UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

WASHINGTON,D.C. 20549

FORM10-K

FORTHE FISCAL YEAR ENDED DECEMBER 31, 2024

OR

FORTHE TRANSITION PERIOD FROM __________ TO __________

COMMISSIONFILE NUMBER 001-41515

(407)804 1000

Registrant’sTelephone Number, Including Area Code

________________________________________________________________

FormerName, Former Address and Former Fiscal Year, if Changed Since Last Report

SECURITIESREGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIESREGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMONSTOCK, $0.001 PAR VALUE

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicateby check mark whether the registrant (1) has filed all reports required to be filed be Section 13 or 15(d) of the Securities ExchangeAct 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 ☐

Indicateby check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive DataFile required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not containedherein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporatedby reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Ifsecurities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrantincluded in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicateby check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reportingcompany, 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.

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

Asof December 31, 2024, and as of the date this Form 10-K is filed with the Securities and Exchange Commission, the Registrant’scommon stock is trading on the NASDAQ under the ticker symbol “LASE”.

0

Asof June 18, 2025, there were 14,276,150 sharesof the registrant’s Common Stock outstanding.

FORWARDLOOKING STATEMENTS

ThePrivate Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements, which are identifiedby the words “believe,” “expect,” “anticipate,” “intend,” “plan” and similarexpressions. The statements contained herein which are not based on historical facts are forward-looking statements that involve knownand unknown risks and uncertainties that could significantly affect our actual results, performance or achievements in the future and,accordingly, such actual results, performance or achievements may materially differ from those expressed or implied in any forward-lookingstatements made by or on our behalf. These risks and uncertainties include, but are not limited to, risks associated with our abilityto successfully develop and protect our intellectual property, our ability to raise additional capital to fund future operations andcompliance with applicable laws and changes in such laws and the administration of such laws. These risks are described below and in“Item 1. Business,” Item 1A “Risk Factors,” “Item 7. Management’s Discussion and Analysis of FinancialCondition and Results of Operations,” and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” includedin this Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the datethe statements were made.

TABLEOF CONTENT

PARTI

ITEM1. BUSINESS

OVERVIEW

Wewere formed under the law of Wyoming on November 8, 2019. We changed our domicile to Delaware on March 5, 2021. We are a vertically integratedmanufacturing company for photonics-based industrial products and solutions and, since recently acquiring the assets of Control MicroSystems, Inc., have now expanded the market for our laser products into the large, growing pharmaceutical manufacturing vertical, inwhat we believe is a recession-resistant sector with significant barriers to entry.

Weare pioneering a new generation of laser blasting technologies focused on disrupting the sandblasting and abrasives blasting markets.We offer a full portfolio of integrated laser blasting solutions for corrosion control, rust removal, de-coating, pre-welding and post-welding,laser cleaning and surface conditioning. Our solutions span use cases throughout product lifecycles, from product fabrication to maintenanceand repair, as well as aftermarket operations. Our laser blasting solutions are applicable in most industries dealing with materialsprocessing, including automotive, aerospace, healthcare, consumer products, shipbuilding, heavy industry, machine manufacturing, nuclearmaintenance and de-commissioning and surface coating.

Ourvertically 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 competingtechnologies.

Weinitiated our sales effort in December 2019. By December 31, 2024, we had net revenues of $3.415 million. We are strategically positionedto drive growth and innovation in the laser technology market by targeting three key customer segments: government entities, Fortune1000 companies, and medium/small businesses. Each of these segments presents unique opportunities and challenges, and our business modelis designed to cater specifically to the needs and growth potential within each category.

Forgovernment agencies, we provide highly specialized laser solutions that meet stringent regulatory and performance standards. This segmentbenefits from our expertise in delivering reliable, durable, and effective laser systems for various applications, from defense and aerospaceto public infrastructure projects. Working with government clients not only solidifies our reputation as a trusted provider of advancedlaser technology but also paves the way for new contracts and collaborative projects. One of our current projects is the Laser ShieldAnti-Drone System (LSAD), a joint development with our affiliate, Fonon Corporation, to create a laser defense system to serve as animmediate response defense system for addressing the threat of small-scale unmanned aerial systems (UAS) in conflict zones and expeditionarylocations. We successfully completed a test of the LSAD prototype at our Orlando facility.

Fortune1000 companies represent another critical segment, where our laser technology can significantly enhance operational efficiency, precision,and productivity. By addressing the unique challenges of large-scale industrial applications, we position ourselves as an essential partnerin the innovation strategies of these corporations. Our advanced laser solutions help these clients stay competitive and maintain high-qualitystandards, driving repeat business and fostering long-term partnerships.

Mediumand small businesses represent the third key pillar of our customer base, and we  recognize that this segment has unique operationalneeds, budget considerations, and purchasing behaviors compared to larger enterprises and government agencies. To better serve this growingmarket, we have launched a targeted initiative to expand our outside sales force and equip them with our CleanTech Professional PortableFinishing Laser 1040 (CTPF-1040)—a compact, high-performance laser system designed for versatility, mobility, and ease of use.

Thisinitiative empowers our sales team to bring the CleanTech experience directly to the customer, allowing potential clients to see andfeel the benefits of our laser technology in real-time, within their own environments. For situations involving larger, more complexcomponents—or when customers are unable to send samples to our Customer Experience Center—we have deployed two fully equippedmobile demonstration vans. These vehicles are outfitted with a range of laser systems and come complete with onboard power generation,compressed air, and full laser safety gear, enabling us to perform live on-site demonstrations, sample processing, and customer traininganywhere in the field.

Bystrategically addressing the distinct needs of enterprise, government, and small-to-medium business customers—and leveraging ouragile, field-ready sales team to deepen engagement and showcase our technology—we are positioning ourselves for strong, sustainablegrowth. Our customer-first approach, combined with cutting-edge product innovation and adaptive market strategies, strengthens our reputationas a trusted, forward-thinking leader in the laser technology industry.

Wemarket our products globally through our direct sales force which is located in the United States.

Wehave a perpetual, worldwide exclusive license agreement with ICT Investments, LLC (“ICT Investments”), an affiliate of theCompany as discussed below, to sell the Laser Photonics™ branded equipment and licenses for laser cleaning and rust removal, inexchange for 3,000,000 shares of common stock.

OnOctober 18, 2023, we entered into a license agreement with an affiliated company, Fonon Technologies, Inc., which is majority-owned byICT Investments, for an exclusive, worldwide, nontransferable license for high power turbo piercing (“Cold Cutting”) lasercutting technology and any improvements to such technology to allow us to manufacture, sell, export and import products incorporatingsuch technology in return for our paying a license fee of $350,000 in cash and a one-time grant of 1,000,000 restricted shares of ourcommon stock to ICT Investments.

ICTInvestments LLC currently owns approximately 31.13% of the outstanding shares of our common stock and Fonon Corporation currently ownsapproximately 21.04% of the outstanding shares of our common stock, and collectively are our majority shareholders. Dmitriy Nikitin hasvoting control of the Company through his ownership of all membership interests of ICT Investments, LLC which is the controlling entityof Fonon Corporation and Fonon Technologies, Inc. On May 21, 2024 we entered into a license agreement with Fonon Corporation to receivean exclusive, worldwide, sublicensable license to Fonon’s laser material processing equipment and technology, including all applicationsof laser cutting, marking, engraving, laser welding, brazing, ablation, laser drilling, semiconductor chip marking, semiconductor andflat panel display laser processing equipment, all other laser material processing equipment documented or existing in a form of knowhowand/or trade secrets in return for 3,000,000 restricted shares of Laser Photonics common stock. ICT Investments, LLC, through its controlof Fonon Corporation and Fonon Technologies, Inc., in the aggregate, owns approximately _59.19_% of our common stock and willhave the voting power to decide all matters submitted to a vote of our shareholders, including the election of our directors. Throughour affiliation with ICT Investments, its portfolio companies and its customers, we have access to more than 1,500 high profile Fortune5000 customer prospects as well as recognition as a global leader in manufacturing premium laser equipment. In addition, through theexpertise and reputation of our officers, Board members and advisors, we have the foundation of our technologically advanced, disruptivelaser systems specifically suited for most material processes with specific cleaning requirements and challenges.

OnOctober 30, 2024, we entered into an Asset Purchase Agreement with Control Micro Systems, Inc. (“CMS”), a laser company locatedin Orlando, Florida, that designs and builds turnkey laser material processing systems for marking, cutting, drilling and welding. CMSallows us to expand into the pharmaceutical market for controlled-release medications that are expanding rapidly, driven by the growingneed for more effective and patient-friendly drug delivery systems. Controlled-release tablets, which gradually release medication overtime, require precision manufacturing techniques to ensure the proper dosage and timing of active ingredient release. Laser technologyplays a critical role in creating micro-drilled apertures in these tablets, ensuring accurate and consistent drug release. We believethat there is a significant opportunity to unlock CMS’s growth potential by integrating it into our existing sales and marketinginfrastructure, enhancing customer engagement and expanding our market reach to maximize wallet share from current customers and bringnew clients on board.

Withglobal pharmaceutical companies focusing on enhancing drug delivery mechanisms, the demand for laser-based solutions like those providedby CMS is expected to rise. CMS’ experience in supplying laser systems to pharmaceutical companies, coupled with Laser Photonics’sales and marketing expertise, positions LPC to take full advantage of this growing market segment. We acquired all business assets ofCMS, including its intellectual property. This purchase enabled us to expand into the large and growing pharmaceutical manufacturingvertical as well as hiring CMS’ existing workforce, including engineers and customer support personnel, that we believe will addsignificant value to the acquired CMS assets.

Ourprincipal executive offices are located at 1101 N. Keller Rd., Suite G, Orlando, Florida 32810, and our telephone number is (407) 804-1000.Our corporate website is https://laserphotonics.com. Information contained on our websites does not form a part of this prospectus.

GrowthStrategy

Ourobjective is to achieve a leadership position in our industry with a focus in growth technologies including laser welding, laser cutting,laser cleaning, semiconductor, 3-D Printing, and anti-drone defense. The key elements of our growth strategy are:

Multi-marketand Multi-product Approach. We intend to develop and manufacture laser systems for a variety of markets to reduce the financial impactthat a downturn in any one market would have.

Accenton Developing Standard Systems for Specific Markets. We expect to increase sales through an industry-recognized expertise inclearly defined markets with substantial sales demand such as rust removal equipment for the shipbuilding industry, laser de-contaminationequipment for the nuclear industry and laser blasting cabinets for the general manufacturing industry.

BroadenCustomer Relationships. We expect to develop a globally diversified customer base in a variety of industries. We seek to differentiateourselves from our competitors through superior product pricing, performance and service. We believe that a global presence and investmentsin application engineering and support will create competitive advantages in serving multinational and local companies.

NewProduct Development. We intend to target new applications early in the development cycle and drive adoption by leveraging our strongcustomer relationships, engineering expertise and competitive production costs.

Weintend to continue to stay ahead of the technology curve by researching and developing cutting edge products and technologies for bothlarge and small businesses. In addition to our attention to Fortune 1000 companies, we also view the small companies as an attractivemarket opportunity since they were previously unable to take advantage of laser processing equipment due to high prices, significantoperating costs and the technical complexities of the laser equipment. As a result, we are developing a group of standardized laser cleaningequipment that we have named the CleanTech™ laser blaster family of equipment that we believe represents a new generation of high-powerlaser cleaning and rust removal systems that will be affordable to more than a million small and mid-size companies.

ControlledCompany Exemption

ICTInvestments, LLC in the aggregate, will control approximately 59.19__% of the voting power of our outstanding capital stock followingthis offering and will have the power to elect a majority of our directors. Pursuant to Nasdaq’s listing standards, a company ofwhich more than 50% of the voting power for the election of directors is held by an individual, a group or another company qualifiesas a “controlled company.” As a controlled company, we may elect not to comply with certain Nasdaq corporate governance requirements,including the requirements to have (i) a board composed of a majority of independent directors; (ii) compensation of executive officersdetermined by a majority of the independent directors or a compensation committee comprised solely of independent directors; and (iii)director nominees selected or recommended for our board either by a majority of the independent directors or a nominating committee comprisedsolely of independent directors. If we cease to be a “controlled company” and our shares are listed on Nasdaq, we will berequired to comply with these standards and, depending on the independence determination with respect to our then-current directors,we may be required to add additional directors to our board to achieve such compliance within the applicable transition periods. We currentlydo, and intend to continue to comply with the Nasdaq corporate governance requirements for companies that are not controlled companies.

OurLaser Cleaning Products

The current administration’s focus on fiscal responsibility and budget constraints has led to reduced spending on new equipment, increasing the need for maintenance, repair, and overhaul (MRO) of existing assets. As a result, demand for cost-effective, high-performance solutions is rising across defense and industrial sectors.  

Laser Photonics is strategically positioned to meet this need with our TAA-compliant line of laser solutions offered under the DefenceTech brand. Our “Made in America” industrial laser systems align with federal procurement priorities, ensuring U.S. agencies have access to cutting-edge, domestically manufactured technology for MRO applications. As one of few industrial laser cleaning equipment manufacturer meeting “Buy American” requirements, we are well-positioned to receive preferential consideration over foreign competitors in the laser cleaning systems market.

Diversifiedand Proprietary Technology Platform and Knowhow

Wewere able to secure through our affiliation with ICT Investments a diverse portfolio of know-how, trade secrets and proprietary technologies.We believe that we possess design documentation for the largest array of laser-based systems for material processing in North America.

CoreTechnologies Underlying Each Product

Fiberlaser cleaning technology or laser ablation which we market under the Laser Blasting™ brand, is a proven, state-of-the-art, 21stCentury replacement for hazardous 19th century abrasives blasting (or sandblasting). It is a non-contact, environmentally friendly processthat removes surface coatings from metals, concrete and delicate substrates such as composites—with minimal impact on the basematerial. Laser Blasting works by aiming brief pulses of high-power laser energy (in the µs–ms range) at a surface to beprepared or cleaned of paint, rust, or other contaminants. The energy applied to the layer being removed doesn’t dissipate. Instead,it blasts off the substrate material being cleaned. Most or all of the material being removed is vaporized, resulting in a much cleanerprocess than other cleaning methods. Whatever removed material has not been vaporized may be suctioned away and filtered out of the airas particle dust.

Weare recognized as a pioneer and an industry leader with our CleanTech™ Laser Blasting™ technology. Laser Blasting can replacesandblasting or dry ice blasting in nearly every industry and every application where an abrasive blasting is used. It is effective onglass, ceramics, metals, concrete, plastics and much more, and provides greater control and precision than possible with the legacy technologiesit is designed to replace. LP portable Laser Blasting systems incorporate proprietary autofocusing C-Optics technology that allows forgreater precision on uneven or contoured surfaces, even from handheld Laser Blasting systems. This innovation expands laser cleaningfrom the production floor to the field. Laser Blasting is effective on small parts and sensitive materials, as well as surfaces of ships,bridges, aircraft, pipelines, large vehicles, and trains, among others.

OurProduct Platforms

Sinceour founding in 2019, and through IP received from ICT Investments, we have developed an extensive portfolio of products based on proprietarytechnologies that form the foundation of our laser blasting equipment manufacturing solutions, which are comprised of hardware, equipmentdesign documentation, bills of materials, software, materials, and service practices.

Designedin-house by industry-recognized laser scientists and inventors, our expansive product portfolio covers a broad spectrum of applicationsacross key industries, including maritime and shipbuilding, oil and gas, automotive manufacturing, rail transport, aerospace, defense,and space exploration. Our CleanTech™ line scales with customer needs, starting with low price-point handheld Laser Blasters™designed to tackle simple cleaning and surface predation jobs, to high-end AI-controlled, user-programmable C-Robotics™ made forcomplex, precision production environments.

