Laser Photonics Corp

NOTE 1 –ORGANIZATION, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Laser Photonics Corporation (the “Company”) was formed under the laws of Wyoming on November 8, 2019, and changed its domicile to Delaware on March 5, 2020. The Company, located in central Florida, is a vertically integrated manufacturing company for photonics-based industrial products and solutions, primarily disruptive laser cleaning technologies.

Going Concern

The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40,Going Concern, the Company’s management has evaluated whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date the accompanying financial statements were issued. The Company has a history of reporting net losses and negative operating cash flows and had a negative net working capital position of $7,344,637 as of December 31, 2025. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s ability to continue as a going concern depends on its ability to raise additional debt or equity capital to fund its business activities and ultimately achieve sustainable operating revenues and profitability. The Company has financed its working capital requirements through borrowings from various sources and the sale of its equity securities.

As market conditions present uncertainty regarding the Company’s ability to secure additional funds, there can be no assurance that the Company will be able to secure additional financing on acceptable terms, as and when necessary, to continue operations. If the Company is unable to obtain the cash resources necessary to satisfy the Company’s ongoing cash requirements, the Company could be required to scale back its business activities or to discontinue its operations entirely.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the financial statements of the Company’s wholly owned operating subsidiary, Control Micro Systems, Inc. (“CMS”). Intercompany balances and transactions have been eliminated in consolidation.

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. Estimates and assumptions include business combinations, valuation of intangibles, valuation of derivative liabilities, revenue recognition, inventory valuation, depreciable lives assessment, valuation of stock-based compensation, and the valuation allowance relating to the Company’s deferred tax assets. Actual results could differ from these estimates.

Accounts Receivable

Trade accounts receivable are recorded net of allowance for expected credit losses. The Company extends credit to its customers in the normal course of business and performs on-going credit evaluations of its customers. The allowance is based upon an estimate of expected credit losses over the life of outstanding receivables and involves an assessment of customer creditworthiness, historical payment experience, an assumption of future expected credit losses, and the age of outstanding receivables. As of December 31, 2025 and 2024, the Company’s allowance for expected credit losses was $0 and $285,486, respectively.

Inventories

Inventories consist of component parts, work in process, and finished goods that are available for sale. Inventories are valued at net realizable value, with cost determined on a first-in, first-out basis. The Company includes certain general and administrative (G&A) costs in the cost of inventory, as these costs are considered to be related to production activities. The amount of G&A costs remaining in inventory at December 31, 2025 and 2024 was$0 and $103,118, respectively. Adjustments, if required, reduce inventory to its net realizable value, reflecting estimated excess, obsolescence, or impairment balances. Factors influencing these adjustments include changes in customer demand, rapid technological changes, and merchant bankruptcy. As of December 31, 2025, and 2024, the Company recorded a provision for inventories of $503,835 and $776,638, respectively.

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation.

Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The Company provides for depreciation, as follows:

Expenditures for additions and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repair costs are charged to expense as incurred.

Business Combinations

The Company allocates the fair value of the purchase consideration to the tangible assets acquired, the liabilities assumed, and the separately identifiable intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, particularly regarding intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology, trademarks, and trade names, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and, as a result, actual results may differ from estimates. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations.

Intangible Assets

The Company has certain intangible assets that were initially recorded at their fair value at the time of acquisition. The finite-lived intangible assets consist of customer relationships, trade name, and developed technology. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful life of three years.

The Company reviews all finite-lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in our consolidated statements of operations. During the year ended December 31, 2025 and 2024, the Company recognized an impairment of $3,902,378 and $932,669, respectively, related to its intangible assets.

Long-Lived Assets

The Company evaluates long-lived assets, other than goodwill and indefinite-lived intangible assets, for impairment whenever events or changes in circumstances (“triggering events”) indicate that their net book value may not be recoverable. The measurement of possible impairment is based upon the ability to recover the carrying value of the asset through the expected future undiscounted cash flows from the use of the asset and its eventual disposition. An impairment loss, equal to the difference between the asset’s fair value and its carrying value, is recognized when the estimated future undiscounted cash flows are less than its carrying amount. No impairment indicators were identified as of December 31, 2024. During the year ended December 31, 2025, the Company recognized an impairment of $236,717 related to the Company’s property, plant, and equipment.

Leases

The Company leases certain corporate office space under lease agreements. The Company determines whether a contract contains a lease at contract inception. A contract is a lease if it conveys the right to control the use of the identified asset for a period in exchange for consideration. Control is determined based on the right to obtain all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. Operating lease right-of-use assets (“ROU”) represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments. Lease liabilities are recognized at the present value of the future minimum lease payments over the lease term at the commencement date. Operating lease expense is recognized on a straight-line basis over the lease term and is included in the general and administrative line in the Company’s consolidated statements of operations.

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.

The Company also earns revenue through affiliate arrangements. These contracts are evaluated under ASC 606 using the same five-step model. Affiliate revenue is recognized when the Company satisfies its performance obligations under the affiliate agreement, which typically occurs when the affiliate completes a qualifying transaction or when the Company provides agreed-upon services. The transaction price is determined based on the contractual terms with the affiliate, and revenue is recorded in the amount the Company expects to receive.

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.

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 recognizes 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.

Revenue from contracts with customers recognized for the year ended December 31, 2025 and 2024 consists of the following:

Revenue from domestic and international customers for the year ended December 31, 2025 and 2024 consists of the following:

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.

