LASE Corp 10-Q/A for FY2022 Q1
LASE Corp. (LASE)
About this 10-Q/A
LASE Corp filed this 10-Q/A on August 26, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.21M
- up 24.2% from $976.03K a year earlier
- Net income
- $376.7K
- up 218.5% from net income of $118.28K a year earlier
- Diluted EPS
- $0.08
- up 300.0% from $0.02 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
For the quarterly period ended:
or
For the transition period from __________________ to __________________
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of |
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incorporation or organization) |
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(Address of Principal Executive Offices) |
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Registrant’s Telephone Number, Including Area Code |
Not Applicable |
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report |
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
COMMON STOCK, $0.001 PAR VALUE
Title of each class |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
As of May 18, 2022, the registrant had
TABLE OF CONTENTS
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EXPLANATORY NOTE
This Amendment No. 1 to Form 10-Q/A (“Amendment No. 1”) is being filed by the registrant (“Laser Photonics”) to amend its Quarterly Report on Form 10-Q for the period ended March 31, 2022, as filed with the U.S. Securities and Exchange Commission (“SEC”) on May 19, 2022 (“Original Filing Date”). The purpose of this Amendment No. 1 is to correct Item 1 (“Financial Statements”) and Item 4 (“Controls and Procedures”). Except as described in the foregoing sentence no other changes have been made to the Original Filing, and this Amendment No. 1 does not modify, amend or update in any way any of the other information contained in the Original Filing. This Amendment No. 1 does not reflect events that may have occurred subsequent to the Original Filing Date or the filing date of this Amendment No. 1, except as set forth below to provide some context for this Amendment No. 1.
As of August 15, 2022, our President and our Vice President, Finance evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by our Quarterly Report on Form 10-Q for the period ended June 30, 2022, as filed with the SEC on August 15, 2022 (the “June 30 Form 10-Q”). Based on such evaluation, our President and Vice President, Finance concluded that as of March 31, 2022, our disclosure controls and procedures were not effective. Specifically, Laser Photonics filed a registration statement (File No. 333-261129) on Form S-1 (the “Registration Statement”) for an initial public offering of its common stock, and during the SEC review process, management detected errors in is financial statements for the year ended December 31, 2021 and for the three months ended March 31, 2022. Specifically, we omitted earnings per share information from the notes to our unaudited financial statements for the three months ended March 31, 2022, as required by ASC 260-10-45 and ASC 260-10-50, in the Form 10-Q filed on the Original Filing Date. This error was corrected in the Registration Statement in pre-effective amendments filed with the SEC during the quarter ended June 30, 2022. Steps taken to remediate our internal controls over financial reporting and disclosure controls and procedures are discussed in the June 30 Form 10-Q and repeated in this Amendment No. 1.