Ourstate-of-the-art, performance-based “Made in America” Laser Blasting™ products are industrial-grade laser cleaningsystems developed to disrupt and displace hazardous legacy abrasives blasting (a.k.a. sandblasting) and chemical cleaning methods thathave been in common usage since the 19th century. Laser Blasting is cleaner to operate, more cost effective to own and safer for theworker and the environment. We believe that Laser Blasting is right on time as industry is increasingly coming under pressure to phaseout abrasive blasting and chemical cleaning methods in compliance with health, environmental and safety regulations designed to protectlaborers and the environment.

Sinceour founding in 2019, we have developed an extensive portfolio of proprietary equipment and technologies that formed the base for ourbroad product offering, starting from relatively simple handheld devices to fully automatic and operated by AI robotic systems.

Ourdiverse lines of laser cleaning equipment are used in a variety of industries to improve and promote programs to address significantconcerns about the exposure of employees to toxic airborne materials to reduce the risk of lung cancer and silicosis triggered by inhalationof crystalline silica dust released from abrasive blasting. Laser cleaning uses photons emissions, thus eliminating the need for abrasivemedia, including silica. The chart below provides information on several industries to indicate the need for laser cleaning equipmentand how our technology meets those industries’ requirements. This chart was developed by us in the last few months to allow oursalespeople to identify the specific model of our CleanTech laser blasting equipment that matches target industries and the surface integrityparameters familiar to prospective customers. We want to demonstrate our capability to address the specific cleaning applications thatsuch customers require. The industry terminology is explained in our footnotes to the chart.

Belowis the description of abbreviations and definitions used in Laser Photonics Laser Blaster products qualification chart:

Ourcurrent Laser Blasting solutions are as follows:

Handheld CleanTech Line: We offer the widest range of Class IV handheld laser blasting equipment in the world, spanning from 50W to 3000W, and including the world’s most powerful production laser blaster on the market — the CleanTech Industrial Roughening Laser 3060, delivering average power levels in the 10,000-watt range.

We’recurrently developing an even more powerful solution designed for seamless integration into our CleanTech Robotic Cell, complete withsafety interlocks to ensure full OSHA and FDA CDRH Class 1 compliance.

The CleanTech 3060 is a high-performance cleaning and surfacepreparation system, engineered to efficiently remove rust, paint, and other surface contaminants from materials such as steel, aluminum,iron, and a wide range of other substrates.

Ourhandheld CleanTech line features five distinct pulse laser patterns, including a proprietary cleaning mode specifically designed to maximizeefficiency and minimize thermal stress, offering unmatched flexibility for a variety of industrial applications across diverse surfacetypes.

CleanTech™ Laser Blaster Cabinet The CleanTech™ Laser Blaster Cabinet is a fully enclosed, Class 1 laser workspace, engineered as a safer, cleaner, and more efficient alternative to traditional sandblasting enclosures—eliminating the noise, dust, media storage, replenishment, and cleanup associated with abrasive blasting.

Designed for companies of all sizes, this self-contained, industrial-grade laser cleaning machine replaces abrasive blasting and chemical baths, providing a high-precision, environmentally friendly solution for part cleaning and material preparation.  

Whatsets the CleanTech™ Laser Blaster Cabinet apart is its exclusive fiber laser technology, paired with a handheld laser-blastinghead, all housed within a fully enclosed 30” x 26” workspace. Built for speed, precision, safety, and flexibility, it isthe only laser-blasting cabinet in the world manufactured in full compliance with CDRH, FDA, and OSHA regulations.

With this system,companies can eliminate hazardous dust, noise, and toxic chemicals, ensuring a safer, cleaner, and more cost-effective work environmentwhile achieving superior cleaning and surface preparation results.

CleanTech™Class I Laser Blasting Systems

Our CleanTech™ MegaCenter, Titan, and Titan Express automated Class I-ready laser blasting systems are purpose-built for massproduction environments. Engineered with advanced automation controls and automated material-loading capabilities, these systemsdeliver maximum throughput for high-volume, high-precision manufacturing operations.  

The CleanTech™ Titan Series is a high-power, large-format laser system designed for parts cleaning, rust removal, and surface conditioning, featuring an expansive 6′ x 12′ working area and Flex-Loading options for seamless, continuous operation. This industrial-grade, turn-key solution can operate as a standalone unit or be fully integrated into an existing production line.  

The full CleanTech lineup includes the Titan, Titan Express, MegaCenter, and the portable CleanTech™ Handheld, ideal for use both in the field and on the factory floor. All CleanTech systems are built for industrial durability and operate in full compliance with OSHA, FDA, and CDRH safety standards, supporting true “Push-Button” laser-safe operation for unmatched ease of use and workplace safety.  

CleanTech™Robotic Cell with AI

TheCleanTech™ Robotic Cell integrates our advanced User-Programmable AI (UPAI), enabling factory line workers to easily program precisionrobotic operations—no coding or robotics expertise required. This breakthrough makes it simple to automate complex, repetitivetasks in high-throughput production environments, boosting both productivity and consistency.  

The CleanTech™ Laser Cleaning Robot is the first commercially available, collaborative, and AI-capable laser cleaning system in the United States. Purpose-built for precise beam positioning and tight focus, it operates at significantly lower laser power levels than traditional handheld systems—dramatically reducing operational costs and making laser cleaning more accessible and affordable for a wide range of industrial applications.  

Safetyand efficiency are at the core of the system’s design. With optional adds on including AI, a 3D scanner and visualizer, visionsystem, and a Class 1 safety enclosure, the robot can perform multiple tasks simultaneously—all while minimizing operator exposureand ensuring full compliance with OSHA and FDA CDRH regulations.

Theresult is a next-generation laser cleaning solution that combines cutting-edge automation, intelligent control, and industry-leadingsafety—bringing unprecedented capability to modern manufacturing floors.

Customers

Ourintent is to establish additional relationships with Fortune 1000 customers primarily within the United States and with select Fortune1000 customers around the globe and represent a broad array of industries, including automotive, aerospace, healthcare, consumer products,heavy industry, machine design, research, and others.

Research,Development and Engineering

Theprincipal focus of our research and development activity is the development of our proprietary laser-based cleaning equipment to replaceglobal sand blasting and abrasive blasting applications in a large number of markets discussed below.

Marketingand Sales 

Forthe year ending in December 31, 2024, we employed 8 direct salespeople, 10 global distributors/resellers, and signed two technologypartnerships for integration of our Cleantech product line into robotic platforms for both commercial and defense applications.

2023& 2024 was a year of investments sales and marketing activity, and we invested nearly $4M in development and scaling of sales andmarketing operation. We have a marketing and sales budget equal to 10% of our gross sales, and a new product promotional budget of $0.7Mfor 2025.

ProductWarranty and Support

Weoffer for sale with our equipment a two-year limited warranty against defects in materials and workmanship under normal use and serviceconditions following delivery of our equipment to our customers.

Wealso warrant the owners of our custom laser systems that are designed and manufactured in accordance with agreed-upon specifications.In resolving claims under both the defects and performance warranties, we have the option of either repairing or replacing the coveredlaser cleaning equipment. Our warranties are automatically transferred from the original purchaser of our laser cleaning equipment andoptical components to subsequent purchasers upon delivery of our finished laser systems.

Ingeneral, our products carry a warranty against defects, depending on the product type and customer negotiations. The costs associatedwith these warranty obligations are not expected to be significant and no such costs have been recorded in our financial statements.

Competition

Thelaser cleaning market is highly fragmented, with most competitors being small, privately held, or operating within limited geographicregions, specific industries, or niche applications. While our competitive landscape is diverse, it remains intensely competitive, shapedby rapid technological advancements, increasing customer demands, and downward pressure on average selling prices as newer, integratedtechnologies replace outdated systems.

Ourmost notable competitors include P-Laser and Clean-Lasersysteme GmbH (represented in the U.S. by Adapt Laser Systems), along with smallerplayers such as Laserax and 4JET. Some of these competitors are attempting to close the gap by increasing the output power of their fiberlasers to compete with our high-powered, industrial-grade solutions.

However,most competitors do not meet CDRH safety requirements for Class 4 laser systems, making them unlikely to be considered by many companiesthat prioritize workplace safety and regulatory compliance. At Laser Photonics, customer safety is our top priority. Our systems aredesigned and manufactured to fully comply with OSHA, FDA, and CDRH regulations, ensuring that companies receive not only cutting-edgeperformance but also the highest level of operational safety and reliability.

Wealso compete with end-users that produce laser technology, as well as with manufacturers of non-laser methods and tools, such as traditionalabrasives blasting (referred to as sandblasting), non-laser welding, cutting dies, mechanical cutters, and plasma cutters in the materialsprocessing market. Some of our competitors are larger, with considerably more financial, managerial, and technical resources, as wellas more extensive sales, distribution, and service networks, and greater marketing capacity.

Ourprimary focus is to provide diversified industrial-grade laser-based cleaning machinery in a variety of markets. Each market has a differentgroup of competitors subject to rapidly changing technologies and materials, a customer base with continuously changing requirementsand geographical outsourcing challenges.

Webelieve that our future success is dependent on our flexibility to adapt to changes in the marketplace, expanding our existing productsand services targeting application specific systems for each industry we serve. We continuously introduce new products and services ona timely and cost-effective basis identifying both standard and niche laser-systems opportunities enhancing our ability to penetratenew customers and new emerging markets.

Primarycompetitive factors in our markets include:

Inthe materials processing market, the competition is fragmented with a large number of competitors that are small or privately owned orcompete with us on a limited geographic, industry, or application specific basis including Trumpf GmbH, Clean Laser GMBH, P-Laser. AdvancedLaser Technology, Anilox Roll Cleaning Systems, General Lasertronics, IPGPhotonics, Laserax, and White Lion Dry Ice & Laser CleaningTechnology. We believe that none of our competitors compete in all the industries, applications, and geographical markets which we serveand that our products compete favorably with respect to their laser cleaning equipment.

IntellectualProperty and License Rights

Webelieve that our success depends, in part, on our ability to maintain and protect our proprietary technology and to conduct our businesswithout infringing on the proprietary rights of others.

Werely primarily on a combination of trademarks and trade secrets, as well as associate and third-party confidentiality agreements, tosafeguard our intellectual property.

Withrespect to proprietary know-how that is not patentable and processes for which patents are difficult to enforce, we rely on, among otherthings, trade secret protection and confidentiality agreements to safeguard our interests. We believe that many elements of our lasersystem manufacturing process, including our unique materials sourcing, involve proprietary know-how, technology, or data that are notcovered by patents or patent applications, including technical processes, equipment designs, algorithms, and procedures. We have takensecurity measures to protect these elements. All our research and development personnel will have to sign confidentiality and proprietaryinformation agreements with us. These agreements address intellectual property protection issues and require our associates to assignto us all the inventions, designs, and technologies they develop during the course of employment with us. We also require our customersand business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our modules, technology, orbusiness plans.

Employeesand Human Capital

Asof December 31, 2024, we employed 94 full-time team members and had no part-time employees. Our human capital strategy focuses on identifying,recruiting, retaining, incentivizing, and effectively integrating both existing personnel and new talent, including employees, advisors,and consultants. These efforts are essential to support our continued growth and innovation across all areas of the business.

GovernmentRegulation

Ourcurrent and contemplated activities and the products and processes that will result from such activities are subject to substantial governmentregulation, both in the United States and internationally.

GovernmentContracts and Regulations

OurU.S Government business is heavily regulated. We contract with several U.S. Government agencies and entities, principally all branchesof the U.S. military. We must comply with, and are affected by, laws and regulations relating to the formation, administration, and performanceof U.S. Government contracts. These laws and regulations, among other things:

TheU.S. Government may terminate any of our government contracts and subcontracts either at its convenience or for default based on ourperformance. If a contract is terminated for convenience, we generally are protected by provisions covering reimbursement for costs incurredon the contract and profit on those costs. If a contract is terminated for default, we generally are entitled to payments for our workthat has been accepted by the U.S. Government or other governments; however, the U.S. Government could make claims to reduce the contractvalue or recover its procurement costs and could assess other special penalties. For more information regarding the U.S. Government’sright to terminate our contracts and government contracting laws and regulations, see “Risk Factors”.

RadiationControl for Health and Safety Act

Weare subject to the laser radiation safety regulations of the Radiation Control for Health and Safety Act administered by the NationalCenter for Devices and Radiological Health, a branch of the United States Food and Drug Administration. Among other things, those regulationsrequire laser manufacturers to file new product and annual reports, to maintain quality control and sales records, to perform producttesting, to distribute appropriate operating manuals, to incorporate design and operating features in lasers sold to end-users and tocertify and label each laser sold to end-users as one of four classes (based on the level of radiation from the laser that is accessibleto users). Various warning labels must be affixed, and certain protective devices installed depending on the class of product. The NationalCenter for Devices and Radiological Health is empowered to seek fines and other remedies for violations of regulatory requirements.

CEMarking

Weare subject to certain regulations in Europe as administered by the European Commission. CE Marking is required for products marketedwithin the European Economic Area (EEA) and confirms that the manufacturer meets certain safety, health and environmental protectionrequirements administered by the European Union. Non-compliance with these regulations could result in warnings, penalties, or fines.We believe that we are currently in compliance with these regulations.

UnitedStates Food and Drug Administration

Certainproducts manufactured by us are integrated into systems by our customers that are subject to certain regulations administered by theUnited States Food and Drug Administration. We must comply with certain quality control measurements for our products to be effectivelyused in our customers’ end products. Non-compliance with quality control measurements could result in loss of business with ourcustomers, fines and penalties.

Facilities

OnDecember 1, 2019, we entered a sub-lease with ICT Investments for 5,000 sf of manufacturing space on a month-to-monthbasis at $4,050 per month. In January 2020, we expanded the lease with ICT Investments to include the entire facility of 18,000 sf.In October of 2021, a direct lease was signed with the landlord for three years, terminating on October 31, 2024. In November weentered into a lease amendment that expires December 31, 2025. The facility is currently equipped with three of our latest advancedlaser cleaning demonstration models. It includes a materials stock room, a ramp and high dock, loading and moving equipment, amachine shop, an electronics room, and an equipment assembly area. The monthly rent for this facility is currently$15,549.

InDecember 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearbythe main facility, for our growing sales and marketing program. The monthly rent for this space is currently $14,805. On February 10,2025, we entered into a Lease Termination Agreement with 2701 Maitland Building Associates, LLC, the Landlord of Suite 125 containingapproximately 7,981 rentable square feet that Laser Photonics had leased from November 7, 2022 through December 31, 2025, at a base monthlyrent of $14,818.06 (“Suite 125”). In light of our entering into a long-term lease at 250 Technology Park. Lake Mary, FL 32746on July 1, 2024, we determined that we did not need Suite 125 for our future growth and, since we could not sublet this space, we enteredinto the Lease Termination Agreement to reduce our lease expense. Under the terms of the Lease Termination Agreement, we agreed to paya monthly termination fee of $14,912.14 base rent plus operating expenses for five months, saving us approximately $80,000 in lease paymentsfor 2025.

OnJuly 1, 2024, we entered into a lease agreement for 48,481 square feet of office space at a base monthly rent of $ 50,354.42with an annual increase of 3%, that has a term of 10.5 years. The location of the facility is 250 Technology Park. Lake Mary,FL.

Ourfacility is currently equipped with three of our latest advanced laser cleaning demonstration models.

Uponacquisition of Control Micro Systems in on October 31, 2024 at 4420 Metric Dr. Winter Park Florida. The lease expires on October 31,2025. The facility is 52,200 total square ft at a cost of $27,700 per month.