Payments received as deposits for specific purchase orders or future laser equipment sales to customers are recognized as customer deposits and included in liabilities on the balance sheet. Customer deposits are recognized as revenue when control over the ordered equipment is transferred to the customer.

All revenues are reported net of any sales discounts or taxes.

Other Revenue Recognition Matters related to Distributors

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 occurs when an item is sold to an end customer, at which time the Company recognizes revenue.

Contract Assets and Liabilities

Given the nature of the revenue recognition process, the Company generates contract liabilities to the extent that a customer pays on project progress before the company fulfills its performance obligations under a contract or contract assets to the extent that the Company has earned by satisfying performance obligations but has not yet billed the customer. Contract assets represent a right to receive payment in the future once certain conditions are met per the terms of the contract. Contract assets were $258,037 and $759,658 as of December 31, 2025 and 2024, respectively, and contract liabilities were $1,205,007 and $1,042,090 as of December 31, 2025 and 2024, respectively. Revenue recognized in 2025 related to the contract liability balance as of December 31, 2024 was $835,929.

Shipping and Handling

The Company classifies all amounts billed to customers for shipping and handling as a component of net sales. Shipping and handling costs are classified as a component of selling, general and administrative expenses. The Company has elected to account for shipping and handling activities that occur after a customer obtains control of a product as a fulfilment activity rather than a separate performance obligation. These costs are accrued at the time the related revenue is recognized.

Product Warranty and Support

The Company generally offers its equipment for sale with a two-year limited warranty for defects in materials and workmanship under normal use and service conditions following delivery of the equipment to our customers.

The Company also warrants the owners of our custom laser systems that are designed and manufactured in accordance with agreed-upon specifications. In resolving claims under both the defects and performance warranties, the Company may repair or replace the covered laser cleaning equipment. Our warranties are automatically transferred from the original purchaser of our laser cleaning equipment and optical components to subsequent purchasers upon delivery of our finished laser systems.

In general, the Company’s products carry a warranty against defects, depending on the product type and the terms of customer negotiations. The amount of warranty expenses incurred during the years ended December 31, 2025 and 2024 was de minimis.

Income Taxes

The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Advertising

Advertising expense are expensed in the period in which they are incurred and included as a component of sales and marketing expenses. During the year ended December 31, 2025 and 2024, advertising costs were $204,761 and $206,888, respectively.

Share-Based Compensation

The Company periodically issues share-based awards to employees, non-employees, and consultants for services rendered. Stock options vest and expire according to the terms established at the grant’s issuance date. Stock grants are measured at the grant date fair value. Stock-based compensation cost is measured at fair value on the grant date and is generally recognized as an expense in the statement of operations ratably over the requisite service period or vesting period. Recognition of compensation expense for non-employees occurs in the same period and in the same manner as if the Company had paid cash for the services.

The Company values its equity awards using the Black-Scholes option-pricing model, and accounts for forfeitures when they occur. Use of the Black-Scholes option pricing model requires the input of subjective assumptions, including expected volatility, expected term, and a risk-free interest rate. The expected volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The risk-free interest rate is estimated using comparable published federal funds rates.

Research & Development Costs

Research and development costs are expensed in the period in which they are incurred.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed using the weighted average number of common shares issued and outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common shares and the dilutive effect of contingent shares outstanding during the period. Potentially dilutive contingent shares, which primarily consist of convertible notes and stock issuable upon the exercise of stock options and warrants, have been excluded from the calculation of diluted loss per share because their effect is anti-dilutive.

Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock issued and outstanding during the respective periods. Basic and diluted loss per common share was the same for all periods presented because all convertible notes and stock issuable upon the exercise of stock options and warrants outstanding were anti-dilutive.

At December 31, 2025 and 2024, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.

The issuable and potentially issuable shares as summarized above. These potentially issuable common shares would have been anti-dilutive because the Company had a net loss for the period ended December 31, 2025 and 2024, as such common stock equivalents were excluded from the calculation of net loss per share.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The Company uses Level 3 inputs for its valuation methodology for the derivative liabilities as their fair values were determined by using a Binomial pricing model. The Company’s derivative liabilities are adjusted to reflect fair value at each reporting date, with any increase or decrease in the fair value being recorded in the statement of operations.

To determine the number of authorized but unissued shares available to satisfy outstanding convertible securities, the Company uses a sequencing method to prioritize its convertible securities as prescribed by ASC 815-40-35,Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40-35). At each reporting date, the Company reviews its convertible securities to determine their classification is appropriate.

Fair Value of Financial Instruments

Fair value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 – unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value.

A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

The carrying value of the Company’s financial instruments (consisting of cash, accounts receivables, contract assets and liabilities, inventories, deferred financing costs, other current assets, accounts payable, accrued expenses, notes payable, deferred revenues, and other liabilities) is considered to be representative of their respective fair values due to the short-term nature of those instruments.

Concentrations

Cash. The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Generally, the Company’s policy is to minimize borrowing costs by immediately applying cash receipts to borrowings against its credit facility. From time to time, however, the Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the FDIC limit; such amounts in excess of the FDIC limit were $388,923 and $45,723, as of December 31, 2025 and 2024, respectively. To minimize the risk, the Company’s policy is to maintain cash balances with high quality financial institutions.