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ITEM I – FINANCIAL STATMENTS
UNAUDITED INTERIM FINANCIAL STATEMENTS
LASER PHOTONICS CORPORATION
CONDENSED BALANCE SHEETS
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| December 31, 2021 |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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Accounts receivable, net |
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Inventory |
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Total Current Assets |
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Other Assets |
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Property and equipment, net |
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Intangible assets |
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Operating lease right of use asset |
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Total Assets |
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Liabilities and Stockholders’ Equity |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Sales tax payable |
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Current portion of operating lease payable |
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Deferred revenue |
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Total Current Liabilities |
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Non-current Liabilities |
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Loan payable - related party |
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PPP loans payable |
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Operating lease payable |
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Total Non-current Liabilities |
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Total Liabilities |
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Commitments and contingencies (Note 3) |
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Stockholders’ Equity |
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Common stock par value $ |
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Additional paid in capital |
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Retained earnings |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity |
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LASER PHOTONICS CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
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Cost of Goods Sold |
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Gross Profit |
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Expense |
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Depreciation and Amortization |
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G&A Expense |
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Interest Expense |
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Payroll Expense |
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Rent Expense |
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Tax |
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Total Expense |
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Net Income |
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Income per share |
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Net income per share |
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Weighted average shares, March 31, 2022 and 2021 are reflective of 1/6 reverse stock split |
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LASER PHOTONICS CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) |
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Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
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Net change right-of-use assets and liabilities |
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Changes in operating assets and liabilities: |
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Inventory |
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Deferred revenue |
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Accounts payable and sales tax payable |
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Net Cash Provided By (Used In) Operating Activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Net Cash Used In Investing Activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from (repayment of) PPP loans |
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Proceeds from (repayment of) loan payable - related party |
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Net Cash (Used In) Provided by Financing Activities |
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Net Change in Cash |
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Cash - Beginning of period |
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Cash - End of period |
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SUPPLEMENTARY CASH FLOW INFORMATION: |
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Cash Paid During the Quarter for: |
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Interest |
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LASER PHOTONICS CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Three Months Ended March 31, 2022
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Balance, January 1, 2022 after 1/6 split. 100,000,000 authorized at 0.001 |
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Net income for the three months ended March 31, 2022 |
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Balance, March 31, 2022 |
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Three Months Ended March 31, 2021
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Balance, January 1, 20211 |
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Net income for the three months ended March 31, 2021 |
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Balance, March 31, 2021 |
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(1) Stock balances retroactively restated for 1-for-6 reverse stock split.
See accompanying notes to financial statements
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NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Laser Photonics Corporation (the “Company”) was formed under the laws of Wyoming on November 8, 2019. The Company changed its domicile to Delaware on March 5, 2021. The Company is a vertically integrated manufacturing company for photonics based industrial products and solutions, primarily disruptive laser cleaning technologies. The vertically integrated operations allows the Company to reduce development and advanced laser equipment manufacturing time, offer better prices, control quality and protect proprietary knowhow and technology compared to other laser cleaning companies and companies with competing technologies.
The Company’s accounting year end is December 31.
Basis of Presentation
These financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles.
Impact of the Novel Coronavirus
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.
The COVID 19 outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown, which is expected to depress our asset values, including long-lived assets, intangible assets, etc.
Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on our results of future operations, financial position, and liquidity in fiscal year 2022.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include depreciation and the fair value of our stock, stock-based compensation, debt discount and the valuation allowance relating to the Company’s deferred tax assets.
Cash and Cash Equivalents
Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.
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Accounts Receivable
Trade accounts receivable are recorded net of allowance for expected uncollectible accounts. The Company extends credit to its customers in the normal course of business and performs on-going credit evaluations of its customers. All accounts, or portions thereof, that are deemed uncollectible are written off to bad debt expense, as incurred. In addition, most sales orders are not accepted without a substantial deposit. As of March 31, 2022, the balance of collectible accounts was $
Inventory
Inventories are stated at the lower of cost or net realizable value using the first-in first-out (FIFO) method. The Company has four principal categories of inventory:
Sales demonstration inventory - Sales demonstration inventory represents completed product used to support our sales force for demonstrations and held for sale. Sales demonstration inventory is held in our demo facilities or by our sales representatives for up to three years, at which time it would be refurbished and transferred to finished goods as used equipment, stated at the lower of cost or net realizable value. The Company expects these refurbished units to remain in finished goods inventory and sold within 12 months at prices that produce reduced gross margins.
Equipment parts inventory - This inventory represents components and raw materials that are currently in the process of being converted to a certifiable lot of saleable product through the manufacturing and/or equipment assembly process. Inventories include parts and components that may be specialized in nature and subject to rapid obsolescence. The Company periodically reviews the quantities and carrying values of inventories to assess whether the inventories are recoverable. Because of the Company's vertical integration, a significant or sudden decrease in sales activity could result in a significant change in the estimates of excess or obsolete inventory valuation. The costs associated with provisions for excess quantities, technological obsolescence, or component rejections are charged to cost of sales as incurred.
