (a) our projected sales, profitability, and cash flows, (b)
our growth strategy, (c) anticipated trends in our industry, (d)
our future financing plans, and (e) our anticipated needs for, and
use of, working capital. They are generally identifiable by use of
the words “may,” “will,”
“should,” “anticipate,”
“estimate,” “plan,”
“potential,” “project,”
“continuing,” “ongoing,”
“expects,” “management believes,” “we
believe,” “we intend,” or the negative of these
words or other variations on these words or comparable terminology.
In light of these risks and uncertainties, there can be no
assurance that the forward-looking statements contained in this
filing will in fact occur. You should not place undue reliance on
these forward-looking statements.
The forward-looking statements speak only as of the date on which
they are made, and, except to the extent required by federal
securities laws, we undertake no obligation to update any
forward-looking statements to reflect events or circumstances after
the date on which the statements are made or to reflect the
occurrence of unanticipated events.
The “Company,” “we,” “us,” or
“our,” are references to the business of Laser
Photonics Corporation, a Wyoming corporation.
Corporation Information
Laser
Photonics Corporation was formed under the laws of Wyoming on
November 8, 2019. We changed our domicile to Delaware on March 5,
2021. We are a vertically integrated manufacturing company for
photonics based industrial products and solutions, primarily
disruptive laser cleaning technologies. Our vertically integrated
operations allow us to reduce development and advanced laser
equipment manufacturing time, offer better prices, control quality
and protect our proprietary knowhow and technology compared to
other laser cleaning companies and companies with competing
technologies.
Our
principal executive offices are located at 1101 N Keller Rd,
Orlando FL, 32810, and our telephone number is (407) 804 1000. Our
website address is www.laserphotonics.com. The Company’s
annual reports, quarterly reports, current reports on Form 8-K and
amendments to such reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”), and other information related to the
Company, are available, free of charge, on that website as soon as
we electronically file those documents with, or otherwise furnish
them to, the SEC. The Company’s website and the information
contained therein, or connected thereto, are not and are not
intended to be incorporated into this Quarterly Report on Form
10-Q.
The
Company’s accounting year end is December 31.
We
intend to continue to stay ahead of the technology curve by
researching and developing cutting edge products and technologies
for both large and small businesses. We view the small companies as
an attractive market opportunity since they were previously unable
to take advantage of laser processing equipment due to high prices,
significant operating costs and the technical complexities of the
laser equipment. As a result, we are developing a group of
standardized laser cutting equipment that we have named the Laser
Tower™ material processing family of equipment that we
believe represents a new generation of high power laser cutting
systems that will be affordable to more than a million small and
mid- size companies.
Critical Accounting Policies
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
reported amounts in the accompanying consolidated financial
statements and related notes. These estimates and assumptions have
a significant impact on our financial statements. Actual results
could differ materially from those estimates. Critical accounting
policies are those that require the most subjective and complex
judgments, often employing the use of estimates about the effect of
matters that are inherently uncertain. Our significant accounting
policies are disclosed in Note 1 to the Financial Statements
included in this Quarterly Report on Form 10-Q. However, we do not
believe that there are any alternative methods of accounting for
our operations that would have a material effect on our financial
statements.
CORONAVIRUS
AID, RELIEF AND ECONOMIC SECURITY ACT
On
March 27, 2020, the U.S. Government enacted the Coronavirus Aid,
Relief, and Economic Security Act (the “CARES Act”).
The CARES Act includes various income and payroll tax provisions.
The Company has analyzed the tax provisions of the CARES Act and
determined they could have a significant financial impact on our
financial statements.
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 from Axiom Bank, N.A.,
headquartered in Central Florida, in the amount of $198,750
pursuant to the Paycheck Protection Program (the “PPP”)
under the CARES Act. The total aggregate amount of PPP Loans
received by the company by March 31, 2021 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. The amount of loan
forgiveness will be reduced if the borrower terminates employees or
reduces salaries during the eight-week period. The Company intends
to use the loan proceeds for purposes consistent with the PPP and
anticipates that a majority of the loan amount will be forgiven,
but no assurance can be given that the Company will not take
actions that could cause the Company to be ineligible for
forgiveness of some portion of the loan. The unforgiven portion of
the loan is payable over two years at an interest rate of 1%, with
a deferral of payments for the first six months.
