Laser Photonics Corp
For the period ended Dec 31, 2025. Filed Apr 20, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Apr 20, 2026
LASE$0.53-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-06-24.
0001641172-25-016194
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2025-12-31; filed 2026-04-20.
0001493152-26-018110
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 78 current paragraphs.
13 unchanged; 6 reworded; 59 added; 83 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (59)
Current report
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes to those financial statements appearing elsewhere in this Report.
Current report
Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. Considering these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
Current report
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Current report
The “Company,” “we,” “us,” or “our,” are references to the business of Laser Photonics Corporation, a Wyoming corporation.
Current report
In 2024, we acquired CMS, a laser company located in Orlando, Florida, that designs and builds turnkey laser material processing systems for marking, cutting, drilling and welding. CMS allows us to expand into the pharmaceutical market for controlled-release medications that is expanding rapidly, driven by the growing need for more effective and patient-friendly drug delivery systems. Controlled-release tablets, which gradually release medication over time, require precision manufacturing techniques to ensure the proper dosage and timing of active ingredient release. Laser technology plays a critical role in creating micro-drilled apertures in these tablets, ensuring accurate and consistent drug release. We believe that there is a significant opportunity to unlock CMS’s growth potential by integrating it into our existing sales and marketing infrastructure, enhancing customer engagement and expanding our market reach to maximize wallet share from current customers and bring new clients on board.
Current report
In 2025, we expanded our product portfolio through the acquisition of Beamer Laser Marking Systems, formerly the laser capital equipment division of ARCH Cutting Tools. Beamer’s IR fiber and CO₂ laser marking systems significantly expand our product offering into high-value industrial marking applications such as serialization, UID marking, medical devices, aerospace traceability, automotive components, and firearms compliance. The Beamer acquisition also provides an established customer base and IP portfolio and is expected to enhance our revenue mix in 2026.
Current report
We intend to continue to stay ahead of the technology curve by researching and developing cutting edge products and technologies for both large and small businesses. We view the small companies as an attractive market opportunity since they were previously unable to take advantage of laser processing equipment due to high prices, significant operating costs and the technical complexities of laser equipment. As a result, we are developing an array of laser cleaning equipment that we have named the CleanTech™ product line, which we believe represents a new generation of high-power laser cleaning systems applicable to numerous material processing operations.
Current report
Beamer integration and expected synergies. With the Beamer acquisition, the Company expects near-term integration costs related to engineering alignment, supply chain consolidation, and facility relocation. Management anticipates long-term synergies through shared manufacturing resources, cross-selling opportunities, and expanded participation in regulated industries requiring permanent laser marking solutions.
Current report
Supply Chain. We are experiencing increased lead times for certain parts and components purchased from third party suppliers; particularly electronic components. We, our customers and our suppliers, continue to face constraints related to supply chain and logistics, including availability of capacity, materials, air cargo space, sea containers and higher freight rates and import duties. Supply chain and logistics constraints are expected to continue for the foreseeable future and could impact on our ability to supply products and our customers’ demand for our product or readiness to accept deliveries. Notwithstanding these effects, we believe we can meet the near-term demand for our products, but the situation is fluid and subject to change.
Current report
Net sales. Our net sales have historically fluctuated from year to year. The increase or decrease in sales from a prior year can be affected by the timing of orders received from customers, the shipment, installation and acceptance of products at our customers’ facilities. Net sales can be affected by the time taken to qualify our products for use in new applications in the end markets that we serve. Our sales cycle varies substantially, ranging from a period of a few weeks to as long as one year or more, but is typically several months. The adoption of our products by a new customer or qualification in a new application can lead to an increase in net sales for a period which may then slow until we penetrate new markets or obtain new customers.
Current report
Our business depends substantially upon capital expenditures by end users, particularly by manufacturers using our products for materials processing, which includes general manufacturing, automotive including electric vehicles (EV), other transportation, aerospace, heavy industry, consumer, semiconductor, pharmaceutical, and electronics. Although applications within materials processing are broad, the capital equipment market in general is cyclical and historically has experienced sudden and severe downturns. For the foreseeable future, our operations will continue to depend upon capital expenditures by end users of materials processing equipment and will be subject to the broader fluctuations of capital equipment spending.