Net Revenue. During the year ended December 31, 2025, one customer accounted for 6% of net sales. During the year ended December 31, 2024, one customer accounted for 8% of net sales.

Accounts receivable. As of December 31, 2025, the Company had accounts receivable from three customers which comprised 31%,22% and 13% of its gross accounts receivable, respectively. As of December 31, 2024, the Company had accounts receivable from two customers which comprised 17% and 14% of its gross accounts receivable, respectively.

Purchases from vendors. During the year ended December 31, 2025, one vendor accounted for approximately 7% of all purchases. During the year ended December 31, 2024, no vendor accounted for more than 10% of all purchases.

Accounts payable. As of December 31, 2025, one vendor accounted for 10% of total accounts payable. As of December 31, 2024, no vendor accounted for more than 10% of total accounts payable.

Segment Information

The Company’s Chief Executive Officer is our chief operating decision maker and evaluates performance and makes operating decisions regarding resource allocation based on financial data presented on a consolidated basis. Because our chief operating decision maker evaluates financial performance on a consolidated basis, the Company has determined that it operates as a single reportable segment, comprising the consolidated financial results of Laser Photonics Corporation.

Reclassifications

Certain prior year amounts have been reclassified to align with the current-period presentation.

Recent Accounting Pronouncements

In November 2024, the FASB issued Accounting Standards Update (ASU) No. 2024-03,Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses which includes amendments that require disclosure in the notes to financial statements of specified information about certain costs and expenses, including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. The amendments are effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is evaluating this ASU to determine its impact on the Company’s disclosures.

Other recent accounting pronouncements issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

NOTE 2. ACQUISITIONS

On October 30, 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 are expanding rapidly, driven by the growing need for more effective delivery systems.

The Company paid $950,000 in cash and $100,000 in common stock to the previous owner. CMS was a distressed company that was in federal bankruptcy court beginning in March 2024. Through the courts, the Company acquired CMS below the value of the assets, free and clear of prior liabilities.

The Company contracted a third-party expert to assist management in determining the fair value of certain identified intangible assets as well as the fair values of property, plant, and equipment acquired. Based on the valuations performed and management’s allocation of the purchase price to the fair value of assets acquired and liabilities assumed, the fair value of the net assets exceeded the purchase price, resulting in a gain of $3,857,999 during the year ended December 31, 2024.

The following unaudited pro forma statement of operations presents the Company’s pro forma results of operations after giving effect to the purchase of CMS based on the historical financial statements of the Company and CMS. The unaudited pro forma statement of operations for the twelve months ended December 31, 2024, gives effect to the transaction as if it had occurred on January 1, 2024.

NOTE 3. ASSET ACQUISITION** FROM COMMON CONTROLLED ENTITY**

On March 31, 2025, ICT Investments, LLC (“ICT”), an affiliated company under common control, acquired inventories and machinery and equipment from ARCH Cutting Tools – Flushing, LLC (“ARCH”), related to their Beamer Laser Marking Systems (“Beamer”) product line, for total cash consideration of $255,824. The transaction was accounted for as an asset acquisition rather than a business combination, as the assets acquired did not meet the definition of a business. The purchase price was allocated to the acquired assets based on their relative cost, which resulted in recording of $238,054 of inventories and $17,770 of machinery and equipment, as of the date of acquisition.

The purchased assets were subsequently transferred to Fonon Quantum Technologies, Inc. (“FQTI”), an affiliate of both ICT and the Company.

On August 5, 2025, the Company entered into an Asset Purchase Agreement with FQTI, to acquire the Beamer assets. Under the terms of the Asset Purchase Agreement, the Company issued 3,000,000 restricted shares of its common stock with a fair value of $8,434,322 (valued at $2.80 per share as of the close of market on August 5, 2025), as payment for the assets acquired of $255,824, resulting in a deemed dividend of $8,835,228 for the year ended December 31, 2025.

Because the transaction was between entities under common control (ICT controls both the Company and FQTI), the acquisition was accounted for in accordance with ASC 805-50,Transactions Between Entities Under Common Control. The Company accounted for the asset purchase as if it had acquired the Beamer assets from ARCH on March 31, 2025. The Company recorded net sales and cost of goods sold of $645,578 and $106,350, respectively, representing the net sales and cost of goods sold realized by FQTI during the period March 31, 2025 through August 5, 2025. Furthermore, the sales were recognized as distributions to affiliates in the accompanying statement of stockholders’ equity (deficit). The Beamer assets are recognized at their historical carrying amounts rather than at fair value as of March 31, 2025, and no goodwill was recorded. Comparative prior-period financial statements were not restated.

NOTE 4. INVENTORY

Inventory is comprised of the following:

During the year ended December 31, 2024, the Company incurred $776,638 of inventory charges related to inventory obsolescence, and $507,931 of demonstration inventory was reclassified to property, plant, and equipment. As of December 31, 2025 and 2024, the Company recorded an inventory reserve of $503,835 and $776,638, respectively.

During the year ended December 31, 2025, $70,309 of sales demonstration units was reclassified from property, plant and equipment to inventory.

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are comprised of the following:

Depreciation expense for the years ended December 31, 2025, and 2024 was $423,098 and $480,880, respectively.

During the year ended December 31, 2025, $236,717 of sales demonstration units was deemed impaired and recorded as an impairment expense.

During the year ended December 31, 2024, $507,931 of sales demonstration units was reclassified from inventory to property, plant, and equipment.