Implicationsof Being an Emerging Growth Company

Weare an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),and therefore we intend to take advantage of certain exemptions from various public company reporting requirements, including not beingrequired to have our internal controls over financial reporting audited by our independent registered public accounting firm pursuantto Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executivecompensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory voteon executive compensation and any golden parachute payments. We may take advantage of these exemptions until we are no longer an “emerginggrowth company.” In addition, the JOBS Act provides that an “emerging growth company” can delay adopting new or revisedaccounting standards until such time as those standards apply to private companies. We have elected to use the extended transition periodfor complying with new or revised accounting standards under the JOBS Act. This election allows us to delay the adoption of new or revisedaccounting standards that have different effective dates for public and private companies until those standards apply to private companies.As a result of this election, our financial statements may not be comparable to companies that comply with effective public company dates.We will remain an “emerging growth company” until the earlier of (1) the last day of the fiscal year: (a) following the fifthanniversary of the completion of our initial public offering; (b) in which we have total annual gross revenue of at least $1.235 billion;or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliatesexceeded $700.0 million as of the prior June 30^th, and (2) the date on which we have issued more than $1.0 billion in non-convertibledebt during the prior three-year period. References herein to “emerging growth company” have the meaning associated withthat term in the JOBS Act.

ITEM1A. RISK FACTORS

Summaryof Risk Factors

Aninvestment in our securities involves a high degree of risk. The occurrence of one or more of the events or circumstances described inthe section titled “Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affectour business, financial condition, and operating results. In that event, the trading price of our securities could decline, and you couldlose all or part of your investment. Such risks include, but are not limited to:

Weare competing in a highly competitive market and to compete effectively we must be able to adapt to technology changes and to implementinnovative technology applications.

ICTInvestments owns a majority of our outstanding shares and exerts significant control over business decisions as well as matters subjectto stockholder approval.

Wedepend on the U.S. Government for a portion of our business, which we expect to increase, and changes in government defense spendingcould have adverse consequences on our financial position, results of operations and business.

Asa U.S. defense contractor, we are vulnerable to security threats and other disruptions that could negatively impact our business.

GoingConcern

Theaccompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note1 to the financial statements, the Company has history of net losses and accumulated deficits. These factors, among others, raise substantialdoubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also describedin Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Ourinternational business exposes us to geo-political and economic factors, regulatory requirements and other risks associated with doingbusiness in foreign countries.

Oursuccess may depend on our ability to obtain and protect the proprietary information on which we base our laser-based cleaning equipment.The patent application process is expensive and time-consuming, and we and our current or future licensors and licensees may not be ableto prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is alsopossible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable aspects of inventionsmade during development and commercialization activities before it is too late to obtain patent protection on them.

Ifwe are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcomein that litigation could harm our business.

Someprovisions of our certificate of incorporation and bylaws may deter takeover attempts, which may inhibit a takeover that stockholdersconsider favorable and limit the opportunity of our stockholders to sell their shares at a favorable price.

Ourindemnification of our officers and directors may cause us to use corporate resources to the detriment of our stockholders.

Provisionsin our certificate of incorporation and bylaws and Delaware law may have the effect of discouraging lawsuits against our directors andofficers.

Ifour shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares. If we do notobtain or retain a listing on the Nasdaq Capital Market and if the price of our common stock is less than $5.00 per share, our commonstock will be deemed a penny stock.

RisksRelated to our Business and Our Industry

Wemay need to raise additional capital.

If,in the future, we are not able to generate sufficient revenues from operations and our capital resources are insufficient to meet futurerequirements, we may have to raise additional funds to allow us to continue to commercialize, market and sell our products. We cannotbe certain that funding will be available on acceptable terms or at all. To the extent that we raise additional funds by issuing equitysecurities, our stockholders may experience dilution. Any debt financing, if available, may involve restrictive covenants that may impacton our ability to conduct business or return capital to investors. If we are unable to raise additional capital if required or on acceptableterms, we may have to significantly scale back, delay or discontinue the development and/or commercialization of our laser-based cleaningproducts, restrict our operations or obtain funds by entering into agreements on unattractive terms.

Ifour proposed marketing efforts are unsuccessful, we may not earn enough revenue to scale the business profitably.

Oursuccess will depend on investment in marketing resources and the successful implementation of our marketing plan. Our marketing planinvolves attendance at trade shows, conducting private demonstrations, utilizing promotional materials, and employing advertising campaignsin print and/or broadcast media. We cannot give any assurance that our marketing efforts will be successful. If they are not, revenuemay be insufficient to cover our growing fixed costs and we may suffer a reduction in profitability.

Wehave a large amount of intangible assets, and if these assets become impaired, our earnings would be adversely affected.

Wehave a substantial amount of intangible assets, representing approximately 33% of our total assets as of December 31, 2024. While we amortizeour intangible assets, they may be subject to impairment testing. If we experience any significant impairment to our intangible assets,it may have a material adverse effect on our reported financial results for the period in which the charge is taken and could resultin a decrease in the market price of our common stock.

Wemay be unable to respond to rapid technological changes and innovative products.

Ina constantly changing and innovative technology market with frequent new product introductions, enhancement, and modifications, we maybe forced to implement and develop new technologies into our products for anticipation of changing customer requirements that may significantlyimpact costs in order to retain or enhance our competitive position in existing and new markets.

Thereis intense competition in our market.

Thereis intense competition amongst manufacturers of crystalline silicon laser modules, thin-film laser modules, solar thermal lasers, andconcentrated fiber laser systems. Our management is aware that the failure to compete away eventual new entrants will affect overallbusiness prospects and the product itself. Therefore, if we can innovate more quickly, we will be better able to defend our pricing power.Competitive factors in this market are all related to product performance, price, customer service, training platforms, reputation, andsales and marketing effectiveness, all of which are factors upon which we believe we can compete successfully but will need greater financialresources to do so.

Futureacquisitions may be unsuccessful and may negatively affect operations and financial condition.

Weplan to grow organically; however, we will opportunistically pursue potential acquisitions of complementary businesses. Should we acquireother companies, the integration of businesses, personnel, product lines, and technologies might prove to be difficult, time consuming,and risky. Any difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses, and impairour revenue and results of operations.

Ifwe are unable to hire additional personnel, we will have trouble growing our business.

Ourfuture success depends on our ability to attract, retain, and motivate skilled marketing, managerial, operational, and administrativepersonnel. We plan to hire additional personnel in all areas of our business as we grow. Competition for qualified personnel is intense.As a result, we may be unable to attract and retain qualified personnel. We may also be unable to retain the employees that we currentlyemploy. The failure to attract and retain highly competent personnel could seriously harm our business, financial condition, and operationalresults.

Ourbusiness depends on experienced and highly skilled technicians and business development personnel, and if we are unable to attract suchtalent, it will be more difficult for us to manage our business and complete contracts.

Thesuccess of our business depends on the skill of our personnel. Accordingly, it is critical that we maintain, and continue to build, ahighly experienced management team and specialized workforce, including designers, engineers, and sales professionals. Competition forpersonnel – particularly those with expertise in government consulting and who possess a security clearance – is high, andidentifying candidates with the appropriate qualifications can be costly and difficult. We may not be able to hire the necessary personnelto implement our business strategy given our anticipated hiring needs, or we may need to provide higher compensation or more trainingto our personnel than we currently anticipate. In addition, our ability to recruit, hire, and indirectly deploy former employees of theU.S. Government is subject to complex laws and regulations, which may serve as an impediment to our ability to attract such talent.

Ourbusiness is labor intensive, and our success depends on our ability to attract, retain, train, and motivate highly skilled employees,including employees who may become part of our organization in connection with our acquisitions. The increase in demand for consulting,technology integration, and managed services has further increased the need for employees with specialized skills or significant experiencein these areas. We may not be successful in attracting and retaining enough employees to achieve our desired staffing and expansion objectives.Furthermore, the industry turnover rates for these types of employees are high and we may not be successful in retaining, training, ormotivating them. Any inability to attract, retain, train, and motivate skilled talent could impair our ability to adequately manage andcomplete existing projects, not to mention restrict our ability to accept new client engagements. Such an inability may also force usto increase our hiring of independent contractors, which may increase our costs and reduce our profitability on client engagements. Wemust also devote substantial managerial and financial resources to monitoring and managing our workforce. Our future success will dependon our ability to manage the levels and related costs of our workforce.

Inthe event we are unable to attract, hire and retain the requisite personnel and subcontractors, we may experience delays in completingcontracts in accordance with project schedules and budgets, which may have an adverse effect on our financial results, harm our reputation,and cause us to curtail our pursuit of new contracts. Further, any increase in demand for personnel may result in higher costs, causingus to exceed the budget on a contract, which in turn may have an adverse effect on our business, financial condition, and operating results,as well as harm our customer relationships.

Weface a higher risk of failure because we cannot accurately forecast our future revenues and operating results.

Therapidly changing nature of the markets in which we compete makes it difficult to accurately forecast our revenues and operating results.Moreover, we expect our future revenues and operating results to fluctuate due to a number of factors, including the following:

thetiming of sales of our products.

unexpecteddelays in the introduction of new products.

increasedexpenses, whether related to sales and marketing, or administration; and

costsrelated to anticipated acquisitions of complementary businesses.

Ourproducts may suffer defects.

Ourproducts may suffer defects that may lead to substantial product liability, damage, or warranty claims. Given the complexity of the platformsand systems inside our products, the potential for errors and defects is heightened. Significant expenses arising from product liabilityor warranty claims could have a material adverse effect on our business, financial condition, and operating results.

Weneed to increase the size and scale of our organization, and we may experience difficulties in managing such growth, which might impairour financial performance.

Weneed to strengthen our managerial, operational, and accounting infrastructure, in addition to integrating employees retained from othercompanies that we might acquire. Future growth will impose significant added responsibilities on members of management, including theneed to identify, recruit, maintain, and integrate new employees. Our future financial performance and our ability to commercialize ourproducts will depend, in part, on our ability to manage any future growth effectively.

Tomanage our future growth, we will need to continue to effect improvements in our managerial, operational, and accounting controls. Allof these measures will require significant expenditure and will demand the attention of management. If we fail to continue making enhancementsto our operational and financial controls in support of the growth in our business, we could develop operating and reporting inefficienciesthat could increase our costs more than we had planned, as well as impair our competitive position. If we are unable to manage growtheffectively, our business, financial condition, and operating results could be adversely affected.

Insuranceand contractual protections may not always cover lost revenue, increased expenses, or liquidated damages payments, which could adverselyaffect our financial results.

Althoughwe maintain insurance and intend to obtain warranties from suppliers, obligate subcontractors to meet certain performance levels andattempt, where feasible, to pass risks we cannot control to our customers, the proceeds of such insurance, warranties, performance guaranteesor risk sharing arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may berequired in the future.

Internalsystem or service failures could disrupt our business and impair our ability to effectively provide our services and products to ourcustomers, which could damage our reputation and adversely affect our revenues and profitability.

Anysystem or service disruptions, including those caused by ongoing projects to improve our information technology systems and the deliveryof services, if not anticipated and appropriately mitigated, could have a material adverse effect on our business including, among otherthings, an adverse effect on our ability to bill our customers for work performed on our contracts, collect the amounts that have beenbilled and produce accurate financial statements in a timely manner. We are also subject to system failures, including network, software,or hardware failures, whether caused by us, third-party service providers, cyber security threats, natural disasters, power shortages,terrorist attacks or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediationcosts, subject us to claims and damage our reputation. In addition, the failure or disruption of our communications or utilities couldcause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurancemay be inadequate to compensate us for all losses that may occur because of any system or operational failure or disruption and, as aresult, our future results could be adversely affected.

Ourfinancial performance could be adversely affected by decreases in spending on technology products and services by our public sector customers.

Oursales to our public sector customers are impacted by government spending policies, budget priorities and revenue levels. An adverse changein government spending policies (including budget cuts at the federal level), budget priorities or revenue levels could cause our publicsector customers to reduce their purchases or to terminate or not renew their contracts with us, which could adversely affect our business,results of operations or cash flows.

Ourbusiness could be adversely affected by the loss of certain vendor partner relationships and the availability of their products.

Wepurchase products from vendors on a global basis as components to include in our finished laser-based cleaning equipment. In the eventwe were to lose one of our significant vendor partners, our business could be adversely affected.

Weexpect to enter joint ventures, teaming and other arrangements, and these activities involve risks and uncertainties.

Weexpect to enter joint ventures, teaming and other arrangements. These activities involve risks and uncertainties, including the riskof the joint venture or applicable entity failing to satisfy its obligations, which may result in certain liabilities to us for guaranteesand other commitments, the challenges in achieving strategic objectives and expected benefits of the business arrangement, the risk ofconflicts arising between us and our partners and the difficulty of managing and resolving such conflicts, and the difficulty of managingor otherwise monitoring such business arrangements.

Ourbusiness and operations expose us to numerous legal and regulatory requirements and any violation of these requirements could harm ourbusiness.

Weare subject to numerous federal, state and foreign legal requirements on matters as diverse as data privacy and protection, employmentand labor relations, immigration, taxation, anticorruption, import/export controls, trade restrictions, internal and disclosure controlobligations, securities regulation and anti- competition. Compliance with diverse and changing legal requirements is costly, time-consumingand requires significant resources. We are also focused on expanding our business in certain identified growth areas, such as energyand environment, which are highly regulated and may expose us to increased compliance risk. Violations of one or more of these diverselegal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against usor our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligationsrelated to regulatory compliance in connection with the performance of customer contracts could also result in liability for significantmonetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our abilityto compete for certain work and allegations by our customers that we have not performed our contractual obligations.

Asa manufacturer of laser cleaning equipment and laser processing systems our future success depends on our ability to effectively balancemanufacturing production with market demand and reducing our manufacturing cost per watt.

Ourability to generate the profits we expect to achieve will depend, in part, on our ability to respond to market demand and add new manufacturingcapacity in a cost-effective manner. In addition, we must continue to increase the efficiency of our manufacturing process to competesuccessfully and generate the returns to our stockholders, attract growth capital and a qualify for and maintain a listing on an exchange.Our failure to do so could threaten our long-term viability.

Weexpect to increase our business with the U.S. Government, and changes in government defense spending could have adverse consequenceson our financial position, results of operations and business.

In2024, less than 18% of our U.S. revenues were derived from sales and services provided directly or indirectly to the U.S. Government.However, we anticipate increasing that figure to 25% over the next 12 to 24 months as we expand our engagement with federal agencies.

Ourwork with the U.S. Army, Navy, and Air Force has been primarily defense-related, and we expect future revenues to stem from contractsawarded under a variety of U.S. Government programs, particularly within the Department of Defense (DoD) and other federal departmentsand agencies.

Underthe current administration, there is a strong focus on modernizing defense capabilities while reducing redundant spending through organizationalconsolidation, cost-cutting measures, and more efficient procurement processes. The DoD is increasingly prioritizing maintenance, repair,and overhaul (MRO) over new equipment purchases—creating a growing opportunity for companies like ours that provide cost-effective,high-performance solutions for extending the life of existing assets.

Fundingfor our programs remains subject to the U.S. Government’s annual budget and appropriation process, which is influenced by a widerange of factors, including geopolitical developments, macroeconomic conditions, and the strategic priorities of the administration andCongress. While overall defense spending has risen in recent years to address emerging global threats and modernization needs, futurebudget levels will continue to reflect a complex balance of domestic and international priorities, as well as the broader fiscal healthof the U.S. economy.

TheBudget Control Act (BCA) of 2011, along with subsequent budget agreements, imposed discretionary spending caps on both defense and non-defenseprograms from FY2012 through FY2021, ushering in a decade of relative fiscal austerity. These caps operated under a “principleof parity,” requiring proportional cuts across both categories. With the expiration of the BCA, federal budgeting has entered anew phase, where non-defense discretionary (NDD) spending has more flexibility to grow without necessarily triggering equal increasesin defense funding.

Underthe current administration, there is heightened emphasis on domestic investment, including infrastructure, advanced manufacturing, andclean energy, which may shift federal funding priorities away from certain defense initiatives. In parallel, ongoing debates over thenational debt, deficit reduction, and federal spending limits—including discussions surrounding the debt ceiling—create continueduncertainty in the budgeting process.