Current report
● As our products mature, we can experience additional competition which tends to decrease average selling prices and affects gross margin.
Current report
● Our gross margin can be significantly affected by product mix. Within each of our product categories, the gross margin is generally higher for devices with greater average power. These higher power products often have better performance, more difficult specifications to attain and fewer competing products in the marketplace.
Current report
*Selling and Marketing expenses.*In the first quarter of 2025, we invested in Selling and Marketing costs to support continued growth in the Company. As the secular shift to laser blasting technology matures, our sales growth becomes more susceptible to the cyclical trends typical of capital equipment manufacturers. Accordingly, our future management of and investments in selling and marketing expenses will also be influenced by these trends, although we may still invest in selling and marketing functions to support sales sustainability even in economic down cycles.
Current report
*Research and development expenses.*We plan to continue to invest in research and development to improve our existing laser blasting technology and equipment and develop new products, systems and applications. We believe that these investments will sustain our position as a leader in the laser industry and will support the development of new products that can address new markets and growth opportunities. The amount of research and development expenses we incur may vary from period to period.
Current report
LASER PHOTONICS CORPORATION
Current report
Net sales
Current report
Net sales for the year ended December 31, 2025 and 2024 was $8.3 million and $3.4 million, respectively. The increase in revenue was due to the recording of a full year of revenue for CMS in 2025, which we acquired on October 30, 2024.
Current report
Cost of sales
Current report
Cost of sales for the year ended December 31, 2025 and 2024, was $7.1 million and $3.0 million, respectively. The increase in cost of sales was due to the increase in our net sales.
Current report
Gross profit for the year ended December 31, 2025 and 2024 was $1.2 million and $0.4 million, respectively. The increase in gross profit was due to our increase in net sales. Our gross margin for the year ended December 31, 2025 and 2024 was 14% and 12%, respectively.
Current report
Operating expenses consist of sales and marketing expense, general and administrative expense, research and development expense, and impairment charges. Operating expenses for the year ended December 31, 2025 and 2024 were $14.5 million and $6.9 million accordingly. The increase of $7.6 million was due to the recording of $1.6 million of non-cash stock-based compensation expense, $0.8 million of non-cash stock-based payment for services, and $0.2 million on the impairment of property and equipment, all of which did not occur in the prior year period. Additionally, we recorded an increase of $3.0 million for the impairment of intangible assets over the prior year period. The remaining increase in operating expenses over the prior year period was from a full year of CMS operating expenses in 2025, which we acquired on October 30, 2024, and normal changes in our operating expenses to support our growth.
Current report
Operating loss
Current report
Operating loss for the year ended December 31, 2025 and 2024 was $13.3 million and $6.5 million, respectively. The increase in operating loss was from increased operating expenses, which was offset by increased gross profit, as discussed above.
Current report
Other income (expenses)
Current report
Other expenses was $4.2 million for the year ended December 31, 2025, compared to other income of $3.9 million for the prior year period. In the current period, we realized financing costs of $0.7 million related to our notes payable, $3.7 million of interest, offset by the change in fair value of derivative liability of $0.3 million, all of which did not occur in the prior year period. In the prior year period, we recorded a $3.9 million gain on bargain purchase of our acquisition of CMS, and other income of $0.1 million, both of which did not occur in the current year period.
Current report
Net loss
Current report
Net loss for the year ended December 31, 2025 and 2024 was $17.4 million and $2.5 million, respectively. The increase in net loss was from the change in other income (expenses), increased operating expenses, offset by increased gross profit, as discussed above.
Current report
The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning our ability to continue as a going concern.
Current report
As reflected in the accompanying financial statements, for the year ended December 31, 2025, the Company recorded a net loss of $17.5 million and used cash in operations of $6.4 million. Cash used in operations was primarily for working capital. As of December 31, 2025, we had a cash balance of $0.7 million.