NOTE 6. INTANGIBLE ASSETS

Intangible assets consist of the following:

During the year ended December 31, 2024, the Company recognized intangible assets of $2,468,000 in relation to the acquisition of CMS (See Note 2), recorded an impairment expense of $932,669, and recorded amortization expense of $400,605, leaving a remaining intangible asset balance of $5,458,522 at December 31, 2024. During the year ended December 31, 2025, the Company recognized an impairment expense of $3,902,378, and recorded amortization expense of $633,442, leaving a remaining intangible asset balance of $922,701 as of December 31, 2025.

Identifiable intangibles are amortized over their estimated remaining useful lives, which are as follows:

Estimated amortization expense for the Company is as follows:

NOTE 7. NOTES PAYABLE

Notes payable consist of the following at December 31, 2025:

District 2 Capital Fundor

On May 6, 2025, the Company issued a Promissory Note (this “Note”) in favor of District 2 Capital Fundor. The Company promises to pay to the order of District 2 Capital Fundor not later than six months from date of the Note, the principal amount of $362,500, . This Note was issued in connection with extinguishment of Holder’s outstanding warrant dated August 19, 2024 (125,000 warrants). As of December 31, 2025, the Note reflects an outstanding principal balance of $362,500 and accrued interest of $19,618 and was past due (see Note 15).

Agile Capital Funding and Agile Lending

During the year ended December 31, 2025, the Company entered into three separate business loan and security agreements (the “Term Loans”) with a lender for short-term loans to be provided by the lender, or the lender’s assignees (collectively, the “Lenders”) and mature seven months from the date the amounts are borrowed. The loans are secured by a blanket lien on the Company’s assets. The loans may be prepaid, subject to payment of a prepayment fee equal to the aggregate and actual amount of interest (at the contract rate of interest) that would be paid through the maturity date. The Company borrowed under three short-term borrowing arrangements during the year ended December 31, 2025, borrowing a gross amount of $4,650,000, net of fees of $225,000, which was recorded as a debt discount and is being amortized over the term of the agreements. During the year ended December 31, 2025, the Company made total repayments of $4,036,015. During the year ended December 31, 2025, the Company amortized $203,125 of the debt discount to interest expense, resulting in unamortized debt discount of $21,875 as of the year then ended. As of December 31, 2025, the Company had outstanding borrowings of $613,985, and unamortized debt discount of $21,875, resulting in net balance of $592,110. The outstanding balance is to be repaid through weekly principal and interest payments of $94,500 ending February 18, 2026 (see Note 15).

Hudson Global

On August 28, 2025, the Company closed a convertible note financing with Hudson Global Ventures, LLC (“Hudson Global”). In connection with this financing, the Company entered into a Securities Purchase Agreement (the “SPA”) with Hudson Global requiring that the Company (i) issue 418,000 shares of its common stock as commitment shares (the “Commitment Shares”), (ii) issue a warrant (the “Warrant”) for 157,258 shares of the Company’s common stock at a conversion price of $4.34 per share subject to customary adjustments for fundamental corporate actions such as mergers, reverse splits and stock dividends, that is exercisable for five years or that the Company must earlier pay the Event of Default Black Scholes Value as that term is defined in the Warrant if the Company’s common stock is deemed “penny Stock” under SEC Rule 240.3a51-1, and (iii) issue a 12 month secured convertible promissory note in the principal amount of $455,000 (the “Convertible Note”) bearing annual interest of 12% to be repaid through monthly amortization payments of $45,818 and that is convertible into shares of the Company’s common stock at a fixed price of $4.34 per share, subject to customary adjustments for fundamental corporate actions such as mergers, reverse splits and stock dividends, that can be prepaid within the first 60 days from August 27, 2025, without any penalty and after 60 days from August 27, 2025, at a payment of 118% of the accrued and unpaid interest and unpaid principal of the Convertible Note. Under the terms of the SPA, Hudson Global has piggyback rights for the conversion shares underlying the Warrant and the Convertible Note, as well as for the Commitment Shares. This loan has been settled in full by refinancing with the Note Purchase Agreement dated September 12, 2025 (see NPA Note Holders below).

Under ASC Topic 470-20, Debt with Conversion and Other Options, the proceeds received in the transaction were allocated between the debt instrument and the warrants based on their relative fair values at issuance. The portion of the proceeds allocated to the warrants created a derivative liability (see Note 11), and a debt discount that was amortized to interest expense over the term of the Note. Because the warrants absorbed the entire allocable fair value, no value was assigned to the common shares issued in the transaction. The debt discount does not affect the total proceeds received but impacts the subsequent recognition of interest expense over the life of the Notes.