15
Liquidity and Capital Resources
For the
three months ended March 31, 2021, our liquidity needs were met
through revenues received from sales and the financial support of
the ICT affiliated companies.
For
the three months ended March 31, 2021, the Company’s
liquidity needs were met through the financing
activity.
The
following is a summary of the Company’s cash flows provided
by (used in) operating, investing and financing
activities:
|
For three
Months ending March 31,
|
|
|
2021
|
2020
|
OPERATING ACTIVITIES
|
|
|
Net Income
|
182,003.21
|
-155,650.99
|
Net cash provided by Operating Activities
|
-171,550.36
|
-363,724.74
|
Net cash provided by Investing Activities
|
77,317.73
|
-151,853.66
|
Net cash provided by Financing Activities
|
148,291.13
|
557,803.21
|
Net cash increase for period
|
54,058.50
|
42,224.81
|
Cash at beginning of period
|
326,713.39
|
0.00
|
Cash at end of period
|
380,771.89
|
42,224.81
|
As of
March 31, 2021, the Company had $380,772 in cash, $2,606,429 in Current assets (without cash and cash
equivalents) and $353,162 in current
liabilities.
As a
result, on March 31, 2021, the Company had $3,014,811 in total
working capital, compared to $2,553,140 of total working capital
for the same period in 2020.
|
Three
Months ended March 31,
|
|
|
2021
|
2020
|
Cash and Cash
Equivalents
|
380,772
|
326,713
|
Working Capital
(excluding cash and cash equivalents)
|
2,634,039
|
2,226,427
|
Total Working
Capital
|
3,014,811
|
2,553,140
|
We will
have to meet all the financial disclosure and reporting
requirements associated with being a publicly reporting company.
Our management will have to spend additional time on policies and
procedures to make sure it is compliant with various regulatory
requirements, especially that of Section 404 of the Sarbanes-Oxley
Act of 2002. This additional corporate governance time required of
management could limit the amount of time our management has to
implement our business plan and may delay our anticipated growth
plans.
Quantitative
and Qualitative Disclosures About Market Risk.
We have
not utilized any derivative financial instruments such as futures
contracts, options and swaps, forward foreign exchange contracts or
interest rate swaps and futures. We believe that adequate controls
are in place to monitor any hedging activities. We do not have any
borrowings and, consequently, we are not affected by changes in
market interest rates. We do not currently have any sales or own
assets and operate facilities in countries outside the United
States and, consequently, we are not affected by foreign currency
fluctuations or exchange rate changes. Overall, 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.
16
Promissory
Notes
In
January 2020, the Company issued a promissory note to ICT in the
principal amount of $439,990 bearing 6% annual interest with a
maturity date of January 31, 2023. This Note may be prepaid in
whole or in part. As of March 31, 2021, the unpaid principal amount
of the Note was $337,457.
Lease
Liability
As of
March 31, 2021, the amount of the recorded lease liability less the
current portion was $43,855.
The
original maturity date of our facility operating lease is November
1, 2021. However, due to the impact of COVID 19, we reached an
agreement with the landlord to defer two monthly payments to the
end of the lease. Those lease liabilities were booked as deferred
lease payments under long term liabilities.
The maturity amounts of our lease liabilities are as
follows:
Year Ending
December 31
|
Operating
leases
|
|
|
2021
|
$138,067
|
|
|
2022
|
$15,100
|
Deferred
rent
|
$28,755
|
|
|
Total lease
payments
|
$181,922
|
|
|
Less imputed
interest
|
$-
|
Total
|
$181,922
|
|
|
|
|
|
|
|
|
|
|
As of
|
3/31/2021
|
|
|
Operating
leases:
|
|
|
|
Operating lease
right-of-use asset
|
$153,167
|
|
|
|
|
|
|
Current operating
lease liability
|
$138,067
|
|
|
Operating lease
liability - less current portion
|
$43,855
|
|
|
Total operating
lease liability
|
$181,922
|
|
17
Off-Balance Sheet Arrangements
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.
Results of Operations
For the three months ended March 31, 2021
Revenues
We
generate revenues through sales of our laser blasting and laser
cleaning products, particularly with introduction of new models
covering the whole range of Roughing, Conditioning and Finishing
laser systems, including laser blasting systems cabinets
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. 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.
Sales
of our products are generally recognized upon shipment, provided
that no obligations remain and collection of the receivable is
reasonably assured.