Asa result, while we remain optimistic about opportunities in defense-related MRO and modernization programs, we acknowledge that budgetaryconstraints and shifting fiscal priorities could result in the reduction, delay, or cancellation of funding for some contracts—particularlythose with unobligated balances. Such developments could adversely affect our operations, financial performance, and growth outlook.

Significantreduction in defense spending could have long-term consequences for our size and structure. In addition, reduction in government prioritiesand requirements could impact the funding, or the timing of funding, of our programs, which could negatively impact our results of operationsand financial condition. In addition, we are involved in U.S. Government programs, which are classified by the U.S. Government and ourability to discuss these programs, including any risks and disputes and claims associated with and our performance under such programs,could be limited due to applicable security restrictions.

Ourfinancial performance is dependent on our ability to perform on our current and future expected U.S. Government contracts, which aresubject to termination for convenience, which could harm our financial performance.

Webelieve that our financial performance will be dependent on our performance under our existing U.S. Government contracts and contractswe may enter into with the U.S. Government in the future. Government customers have the right to cancel any contract for its convenience.An unanticipated termination of, or reduced purchases under, one of our major contracts whether due to lack of funding, for convenienceor otherwise, or the occurrence of delays, cost overruns and product failures could adversely impact our results of operations and financialcondition. If one of our U.S. Government contracts were terminated for convenience, we would generally be entitled to payments for ourallowable costs and would receive some allowance for profit on the work performed. If one of our contracts were terminated for default,we would generally be entitled to payments for our work that has been accepted by the government. A termination arising out of our defaultcould expose us to liability and have a negative impact on our ability to obtain future contracts and orders. Furthermore, on contractsfor which we are a subcontractor and not the prime contractor, the U.S. Government could terminate the prime contract for convenienceor otherwise, irrespective of our performance as a subcontractor.

Ourfailure to comply with a variety of complex procurement rules and regulations could result in our being liable for penalties, includingtermination of our current and anticipated U.S. Government contracts, disqualification from bidding on future U.S. Government contractsand suspension or debarment from U.S. Government contracting that could adversely affect our financial condition.

Wemust comply with laws and regulations relating to the formation, administration and performance of our one existing and anticipated futureU.S. Government contracts, which affect how we do business with our customers and may impose added costs on our business. U.S. Governmentcontracts generally are subject to the Federal Acquisition Regulation (FAR), which sets forth policies, procedures and requirements forthe acquisition of goods and services by the U.S. Government, department-specific regulations that implement or supplement DFAR, suchas the DOD’s Defense Federal Acquisition Regulation Supplement (DFARS) and other applicable laws and regulations. We are also subjectto the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with certain contractnegotiations; the Procurement Integrity Act, which regulates access to competitor bid and proposal information and government sourceselection information, and our ability to provide compensation to certain former government officials; the Civil False Claims Act, whichprovides for substantial civil penalties for violations, including for submission of a false or fraudulent claim to the U.S. Governmentfor payment or approval; the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submissionof a false or fraudulent claim to the U.S. Government for payment or approval; and the U.S. Government Cost Accounting Standards, whichimpose accounting requirements that govern our right to reimbursement under certain cost- based U.S. Government contracts. These regulationsimpose a broad range of requirements, many of which are unique to government contracting, including various procurement, import and export,security, contract pricing and cost, contract termination and adjustment, and audit requirements. A contractor’s failure to complywith these regulations and requirements could result in reductions to the value of contracts, contract modifications or termination,and the assessment of penalties and fines and lead to suspension or debarment, for cause, from government contracting or subcontractingfor a period. In addition, government contractors are also subject to routine audits and investigations by U.S. Government agencies suchas the Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA). These agencies review a contractor’sperformance under its contracts, cost structure and compliance with applicable laws, regulations and standards. The DCAA also reviewsthe adequacy of and a contractor’s compliance with its internal control systems and policies, including the contractor’spurchasing, property, estimating, compensation and management information systems. During the term of any suspension or debarment byany U.S. Government agency, contractors can be prohibited from competing for or being awarded contracts by U.S. Government agencies.The termination of any of our significant Government contracts or the imposition of fines, damages, suspensions or debarment would adverselyaffect our business and financial condition.

TheU.S. Government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time.

Ourindustry has experienced, and we expect it will continue to experience, significant changes to business practices because of an increasedfocus on affordability, efficiencies, and recovery of costs, among other items. U.S. Government agencies may face restrictions or pressureregarding the type and number of services that they may obtain from private contractors. Legislation, regulations and initiatives dealingwith procurement reform, mitigation of potential conflicts of interest and environmental responsibility or sustainability, as well asany resulting shifts in the buying practices of U.S. Government agencies, such as increased usage of fixed price contracts, multipleaward contracts and small business set-aside contracts, could have adverse effects on government contractors, including us. Any of thesechanges could impair our ability to obtain new contracts or renew our existing contracts when those contracts are recompeted. Any newcontracting requirements or procurement methods could be costly or administratively difficult for us to implement and could adverselyaffect our future revenues, profitability and prospects.

Wemay incur cost overruns because of fixed priced government contracts which would have a negative impact on our operations.

Aswe pursue additional U.S. Government contracts in addition to the one U.S. Government contract we now have for the U.S. Army, we expectto have to perform under fixed price contracts such as multi-award, multi-year IDIQ task order based contracts, which generally providefor fixed price schedules for products and services, have no pre-set delivery schedules, have very low minimum purchase requirements,are typically competed among multiple awardees and could force us to carry the burden of any cost overruns. Due to their nature, fixed-pricedcontracts inherently have more risk than cost reimbursable contracts. If we are unable to control costs or if our initial cost estimatesare incorrect, we can lose money on these contracts. In addition, some of these fixed price contracts will likely have provisions relatingto cost controls and audit rights, and if we fail to meet the terms specified in those contracts, we may not realize their full benefits.Lower earnings caused by cost overruns and cost controls would have a negative impact on our results of operations should we receiveawards of such contracts. The U.S. Government has the right to enter into contracts with other suppliers, which may be competitive withour IDIQ contracts. We anticipate that it may also perform fixed priced contracts under which we agree to provide specific quantitiesof products and services over time for a fixed price. Since the price competition to win both IDIQ and fixed price contracts is intenseand the costs of future contract performance cannot be predicted with certainty, there can be no assurance as to the profits, if any,that we will realize over the term of such contracts.

Misconductof employees, subcontractors, agents and business partners could cause us to lose existing contracts or customers and adversely affectour ability to obtain new contracts and customers and could have a significant adverse impact on our business and reputation.

Misconductcould include fraud or other improper activities such as falsifying time or other records and violations of laws, including the Anti-KickbackAct. Other examples could include the failure to comply with our policies and procedures or with federal, state or local government procurementregulations, regulations regarding the use and safeguarding of classified or other protected information, legislation regarding the pricingof labor and other costs in government contracts, laws and regulations relating to environmental, health or safety matters, bribery offoreign government officials, import-export control, lobbying or similar activities, and any other applicable laws or regulations. Anydata loss or information security lapses resulting in the compromise of personal information or the improper use or disclosure of sensitiveor classified information could result in claims, remediation costs, regulatory sanctions against us, loss of current and future contractsand serious harm to our reputation. Although we have implemented policies, procedures and controls to prevent and detect these activities,these precautions may not prevent all misconduct, and as a result, we could face unknown risks or losses. Our failure to comply withapplicable laws or regulations or misconduct by any of our employees, subcontractors, agents or business partners could damage our reputationand subject us to fines and penalties, restitution or other damages, loss of security clearance, loss of current and future customercontracts and suspension or debarment from contracting with federal, state or local government agencies, any of which would adverselyaffect our business, reputation and our future results.

Wemay fail to obtain and maintain necessary security clearances, which may adversely affect our ability to perform on certain anticipatedU.S. government contracts and depress our potential revenues.

ManyU.S. Government programs require contractors to have security clearances. Depending on the level of required clearance, security clearancescan be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain necessary security clearances, wemay not be able to win new business, and our existing clients could terminate their contracts with us or decide not to renew them. Tothe extent we are not able to obtain and maintain facility security clearances or engage employees with the required security clearancesfor a particular contract, we may not be able to bid on or win new contracts, or effectively rebid on expiring contracts, as well aslose existing contracts, which may adversely affect our operating results and inhibit the execution of our growth strategy.

Ourfuture revenues and growth prospects could be adversely affected by our dependence on other contractors.

Ifother contractors with whom we have contractual relationships either as a prime contractor or subcontractor eliminate or reduce theirwork with us, or if the U.S. Government terminates or reduces these other contractors’ programs, does not award them new contractsor refuses to pay under a contract our financial and business condition may be adversely affected. Companies that do not have accessto U.S. Government contracts may perform services as our subcontractor and that exposure could enhance such companies’ prospectof securing a future position as a prime U.S. Government contractor which could increase competition for future contracts and impairour ability to perform on contracts.

Wemay have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor,customer concerns about the subcontractor, our failure to extend existing task orders or issue new task orders under a subcontract, ourhiring of a subcontractor’s personnel or the subcontractor’s failure to comply with applicable law. Current uncertain economicconditions heighten the risk of financial stress of our subcontractors, which could adversely impact their ability to meet their contractualrequirements to us. If any of our subcontractors fail to timely meet their contractual obligations or have regulatory compliance or otherproblems, our ability to fulfill our obligations as a prime contractor or higher tier subcontractor may be jeopardized. Significant lossescould arise in future periods and subcontractor performance deficiencies could result in our termination for default. A termination fordefault could eliminate a revenue source, expose us to liability and have an adverse effect on our ability to compete for future contractsand task orders, especially if the customer is an agency of the U.S. Government.

Ourinternational business exposes us to geo-political and economic factors, regulatory requirements and other risks associated with doingbusiness in foreign countries.

Weintend to engage in additional foreign operations which pose complex management, foreign currency, legal, tax and economic risks, whichwe may not adequately address. These risks differ from and potentially may be greater than those associated with our domestic business.

Ourinternational business is sensitive to changes in the priorities and budgets of international customers and geo-political uncertainties,which may be driven by changes in threat environments and potentially volatile worldwide economic conditions, various regional and localeconomic and political factors, risks and uncertainties, as well as U.S. foreign policy. Our international sales are subject to U.S.laws, regulations and policies, including the International Traffic in Arms Regulations (ITAR) and the Foreign Corrupt Practices Act(see below) and other export laws and regulations. Due to the nature of our products, we must first obtain licenses and authorizationsfrom various U.S. Government agencies before we are permitted to sell our products outside of the U.S. We can give no assurance thatwe will continue to be successful in obtaining the necessary licenses or authorizations or that certain sales will not be prevented ordelayed. Any significant impairment of our ability to sell products outside of the U.S. could negatively impact our results of operationsand financial condition.

Ourinternational sales are also subject to local government laws, regulations and procurement policies and practices which may differ fromU.S. Government regulations, including regulations relating to import-export control, investments, exchange controls and repatriationof earnings, as well as to varying currency, geo- political and economic risks. Our international contracts may include industrial cooperationagreements requiring specific in-country purchases, manufacturing agreements or financial support obligations, known as offset obligations,and provide for penalties if we fail to meet such requirements. Our international contracts may also be subject to termination at thecustomer’s convenience or for default based on performance and may be subject to funding risks. We also are exposed to risks associatedwith using foreign representatives and consultants for international sales and operations and teaming with international subcontractors,partners and suppliers in connection with international programs. As a result of these factors, we could experience award and fundingdelays on international programs and could incur losses on such programs, which could negatively impact our results of operations andfinancial condition.

Weare also subject to a number of other risks including:

Ourinternational operations are subject to special U.S. government laws and regulations, such as the Foreign Corrupt Practices Act, andregulations and procurement policies and practices, including regulations to import-export control, which may expose us to liabilityor impair our ability to compete in international markets.

Ourinternational operations are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, and other laws that prohibit improper paymentsor offers of payments to foreign governments and their officials and political parties by U.S. and other business entities for the purposeof obtaining or retaining business. We expect to have operations and deal with governmental customers in countries known to experiencecorruption, including certain countries in the Middle East and in the future, the Far East. Our activities in these countries could createthe risk of unauthorized payments or offers of payments by one of our employees, consultants or contractors that could be in violationof various laws including the FCPA, even though these parties are not always subject to our control. We are also subject to import-exportcontrol regulations restricting the use and dissemination of information classified for national security purposes and the export ofcertain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved insuch work.

Asa U.S. defense contractor, we are vulnerable to security threats and other disruptions that could negatively impact our business.

Asa U.S. defense contractor, we face certain security threats, including threats to our information technology infrastructure, attemptsto gain access to our proprietary or classified information, and threats to physical security. These types of events could disrupt ouroperations, require significant management attention and resources, and could negatively impact on our reputation among our customersand the public, which could have a negative impact on our financial condition, results of operations and liquidity. We are continuouslyexposed to cyber-attacks and other security threats, including physical break-ins. Any electronic or physical break-in or other securitybreach or compromise may jeopardize security of information stored or transmitted through our information technology systems and networks.This could lead to disruptions in mission-critical systems, unauthorized release of confidential or otherwise protected information andcorruption of data. Although we have implemented policies, procedures and controls to protect against, detect and mitigate these threats,we face advanced and persistent attacks on our information systems and attempts by others to gain unauthorized access to our informationtechnology systems are becoming more sophisticated. These attempts include covertly introducing malware to our computers and networksand impersonating authorized users, among others, and may be perpetrated by well- funded organized crime or state sponsored efforts.We seek to detect and investigate all security incidents and to prevent their occurrence or recurrence. We continue to invest in andimprove our threat protection, detection and mitigation policies, procedures and controls. In addition, we work with other companiesin the industry and government participants on increased awareness and enhanced protections against cyber security threats. However,because of the evolving nature and sophistication of these security threats, which can be difficult to detect, there can be no assurancethat our policies, procedures and controls have or will detect or prevent any of these threats and we cannot predict the full impactof any such past or future incident. Although we work cooperatively with our customers and other business partners to seek to minimizethe impacts of cyber and other security threats, we must rely on the safeguards put in place by those entities. Any remedial costs orother liabilities related to cyber or other security threats may not be fully insured or indemnified by other means. Occurrence of anyof these security threats could expose us to claims, contract terminations and damages and could adversely affect our reputation, abilityto work on sensitive U.S. Government contracts, business operations and financial results.

Difficultconditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations.

Ourresults of operations are materially affected by conditions in the global capital markets and the economy generally, both in the U.S.and elsewhere around the world. Weak economic conditions sustained uncertainty about global economic conditions, concerns about futureU.S. budgetary cuts, or a prolonged or further tightening of credit markets could cause our customers and potential customers to postponeor reduce spending on technology products or services or put downward pressure on prices, which could have an adverse effect on our business,results of operations or cash flows. In the event of extreme prolonged adverse market events, such as a global credit crisis, we couldincur significant losses.

Inflationhas been on the rise and continues to destabilize the global economy. The Russia Ukraine conflict and other geopolitical tensions, aswell as the related international response, have exacerbated inflationary pressures, including causing increases in the price for goodsand services and exacerbated global supply chain disruptions, which have resulted in, and may continue to result in, shortages in materialsand services and related uncertainties. Such shortages have resulted in and may continue to result in cost increases for labor, fuel,materials and services, and could continue to cause costs to increase, and result in the scarcity of certain materials. We cannot predictany future trends in the rate of inflation or other negative economic factors or associated increases in our operating costs and howthat may impact our business. To the extent we are unable to recover higher operating costs resulting from inflation or otherwise mitigatethe impact of such costs on our business, our revenues and gross profit could decrease, and our financial condition and results of operationscould be adversely affected.

RisksRelated to Our Intellectual Property

Oursuccess may depend on our ability to obtain and protect the proprietary information on which we base our laser-based cleaning equipment.