Work in process inventory - Work in process inventory consists of inventory that is partially manufactured or not fully assembled as of the date of these financial statements. This equipment, machines, parts, frames, lasers and assemblies are items not ready for use or resale. Costs are accumulated as work in process until sales ready items are compete when it is moved to finished goods inventory. Amounts in this account represent items at various stages of completion at the date of these financial statements.
Finished goods inventory - Finished goods inventory consists of purchased inventory that were fully manufactured, assembled or in salable condition. Finished goods inventory is comprised of items that are complete and ready for commercial application without further cost other that delivery and setup. Finished goods inventory includes demo and other equipment, lasers, software, machines, parts or assemblies.
At March 31, 2022 and December 31, 2021, respectively, our inventory consisted of the following:
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Inventory |
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Equipment Parts Inventory |
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Finished Goods Inventory |
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Sales Demo Inventory |
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Work in process Inventory |
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Total Inventory |
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Fixed Assets - Plant Machinery and Equipment
Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period.
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Machinery and Equipment
Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:
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Machinery and equipment |
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Capital Assets |
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Equipment and Furniture |
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Accumulated Depreciation |
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Machinery & Equipment |
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Office and Computer Equipment |
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Office Furniture |
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R&D Equipment |
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Vehicles |
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Property and Equipment |
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Intangible Assets
Intangible assets consist primarily of capitalized equipment design documentation, software costs for equipment manufactured for sale, research and development, as well as certain patent, trademark and license costs. Capitalized software and equipment design documentation development costs are recorded in accordance with Accounting Standard Codification ("ASC ") 985 "Software" with costs amortized using the straight-line method over a ten-year period. Patent, trademark and license costs are amortized using the straight-line method over their estimated useful lives of 12 years. On an ongoing basis, management reviews the valuation of intangible assets to determine if there has been impairment by comparing the related assets’ carrying value to the undiscounted estimated future cash flows and/or operating income from related operations.
Intangible Assets |
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Accumulated Amortization |
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Customer Relationships |
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Equipment Design Documentation |
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Operational Software & Website |
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Trademarks |
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Total Intangible Assets |
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Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment is measured by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from use of the assets and their ultimate disposition. In instances where impairment is determined to exist, the Company will write down the asset to its fair value based on the present value of estimated future cash flows.
Current Liabilities
Our current liabilities consist of accounts payable, accrued liabilities, sales tax payable, current portion of operating lease payable and deferred revenue. Sales tax liability is created when the Company sells equipment and services to another entity located in the State of Florida. Currently the sales tax rate in Orange County, our place of business, is 6.5%. As of March 31, 2022, our sales tax liability was recorded at $
Deferred Revenue
The Company requires deposits for most sales orders. These deposits are recorded as deferred revenue until such time as the revenue recognition criteria for that project or order is completed. As of March 31, 2022, our deferred revenue was recorded at $
Liquidity and Capital Resources
For the three months ended March 31, 2022, our liquidity needs were met through cash from our operations.
The following is a summary of our cash flows provided by (used in) operating, investing and financing activities:
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Net cash provided by Investing Activities |
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Net cash provided by Financing Activities |
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As of March 31, 2022, the Company had $
As a result, on March 31, 2022, the Company had $
Net Earnings/Loss per Share
Basic Earnings/Loss per share is calculated by dividing the Earnings/Loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted Earnings/Loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings (loss) of the Company. Diluted Earnings/Loss per share is computed by dividing the Earnings/Loss available to stockholders by the weighted average number of shares outstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result in anti-dilution.
On March 31, 2022, the Company recorded $
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Revenue Recognition
Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Refunds and returns, which are minimal, are recorded as a reduction of revenue. Payments received by customers prior to our satisfying the above criteria are recorded as unearned income in the combined balance sheets.
All revenues were reported net of any sales discounts or taxes.