During
the three months ended March 31, 2021, we recognized revenue of
$976,025, as compared to $177,925 in revenue recognized during the
same period in 2020, an increase of $798,099. The increase is
primarily due to increase of Roughing high power 2000CTH model unit
sales in the first quarter of 2021, and increased recognition and
approval of Laser blasting by leading US Agencies and
Industries.
|
Three Months
ended
|
|
|
March 31,
2021
|
March 31,
2020
|
Revenue
|
976,025
|
177,925
|
Our
rent expenses for the three months ended March 31, 2021 totaled
$43,133 as compared to $43,162for the same period in
2020.
Our
payroll expenses for the three months ended March 31, 2021 totaled
$253,560 as compared to $189,491 for the same period in 2020
increased by $64,068 due to hiring more personnel mainly for system
assembly operation.
In the
three months ended March 31, 2021, our net income was $182,003
compared to net Loss of $(155,651) in the same period of
2020.
We are
entering into laser equipment sales agreements with customers for
specific equipment based upon purchase orders and our standard
terms and conditions of sale.
Under
our customer contracts or/and purchase orders, we transfer title
and risk of loss to the customer and recognize revenue upon
shipment. Our customers do not have extended payment terms or
rights of return under these contracts.
Our
largest sales were to AMMO, Blue Origin, SPX, Illumina, and Excet
c/o Naval Research Laboratory.
18
Revenue Recognition
We
generate revenue from the production and sale of laser equipment,
OEM Laser Products and Service and Repair. We recognize revenue
according to ASC 606. When the customer obtains control over the
promised equipment or services, we record revenue in the amount of
consideration that we receive or can expect to receive in exchange
for those goods and services. The Company applies the following
five-step model to determine revenue recognition:
|
●
|
Identification
of a contract with a customer
|
|
●
|
Identification
of the performance obligations in the contact
|
|
●
|
determination
of the transaction price
|
|
●
|
allocation
of the transaction price to the separate performance
allocation
|
|
●
|
recognition
of revenue when performance obligations are satisfied
|
The Company only applies the five-step model when it is probable
that the Company will collect the consideration it is entitled to
in exchange for the goods or services it transfers to the customer.
At contract inception and once the contract is determined to be
within the scope of ASC 606, we assess the goods or services
promised within each contract and determines those that are
performance obligations and assesses whether each promised good or
service is distinct. Our contracts contain a single performance
obligation and the entire transaction price is allocated to the
single performance obligation. We recognize as revenues the amount
of the transaction price that is allocated to the respective
performance obligation when the performance obligation is satisfied
or as it is satisfied. Accordingly, we recognize revenues (net)
when the customer obtains control of the Company’s product,
which typically occurs upon shipment of the product.
The
Company recorded revenues when the following criteria were met:
(i) persuasive evidence of an arrangement existed;
(ii) delivery had occurred; (iii) the price to the
customer was fixed or determinable; and (iv) collection of the
sales price was reasonably assured. Delivery occurred
when goods were shipped and title and risk of loss were passed to
the customer. Revenue was deferred in all instances
where the earnings process was incomplete. The Company
recognized revenue from distribution sales when all contingencies
were satisfied and upon persuasive evidence of a sale to end users
until such time that historical sell through ratios had been
developed. Payments received before all of the relevant
criteria for revenue recognition were satisfied were recorded as
deferred revenue in the accompanying balance
sheets. Revenues and costs of revenues from consulting
contracts were recognized during the period in which the service
was performed. All revenues were reported net of any
sales discounts or taxes.
The Company also applies the percentage-of-completion method to
certain arrangements covered under ASC 360, when the sale has been
consummated, when we have transferred the usual risks and rewards
of ownership to the buyer, the initial or continuing investment
criteria have been met, we have the ability to estimate our costs
and progress toward completion, and other revenue recognition
criteria have been met. Such estimates include significant
judgment. Depending on the value of the initial and continuing
payment commitment by the buyer, we may align our revenue
recognition and release of project assets to cost of sales with the
receipt of payment from the buyer for sales arrangements accounted
for under ASC 360.
The Company recognizes revenue from contracts when specific
progress defined by contract terms are met, or when the contract
has been completed to specifications. The Company recognizes
revenue for product when shipped. Contracts or purchase orders,
according to the terms and conditions of the sale, are not
cancellable and deposits are not refundable unless the Company
cannot perform on the contract. The Company has no obligation to
provide upgrades, enhancements, or customer support subsequent to
the sale, other than warranty.