Inthe event we acquire companies with intellectual property (“IP”) that is important to the development of our laser cleaningproducts, we will need to:

Wewill be able to protect our proprietary technology from unauthorized use by third parties only to the extent that such proprietary rightsare covered by valid and enforceable patents or are effectively maintained as trade secrets. Any non-confidential disclosure or misappropriationby third parties of our confidential or proprietary information could enable competitors to quickly duplicate or surpass our technologicalachievements, thus eroding our competitive position in our market.

Thepatent application process, also known as patent prosecution, is expensive and time-consuming, and we and our current or future licensorsand licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or ina timely manner. It is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentableaspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protectionon them. Therefore, these and any of our patents and applications may not be prosecuted and enforced in a manner consistent with thebest interests of our business. It is possible that defects of form in the preparation or filing of our patents or patent applicationsmay exist, or may arise in the future, for example with respect to proper priority claims or inventorship. If we or our current licensorsor licensees, or any future licensors or licensees, fail to establish, maintain or protect such patents and other intellectual propertyrights, such rights may be reduced or eliminated. If our current licensors or licensees, or any future licensors or licensees, are notfully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights couldbe compromised. If there are material defects in the form or preparation of our patents or patent applications, such patents or applicationsmay be invalid and unenforceable. Any of these outcomes could impair our ability to prevent competition from third parties, which mayharm our business.

Thepatent applications that we may own, or license may fail to result in issued patents in the United States or in other countries. Evenif patents are issued on such patent applications, third parties may challenge the validity, enforceability or scope thereof, which mayresult in such patents being narrowed, invalidated or held unenforceable. For example, U.S. patents can be challenged by any person beforethe new USPTO Patent Trial and Appeals Board at any time within the first year of that person’s receipt of an allegation of infringementof the patents. Patents granted by the European Patent Office may be similarly opposed by any person within nine months from the publicationof the grant. Similar proceedings are available in other jurisdictions, and in the United States, Europe and other jurisdictions thirdparties can raise questions of validity with a patent office even before a patent has granted. Furthermore, even if they are unchallenged,our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around ourclaims. If the breadth or strength of protection provided by the patents and patent applications we hold or pursue with respect to ourproduct candidates is successfully challenged, then our ability to commercialize such product candidates could be negatively affected,and we may face unexpected competition that could harm our business. Further, if we encounter delays in our clinical trials, the periodof time during which we or our collaborators could market our product candidates under patent protection would be reduced.

Thedegree of future protection of our proprietary rights is uncertain. Patent protection may be unavailable or severely limited in somecases and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:

Evenwhere laws provide protection, costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietaryrights, and the outcome of such litigation would be uncertain. If we or one of our collaborators were to initiate legal proceedings againsta third party to enforce a patent covering the product candidate, the defendant could assert an affirmative defense or counterclaim thatour patent is not infringed, invalid and/or unenforceable. In patent litigation in the United States, defendant defenses and counterclaimsalleging non-infringement, invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failureto meet any of several statutory requirements, including lack of novelty, anticipation or obviousness, and lack of written description,definiteness or enablement. Patents may be unenforceable if someone connected with prosecution of the patent withheld material informationfrom the USPTO, or made a misleading statement, during prosecution. The outcomes of proceedings involving assertions of invalidity andunenforceability are unpredictable. It is possible that prior art of which we and the patent examiner were unaware during prosecutionexists, which would render our patents invalid. Moreover, it is also possible that prior art may exist that we are aware of, but thatwe do not believe are relevant to our current or future patents, that could nevertheless be determined to render our patents invalid.If a defendant were to prevail over a legal assertion of invalidity and/or unenforceability of our patents covering one of our productcandidates, we would lose at least part, and perhaps all, of the patent protection on such a product candidate. Such a loss of patentprotection would harm our business. Moreover, our competitors could counterclaim in any suit to enforce our patents that we infringetheir intellectual property. Furthermore, some of our competitors have substantially greater intellectual property portfolios, and resources,than we do.

Ourability to stop third parties from using our technology or making, using, selling, offering to sell or importing our products is dependentupon the extent to which we have rights under valid and enforceable patents that cover these activities. If any patent we currently orin the future may own or license is deemed not infringed, invalid or unenforceable, it could impact our commercial success. We cannotpredict the breadth of claims that may be issued from any patent applications we currently or may in the future own or license from thirdparties.

Tothe extent that consultants or key employees apply technological information independently developed by them or by others to our productcandidates, disputes may arise as to who has the proprietary rights to such information and product candidates, and certain of such disputesmay not be resolved in our favor. Consultants and key employees that work with our confidential and proprietary technologies are requiredto assign all intellectual property rights in their inventions and discoveries created during the scope of their work to our company.However, these consultants or key employees may terminate their relationship with us, and we cannot preclude them indefinitely from dealingwith our competitors.

Ifwe are unable to prevent disclosure of our trade secrets or other confidential information to third parties, our competitive positionmay be impaired.

Wealso may rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.Our ability to stop third parties from obtaining the information or know-how necessary to make, use, sell, offer to sell or import ourproducts or practice our technology is dependent in part upon the extent to which we prevent disclosure of the trade secrets that coverthese activities. Trade secret rights can be lost through disclosure to third parties. Although we use reasonable efforts to protectour trade secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally orwillfully disclose our trade secrets to third parties, resulting in loss of trade secret protection. Moreover, our competitors may independentlydevelop equivalent knowledge, methods and know-how, which would not constitute a violation of our trade secret rights. Enforcing a claimthat a third party is engaged in the unlawful use of our trade secrets is expensive, difficult and time consuming, and the outcome isunpredictable. In addition, recognition of rights in trade secrets and a willingness to enforce trade secrets differs in certain jurisdictions.

Ifwe are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcomein that litigation could harm our business.

Ourcommercial success depends significantly on our ability to operate without infringing, violating or misappropriating the patents andother proprietary rights of third parties. Our own technologies we acquire or develop may infringe, violate or misappropriate the patentsor other proprietary rights of third parties, or we may be subject to third-party claims of such infringement. Numerous U.S. and foreignissued patents and pending patent applications owned by third parties, exist in the fields in which we are developing our product candidates.Because some patent applications may be maintained in secrecy until the patents are issued, because publication of patent applicationsis often delayed, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain thatwe were the first to invent the technology or that others have not filed patent applications for technology covered by our pending applications.We may not be aware of patents that have already issued that a third party might assert are infringed by our product candidates. It isalso possible that patents of which we are aware, but which we do not believe are relevant to our product candidates, could neverthelessbe found to be infringed by our product candidates. Moreover, we may face patent infringement claims from non-practicing entities thathave no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect. In the future, we may agreeto indemnify our manufacturing partners against certain intellectual property claims brought by third parties.

Intellectualproperty litigation involves many risks and uncertainties, and there is no assurance that we will prevail in any lawsuit brought againstus. Third parties making claims against us for infringement, violation or misappropriation of their intellectual property rights mayseek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercializeour product candidates. Further, if a patent infringement suit were brought against us, we could be forced to stop or delay research,development, manufacturing or sales of the product or product candidate that is the subject of the suit. Defense of these claims, regardlessof their merit, would cause us to incur substantial expenses and, would be a substantial diversion of resources from our business. Inthe event of a successful claim of any such infringement, violation or misappropriation, we may need to obtain licenses from such thirdparties and we and our partners may be prevented from pursuing product development or commercialization and/or may be required to paydamages. We cannot be certain that any licenses required under such patents or proprietary rights would be made available to us, or thatany offer to license would be made available to us on commercially reasonable terms. If we cannot obtain such licenses, we and our collaboratorsmay be restricted or prevented from manufacturing and selling products employing our technology. These adverse results, if they occur,could adversely affect our business, results of operations and prospects, and the value of our shares.

Wemay become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consumingand unsuccessful.

Thedefense and prosecution of contractual or intellectual property lawsuits, USPTO interference or derivation proceedings, European PatentOffice oppositions and related legal and administrative proceedings in the United States, Europe and other countries, involve complexlegal and factual questions. As a result, such proceedings may be costly and time-consuming to pursue, and their outcome is uncertain.

Competitorsmay infringe our intellectual property. As a result, we may be required to file infringement claims to stop third-party infringementor unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming. In addition, in an infringementproceeding, a court may decide that a patent of ours is not valid or is unenforceable or may refuse to stop the other party from usingthe technology at issue on the grounds that our patent claims do not cover its technology or that the factors necessary to grant an injunctionagainst an infringer are not satisfied. An adverse determination of any litigation or other proceedings could put one or more of ourpatents at risk of being invalidated, interpreted narrowly, or amended such that they do not cover our product candidates. Moreover,such adverse determinations could put our patent applications at risk of not issuing or issuing with limited and potentially inadequatescope to cover our product candidates or to prevent others from marketing similar products.

Interference,derivation or other proceedings brought at USPTO, may be necessary to determine the priority or patentability of inventions with respectto our patent applications or those of our licensors or potential collaborators. Litigation or USPTO proceedings brought by us may failor may be invoked against us by third parties. Even if we are successful, domestic or foreign litigation or USPTO or foreign patent officeproceedings may result in substantial costs and distraction to our management. We may not be able, alone or with our licensors or potentialcollaborators, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rightsas fully as in the United States.

Furthermore,because of the substantial amount of discovery required in connection with intellectual property litigation or other proceedings, thereis a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings.In addition, during this kind of litigation or proceedings, there could be public announcements of the results of hearings, motions orother interim proceedings or developments or public access to related documents. If investors perceive these results to be negative,the market price for our common stock could be significantly harmed.

Someof our competitors may be able to sustain the costs of patent-related disputes, including patent litigation, more effectively than wecan because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuationof any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

Wemay not be able to enforce our intellectual property rights throughout the world.

Filling,prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive. Therequirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our ability to protectand enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. Additionally,laws of some countries outside of the United States do not afford intellectual property protection to the same extent as the laws ofthe United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certainforeign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patentsand other intellectual property rights. This could make it difficult for us to stop the infringement of our patents or the misappropriationof our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent ownermust grant licenses to third parties. Consequently, we may not be able to prevent third parties from practicing our inventions in allcountries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protectionto develop their own products and, further, may export otherwise infringing products to territories where we have patent protection,if our ability to enforce our patents to stop infringing activities is inadequate. These products may compete with our products, andour patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Proceedingsto enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our effortsand resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property rights in major marketsfor our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we maywish to market our products. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.

RisksRelated to Investing in Our Common Stock

Weare an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certainif the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

Weare an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For aslong as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that areapplicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditorattestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which we refer to as the Sarbanes-Oxley Act, (2) reduced disclosureobligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holdinga nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, includingif the market value of our common stock held by non-affiliates exceeds $700 million as of any September 30 before that time or if wehave total annual gross revenue of $1.0 billion or more during any fiscal year before that time, in which cases we would no longer bean emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during anythree-year period before that time, we would cease to be an emerging growth company immediately. Even after we no longer qualify as anemerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage ofmany of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirementsof Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reportsand proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and/orwarrants and our stock price and price for the warrants may be more volatile.

Ourindependent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control overfinancial reporting until the later of our second annual report or the first annual report required to be filed with the Securities andExchange Commission (the “SEC”) following the date upon which we are no longer an “emerging growth company” asdefined in the JOBS Act.

Underthe JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standardsapply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore,will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies

Becausethe Company is a “smaller reporting company,” we may take advantage of certain scaled disclosures available to us, resultingin holders of our securities receiving less Company information than they would receive from a public company that is not a smaller reportingcompany.

Weare a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”).As a smaller reporting company, we may take advantage of certain of the scaled disclosures available to smaller reporting companies andwill be able to take advantage of these scaled disclosures for so long as (i) our common shares held by non-affiliates is less than $250million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100 million during themost recently completed fiscal year and our common shares held by non-affiliates is less than $700 million measured on the last businessday of our second fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investorsto analyze the Company’s results of operations and financial prospects in comparison with other public companies.

Asa smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to otherissuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements.We have elected to adopt the accommodation available to smaller reporting companies. Until we cease to be a smaller reporting company,the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other publiccompanies.

Ourlargest stockholder beneficially owns a significant number of shares of our common stock. That stockholder’s interests may conflictwith other stockholders, who may be unable to influence management and exercise control over our business.

ICTInvestments, via common control of Fonon Corporation and Fonon Technologies combined owns 59.19% of our shares of common stock. As aresult, ICT Investments is able to: place, elect, or defeat the election of our directors; amend or prevent amendment to our certificatesof incorporation or bylaws; effect or prevent a merger, sale of assets or other corporate transaction; drive business decisions and controlexpenditures; and control the outcome of any other matter submitted to the stockholders for vote. Accordingly, other stockholders areunable to influence management or exercise control over our business.

Wedo not intend to pay cash dividends to our stockholders.

Wepaid a one-time cash dividend for the year ending December 31, 2021, in the amount of $310,280. We currently intend to retain any futureearnings for funding growth and, therefore, do not expect to pay any cash dividends in the foreseeable future. If we determine that wewill pay cash dividends to the holders of our common stock, we cannot assure that such cash dividends will be paid on a timely basis.The success of your investment in our Company will likely depend entirely upon any future appreciation.

Someprovisions of our certificate of incorporation and bylaws may deter takeover attempts, which may inhibit a takeover that stockholdersconsider favorable and limit the opportunity of our stockholders to sell their shares at a favorable price.

Underour certificate of incorporation, our Board of Directors may issue additional shares of common or preferred stock. Our Board of Directorshas the ability to authorize “blank check” preferred stock without future stockholder approval. This makes it possible forour Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attemptto acquire us by means of a merger, tender offer, proxy contest or otherwise, including a transaction in which our stockholders wouldreceive a premium over the market price for their shares and/or any other transaction that might otherwise be deemed to be in their bestinterests, and thereby protects the continuity of our management and limits an investor’s opportunity to profit by their investmentin our business. Specifically, if in the due exercise of its fiduciary obligations, the Board of Directors were to determine that a takeoverproposal was not in our best interest, shares could be issued by our Board of Directors without stockholder approval in one or more transactionsthat might prevent or render more difficult or costly the completion of the takeover by:

Ourindemnification of our officers and directors may cause us to use corporate resources to the detriment of our stockholders.

Ourcertificate of incorporation eliminates the personal liability of our directors for monetary damages arising from a breach of their fiduciaryduty as directors to the fullest extent permitted by Delaware law. This limitation does not affect the availability of equitable remedies,such as injunctive relief or rescission. Our certificate of incorporation requires us to indemnify our directors and officers to thefullest extent permitted by Delaware law, including in circumstances in which indemnification is otherwise discretionary under Delawarelaw.

UnderDelaware law, we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendantor respondent in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person:

conductedhimself or herself in good faith, reasonably believed, in the case of conduct in his or her official capacity as our director or officer,that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed to our bestinterests; and

inthe case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.

Thesepersons may be indemnified against expenses, including attorneys’ fees, judgments, fines, including excise taxes, and amounts paidin settlement, actually and reasonably incurred, by the person in connection with the proceeding. If the person is found liable to thecorporation, no indemnification will be made unless the court in which the action was brought determines that the person is fairly andreasonably entitled to indemnity in an amount that the court will establish.

Insofaras indemnification for liabilities under the Securities Act of 1933, as amended – the “Securities Act” – maybe permitted to directors, officers or persons controlling us under the above provisions, we have been informed that, in the opinionof the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Ourbylaws include a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputeswith us, remove current management or to be acquired by a third party.

Ourbylaws require that, unless we consent in writing to the selection of an alternative forum, either (i) the Court of Chancery of the Stateof Delaware is to be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action assertinga claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (c) any actionasserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware or our bylaws or (d) anyaction or proceeding asserting a claim governed by the internal affairs doctrine or (ii) the federal district court in the State of Delawarewill be the exclusive forum for a cause of action arising under the Securities Act and the Exchange Act. In addition, our bylaws couldmake it more difficult for a third party to acquire us or to remove current management through provisions that preclude cumulative votingin the election of directors and that allow our bylaws to be adopted, amended or repealed by our board of directors.