Current report
On February 9, 2026, we conducted a public offering of an aggregate of (i) 7,142,858 shares (the “Shares”) of the Company’s common shares, par value $0.001 per share (the “Common Stock”), at an offering price per Share and associated Warrants of $0.70, (ii) five year Series A-1 Common Stock purchase warrants (the “Series A-1 Warrants”) to purchase up to 7,142,858 shares of Common Stock at an exercise price of $0.70 per share, and (iii) twenty-four month Series A-2 Common Stock purchase warrants (the “Series A-2 Warrants”, and, collectively with the Series A-1 Warrants, the “Warrants”) to purchase up to 7,142,858 shares of Common Stock at an exercise price of $0.70 per share, for aggregate gross proceeds of $5,000,001. In connection with the closing, the Company will issue to H.C. Wainwright & Co., LLC (“Wainwright”) or its designees warrants to purchase up to an aggregate of 500,000 shares of Common Stock at an exercise price of $0.875 per share, which are exercisable immediately upon issuance and have a termination date of February 6, 2031. Additionally, in connection with a note financing conducted by the Company in September 2025, the Company will pay Wainwright a cash fee equal to $147,777.78 and issue to Wainwright or its designees unregistered warrants to purchase up to an aggregate of 57,058 shares of Common Stock at an exercise price of $3.2375 per share, which are exercisable immediately upon issuance and have a termination date of February 6, 2031. The net proceeds received by the Company after commissions, fees, legal expenses, and payment of the cash fee to Wainwright, was $4.1 million.
Current report
In February 2026, we made notes payable principal and interest payments of $4.2 million.
Current report
During February and March 2026, we issued 2,449,474 common shares and received proceeds of $0.8 million on the exercise of 2,449,474 warrants.
Current report
Historically, we have financed our operations through existing cash balances, public and private issuance of common stock, term loans, and credit lines from financial institutions.
Current report
As of the issuance date of the financial statements included in this Annual Report on Form 10-K, management expects that the Company’s existing cash of $1.4 million will last until approximately August 2026.
Current report
To address funding considerations, management periodically evaluates funding alternatives and may raise additional funds through equity issuances, debt securities, strategic partner arrangements, strategic transactions, or credit from financial institutions. As we seek additional financing, there is no assurance that such financing will be available to us on favorable terms, or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance, and investor sentiment regarding us and our industry.
Current report
We are also continuing to take actions to improve the Company’s operating performance and cash generated from operations, including product optimization, sales growth strategies, operational streamlining, negotiating equitable vendor contracts, and managing product pricing. However, we may be unable to execute these actions in a timely manner, or at all.
Current report
If the Company is unable to raise additional capital whenever necessary or otherwise improve its operating performance or generation of cash from operations, it may be forced to decelerate or curtail certain of its operations until such time as additional capital becomes available.
Current report
Our consolidated statements of cash flows as discussed herein are presented below.
Current report
Operating Activities
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Previous report
General
Previous report
The following 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 description of our business and properties included elsewhere herein.
Previous report
We are a vertically integrated manufacturing company for photonics-based industrial products and solutions and, since recently acquiring the assets of Control Micro Systems, Inc., have now expanded the market for our laser products into a large, growing pharmaceutical manufacturing vertical, in what we believe is a recession-resistant sector with significant barriers to entry.
Previous report
We are 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 maintenance and repair, as well as aftermarket operations. Our laser blasting solutions are applicable in most industries dealing with materials processing, including automotive, aerospace, healthcare, consumer products, shipbuilding, heavy industry, machine manufacturing, nuclear maintenance and de-commissioning and surface coating.
Previous report
Description of Our Gross Sales, Costs and Expenses
Previous report
Gross sales. We derive net sales primarily from the growth was driven by increasing demand for our products, partially offset by declines in average sales prices, the introduction of new products, including laser blasting systems and the development of new applications for our products.
Previous report
We develop our products to standard specifications and use a common set of components within our product architecture. Our major products are based upon a common technology platform. We continually enhance these and other products by improving their components and developing new product designs. Sales of our products are generally recognized upon shipment, provided that no obligations remain, and collection of the receivable is reasonably assured.
Previous report
Our sales typically are made on a purchase order basis rather than through long-term purchase commitments. We entered into laser equipment sales agreements with customers for specific equipment based on purchase orders and our standard terms and conditions of sale. All revenues are reported net of any sales discounts or taxes. Under our customer contracts or/and purchase orders, we transfer title and risk of loss to the customer and recognize revenue upon shipment. Our customers do not have extended payment terms or rights of return under these contracts.