Refunds
and returns, which are minimal, are recorded as a reduction of
revenue. Unshipped product on received purchase orders by customers
prior to our satisfying the above criteria are recorded as deferred
revenue in the balance sheets.
All
revenues were reported net of any sales discounts or
taxes.
Cost of Goods Sold
Our
cost of goods sold includes the cost of raw materials and
components for manufacturing laser systems, OEM laser modules,
consists of different electronic and optical components such as
optical generators, scan heads, tempered glass, protective back
sheet, semiconductor laser cells, connector assemblies and wires,
edge seal and adhesives, junction boxes, and other items, such as
raw aluminum and aluminum extrusions, steel for tilt brackets and
frames. Our cost of goods sold does not includes direct labor for
the manufacturing and manufacturing overhead such as engineering,
equipment maintenance, quality and production control, and
procurement costs. Cost of goods sold dose not includes
depreciation of manufacturing plant and equipment and
facility-related expenses. In addition, we accrue warranty costs to
our cost of sales.
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. This
expected decrease in cost for laser technology would be partially
offset during periods in which we underutilize manufacturing
capacity.
As of
March 31, 2021, we recorded our cost of goods sold at $214,227 for
the three-month period.
19
Gross Profit
Gross
profit 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-up of production on new
products.
For the
three months ending March 31, 2021 and 2020, we recorded gross
profit of $623,988 and $120,606, respectively.
Operating Expenses
Selling, General and Administrative
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. Over time, we expect selling, general and administrative
expense to decline as a percentage of net sales as our net sales
increase.
Our
business has certain of its own dedicated administrative key
functions, such as accounting, legal, finance, project finance,
human resources, procurement, and marketing. Costs for such
functions are recorded and included within selling, general and
administrative costs for our systems segment. Our corporate key
functions consist primarily of company-wide corporate tax,
corporate treasury, corporate accounting/finance, corporate legal,
investor relations, corporate communications, and executive
management functions.
|
March 31,
2021
|
March 31,
2020
|
Expense
|
|
|
Depreciation Expense
|
39,930
|
6,602
|
G&A Expense
|
105,295
|
37,002
|
Payroll Expenses
|
253,560
|
189,491
|
Rent Expense
|
43,133
|
43,162
|
Tax
|
68
|
0
|
Total Expense
|
441,986
|
276,257
|
For the
three months ending March 31, 2021 and 2020, we recorded our total
expense as $441,986 and $276,257 accordingly.
Research and Development
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.
We
maintain a number of programs and activities to improve our
technology and processes in order to enhance the performance and
reduce the costs of our Cleaning Laser modules.
All our
R&D expenses for the period of three months ending March 31
2021 were expensed and not booked as a separate line item. We
intent to establish a separate accounting for R&D expenses in
the near future.
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Facility
We are
leasing our manufacturing facility from ICT with monthly payments
and recording those expenses as rent expense. On January 1, 2020,
we entered a sub-lease with ICT Investments for 18,000 sf of
manufacturing space at a rate of $14,377 per month.
For the
three and six months ended March 31, 2021, we recorded our rent
expense of $43,133 and $86,294, respectively.
Our
facility is currently equipped with three of our latest advanced
laser cleaning demonstration models. It has a materials stock room,
ramp and high dock in the warehouse with loading and moving
equipment. It also has a machine shop, electronic assembly, and
equipment assembly area.
Foreign Currency Gain (Loss)
Foreign
currency gain (loss) consists of gains and losses resulting from
conducting transactions denominated in currencies other than our
functional currencies. As of March 31, 2021, we have not incurred
any foreign currency gain (loss).
Interest Expense, Net
Interest
expense, net of amounts capitalized, is incurred on various debt
financings. We capitalize interest expense into our property, plant
and equipment, project assets, and deferred project costs when such
costs qualify for interest capitalization.
Income Tax Expense
Income
taxes are imposed on our income by taxing authorities in the
various jurisdictions in which we operate, principally the United
States.
Critical Accounting Polices and Estimates
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent liabilities at dates of the financial statements and the
reported amounts of revenue and expenses during the periods. Actual
results could differ from these estimates. Our significant
estimates and assumptions include depreciation and the fair value
of our stock, stock-based compensation, debt discount and the
valuation allowance relating to the Company’s deferred tax
assets.