Thisexclusive forum provision will apply to other states and federal law claims including actions arising under the Securities Act (althoughour stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder).Section 22 of the Securities Act, however, creates concurrent jurisdiction for federal and state courts over all suits brought to enforceany duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as towhether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consentedto the foregoing provisions. This forum selection provision in our bylaws may limit our stockholders’ ability to obtain a favorablejudicial forum for disputes with us. It is also possible that, notwithstanding the forum selection clause included in our bylaws, a courtcould rule that such a provision is inapplicable or unenforceable.

Theobligations associated with being a public company require significant resources and management attention, which may divert from ourbusiness operations.

Weare subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and TheSarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. The Exchange Act requires that we file annual, quarterly and current reports withrespect to our business and financial condition, proxy statement, and other information. The Sarbanes-Oxley Act requires, among otherthings, that we establish and maintain effective internal controls and procedures for financial reporting. Our Chief Executive Officerand Chief Financial Officer will need to certify that our disclosure controls and procedures are effective in ensuring that materialinformation we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in SEC’s rules and forms. We may need to hire additional financial reporting, internalcontrols and other financial personnel to develop and implement appropriate internal controls and reporting procedures. As a result,we will incur significant legal, accounting and other expenses. Furthermore, the need to establish the corporate infrastructure demandedof a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improvingour business, results of operations and financial condition. We have made, and will continue to make, changes to our internal controlsand procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measureswe take may not be sufficient to satisfy our obligations as a public company. In addition, we cannot predict or estimate the amount ofadditional costs we may incur to comply with these requirements. We anticipate that these costs will materially increase our sales, generaland administrative expenses.

Publiccompany compliance may make it more difficult to attract and retain officers and directors.

TheSarbanes-Oxley Act and rules implemented by the SEC have required changes in corporate governance practices of public companies. As apublic company, these rules and regulations increase our compliance costs and make certain activities more time-consuming and costly.As a public company, these rules and regulations may make it more difficult and expensive for us to maintain our director and officerliability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtainthe same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Boardof Directors or as executive officers, and to maintain insurance at reasonable rates, or at all.

Ifwe fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accuratelyor prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adverselyimpact the trading price of our common stock.

Effectiveinternal controls are necessary for us to provide reliable financial reports and prevent fraud. There exist material weaknesses in ourinternal controls as of December 31, 2024. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manageour business as effectively as we would if an effective control environment existed, and our business and reputation with investors maybe harmed. With each prospective acquisition we may make we will conduct whatever due diligence is necessary or prudent to assure usthat the acquisition target can comply with the internal control requirements of the Sarbanes- Oxley Act. Notwithstanding our diligence,certain internal control deficiencies may not be detected at acquired entities. As a result, any internal control deficiencies may adverselyaffect our financial condition, results of operations, and access to capital.

Amaterial weakness is a deficiency, or a combination of deficiencies, in internal financial controls such that there is a reasonable possibilitythat a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timelybasis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluatesteps to remediate our material weaknesses. These remediation measures may be time-consuming and costly and there is no assurance thatthese initiatives will ultimately have the intended effects.

Anyfailure to maintain effective internal controls could adversely impact on our ability to report our financial position and results fromoperations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understandingof our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigationsby the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffectiveinternal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effecton the trading price of our stock.

Wecan give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses or that anyadditional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintainadequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengtheningour controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities orerrors or to facilitate the fair presentation of our consolidated financial statements.

Ourstock price may be volatile.

Themarket price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors,many of which are beyond our control, including the following:

Inaddition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to theoperating performance of particular companies. These market fluctuations may also materially and adversely affect the market price ofour common stock.

Ifour shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.

TheSEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generallyequity securities with a price per share of less than $5.00, other than securities registered on certain national securities exchangesor authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect totransactions in such securities is provided by the exchange or system. If we do not obtain or retain a listing on the Nasdaq CapitalMarket and if the price of our common stock is less than $5.00 per share, our common stock will be deemed a penny stock. The penny stockrules require a broker-dealer, before effecting a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardizedrisk disclosure document containing specified information. In addition, the penny stock rules require that, before effecting any suchtransaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that thepenny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt ofa risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of awritten suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary marketfor our common stock, and therefore stockholders may have difficulty selling their shares.

FINRAsales practice requirements may limit a stockholder’s ability to buy and sell our stock.

Inaddition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investmentto a customer, a broker- dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior torecommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts toobtain information about the customer’s financial status, tax status, investment objectives and other information. The FINRA requirementsmay make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducingthe level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock,reducing a stockholder’s ability to resell shares of our common stock.

Ifsecurities or industry analysts do not publish research or reports about our business, or publish negative reports about our business,our share price and trading volume could decline.

Thetrading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publishabout us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our sharesor change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us orfail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or tradingvolume to decline.

Offersor availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

Ifour stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding periodunder Rule 144, or shares issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referredto as an “overhang” and, in anticipation of which, the market price of our common stock could fall. The existence of an overhang,whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing throughthe sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

Salesof substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely affectthe price of our common stock and impair our ability to raise capital through the sale of shares.

Anysubstantial sale of stock by existing stockholders could depress the market value of our stock, thereby devaluing the market price andcausing investors to risk losing all or part of their investment.

ICTInvestments through its ownership of Fonon Corporation, holds a large number of our outstanding shares. We can make no prediction asto the effect, if any, that sales of shares, or the availability of shares for future sale, will have on the prevailing market priceof our shares of common stock. Sales of substantial amounts of shares in the public market, or the perception that such sales could occur,could depress prevailing market prices for the shares. Such sales may also make it more difficult for us to sell equity securities orequity-related securities in the future at a time and price which it deems appropriate.

ITEM1B. UNRESOLVED STAFF COMMENTS

None.

ITEM1C. CYBERSECURITY

Weuse, store and process data for and about our customers, employees, partners, and suppliers. We have implemented a cybersecurity riskmanagement program that is designed to identify, assess, and mitigate risks from cybersecurity threats to this data, our systems andbusiness operations.

Althoughrisks from cybersecurity threats have to date not materially affected us, our business strategy, results of operations or financial condition,we have, from time to time, experienced threats to and breaches of our and our third-party vendors’ data and systems. For moreinformation, please see Item 1A. Risk Factors, the section titled “Risk Factors—Risks Related to our Business and Our Industry—Internal system or service failures could disrupt our business and impair our ability to effectively provide our services and productsto our customers, which could damage our reputation and adversely affect our revenues and profitability.” and “Asa U.S. defense contractor, we are vulnerable to security threats and other disruptions that could negatively impact our business.”

RiskManagement Oversight and Governance

TheBoard of Directors has oversight of the Company’s cybersecurity program and has delegated the quarterly assessments and managementof cybersecurity risks to the Audit Committee.

OurIT Manager and our IT Administrator oversee our information security program and lead our information security team. Our IT Manager hasprimary responsibility for assessing and managing our cybersecurity threat management program, informed by over ten years of experienceleading cross-functional organizations in the development and operation of large-scale systems.

OurIT Manager reports quarterly to the Audit Committee of the Board of Directors on the information   security program and relatedcyber risks and provides an annual update to the Board of Directors on the Company’s overall risk management strategy, which includesaddressing cybersecurity risks. Any cybersecurity incidents at the Company are reported to the Audit Committee by the IT Manager.

ITEM2. PROPERTIES

OnDecember 1, 2019, we entered a sub-lease with ICT Investments for 5,000 sf of manufacturing space on a month-to-month basis at $4,050per month. In January 2020, we expanded the lease with ICT Investments to include the entire facility of 18,000 sf. In October 2021,we signed a direct lease with the landlord for three years, terminating on October 31, 2024. The monthly rent for this facility is currently$15,549.

InDecember 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearbythe main facility, for our growing sales and marketing program. The monthly rent for this space is currently $14,805. On July 1, 2024,we determined that we did not need this facility for our future growth and, since we could not sublet this space, we entered into theLease Termination Agreement to reduce our lease expense. Under the terms of the Lease Termination Agreement, we agreed to pay a monthlytermination fee of $14,912.14 base rent plus operating expenses for five months, saving us approximately $80,000 in lease payments for2025.

OnJuly 1, 2024, we entered into a lease agreement for 48,481 square feet of office space at a base monthly rent of $ 50,354.42with an annual increase of 3%, that has a term of 10.5 years.

Uponacquisition of Control Micro Systems in on October 31, 2024 at 4420 Metric Dr. Winter Park Florida. The lease expires on October 31,2025. The facility is 52,200 square ft total at a cost of $27,700 per month.

ITEM3. LEGAL PROCEEDINGS

Fromtime to time, we have been and will continue to be subject to legal proceedings and claims. We are not presently a party to any legalproceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business,results of operations, financial condition, or cash flows.

ITEM4. MINE SAFETY DISCLOSURES

None.

PARTII

ITEM5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Thefollowing table provides information about the common stock that may be issued upon the exercise of options, warrants and rights underall of the Company’s existing equity compensation plans as of December 31, 2024.

(1)In December 2019 our Board of Directors and a majority of our shareholders approved a 2019 Stock Incentive Plan and authorized the issuanceof up to 10,000,000 shares under this plan.

Useof Proceeds

OnOctober 4, 2022, the Company closed on an IPO in which it issued 3,000,000 additional shares of common stock at an offer price of $5.00per share. The shares trade on the NASDAQ under the ticker symbol, “LASE.” Including this issuance, there were 7,878,419shares outstanding as of December 31, 2022.

Theremaining planned use of proceeds has not changed since the initial public offering.

RecentSales of Unregistered Securities.

Setforth below is information regarding shares of common stock issued, and options granted, from January 1, 2022, to March 10,2025:

OnJuly 24, 2022: 25,000 Incentive Stock Options (‘ISOs’) were issued to Tim Schick, CFA. The options vest over four (4) yearsand are exercisable at $5.00 per share. These options were cancelled when Tim Schick was terminated as our CFO on March 27, 2023.

OnDecember 12, 2022: 180,000 warrants were issued to the following members of Alexander Capital, the Underwriter of the IPO. The warrantsare exercisable at $6.00 per share, between March 28, 2023, and September 29, 2027:

OnOctober 4, 2022, we entered into a marketing agreement with TraDigital Marketing Group. In accordance with the contract we issued toTraDigital in 2023 350,000 shares of our common stock in full satisfaction of the balance due on our agreement, reflected in AccruedExpenses at December 31, 2022 in the amount of $829,500 ($2.37 per share, the company’s closing stock price on the contract date).

OnOctober 18, 2023, we entered into a license agreement with an affiliated company, Fonon Technologies, Inc., which is majority-owned byICT Investments, for an exclusive, worldwide, nontransferable license for high power turbo piercing (“Cold Cutting”) lasercutting technology and any improvements to such technology to allow us to manufacture, sell, export and import products incorporatingsuch technology in return for our paying a license fee of $350,000 in cash and a one-time grant of 1,000,000 restricted shares of ourcommon stock to ICT Investments.

OnMay 21, 2024 we entered into a license agreement with Fonon Corporation to receive an exclusive, worldwide, sublicensable license toFonon’s laser material processing equipment and technology, including all applications of laser cutting, marking, engraving, laserwelding, brazing, ablation, laser drilling, semiconductor chip marking, semiconductor and flat panel display laser processing equipment,all other laser material processing equipment documented or existing in a form of knowhow and/or trade secrets in return for 3,000,000restricted shares of our   common stock.

OnSeptember 6, 2024, 1,500,000 Shares of Common stock were issued under PIPE Offering with Aegis Capital Cop. As Agent. The overall deal raised $3,000,000 gross for the company

OnSeptember 10, 2024, 61,968 Shares of Common Stock were issued under a Cashless Exercised Warrants for Alexander Capital Specialists,related to the IPO in October 2022.

OnOctober 21, 2024, Warrants were exercised, and 255,000 Shares of Common stock were issued under PIPE Offering with Aegis Capital Cop.As Agent. This resulted in funds to the company of $1,018,164.

OnOctober 23, 2024, Warrants were exercised, and 175,000 Shares of Common stock were issued under PIPE Offering with Aegis CapitalCop. As Agent This resulted in funds to thecompany of $698,740

OnNovember 26, 2024, Warrants were exercised, and 20,000 Shares of Common stock were issued under PIPE Offering with Aegis Capital Cop.As Agent. This resulted in funds to the company of $79,856.

OnJanuary 22, 2025 as a condition of the acquisition of Control Micro Systems Laser Wind Down, Inc was issued 18,692 shares of our commonstock for a value of $100,000.

On March 6, 2025 Sanjay Adhav issued 65,000 sharesof common stock through affiliate company Fonon Technologies as part of Fonon Corp acquisition of Quantum Technologies.

Theoffer, sale and issuance of the securities described in the paragraphs above were deemed to be exempt from registration under the SecuritiesAct in reliance on Rule 506 of Regulation D in that the issuance of securities to the accredited investors did not involve a public offering.Each of the recipients of the securities in this transaction acquired the securities for investment only and not with a view to or forsale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.Each of the recipients of these securities in this transaction was an accredited investor under Rule 501 of Regulation D. 

ITEM6. SELECTED FINANCIAL DATA

Thefollowing selected consolidated financial data should be read in conjunction with, and is qualified by reference to, our consolidatedfinancial statements and related notes and Item 7, “Management’s Discussion and Analysis of Financial Condition and Resultsof Operations” included elsewhere in this Annual Report on Form 10-K. The data for the years ended December 31, 2024, and 2023,is derived from our audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. Our historicalresults are not necessarily indicative of the results for any future period.

Statementof Operations Data:

Balancesheet data:

Cashflow data:

Otherfinancial data (audited)

Inaddition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we providethe following additional financial metrics that are not prepared in accordance with GAAP (non-GAAP): EBITDA and adjusted EBITDA. Managementuses these non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accountingperiods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance.We believe that these non-GAAP financial measures help us to identify underlying trends in our business that could otherwise be maskedby the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measures.

Accordingly,we believe that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons andanalysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operatingresults, enhancing the overall understanding of our past performance and prospects.

Thesenon-GAAP financial measures do not replace the presentation of our GAAP financial results and should only be used as a supplement to,not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures,because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerningexclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluatetheir performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financialmeasures as tools for comparison.

(1)EBITDA. EBITDA is a non-GAAP financial measure used by management, lenders, and certain investors as a supplemental measure in the evaluationof some aspects of a corporation’s financial position and core operating performance. Investors sometimes use EBITDA, as it allowsfor some level of comparability of profitability trends between those businesses differing as to capital structure and capital intensityby removing the impacts of depreciation and amortization. EBITDA also does not include changes in major working capital items, such asreceivables, inventory and payables, which can also indicate a significant need for, or source of, cash. Since decisions regarding capitalinvestment and financing and changes in working capital components can have a significant impact on cash flow, EBITDA is not necessarilya good indicator of a business’s cash flow. We use EBITDA for evaluating the relative underlying performance of our core operationsand for planning purposes. We calculate EBITDA by adjusting net income to exclude net interest expense, income tax expense or benefit,depreciation and amortization, thus the term “Earnings Before Interest, Taxes, Depreciation and Amortization” and the acronym“EBITDA.”

(2)ADJUSTED EBITDA. Adjusted EBITDA is defined as comprehensive income (loss) as reported in our consolidated statements of income excludingthe impact of (i) interest expense; (ii) income tax provision; (iii) depreciation and amortization; (iv) stock-based compensation expense;(v) accretion of debt discounts; (vi) other income – forgiveness of Paycheck Protection Program loan; (vii) other financing costs;(viii) loss on extinguishment of debt; (ix) warrant inducement expense; (x) amortization of right-of-use assets; and (xi) change in fairvalue of derivative liabilities. Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations incapital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense)and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-timecosts associated with our IPO and non-cash costs.