Long Term Liabilities
In January 2020, the Company issued a promissory note to ICT in the principal amount of $
In October 2020, the Company issued a second promissory note to ICT in the principal amount of $
Fair Value of Financial Instruments
The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from m selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
| ☐ | Level 1 - quoted market prices in active markets for identical assets or liabilities. |
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| ☐ | Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
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| ☐ | Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The carrying amount of our financial instruments approximates their fair value as of March 31, 2022, due to the short-term nature of these instruments.
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Tax Loss Carryforwards
The Company recognizes deferred tax assets and liabilities for the tax effects of differences between the financial statement and tax basis of assets and liabilities. A valuation allowance is established to reduce the deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.
Off-Balance Sheet Arrangements
During the quarter ended March 31, 2022, the Company did not engage in any off-balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation S-K.
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Recent Accounting Pronouncements
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods therein. Early application with the first annual reporting period or interim period for which the entity’s financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). The Company adopted this pronouncement for the year ended December 31, 2014.
In June 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-12, “Compensation - Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”. The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is not expected to have a material impact on our results of operations, cash flows or financial condition. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
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In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.
NOTE 3 – COMMITMENTS AND CONTINGENCIES
The Company has committed to the Landlord to lease
NOTE 4 - CASH FLOW REPORT
The Statements of Cash Flows for the quarters ended March 31, 2022 and 2021 have been updated, as required by ASC 250-10-50-7 through - 10. The updates reflect the quantitative requirements of ASC 250-10-50-7, specifically presenting lease obligations on a net basis rather than gross basis for consistency with balance sheet assets and liabilities as reported. The reclassification required no changes to net cash flow for the periods presented, and there were no changes to the balance sheet or income statement. We believe these reclassifications were neither quantitatively or qualitatively material to the financial statements and accompanying notes.
NOTE 5 - SUBSEQUENT EVENTS
On April 29, 2022, we entered into a Forbearance Agreement with Axiom Bank regarding the one unpaid PPP loan totaling $
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ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
Disclosure controls and procedures include, without limitations, controls and procedures designed to ensure that information required to be disclosed by Laser Photonics in the reports that it files or submits under the Exchange Act is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure. Our management is responsible for monitoring the process pursuant to which information is gathered and analyze such information to determine the extent to which such information requires disclosure in the reports filed with the SEC.
During the quarter ended June 30, 2022, as part of the review of the Registration Statement, we discovered errors in our historical financial statements, including the omission of earnings per share information from our unaudited financial statements for the quarter ended March 31, 2022. Accordingly, we have concluded that, as of the end of the period covered by this Amendment No. 1, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective.
Also, as part of the review of the Registration Statement, we determined that a restatement of our December 31, 2021 audited financial statements was required due to the incorrect presentation of the Statement of Cash Flows, inconsistent with the requirements of ASC 230-10-45 and ASC 842-20-45-5, and identified material weaknesses in our internal control over financial reporting that resulted in this incorrect presentation.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate our material weaknesses. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
Any failure to maintain effective internal controls could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective internal controls could also cause investors to lose confidence in our reported financial information which could have a negative effect on the trading price of our stock.
We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.