NPA Note Holders

On September 12, 2025, the Company entered into a Note Purchase Agreement (the “NPA”) with four holders pursuant to which it issued to such holders certain unsecured promissory notes (the “Notes”). The Notes are (i) in the total principal amount of $2,111,111 with an Original Issuance Discount (“OID”)equal to 10% that resulted in the Company receiving net proceeds of $1,129,400 following deductions for expenses, including an 8% placement agency fee and 1% non-accountable allowance paid to RBW Capital Partners LLC (“RBW”), a division of Dawson James Securities, Inc., under the terms of a Placement Agency Agreement dated September 5, 2025, between the Company and RBW, and repayment of principal and accrued and unpaid interest of $509,600 owed to Hudson Global Ventures, LLC (“Hudson Global”) under a convertible note in the principal amount of $455,000 issued under the term of a Securities Purchase Agreement dated August 27, 2025, (ii) due the earlier of three (3) months from the dates of the Notes which are all September 12, 2025, or in the event of a prior subsequent financing by the Company, the Notes at the option of the holder must be repaid in full or, if applicable, are exchangeable into the consideration in the subsequent offering, (iii)subject to a payment in the event of a default of 120% of the unpaid principal amount, accrued interest and all other amounts owing under the Notes, which amount increases by 5% every 30 days following the date of the event of default until the Notes are paid in full (the “Mandatory Default Amount”) and (iv) limited to prepayment only upon a change of control of the Company subject to payment of the Mandatory Default Amount. The Company was deemed to be in default and recorded an additional 120% of the unpaid principal amount, or $738,889. As of December 31, 2025, the loan reflects an outstanding principal balance of $2,850,000, and accrued interest of $158,175 (see Note 15).

NOTE 8. NOTE PAYABLE – RELATED PARTY

Notes payable to a related party consist of the following at December 31, 2025:

On April 3, 2025, April 16, 2025, June 20, 2025, July 8, 2025, and July 12, 2025, the Company received from ICT Investments, the owner of the majority of outstanding shares of the Company’s common stock, unsecured loans in the principal amount of $200,000, $400,000, $20,000, $101,000, and $30,000 respectively (the “ICT Loans”). Laser Photonics issued promissory notes, with interest at $20,000, $40,000, $2,000, $10,000 and $3,000, respectively, and a maturity date of May 31, 2025, June 30, 2025, August 30, 2025, September 8, 2025, and September 12, 2025, respectively. On September 12, 2025, the Company amended the promissory notes to include a default provision that upon default, the loans bear an annual interest rate of 10% and are due on demand. The unpaid principal balance of the ICT loans as of December 31, 2025, was $751,000. The unpaid interest balance as of December 31, 2025, was $111,623, which included in the balance of accrued expenses in the accompanying consolidated balance sheets as of the year then ended.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its office facilities under noncancelable operating lease agreements. On July 1, 2024, the Company entered into a lease agreement for 48,481 square feet of office space in Lake Mary, Florida. The operating lease has a base monthly rent of $50,354 with an annual increase of 3% and a lease term of 10.5 years.

The Company’s operating lease liability balance was $5,016,408 as of December 31, 2024. During the year ended December 31, 2025, the Company made payments of $649,997 against its operating lease liability, resulting in a lease liability of $4,366,420 as of December 31, 2025, of which the current portion was $214,044 and the long-term portion was $4,152,375.

Maturities of the Company’s operating lease liabilities are as follows as of December 31, 2025:

The Company is, from time to time, involved in various legal proceedings incidental to the conduct of our business. Historically, the outcome of such legal proceedings has not been material to our business, results of operations, or liquidity. There were no material pending or threatened legal proceedings as of December 31, 2025.

NOTE 10. INCOME TAXES

For the years ended December 31, 2025 and 2024, a reconciliation of the effective income tax rate to the U.S. statutory rate is as follows:

As of December 31, 2025 and 2024, the following table summarizes our deferred tax asset:

The provision for income taxes differs from the expense that would result from applying statutory rates to income before income taxes. The differences primarily result from changes in valuation allowance.

As of December 31, 2025 and 2024, the Company is in a net deferred tax asset position before valuation allowance. The future realization of the tax benefits from existing temporary differences and tax attributes ultimately depends on the existence of sufficient future taxable income. In assessing the realization of the deferred tax assets, the Company considers whether deferred tax assets will not be realized. The Company considers projected future taxable income, scheduled reversal of existing deferred tax liabilities, and tax planning strategies in making this assessment. As of December 31, 2025 and 2024, the Company has considered all available evidence, both positive and negative, and determined that it is more likely than not that the Company’s net deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2025 and 2024. The change in the valuation allowance for year ended December 31, 2025 was an increase of $2,619,000.

As of December 31, 2025, the Company had federal net operating loss carryforwards totaling 24,611,000, which are available to reduce the Company’s future taxes and have an unlimited carryforward period. As of December 31, 2025, the Company had state net operating loss carryforwards totaling $7,104,473.

The future realization of the net operating loss carryforwards may be limited by the change in ownership rules under Section 382 of the Internal Revenue Code (“Section 382”). Under Section 382, if a corporation undergoes an ownership change (as defined), the corporation’s ability to utilize its net operating loss carryforwards and other tax attributes to offset income may be limited. The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development credit carryforward before utilization.

The Company files income tax returns in the U.S. federal tax jurisdiction and in various state and foreign jurisdictions in which it operates and is therefore subject to tax examination by various taxing authorities. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, foreign, state and local income tax authorities for all tax years in which a loss carryforward is available. The Company is currently not under examination by the Internal Revenue Service or any other jurisdiction for any tax years. The Company has not recorded any interest or penalties on any unrecognized tax benefits as of December 31, 2025 and 2024.

The Company accounts for uncertain tax positions recognized in the consolidated financial statements following a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. As of December 31, 2025 and 2024, the Company has not identified any uncertain tax positions. The Company will recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. As of December 31, 2025, no interest or penalties have been accrued.