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Our sales channels
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Sales Channels Overview
Previous report
We generate revenue through a multi-channel sales strategy that includes a Direct Sales team—comprised of Strategic Account Managers and a regionally distributed Outside Sales force—along with a growing network of distributors and resellers. This integrated approach enables us to maximize market reach, tailor engagement by customer segment, and accelerate the sales cycle across both commercial and government markets.
Previous report
Direct Sales
Previous report
Our Direct Sales team consists of Strategic Account Managers based at our corporate headquarters and a rapidly expanding Outside Sales team positioned in key heavy manufacturing regions across the United States.
Previous report
This dual structure allows us to deepen relationships with major strategic accounts, driving broader adoption of our laser systems within large enterprises, while our Outside Sales representatives focus on engaging small and mid-sized businesses. These field reps play a critical role in educating customers on the advantages of laser solutions over outdated, hazardous legacy methods—such as sandblasting or chemical cleaning—highlighting the efficiency, safety, and cost-effectiveness of our technology.
Previous report
Distributors and Resellers
Previous report
Our distribution and reseller network extends our reach to a wider audience by placing our product line within trusted sales channels that many customers already use and have contracts with. This not only increases exposure and accessibility but also streamlines the purchasing process, particularly for customers in the government and enterprise sectors where existing vendor relationships and procurement frameworks are critical.
Previous report
By leveraging both direct and indirect sales strategies, we’re able to accelerate growth, build lasting customer relationships, and deliver tailored solutions that meet the evolving needs of diverse market segments.
Previous report
All orders are received on a revolving bases in accordance with the Company’s standard Terms and Conditions of Sale. Orders are not cancelable. Orders typically consist of multiple units. Payment terms are typically net 120 days from transferring the ownership of equipment to the distributor. Revenue is recognized on a “piece by piece” equipment basis after the appropriate transfer of the equipment’s ownership to the distributor. Payments are made by the distributor to the Company when the distributor collects funds from its regional customers or when they have funds available to reduce the outstanding balance. The Company allocates payments in accordance with its accounting practices. Detailed aging is accounted for in the Company’s MRP system – DBA Manufacturing keeping records of all equipment units ever manufactured with coordinating serial numbers. Higher level account-related data with payment history is recorded in the Company’s QuickBooks accounting software.
Previous report
Cost of Sales. Our cost of sales includes the cost of raw materials and components for manufacturing laser systems and consists of different electronic and optical components such as optical generators, scan heads, connector assemblies and wires, edge seal and adhesives, junction boxes, and other items, such as raw aluminum and aluminum extrusions, steel for tilt brackets and frames, subassemblies, miscellaneous materials, 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 and production 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).
Previous report
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 fiber laser parts and components, and availability of optical generators, an increase in unit output per production line, and more efficient absorption of fixed costs driven by economies of scale. This expected decrease in cost for laser technology would be partially offset during periods in which we underutilize manufacturing capacity.
Previous report
Sales and marketing. Our sales and marketing expenses consist primarily of costs related to compensation, trade shows, professional and technical conferences, travel, facilities, depreciation of equipment used for demonstration purposes and other marketing costs.
Previous report
Selling, general, and administrative Expenses. Our general and administrative expense consists primarily of compensation and associated costs for executive management, sales and marketing personnel, outside legal and professional fees, insurance premiums and fees, allocated facilities costs, and other corporate expenses such as charges and benefits related to the change in allowance for doubtful debt.
Previous report
Research and development expenses. Our research and development expenses consist primarily of compensation, development expenses related to the design of our products and certain components, the cost of materials and components to build prototype devices for testing and facilities costs. 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 development expense.
Previous report
We plan 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 the costs of our laser cleaning modules.
Previous report
Interest Expense, Net. Interest expense, net of capitalized amounts, is incurred on various debt financings. We capitalize interest expense into our property, plant and equipment, project assets, and deferred project costs when such costs qualify for interest capitalization.
Previous report
Net sales. Net sales generated in 2024 increased towards the second half of the year driven by the sales of recently purchased of CMS and the 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.