Making Our Internal Controls Effective
Management has taken, continues to work with, or plans to implement the following actions to remediate identified material weaknesses and improve its internal control over financial reporting, and we estimate the cost of each action as follows:
| · | In January 2021, we launched a comprehensive software system tailored to manufacturing environments, to create and track quotes, sales orders, purchase orders, and inventory. We believe this system is scalable with our business and provides detailed reports to management. We intend to add an additional staff member in this area to strengthen our internal controls coincident with an increase to the number and size of our business transactions. |
| · | In February 2022, we engaged MKA CPAs & Advisors, a regional advisory firm that provides outsourced accounting services, to assist us with month-end closing activities and the preparation of end-of-period financial statements in accordance with Statements on Standards for Accounting Review Services promulgated by the AICPA. We estimate the annual cost of their services to be $20,000. |
| · | In April 2022, we engaged CFO Systems, LLC, an outsourced CFO consultancy, to assist with the preparation of, and revisions to, the financial information presented in the Registration Statement, as well as to implement any improvements and enhancements to such financial information for inclusion in our periodic reports. This is a non-recurring arrangement, and we expect the total cost of their services to be less than $50,000 through the completion of this offering. |
| · | In July 2022, we hired, for the first time, a Vice President of Finance, Tim Schick, CFA, who has extensive financial planning and reporting experience in manufacturing and distribution, including larger public company settings. Mr. Schick serves as both our principal accounting officer and principal financial officer. He establishes immediate financial reporting leadership and has assumed responsibility for the development of a comprehensive system of internal controls over financial reporting and disclosure controls and procedures, including the hiring of additional specialized accounting expertise as the business grows and evolves. We expect the 2023 cash compensation expense for Mr. Schick to be $200,000. |
| · | We plan to use a portion of the proceeds from our pending public offering to build and develop an internal accounting team, beginning with a dedicated Controller and a specialist to work both accounts payable and accounts receivable. In addition, we will provide training specific to public company financial reporting, to improve our quarterly and year-end reporting processes. Including an additional staff member in the area of purchasing and inventory control, as described in the first bullet point above, we expect to spend between $175,000 to $200,000 on new personnel and training next year. |
Management believes these changes in our internal controls over financial reporting and our disclosure controls and procedures materially affected, and are reasonably likely to materially affect, our internal controls over financial reporting and our disclosure controls and procedures in a positive way going forward. We will continue to evaluate our internal controls, as well as our disclosure controls and procedures, and make adjustments and enhancements as necessary and appropriate to remediate any deficiencies in our internal control over financial reporting.
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ITEM 6. EXHIBITS
| Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer | |
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| Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial Officer | |
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* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q/A shall be deemed “furnished” and not “filed.”
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Laser Photonics Corporation |
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Date: August 25, 2022 | By: | /s/ Wayne Tupuola |
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| Name: Wayne Tupuola |
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| Title: President and CEO |
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| (Principal Executive Officer) |
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Date: August 25, 2022 | By: | /s/ Tim Schick, CFA |
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| Name: Tim Schick, CFA |
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| Title: Vice President, Finance |
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| (Principal Financial and Accounting Officer) |
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EXHIBIT 31.1
CERTIFICATIONS
I, Wayne Tupuola, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q/A of Laser Photonics Corporation (the “registrant”). |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
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| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 25, 2022 | By: | /s/ Wayne Tupuola | |
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| President and CEO (Principal Executive Officer) |
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EXHIBIT 31.2
I, Tim Schick, Vice President, Finance, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q/A of Laser Photonics Corporation; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 25, 2022 | By: | /s/ Tim Schick, CFA |
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| (Principal Financial and Accounting Officer) |
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EXHIBIT 32.1
PURSUANT TO 18 U.S.C. 1350
Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Laser Photonics Corporation, a Delaware corporation (the "Company"), does hereby certify, to such officer's knowledge, that:
The Quarterly Report on Form 10-Q/A for the three months ended March 31, 2022 (the "Form 10-Q/A") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained in the Form 10-Q/A fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: August 25, 2022 | By: | /s/ Wayne Tupuola | |
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| President and CEO (Principal Executive Officer) |
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The foregoing certification is being furnished solely pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as a separate disclosure document.
EXHIBIT 32.2
PURSUANT TO 18 U.S.C. 1350
Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Laser Photonics Corporation, a Delaware corporation (the "Company"), does hereby certify, to such officer's knowledge, that:
The Quarterly Report on Form 10-Q/A for the three months ended March 31, 2022 (the "Form 10-Q/A") of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained in the Form 10-Q/A fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: August 25, 2022 | By: | /s/ Tim Schick, CFA | |
| Vice President, Finance (Principal Financial and Accounting Officer) |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as a separate disclosure document.