NOTE 11 –DERIVATIVE LIABILITY

On August 27, 2025, pursuant to the note payable with Hudson Global (see Note 7), the Company granted Hudson Global the right to convert 157,258 warrants, whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant. The Company analyzed the conversion option for derivative accounting consideration under ASC 815,Derivatives and Hedging, and determined that the conversion option should be classified as a derivative liability since it does not have an explicit limit to the number of shares to be delivered upon settlement of the conversion option. The derivative liability is remeasured to fair value at each reporting period, and the change in the fair value is recognized in earnings in the accompanying statements of operations. The Company estimated the fair value of the conversion option derivative liability using a Black-Scholes option pricing model. The fair value of the derivative liability at December 31, 2025 was $338,902.

The following tables summarize the derivative liability:

The following table provides a roll-forward of the derivative liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period ended December 31, 2025, as follows:

NOTE 12 –STOCKHOLDERS’ (DEFICIT) EQUITY

Preferred Stock

Shares of preferred stock may be issued from time to time in one or more series as may be determined by the board of directors. The board of directors may fix the designation, powers, preferences, and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the stockholders of the Company, except that no holder of preferred stock shall have pre-emptive rights. Any shares of preferred stock so issued would typically have priority over the common stock concerning dividend or liquidation rights. The board of directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock unless otherwise required by law.

The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.001 per share. As of December 31, 2025 and 2024, there wereno shares of preferred stock issued and outstanding.

Common Stock

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights.

Subject to preferences that may be applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to share ratable in dividends, if any, as may be declared from time to time by the board of directors in its discretion from funds legally available, therefore.

Holders of common stock have no pre-emptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. The Company may issue additional shares of common stock which could dilute its current shareholder’s share value.

The Company is authorized to issue a total of 100,000,000 shares of common stock, par value $0.001 per share. As of December 31, 2025 and 2024, the Company had 22,852,723 and 14,282,395 shares of common stock issued, respectively, the Company had 22,845,345 shares and 14,257,458 shares, respectively, of common stock outstanding.

Common Shares Transactions

2025 Transactions

Common shares issued for officers’ and directors’ compensation

On November 4, 2025, the Company granted its officers and directors an aggregate of 435,000 shares of the Company’s restricted stock, with an aggregate fair value of $1,579,050, or $3.63 per share.

Common shares issued for services

During the year ended December 31, 2025, the Company issued an aggregate of 292,519 shares of common stock with a fair value of $755,900, or an average price of $2.58 per share, for service rendered.

Common shares issued for cash under Securities Purchase Agreement

On September 22, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors in a private placement (the “Offering”) (i)1,098,902 shares (the “Shares”) of common stock of the Company, $0.001 par value (the “Common Stock”), (ii) series A warrants to purchase up to 1,098,902 shares of Common Stock (the “Series A Warrants”) and (iii) series B warrants to purchase up to 1,098,902 shares of Common Stock (the “Series B Warrants” and, with the Series A Warrants, the “Common Warrants” and, collectively with the Shares, and the Series B Warrants, the “Securities”) for a purchase price of $3.64 per share of Common Stock and related Common Warrants, for a net total of $3,487,353, the fees were net against the proceeds. The Offering was closed on September 29, 2025, subjected to customary closing conditions. The Company also issued to the placement agent facilitating the Exchange Agreement or its designees warrants to purchase an aggregate of 76,923 shares of its restricted common stock that are exercisable forfive years at $4.55 per share subject to customary adjustments, including for stock splits, stock dividends, rights offerings and fundamental transactions such as a merger resulting in a change of control.

The Series A Warrants have an exercise price of $3.40 per share, are exercisable upon issuance (the “Initial Exercise Date”), and expire five years following the effective date of the registration statement to be filed in connection with the Offering. The Series B Warrants have an exercise price of 3.40 per share, are exercisable commencing on the Initial Exercise Date and expire eighteen months following the effective date of the registration statement to be filed in connection with the Offering. Under the terms of the Common Warrants, the Investors may not exercise the warrants to the extent such exercise would cause the Investor, together with its affiliates and attribution parties, to beneficially own a number of shares of common stock which would exceed 4.99% (or, at such Investor’s option upon issuance,9.99%), of the Company’s then outstanding Common Stock following such exercise, excluding for purposes of such determination shares of Common Stock issuable upon exercise of such warrants which have not been exercised.

The Purchase Agreement contains representations, warranties, indemnification and other provisions customary for transactions of this nature. The Purchase Agreement also provides that, subject to certain exceptions, until 15 days after the effective date of the registration statement to be filed in connection with Offering, neither the Company nor any of its subsidiaries will issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock equivalents or file a registration statement other than one in connection with the Offering. The Purchase Agreement also provides that, subject to certain exceptions, for a period of one year following the effective date of the registration statement to be filed in connection with Offering, the Company will be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents (or a combination of units thereof) involving a variable rate transaction, which generally includes any transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of common stock either (A) at a conversion price or exchange rate that is based upon and/or varies with the trading prices of or quotations for the shares of common stock at any time after the initial issuance of such securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the common stock or (ii) enters into any agreement, whereby the Company may issue securities at a future determined price (including but not limited to, certain “at-the-market offerings” as described more fully in the Purchase Agreement).