(3)We believe EBITDA and Adjusted EBITDA are helpful for investors to better understand our underlying business operations. The followingtable adjusts Net Income (Loss) to EBITDA and Adjusted EBITDA years ended December 31, 2024, and 2023.

Reconciliationof Adjusted EBITDA

ITEM7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Thefollowing discussion and analysis of the results of operations and financial condition of the Company for the years ended December 31,2024, and 2023 should be read in conjunction with our audited consolidated financial statements and  related notes and the descriptionof our business and properties included elsewhere herein.

Overview

Weare a vertically integrated manufacturing company for photonics-based industrial products and solutions and, since recently acquiringthe assets of Control Micro Systems, Inc., have now expanded the market for our laser products into a large, growing pharmaceuticalmanufacturing vertical, in what we believe is a recession-resistant sector with significant barriers to entry.

Weare pioneering a new generation of laser blasting technologies focused on disrupting the sandblasting and abrasives blasting markets.We offer a full portfolio of integrated laser blasting solutions for corrosion control, rust removal, de-coating, pre-welding and post-welding,laser cleaning and surface conditioning. Our solutions span use cases throughout product lifecycles, from product fabrication to maintenanceand repair, as well as aftermarket operations. Our laser blasting solutions are applicable in most industries dealing with materialsprocessing, including automotive, aerospace, healthcare, consumer products, shipbuilding, heavy industry, machine manufacturing, nuclearmaintenance and de-commissioning and surface coating.

Ourvertically 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 competingtechnologies.

Descriptionof Our Gross Sales, Costs and Expenses

Grosssales. We derive net sales primarily from the growth was driven by increasing demand for our products, partially offset by declines inaverage sales prices, the introduction of new products, including laser blasting systems and the development of new applications forour products.

Wedevelop our products to standard specifications and use a common set of components within our product architecture. Our major productsare based upon a common technology platform. We continually enhance these and other products by improving their components and developingnew product designs. Sales of our products are generally recognized upon shipment, provided that no obligations remain, and collectionof the receivable is reasonably assured.

Oursales typically are made on a purchase order basis rather than through long-term purchase commitments. We entered into laser equipmentsales agreements with customers for specific equipment based on purchase orders and our standard terms and conditions of sale. All revenuesare reported net of any sales discounts or taxes. Under our customer contracts or/and purchase orders, we transfer title and risk ofloss to the customer and recognize revenue upon shipment. Our customers do not have extended payment terms or rights of return underthese contracts.

Oursales channels

SalesChannels Overview

Wegenerate revenue through a multi-channel sales strategy that includes a Direct Sales team—comprised of Strategic Account Managersand a regionally distributed Outside Sales force—along with a growing network of distributors and resellers. This integrated approachenables us to maximize market reach, tailor engagement by customer segment, and accelerate the sales cycle across both commercial andgovernment markets.

DirectSales

OurDirect Sales team consists of Strategic Account Managers based at our corporate headquarters and a rapidly expanding Outside Sales teampositioned in key heavy manufacturing regions across the United States.

Thisdual structure allows us to deepen relationships with major strategic accounts, driving broader adoption of our laser systems withinlarge enterprises, while our Outside Sales representatives focus on engaging small and mid-sized businesses. These field reps play acritical role in educating customers on the advantages of laser solutions over outdated, hazardous legacy methods—such as sandblastingor chemical cleaning—highlighting the efficiency, safety, and cost-effectiveness of our technology.

Distributorsand Resellers

Ourdistribution and reseller network extends our reach to a wider audience by placing our product line within trusted sales channels thatmany customers already use and have contracts with. This not only increases exposure and accessibility but also streamlines the purchasingprocess, particularly for customers in the government and enterprise sectors where existing vendor relationships and procurement frameworksare critical.

Byleveraging both direct and indirect sales strategies, we’re able to accelerate growth, build lasting customer relationships, anddeliver tailored solutions that meet the evolving needs of diverse market segments.

Allorders are received on a revolving bases in accordance with the Company’s standard Terms and Conditions of Sale. Orders are notcancelable. Orders typically consist of multiple units. Payment terms are typically net 120 days from transferring the ownership of equipmentto the distributor. Revenue is recognized on a “piece by piece” equipment basis after the appropriate transfer of the equipment’sownership to the distributor. Payments are made by the distributor to the Company when the distributor collects funds from its regionalcustomers or when they have funds available to reduce the outstanding balance. The Company allocates payments in accordance with itsaccounting practices. Detailed aging is accounted for in the Company’s MRP system – DBA Manufacturing keeping records ofall equipment units ever manufactured with coordinating serial numbers. Higher level account-related data with payment history is recordedin the Company’s QuickBooks accounting software.

Costof Sales. Our cost of sales includes the cost of raw materials and components for manufacturing laser systems and consists of differentelectronic and optical components such as optical generators, scan heads, connector assemblies and wires, edge seal and adhesives, junctionboxes, and other items, such as raw aluminum and aluminum extrusions, steel for tilt brackets and frames, subassemblies, miscellaneousmaterials, chemicals, support and low cost common parts and components, like tie wraps, insulating tape, shrink wraps, terminals, etc.We are vertically integrated and currently manufacture all critical components for our products as well as assemble finished products.Our cost of sales also includes direct labor, manufacturing overhead (such as engineering labor), equipment maintenance, quality andproduction control, procurement costs, and warranty costs. Cost of sales does not include depreciation of manufacturing plant and equipment,nor does it include facility-related expenses (such as rent and utilities).

Overall,we expect our cost of goods sold to continue to decrease over the next several years due to an increase in worldwide capacity in fiberlaser parts and components, and availability of optical generators, an increase in unit output per production line, and more efficientabsorption of fixed costs driven by economies of scale. This expected decrease in cost for laser technology would be partially offsetduring periods in which we underutilize manufacturing capacity.

Salesand marketing. Our sales and marketing expenses consist primarily of costs related to compensation, trade shows, professional and technicalconferences, travel, facilities, depreciation of equipment used for demonstration purposes and other marketing costs.

Selling,general, and administrative Expenses. Our general and administrative expense consists primarily of compensation and associated costsfor executive management, sales and marketing personnel, outside legal and professional fees, insurance premiums and fees, allocatedfacilities costs, and other corporate expenses such as charges and benefits related to the change in allowance for doubtful debt.

Grossmargin. Our total gross margin in any period can be significantly affected by total net sales in any period, by competitive factors,by product mix, and by other factors such as changes in foreign exchange rates relative to the U.S. Dollar, some of which are not underour control. Gross margin is affected by numerous factors, including our module average selling prices, foreign exchange rates, the existenceand effectiveness of subsidies and other economic incentives, competitive pressures, market demand, market mix, our manufacturing costs,product development costs, the effective utilization of our production facilities, and the ramp of production on new products.

Researchand development expenses. Our research and development expenses consist primarily of compensation, development expenses related to thedesign of our products and certain components, the cost of materials and components to build prototype devices for testing and facilitiescosts. Costs related to product development are recorded as research and development expenses in the period in which they are incurred.We acquire equipment for general use in further process developments and record the depreciation of this equipment as research and developmentexpense.

Weplan to continue to invest in research and development to improve our existing products and develop new systems and applications technology.We maintain several programs and activities to improve our technology and processes in order to enhance the performance and reduce thecosts of our laser cleaning modules.

InterestExpense, Net. Interest expense, net of capitalized amounts, is incurred on various debt financings. We capitalize interest expense intoour property, plant and equipment, project assets, and deferred project costs when such costs qualify for interest capitalization.

Factorsand Trends That Affect Our Operations and Financial Results

Inreading our financial statements, you should be aware of the following factors and trends that our management believes are importantin understanding our financial performance.

Netsales. Net sales generated in 2024 increased towards the second half of the year driven by the sales of recently purchased of CMS andthe stable sales of traditional products. Sales were unaffected by market pricing pressures, due to our lower prices, quality control,and proprietary know-how as compared to other laser cleaning companies with competing technologies.

Grossmargin. Our total gross margin in any period can be significantly affected by total net sales in any period, by competitive factors suchas product mix, and by other factors, some of which are not under our control. For instance, the gross margin for certain specialty productsmay be higher because there are fewer or sometimes no equivalent competing products. Further, we expect that some new technologies, productsand systems will have returns above our cost of capital but may have gross margins below our corporate average.

Selling,general, and administrative expenses. Selling, general and administrative expenses consist primarily of salaries and other personnel-relatedcosts, professional fees, insurance costs, travel expenses and other selling expenses. We expect selling expenses to increase in thenear term to support the planned growth of our business as we expand our sales and marketing efforts.

Researchand development expenses. Research and development expenses consist primarily of salaries and personnel-related costs, the cost of products,materials, and outside services used in our process and product research and development activities. We acquire equipment for generaluse in further process developments and record the depreciation of this equipment as research and development expense. We maintain several programs and activities to improve our technology and processes to enhance performance and reduce the costs of our cleaninglaser modules.

Goodwilland long-lived assets impairments. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicatethat the carrying value may not be recoverable. Impairment is measured by comparing the carrying value of the long-lived assets to theestimated undiscounted future cash flow expected to result from use of the assets and their ultimate disposition. In instances whereimpairment is determined to exist, the Company will write down the asset to its fair value based on the present value of estimated futurecash flows.

Majorcustomers. While we would expect to depend on current customers for a large percentage of our annual net sales, thecomposition of this group can change from year to year. Net sales derived from our current customers as a percentage of our annual netsales was 17.42% in 2024. New customers accounted for 82.58% of our net sales in 2024. We seek to add new customers and to expand ourrelationships with existing customers.

Relationshipwith distributors. All orders received on revolving bases in accordance with LPC standard Terms and Conditions of Sale. Orders are notcancelable. Orders typically consist of multiple units. Payment terms are typically Net 30 days from transferring the ownership of equipmentto Distributor. Revenue recognized on a “piece by piece” equipment bases after appropriate transfer equipment ownership toDistributor. Payments are made by Distributor to The Company when Distributor collects funds from their regional customers, or then theyhave funds availability to reduce the outstanding balance. The company allocates payments in accordance with LPC Accounting practices.Detailed aging is accounted in MRP system – DBA Manufacturing keeping records of all equipment units ever manufactured with coordinatingserial numbers. Higher level account-related data with payment history is recorded in Company’s Quick Books Accounting software.

DistributorDiscounts. Distributors and representatives earn various rebates and discounts based on purchase volume commitments and the achievementof certain performance KPIs. The company estimates the amount of discounts based on historical volumes, geographical market, end customerbuying potential, and the ordered equipment amount. The company also utilizes various programs to offer volume cash discounts, firstcustomer discounts, or reimburse distributors for certain expenses, mainly associated with warranty, transportation costs, and inventoryinterest costs incurred by the distributor for limited periods of time, generally up to eighteen months.

Repurchasepolicy. LPC Operational Management regular conducts evaluation of unsold equipment in Distributors possession and determines what particularunits cannot be sold anymore because of the moral aging. However, after the manufacturing upgrade it can be added back to the finishedgoods inventory and sold as a current model. Repurchase records can be viewed in the Repurchase History Records folder.

CriticalAccounting Policies and Estimates

Thepreparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”)requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosureof contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses

Ourfinancial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principlesapplied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reportingperiods.

Weregularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’sestimates are based on historical experience, and on various other assumptions that are believed to be reasonable under the facts andcircumstances. Actual results could differ from those estimates made by management. These estimates are based on management’s historicalindustry experience and not the company’s historical experience.

RevenueRecognition

UnderTopic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects theconsideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangementsthat 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 thetransaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performanceobligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the considerationit is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determinedto be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performanceobligations and assess whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transactionprice that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Revenueis then recognized for the amount of the transaction price allocated to each respective performance obligation when (or as) the performanceobligation is satisfied. For our products, revenue is generally recognized on a free on board origin (FOB Origin) basis. This means thatrevenue is recognized when our products have been manufactured, crated, and placed in the collection warehouse for customer pick-up inaccordance with the Customer Quote and Company Terms and Conditions of Sale. At this stage, the title on the manufactured equipment istransferred to the customer, and the customer is responsible for transportation expenses, insurance, and any transport-related damageto the equipment in transit. We do not hold any obligations to deliver beyond the collection warehouse, and it is the customers’contractual responsibility to ensure their goods reach their destination.

For projects that are considered custom in nature like most of what we see at ControlMicro systems, and we’ve determined the obligation will be six months to a year or more, the company will recognize revenue asa percentage of completion basis. The percentage of completion method recognizes income as work on a project progresses. Therecognition of revenues and profits is generally related to costs incurred in providing the services required under theproject.Refunds   andreturns, which are minimal, are recorded as a reduction of revenue.

Payments received from customers before satisfying the abovecriteria are recorded as unearned income on the combined balance sheets.

Paymentsreceived as deposits for specific purchase orders or future laser equipment sales to customers are recognized as customer deposits andincluded in liabilities on the balance sheet. Customer deposits are recognized as revenue when control over the ordered equipment istransferred to the customer.

Allrevenues are reported net of any sales discounts or taxes.

OtherRevenue Recognition Matters related to Distributors

Distributorsgenerally have no right to return unsold equipment. However, in limited circumstances, if the company determines that distributor stockis morally aging beyond the company’s new model releases, it may accept returns and provide the distributor with credit againsttheir trading account at the company’s discretion under its warranty policy. This situation may also arise if the business climatesuddenly changes in the distributor’s country of operation, and the company determines that older and aged equipment can no longerbe sold in a specific geographical area, requiring equipment stock to be upgraded to modern models and capabilities. The company mayalso be obligated, in the event of default by a distributor, to accept returns of unsold laser equipment under its repurchase commitmentto equipment financing providers or directly to the distributor. The repurchase commitment is on an individual piece of equipment basiswith a term from the date it is financed by the lending institution through the payment date by the distributor, generally not exceeding36 months.

Thecompany has excluded sales and other taxes assessed by a governmental authority in connection with revenue-producing activities fromthe determination of the transaction price for all contracts. The company has not adjusted net sales for the effects of significant repurchasefinancing activity (e.g., customer default with a financial institution, repurchasing, or warranty replacement) because the period betweenthe transfer of the equipment title and the customer’s payment may exceed 24 months of the equipment warranty period and occurwithin the maturity of the equipment financial agreement between the customer or distributor and the financial institution.

Inventory.Inventory is stated at the lower level of cost (first-in, first-out method) or market value. Inventory includes parts and components thatmay be specialized in nature and subject to rapid obsolescence. We maintain a reserve for excess or obsolete inventory items. Inventoriesare written off and charged to cost of goods sold when identified as excess or obsolete. If future sales differ from these forecasts,the valuation of excess and obsolete inventory may change, and additional inventory provisions may be required. Because of our verticalintegration, a significant or sudden decrease in sales could result in a significant change in the estimates of excess or obsolete inventoryvaluation. As ofn December 31, 2024, we have recorded $776,638 for obsolescence.

Warranty.We maintain an accrual for warranty claims for units sold that are subject to warranty.

IncomeTaxes and Deferred Taxes. Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities availableto us in the various jurisdictions in which we operate. The net operating loss reported in 2023 will be carried forward to subsequentperiods. No deferred tax asset has been recorded.

Goodwilland Long-lived assets impairments. We review our intangible assets and property, plant and equipment for impairment when events orchanges in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment atleast annually. We perform our annual goodwill impairment review as of the first day of our fourth quarter, or more frequently if eventsor circumstances indicate it is more likely than not that the fair value of an intangible is less than the carrying amount.

Resultsof Operations

Summaryof Statements of Operations for the Years Ended December 31, 2024, and 2023:

Revenue

GrossProduct Sales were $3,969,798 for the year ended December 31, 2024 as compared to $4,520,892 for the comparable year ended December 31,2023, representing a 12.19% decrease. Our sales typically are made on a purchase order basis rather than through long-term purchase commitments.We entered into laser equipment sales agreements with customers for specific equipment based on purchase orders and our standard termsand conditions of sale. Our largest sales were to is E.S FOX LTD for $273,518. for the year ended December 31, 2024. However,sales discounts applied in 2024 in the amount of $554,602 in comparison to $581,419 in 2023 reflects the fact of stronger completionon the market and a need for a price adjustment. The net revenue decreased accordingly by $524,278 or 13.30% in the year of 2024in comparison to 2023.