Previous report
Gross margin. Our total gross margin in any period can be significantly affected by total net sales in any period, by competitive factors such as product mix, and by other factors, some of which are not under our control. For instance, the gross margin for certain specialty products may be higher because there are fewer or sometimes no equivalent competing products. Further, we expect that some new technologies, products and systems will have returns above our cost of capital but may have gross margins below our corporate average.
Previous report
Selling, general, and administrative expenses. Selling, general and administrative expenses consist primarily of salaries and other personnel-related costs, professional fees, insurance costs, travel expenses and other selling expenses. We expect selling expenses to increase in the near term to support the planned growth of our business as we expand our sales and marketing efforts.
Previous report
Research and development expenses. Research and development expenses consist primarily of salaries and personnel-related costs, the cost of products, materials, and outside services used in our process and product research and development activities. We acquire equipment for general use 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 cleaning laser modules.
Previous report
Goodwill and long-lived assets impairments. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment is measured by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flow 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.
Previous report
Major customers. While we would expect to depend on current customers for a large percentage of our annual net sales, the composition of this group can change from year to year. Net sales derived from our current customers as a percentage of our annual net sales 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 our relationships with existing customers.
Previous report
Relationship with distributors. All orders received on revolving bases in accordance with LPC standard Terms and Conditions of Sale. Orders are not cancelable. Orders typically consist of multiple units. Payment terms are typically Net 30 days from transferring the ownership of equipment to Distributor. Revenue recognized on a “piece by piece” equipment bases after appropriate transfer equipment ownership to Distributor. Payments are made by Distributor to The Company when Distributor collects funds from their regional customers, or then they have funds availability to reduce the outstanding balance. 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 coordinating serial numbers. Higher level account-related data with payment history is recorded in Company’s Quick Books Accounting software.
Previous report
Distributor Discounts. Distributors and representatives earn various rebates and discounts based on purchase volume commitments and the achievement of certain performance KPIs. The company estimates the amount of discounts based on historical volumes, geographical market, end customer buying potential, and the ordered equipment amount. The company also utilizes various programs to offer volume cash discounts, first customer discounts, or reimburse distributors for certain expenses, mainly associated with warranty, transportation costs, and inventory interest costs incurred by the distributor for limited periods of time, generally up to eighteen months.
Previous report
Repurchase policy. LPC Operational Management regular conducts evaluation of unsold equipment in Distributors possession and determines what particular units cannot be sold anymore because of the moral aging. However, after the manufacturing upgrade it can be added back to the finished goods inventory and sold as a current model. Repurchase records can be viewed in the Repurchase History Records folder.
Previous report
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses
Previous report
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Previous report
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. These estimates are based on management’s historical industry experience and not the company’s historical experience.
Previous report
The company has excluded sales and other taxes assessed by a governmental authority in connection with revenue-producing activities from the determination of the transaction price for all contracts. The company has not adjusted net sales for the effects of significant repurchase financing activity (e.g., customer default with a financial institution, repurchasing, or warranty replacement) because the period between the transfer of the equipment title and the customer’s payment may exceed 24 months of the equipment warranty period and occur within the maturity of the equipment financial agreement between the customer or distributor and the financial institution.
Previous report
*Inventory.*Inventory is stated at the lower level of cost (first-in, first-out method) or market value. Inventory includes parts and components that may be specialized in nature and subject to rapid obsolescence. We maintain a reserve for excess or obsolete inventory items. Inventories are written off and charged to cost of goods sold when identified as excess or obsolete. If future sales differ from these forecasts, the valuation of excess and obsolete inventory may change, and additional inventory provisions may be required. Because of our vertical integration, a significant or sudden decrease in sales could result in a significant change in the estimates of excess or obsolete inventory valuation. As ofn December 31, 2024, we have recorded $776,638 for obsolescence.
Previous report
*Warranty.*We maintain an accrual for warranty claims for units sold that are subject to warranty.
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Previous wording
Our vertically integrated operations allow us to reduce development and advanced laser equipment manufacturing time, offer better prices, control quality and protect our proprietary knowhow and technology compared to other laser cleaning companies and companies with competing technologies.