As part of the Offering, the Company entered into a Registration Rights Agreement, dated September 22, 2025, with the Investors, pursuant to which the Company agreed to register the resale of the shares of Common Stock sold in the Offering and the shares of Common Stock issuable upon exercise of the Common Warrants. The Company will use its commercially reasonable best efforts to file the registration statement by the 15 th calendar day after the date of the Registration Rights Agreement and cause the registration statement to be declared effective within 45 days of September 22, 2025 (or 75 days in the event the registration statement is reviewed in “full”). If the Company fails to meet the specified filing deadlines or keeps the registration statement effective, subject to certain permitted exceptions, the terms of the Registration Rights Agreement provide that the Company will be required to pay certain liquidated damages to the Investor. The Company also agreed, among other things, to indemnify the Investors under the registration statement from certain liabilities and to pay all fees and expenses incident to the Company’s performance of or compliance with the Registration Rights Agreement.

Common shares issued under common control acquisition

On August 5, 2025, the Company issued 3,000,000 restricted shares of common stock to Fonon Quantum Technologies, Inc. as consideration for the acquisition of certain assets of Beamer Laser Marking Systems. The shares were valued at the market rate of the Company’s stock on the date of the Agreements which was $2.80, for a total amount of $8,434,322. Both companies are under common control of ICT Investments and the excess paid over the net assets of Beamer Laser Marking Systems was accounted as a deemed dividend for a total of $8,835,228.

Common shares issued for consideration of promissory note

On August 27, 2025, the Company issued 418,000 restricted shares of common to Hudson Global Ventures, LLC as additional consideration for the purchase of the secured promissory note (see Note 7).

Common Shares issued on exchange of warrants

On May 5, 2025, the Company entered into exchange agreement with Empery Asset Master LTD, Empery Tax Efficient, LP and Empery Tax Efficient III, LP, (“Holders”). Holders hold the number of Warrants to Purchase Common Stock originally issued on August 19, 2024, to Altium Growth Fund, LP (125,000 warrants), exercisable into the number of shares of Common Stock of the Company. In a modified agreement dated July 8, 2025, the Holders received in exchange to the 125,000 warrants,107,215 shares of common stock at agreed price of $2.90. The Company updated the number of shares being issued to reflect the difference in value of the shares previously agreed at $2.90, as compared to the closing stock price of $2.53 on May 8, 2025.

On September 2, 2025, the Company entered into an agreement to exchange certain outstanding warrants issued in the August 2024 PIPE financing (the “Exchange Agreement”). These warrants, which had an exercise price of $4.34 per share, entitled holders to purchase up to an aggregate of 0.8 million shares of the Company’s common stock. In exchange for relinquishing these warrants, the warrant holders will receive unrestricted shares of the Company’s common stock equal to 400% of the number of shares of the Company’s common stock issuable upon exercise of the warrants that for all warrant holders results in an aggregate of 3.2 million unrestricted shares of the Company’s common stock. The Company also has agreed, subject to customary exceptions, for a period of 30 days starting on September 3, 2025, not to issue any shares of its common stock nor to file any registration statant or any amendment or supplement to any existing registration statement. The excess of the fair value of the shares of common stock over the fair value recalculated using Black-Scholes method at the date of the operation was considered and accounted as deemed dividend.

Common shares issued to common shares issuable (CMS)

In January 2025,18,692 common shares with a fair value of $100,000 were issued for common shares previously recorded as issuable, related to the acquisition of CMS in 2024.

2024 Transactions

Common shares issued for officer compensation

On February 2, 2024,17,008 Shares of Common stock with a fair value $33,336 were issued to Jade Barnwell, the former Laser Photonics CFO, under the terms of employment.

Common shares issued for License Agreement

On May 24, 2024,3,000,000 Shares of Common stock with a fair value $6,615,000 were issued to FONON Corporation under a License Agreement.

Common shares issued for cash under Asset Purchase Agreement

On September 6, 2024,1,500,000 shares of Common stock were issued under a PIPE Offering with Aegis Capital Corp. The Company received net proceeds of $2,652,350.

Common shares issued on cashless exercise of warrants

On September 16, 2024,61,968 common shares were issued on the cashless exercise of a warrant held by an investor in the Company’s initial public offering in November 2022.

Common shares issued on exercise of warrants

During the year ended December 31, 2024, the Company issued 450,000 common shares on the exercise of 450,000 warrants and received net proceeds of $1,796,760.

Common shares issuable on acquisition

At December 31, 2024,18,692 common shares with a fair value of $100,000, remained unissued to the seller of CMS (see Note 2). The common shares were issued in January 2025.

Warrants

The Company issues warrants in conjunction with its capital raise activities.

The fair value of a warrant is calculated on the grant date using the Black-Scholes option-pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve in effect as of the grant date. The expected dividend yield assumption is based on the Company’s expectation of dividend payouts and is assumed to be zero. The expected volatility is based on the historical volatility of the Company’s common stock, calculated utilizing a look-back period approximately equal to the contractual life of the stock option being granted. The expected life of the stock option is calculated as the mid-point between the vesting period and the contractual term (the “simplified method”). The fair market value of the common stock is determined by reference to the quoted market price of the common stock on the grant date.

The expected term represents the weighted-average period of time that warrants are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future; and the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award.