SalesPipeline

OurSales Pipeline at the end of December 31, 2024, has reached $41.1M in industrial products and $19.9M in Military and Government saleswhat can support the revenue for up to $10M a year.

GrossProfit

Forthe year ending December 31, 2024, we reported gross profit in the amount of $1,481,046 or 43.37% of net sales, as compared to $2,897,777or 73.56% net sales, in the year ended December 31, 2023. Gross profit is affected by numerous factors, including our module averageselling 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. Our cost of sales includes the cost of raw materials and components for manufacturinglaser systems. We are vertically integrated and currently manufacture all critical components for our products as well as assemble finishedproducts. Our cost of sales also includes direct labor for manufacturing, and manufacturing overhead such as engineering, equipment maintenance,quality and production control, and procurement costs. Cost of sales does not include depreciation of manufacturing plant and equipmentand facility-related expenses.

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 laserparts and components, and availability of optical generators, an increase in unit output per production line, and more efficient absorptionof fixed costs driven by economies of scale. This expected decrease in cost for laser technology would be partially offset during periodsin which we underutilize manufacturing capacity.

The Company contracted with a third partyto test impairment of their intangible assets. After the evaluation was completed, the company recognized an impairment of $932,669 basedon the third parties report.

OperatingExpenses

Operatingexpenses for the year ended December 31, 2024, were $ 7,944,389 as compared to $ 6,246,011 for the year ended December 31, 2023, representingan increase of $ 1,698,378. The following table summarizes the significant changes in operating expenses for the years ended December 31,2024, and 2023

Weexpect recurring selling expenses to increase in the near term to support the planned growth of our business as we expand our sales andmarketing efforts. In the future, we expect selling, general, and administrative expenses to decline as a percentage of net sales, asour net sales grow beyond the fixed costs of the business.

NetLoss (Income)

Netloss for the year ending December 31, 2024, was $ 2,518,827 compared to $ 3,318,171 for the year ended December 31, 2023.We have spent much of the last two years assembling people and equipment necessary to increase sales and production levels. While ourrevenue levels increased, our expenses also increased. That coupled with the additional expenses associated with being a public companyand our research and development efforts for our new generation of laser blasting equipment, resulted in a net loss for 2024. With theseinvestments, we are building the foundation for our future, not only for our laser blasters, but also for the expansion of our laserequipment for material processing product offering. Basic and dilutive loss per share of common stock decreased for the year ended December31, 2024, to ($0.22) compared to ($0.37) for the year ended December 31, 2023

Inflationdid not have a material impact on our operations for the period applicable. Other than the foregoing, management knows of no trends,demands, or uncertainties that are reasonably likely to have a material impact on our results of operations.

NetIncome/Loss per Share

Basicearnings/loss per share is calculated by dividing the loss attributable to stockholders by the weighted-average number of shares outstandingfor the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue commonstock were exercised or converted into common stock or resulted in the issuance of common stock that shared in our earnings (loss). Dilutedearnings/(loss) per share is computed by dividing the earnings/loss available to stockholders by the weighted average number of sharesoutstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution.

Liquidityand Capital Resources

Thefollowing is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for theyears ended December 31, 2024, and 2023:

Asof December 31, 2024, the Company had $ 4,664,460 in current assets, comprised of $ 533,871 in cash, $ 937,605 in accountsreceivable, $ 2,338,759 in inventory, $759,658 in Contract Assets and $58,567 in Other Assets, as of December 31, 2023, the Companyhad $ 9,294,147 in current assets, comprised of $ 6,201,137 in cash, $ 816,364 in accounts receivable, $ 2,237,456 in inventory, and$39,190 in other assets.

Asof December 31, 2024, current liabilities totaled $2,573,435 as compared to $ $ 1,031,844 as of December 31, 2023. As a result, asof December 31, 2024, the Company had $2,091,025 in total working capital as compared to $ 8,262,303 as of December 31, 2023.

Weanticipate spending an additional $3M over the next 2 years, to increase our sales and marketing efforts, as well as to increase ourmanufacturing capacity. While doing so, we expect to return to profitability in 2025. Therefore, we anticipate minimal long-term liquidityneeds to support our organic growth, which we expect to achieve using the proceeds of our recent IPO, exclusively.

Wemust fulfill all of the financial disclosure and reporting requirements of a public reporting company. Our management must spend additionaltime on policies and procedures to ensure compliance with various regulatory requirements, especially that of Section 404 of the Sarbanes-OxleyAct of 2002. The additional corporate governance required of management could limit the amount of attention management can afford toour business plan, and therefore may delay our anticipated growth plans. Over the next 12 months, we anticipate the marginal cost ofbeing a public company to exceed $750,000.

LeaseLiability

OnDecember 1, 2019, we entered a sub-lease with ICT Investments for 5,000 sf of manufacturing space on a month-to  -month basisat $4,050 per month. In January 2020, we expanded the lease with ICT Investments to include the entire facility of 18,000 sf. In Octoberof 2021, a direct lease was signed with the landlord for three years, terminating on October 31, 2024. In November we entered into alease amendment that expires December 31, 2025.The facility is currently equipped with three of our latest advanced laser cleaning demonstrationmodels. It includes a materials stock room, a ramp and high dock, loading and moving equipment, a machine shop, an electronics room,and an equipment assembly area. The monthly rent for this facility is currently $15,549.

InDecember 2022, we entered into an agreement with 2701 Maitland Building Associates to rent 8,000 sf of additional office space nearbythe main facility, for our growing sales and marketing program. The monthly rent for this space is currently $14,805. On February 10,2025, we entered into a Lease Termination Agreement with 2701 Maitland Building Associates, LLC, the Landlord of Suite 125 containingapproximately 7,981 rentable square feet that Laser Photonics had leased from November 7, 2022 through December 31, 2025, at a base monthlyrent of $14,818.06 (“Suite 125”). In light of our entering into a long-term lease at 250 Technology Park. Lake Mary, FL 32746on July 1, 2024, we determined that we did not need Suite 125 for our future growth and, since we could not sublet this space, we enteredinto the Lease Termination Agreement to reduce our lease expense. Under the terms of the Lease Termination Agreement, we agreed to paya monthly termination fee of $14,912.14 base rent plus operating expenses for five months, saving us approximately $80,000 in lease paymentsfor 2025.

OnJuly 1, 2024, we entered into a lease agreement for 48,481 square feet of office space at a base monthly rent of $ 50,354.42with an annual increase of 3%, that has a term of 10.5 years. The location of the facility is 250 Technology Park. Lake Mary,FL

Ourfacility is currently equipped with three of our latest advanced laser cleaning demonstration models.

Uponacquisition of Control Micro Systems in on October 31, 2024 at 4420 Metric Dr. Winter Park Florida. The lease expires on October 31,2025. The facility is 52,200 total square ft at a cost of $27,700 per month.

Off-BalanceSheet Arrangements

Asof December 31, 2024, we have not entered any off-balance sheet arrangements that have or are reasonably likely to have a current orfuture effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capitalexpenditures or capital resources and would be considered material to investors.

LegalProceedings

Weexpect from time to time to be the subject of various claims, lawsuits and other legal and administrative proceedings arising in theordinary course of business. As of the date of this report we have not subject to any legal threats, proceedings or lawsuits of any nature.

CriticalAccounting Policies and Estimates

Thepreparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”)requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses.

Ourfinancial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principlesapplied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingentassets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reportingperiods.

Weregularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’sestimates are based on historical experience, and on various other assumptions that are believed to be reasonable under the facts andcircumstances. Actual results could differ from those estimates made by management. These estimates are based on management’s historicalindustry experience and not our historical experience.

RevenueRecognition- Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amountthat reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognitionfor arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identifythe 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 satisfiesa performance obligation. We only apply the five-step model to contracts when it is probable that the entity will collect the considerationit is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determinedto be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performanceobligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transactionprice 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 criteriaare recorded as unearned income in the combined balance sheets. All revenues were reported net of any sales discounts or taxes.

Inventory— Inventory is stated at the lower cost (first-in, first-out method) or market value. Inventory includes parts and componentsthat may be specialized in nature and subject to rapid obsolescence. We maintain a reserve for excess or obsolete inventory items. Inventoriesare written off and charged to cost of goods sold when identified as excess or obsolete. If future sales differ from these forecasts,the valuation of excess and obsolete inventory may change, and additional inventory provisions may be required. Because of our verticalintegration, a significant or sudden decrease in sales could result in a significant change in the estimates of excess or obsolete inventoryvaluation. On December 31, 2024, we recorded $776,638 in Inventory Obsolescence.

Warranty— We maintain an accrual for warranty claims for units sold that are subject to warranty.

IncomeTaxes and Deferred Taxes — Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities availableto us in the various jurisdictions in which we operate.

Goodwilland Long-lived assets impairment. We review our intangible assets and property, plant and equipment for impairment when events or changesin circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually.We perform our annual goodwill impairment review as of the first day of our fourth quarter, or more frequently if events or circumstancesindicate it is more likely than not that the fair value of a reporting unit is less than the carrying amount.

RecentAccounting Pronouncements

TheCompany evaluates all Accounting Standard Updates (“ASUs”) issued by the Financial Accounting Standards Board(“FASB”) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to beeither not applicable or are not expected to have a material impact on our consolidated financial statements.

OnNovember 27, 2023, FASB issues ASU 2023-07. ASU 2023-07 is effective for public entities fiscal years beginning after December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 enhances segment reporting under Topic 280 byexpanding the breadth and frequency of segment disclosures. Its amendments fall into the following categories. Topic 280 requires a publicentity to disclose entity-wide and segment information in the notes to financial statements. This includes the measure of profit or lossthat the CODM uses to assess segment performance and decide how to allocate resources, as well as certain specified amounts includedin that measure – e.g. revenue, depreciation and amortization, interest and income tax expense. However, investors have observedthat there has been limited information reported about a segment’s expenses. The analysis of the company after acquisition of CMSconcluded that we have only one segment and according to this, the results will be disclosed consolidated.

ASC-280Segment Reporting

FinancialAccounting Standard Board (“FASB”) ASC Topic 280, “Segment Reporting,” requires annual and interim reportingfor an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers.An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues andexpenses, and about which separate financial information is regularly evaluated by the chief operating decision maker in deciding howto allocate resources.

LaserPhotonics operates as one segment located in Orlando, FL. Our company develops industrial laser cleaning, cutting, welding, marking,and wire stripping across multiple industries and customer bases. The chief operating decision maker (CODM) being the Chief ExecutiveOfficer. The CODM uses net income from operations to evaluate and make key operating decisions.

ITEM7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Wehave not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contractsor interest rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not haveany borrowings and, consequently, we are not affected by changes in market interest rates. We do not currently have any sales or ownassets and operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuationsor exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is notmaterial to our financial condition or results of operations.

ITEM8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEXTO FINANCIAL STATEMENTS

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

Tothe Board of Directors and Stockholders of Laser Photonics Corporation

Opinionon the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Laser PhotonicsCorporation (the Company) as of December 31, 2024, and the related consolidated statements of operations, stockholders’ equity,and cash flows for the year-ended December 31, 2024, and the related notes (collectively referred to as the financial statements). Inour opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company asof December 31, 2024, and the results of its consolidated operations and its cash flows for the year ended December 31, 2024, in conformitywith accounting principles generally accepted in the United States of America. The consolidated financial statements of Laser PhotonicsCorporation as of December 31, 2023 were audited by other auditor whose report dated April 16, 2024, except for certain items disclosedin Note 7, as to which the date is August 27, 2024, expressed an unqualified opinion on those statements.

GoingConcern

The accompanying consolidated financial statementshave been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,the Company has not earned sufficient revenue since inception and has sustained operating losses during the year ended December 31, 2024,which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters arediscussed in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basisfor Opinion

These consolidated financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statementsbased on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicablerules and regulations of the Securities and Exchange Commission and the PCAOB.

Weconducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due toerror or fraud. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financialreporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but notfor the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.Accordingly, we express no such opinion.

Our audit included performing procedures to assessthe risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing proceduresthat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in theconsolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit providesa reasonable basis for our opinion.

CriticalAudit Matter

The critical audit matter communicated below is amatter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicatedto the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter inany way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audits matterbelow, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Evaluationof Intangible Assets

Asdiscussed in Note 2 and 8 to the consolidated financial statements, the Company acquired an entity during 2024 accounted for as businesscombinations, which required assets and liabilities assumed to be measured at their acquisition date fair values. Additionally, the Companyhas other intangible assets from previous years activities. At each reporting period, certain intangible assets are required to be assessedannually for impairment based on the facts and circumstances at that time. Auditing management’s evaluation of intangible assetscan be a significant judgment given the fact that the Company uses management estimates on future revenues and expenses which are noteasily able to be substantiated.

Giventhese factors and due to significant judgements made by management, the related audit effort in evaluating management’s judgmentsin evaluation of intangible assets required a high degree of auditor judgment.

Theprocedures performed included evaluation of the methods and assumptions used by the Company, tests of the data used and an evaluationof the findings. We evaluated and tested the Company’s significant judgments that determine the valuation of and impairment evaluationof intangible assets.

/s/M&K CPAS, PLLC

www.mkacpas.com

Wehave served as the Company’s auditor since 2024.

TheWoodlands, Texas

June24, 2025

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Tothe Board of Directors and Shareholders of Laser Photonics Corporation

Opinionon the Financial Statements

Wehave audited the accompanying balance sheets of Laser Photonics Corporation (“the Company”) as of December 31, 2023 and 2022,and the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-yearperiod ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financialstatements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the resultsof its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accountingprinciples generally accepted in the United States of America.

Asdiscussed in Note 7 to the financial statements, the financial statements have been revised to incorporate changes related to the correctionof an error.

GoingConcern

Theaccompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note1 to the financial statements, the Company has history of net losses and accumulated deficits. These factors, among others, raise substantialdoubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are alsodescribed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basisfor Opinion

Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sfinancial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securitieslaws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Weconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Companyis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Ouraudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erroror fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regardingthe amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our auditsprovide a reasonable basis for our opinion.

CriticalAudit Matters

Thecritical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicatedor required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financialstatements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit mattersdoes not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical auditmatters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

RevenueRecognition – Refer to Note 2 to the financial statements

Descriptionof the Critical Audit Matter

TheCompany has material revenue with a revenue recognition policy in which determining when the performance obligation has been settledand obtaining appropriate and sufficient audit evidence took significant audit effort.

Howthe Critical Audit Matter was Addressed in the Audit

Allowancefor Uncollectible Accounts – Refer to Note 2 to the financial statements

Descriptionof the Critical Audit Matter

TheCompany has material accounts receivable for which assessing the potential collectability of accounts may include subjective and potentiallycomplex considerations from management, as well as requiring high degrees of auditor judgment to assess the appropriateness of the auditevidence to support the Company’s assessment.

Howthe Critical Audit Matter was Addressed in the Audit

Fruci& Associates II, PLLC – PCAOB ID #05525

Wehave served as the Company’s auditor since 2023.

Spokane,Washington

April16, 2024, except for certain items disclosed in Note 7, as to which the date is August 27, 2024.

LASERPHOTONICS CORPORATION.

Consolidated BalanceSheets as of December 31, 2024, and 2023

* See accompanying notes to financial statements.

LASERPHOTONICS CORPORATION.

Consolidated Statementsof Operations for the years ended December 31, 2024, and 2023

* See accompanying notesto financial statements.

LASERPHOTONICS CORPORATION.

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, and 2023 (Restated)