Recent Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update
(“ASU”) No. 2016-02, Leases
(Topic 842) (“ASU
2016-02”), which is intended to increase transparency and
comparability among organizations by recognizing lease assets and
lease liabilities on the balance sheet and disclosing key
information about leasing arrangements to enable users of financial
statements to assess the amount, timing and uncertainty of cash
flows arising from 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. The new guidance is effective for
fiscal years beginning after December 15, 2018 and interim periods
within those years.
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 as of March
31, 2021 of $282,565 of right-of-use assets for operating
leases.
The adoption of ASU 2016-02 also required us to include any initial
direct costs, which are incremental costs that would not have been
incurred had the lease not been obtained, in the right-of-use
assets. The recognition of these costs in connection with our
adoption of this guidance did not have a material impact on our
financial statements.
Amounts related to our reporting segment information for the three
and six months ended March 31, 2021 have been restated throughout
this Quarterly Report on Form 10-Q to reflect the changes in our
reporting segments.
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In
June 2014, FASB issued Accounting Standards Update
(“ASU”) No. 2014-10, “Development Stage
Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements, Including an Amendment to Variable Interest
Entities Guidance in Topic 810, Consolidation”. The update
removes all incremental financial reporting requirements from GAAP
for development stage entities, including the removal of Topic 915
from the FASB Accounting Standards Codification. In addition, the
update adds an example disclosure in Risks and Uncertainties (Topic
275) to illustrate one way that an entity that has not begun
planned principal operations could provide information about the
risks and uncertainties related to the company’s current
activities. Furthermore, the update removes an exception provided
to development stage entities in Consolidations (Topic 810) for
determining whether an entity is a variable interest entity-which
may change the consolidation analysis, consolidation decision, and
disclosure requirements for a company that has an interest in a
company in the development stage. The update is effective for the
annual reporting periods beginning after December 15, 2014,
including interim periods therein. Early application with the first
annual reporting period or interim period for which the
entity’s financial statements have not yet been issued
(Public business entities) or made available for issuance (other
entities). The Company adopted this pronouncement for the year
ended December 31, 2014.
In
June 2014, FASB issued Accounting Standards Update
(“ASU”) No. 2014-12, “Compensation –
Stock Compensation ( Topic 718 ); Accounting for Share-Based
Payments When the Terms of an Award Provide That a Performance
Target Could Be Achieved after the Requisite Service Period”.
The amendments in this ASU apply to all reporting entities that
grant their employees share-based payments in which the terms of
the award provide that a performance target that affects vesting
could be achieved after the requisite service period. The
amendments require that a performance target that affects vesting
and that could be achieved after the requisite service period be
treated as a performance condition. A reporting entity should apply
existing guidance in Topic 718 as it relates to awards with
performance conditions that affect vesting to account for such
awards. For all entities, the amendments in this ASU are effective
for annual periods and interim periods within those annual periods
beginning after December 15, 2015. Earlier adoption is
permitted. Entities may apply the amendments in this ASU either
(a) prospectively to all awards granted or modified after the
effective date or (b) retrospectively to all awards with
performance targets that are outstanding as of the beginning of the
earliest annual period presented in the financial statements and to
all new or modified awards thereafter. If retrospective transition
is adopted, the cumulative effect of applying this Update as of the
beginning of the earliest annual period presented in the financial
statements should be recognized as an adjustment to the opening
retained earnings balance at that date. Additionally, if
retrospective transition is adopted, an entity may use hindsight in
measuring and recognizing the compensation cost. This updated
guidance is not expected to have a material impact on our results
of operations, cash flows or financial condition. We are currently
reviewing the provisions of this ASU to determine if there will be
any impact on our results of operations, cash flows or financial
condition.