Current wording
We are a vertically integrated manufacturing Company for photonics based industrial products and solutions, primarily disruptive laser cleaning technologies and applications for the pharmaceutical industry. Our vertically integrated operations allow us to reduce development and advanced laser equipment manufacturing time, offer better prices, control quality and protect our proprietary knowhow and technology compared to other laser cleaning companies and companies with competing technologies.
Previous wording
Gross margin. 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 under our control. Gross margin is affected by numerous factors, including our module average selling prices, foreign exchange rates, the existence and effectiveness of subsidies and other economic incentives, competitive pressures, market demand, market mix, our manufacturing costs, product development costs, the effective utilization of our production facilities, and the ramp of production on new products.
Current wording
Gross margin. Our total gross margin in any period can be significantly affected by several factors, including net sales, production volumes, competitive factors, product mix, and by other factors such as changes in foreign exchange rates relative to the U.S. Dollar. Many of these factors are not under our control. The following are examples of factors affecting gross margin:
Previous wording
Revenue is then recognized for the amount of the transaction price allocated to each respective performance obligation when (or as) the performance obligation is satisfied. For our products, revenue is generally recognized on a free on board origin (FOB Origin) basis. This means that revenue is recognized when our products have been manufactured, crated, and placed in the collection warehouse for customer pick-up in accordance with the Customer Quote and Company Terms and Conditions of Sale. At this stage, the title on the manufactured equipment is transferred to the customer, and the customer is responsible for transportation expenses, insurance, and any transport-related damage to the equipment in transit. 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.
Current wording
Revenue is then recognized for the transaction price allocated to each respective performance obligation when (or as) the performance obligation is satisfied. For our products, revenue is generally recognized upon shipment or pickup by the customer. At this stage, the title on the manufactured equipment is transferred to the customer, and the customer is responsible for transportation expenses, insurance, and any transport-related damage to the equipment in transit. We do not have any obligation to deliver beyond the collection warehouse, and it is the customers’ contractual responsibility to ensure their goods reach their destination.
Previous wording
For projects that are considered custom in nature like most of what we see at Control Micro systems, and we’ve determined the obligation will be six months to a year or more, the company will recognize revenue as a percentage of completion basis. The percentage of completion method recognizes income as work on a project progresses. The recognition of revenues and profits is generally related to costs incurred in providing the services required under the project.Refunds and returns, which are minimal, are recorded as a reduction of revenue.
Current wording
In CMS for projects that are considered custom in nature and determined the obligation will be six months to a year or more, the company will recognize revenue as a percentage of completion basis. The percentage of completion method recognizes income as work on a project progresses. The recognition of revenues and profits is generally related to costs incurred in providing the services required under the project.
Previous wording
Payments received from customers before satisfying the above criteria are recorded as unearned income on the combined balance sheets.
Current wording
Refunds and returns, which are minimal, are recorded as a reduction of revenue. Payments received from customers before satisfying the above criteria are recorded as unearned income on the combined balance sheets.
Previous wording
Distributors generally have no right to return unsold equipment. However, in limited circumstances, if the company determines that distributor stock is morally aging beyond the company’s new model releases, it may accept returns and provide the distributor with credit against their trading account at the company’s discretion under its warranty policy. This situation may also arise if the business climate suddenly changes in the distributor’s country of operation, and the company determines that older and aged equipment can no longer be sold in a specific geographical area, requiring equipment stock to be upgraded to modern models and capabilities. The company may also be obligated, in the event of default by a distributor, to accept returns of unsold laser equipment under its repurchase commitment to equipment financing providers or directly to the distributor. The repurchase commitment is on an individual piece of equipment basis with a term from the date it is financed by the lending institution through the payment date by the distributor, generally not exceeding 36 months.
Current wording
Distributors generally have no right to return unsold equipment. However, in limited circumstances, if the Company determines that distributor stock is aging beyond the Company’s new model releases, it may accept returns and provide the distributor with credit against their trading account at the Company’s discretion under its warranty policy. This revenue is recognized on a consignment basis and transfer of control is when an item is sold to end customer at which time the Company recognizes revenue.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Revenue Recognition- Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Refunds and returns, which are minimal, are recorded as a reduction of revenue. Payments received by customers prior to our satisfying the above criteria are recorded as unearned income in the combined balance sheets. All revenues were reported net of any sales discounts or taxes.