A summary of warrants activity is presented below:

Warrants issued with shares of common stock

On September 22, 2025, under that certain Purchase Agreement, the Company issued (i) series A warrants to purchase up to 1,098,902 shares of Common Stock with exercise price of $3.40 per share, are exercisable upon issuance, and expire five years following the effective date of the registration statement to be filed in connection with the Offering; and (i) series B warrants to purchase up to 1,098,902 shares of Common Stock with exercise price of 3.40 per share, are exercisable commencing on the Initial Exercise Date and expire eighteen months following the effective date of the registration statement to be filed in connection with the Offering. The Company also issued to the placement agent facilitating the Exchange Agreement or its designees warrants to purchase an aggregate of 76,923 shares of its restricted common stock that are exercisable for five years at $4.55 per share subject to customary adjustments, including for stock splits, stock dividends, rights offerings and fundamental transactions such as a merger resulting in a change of control.

On September 6, 2024,1,500,000 warrants to purchase common stock were issued under PIPE Offering with Aegis Capital Corp.

Warrant redemption

On May 6, 2025, the Company cancelled 125,000 outstanding warrants granted to District 2 Capital Fundor in August 2024 in exchange for a $362,500 Promissory Note (see Note 7).

Warrants exchanged for common shares on a cashless basis

The Company entered into two (2) separate transactions for the exchange of warrants for shares of the Company’s common stock on a cashless basis (refer to common shares issued on exchange of warrants).

The outstanding warrants had no intrinsic value at December 31, 2025.

The exercise prices of common warrants outstanding and exercisable at December 31, 2025 are as follows:

NOTE 13. RELATED PARTY TRANSACTIONS

During the years ended December 31, 2025 and 2024, the Company has engaged in the following transactions with our directors, executive officers, holders of more than 5% of its voting securities, and affiliates or immediately family members of its directors, executive officers, and holders of more than 5% of our voting securities, and its co-founders.

At December 31, 2025, ICT Investments, its Managing Partner Dmitriy Nikitin, and its affiliates Fonon Corporation and Fonon Technology, Inc., owns 11,373,695 shares of the Company’s common shares, or 50.7% of the Company’s shares outstanding.

On May 21, 2024,3,000,000 Common shares were issued and transferred to Fonon Corporation in exchange for licenses for all commercial and non-commercial applications of Fonon Corp for laser cutting, marking, engraving, welding, semiconductor applications and flat panel display. The shares were valued at its fair-market value of $6,615,000 and recorded as a deemed dividend.

During the year ended December 31, 2025, and 2024, the Company paid $180,000 and $30,047, respectively, to Dmitriy Nikitin for advisory fees and allowances. During the years ending December 31, 2025, and 2024, the Company also accrued expenses of $89,165 and $92,764 to ICT Investments for advisory services, accordingly.

As discussed in Note 3, on August 5, 2025, the Company acquired the Beamer assets from FQTI. The Company issued 3,000,000 restricted shares of its common stock with a fair value of $8,400,000 (valued at $2.80 per share as of the close on August 5, 2025), as payment for the assets acquired of $255,824, resulting in a deemed dividend of $8,144,176.

For the year ended December 31, 2025, and 2024, $3,552,696 and $5,780,578, respectively, which was distributed to an affiliate party, Fonon Corporation. The majority of the distributions is related to payroll costs, certain shared facility and overhead costs that are allocated in the distribution, which amount to $2,917,843 and $5,780,578 for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2025, the amount distributed included the net sales realized by FQTI of $645,578 (see Note 3).

For the year ended December 31, 2025 and 2024, affiliate revenue totaled $420,089 and $47,515, respectively.

Accounts payable due to ICT investments, and its affiliates, as of December 31, 2025 and 2024 was $349,961 and $27,988 respectively.

NOTE 14 –SEGMENT INFORMATION

The Company operates and manages its business activities on a consolidated basis and operates in a single reportable and operating segment. The Company’s Chief Executive Officer, serving as the Chief Operating Decision Maker (“CODM”), oversees operations on an aggregated basis to allocate resources effectively. In assessing the Company’s financial performance, the CODM regularly reviews consolidated net income (loss). Significant expense categories are not presented, as the expense information regularly provided to the CODM is presented on the same basis as the consolidated statements of operations and comprehensive income (loss). The CODM relies on consolidated net loss as a comprehensive measure of the Company, considering all revenues and expenses, including cost of revenue, research and development expenses, general and administrative expenses and sales and marketing expenses, to assess the Company’s overall performance and inform strategic decisions on cost control, pricing and investments. Additionally, the CODM also reviews total assets to assess the Company’s financial position and resource allocation. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. The Company’s long-lived assets consist primarily of property and equipment, net. As of December 31, 2025, the Company does not have material long-term assets outside the U.S.

NOTE 15 –SUBSEQUENT EVENTS

On February 2, 2026, pursuant to an employment agreement, the Company granted stock options under the Company’s 2019 Stock Incentive Plan to acquire 40,000 shares of the Company’s Common Shares to vest pro rata on the three subsequent anniversary dates of the date of grant. The Company will account and record the fair value of these stock options based upon its vesting term.

On February 9, 2026, the Company 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 $147,778 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, were $4,121,273. The Company is in the process of determining the fair value and corresponding accounting for the equity securities granted to Wainwright as part of this public offering.

In February 2026, the Company fully repaid its notes payable, including accrued interest through February 2026, totaling $4,217,028 (see Note 7).

During February and March 2026, the Company issued 2,449,474 common shares and received proceeds of $2,026,815 on the exercise of 2,449,474 warrants.

In March 2026, the Company issued 99,738 shares of common stock for service rendered.

On April 9, 2025, the Company issued its directors an aggregate of 60,000 shares of common stock for director compensation.