In
August 2014, the FASB issued Accounting Standards Update
“ASU” 2014-15 on “Presentation of Financial
Statements Going Concern (Subtopic 205-40) – Disclosure of
Uncertainties about an Entity’s Ability to Continue as a
Going Concern”. Currently, there is no guidance in U.S. GAAP
about management’s responsibility to evaluate whether there
is substantial doubt about an entity’s ability to continue as
a going concern or to provide related footnote disclosures. The
amendments in this Update provide that guidance. In doing so, the
amendments are intended to reduce diversity in the timing and
content of footnote disclosures. The amendments require management
to assess an entity’s ability to continue as a going concern
by incorporating and expanding upon certain principles that are
currently in U.S. auditing standards. Specifically, the amendments
(1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including
interim periods, (3) provide principles for considering the
mitigating effect of management’s plans, (4) require
certain disclosures when substantial doubt is alleviated as a
result of consideration of management’s plans,
(5) require an express statement and other disclosures when
substantial doubt is not alleviated, and (6) require an
assessment for a period of one year after the date that the
financial statements are issued (or available to be issued). We are
currently reviewing the provisions of this ASU to determine if
there will be any impact on our results of operations, cash flows
or financial condition.
All
other newly issued accounting pronouncements but not yet effective
have been deemed either immaterial or not applicable.
Off-Balance Sheet Arrangements
As of
March 31, 2021, we did not have any off-balance sheet
arrangements.
Subsequent Events
The
Company has evaluated subsequent events through the filing of this
Quarterly Report on Form 10-Q and determined that there have been
no events that have occurred that would require adjustments to our
disclosures in the consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company
is not required to provide the information required by this Item as
it is a “smaller reporting company,” as defined by Rule
229.10(f)(1).
We have
not utilized any derivative financial instruments such as futures
contracts, options and swaps, forward foreign exchange contracts or
interest rate swaps and futures. We believe that adequate controls
are in place to monitor any hedging activities. We do not have any
borrowings and, consequently, we are not affected by changes in
market interest rates. We do not currently have any sales or own
assets and operate facilities in countries outside the United
States and, consequently, we are not affected by foreign currency
fluctuations or exchange rate changes. Overall, 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.
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ITEM 4. CONTROLS AND
PROCEDURES
Disclosures Control and Procedures
Our
management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Exchange Act as a process designed by, or
under the supervision of, the company’s principal executive
and principal financial officers and effected by the
Company’s board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with accounting principles
generally accepted in the United States of America and includes
those policies and procedures that:
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Pertain
to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets
of the company;
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Provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
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Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on the financial
statements.
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Because
of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of
any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and
presentation. Because of the inherent limitations of internal
control, there is a risk that material misstatements may not be
prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is
possible to design into the process safeguards to reduce, though
not eliminate, this risk.
As of
March 31, 2021, our President evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act), as of the end of the period
covered by this Quarterly Report on Form 10-Q. Disclosure controls
and procedure include, without limitations, controls and procedures
designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding
required disclosure. Our management is responsible for monitoring
the process pursuant to which information is gathered and analyze
such information to determine the extent to which such information
requires disclosure in the reports filed with the Securities and
Exchange Commission. Based on such evaluation, our President has
concluded that as of March 31, 2021, the Company’s disclosure
controls and procedures were effective.
Changes in internal controls over financial reporting
There
was no change in our internal controls over financial reporting
that occurred during the period covered by this Report, which has
materially affected, or is reasonably likely to materially affect,
our internal controls over financial reporting.
This
quarterly report does not include an attestation report of the
Company’s registered independent public accounting firm
regarding internal control over financial
reporting. Management’s report was not subject to
attestation by the Company’s registered
independent public accounting firm pursuant to rules of the
Securities and Exchange Commission that permit the Company to
provide only management’s report in this quarter report on
Form 10-Q.
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PART II – OTHER
INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not involved in any legal proceedings, including routine
litigation arising in the normal course of business that we believe
will have a material adverse effect on our business, financial
condition or results of operations.
ITEM 1A. RISK FACTORS
Not
applicable to a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
On
January 1, 2020, the Company purchased from ICT Investments certain
capital manufacturing equipment valued at $158,456 which the
Company will use in its business in exchange for 900,000 shares of
its common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not
applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXIBITS.
Rule
13(a)-14(a)/15(d)-14(a) Certification of principal executive and
financial officer
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Section
1350 Certification of principal executive officer and principal
financial and accounting officer
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101*
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XBRL
data files of Financial Statements and Notes contained in this
Quarterly Report on Form 10-Q.
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* In
accordance with Regulation S-T, the Interactive Data Files in
Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed
“furnished” and not “filed.”
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
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Laser Photonics Corporation
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By:
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/s/
Wayne Tupuola
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Name:
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Wayne
Tupuola
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Title:
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President
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(Principal
Executive and Financial Officer)
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Date:
May 24, 2021
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