LASE Corp.: Form 10-Q for the period ended Jun 30, 2026

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes to those financial statements appearing elsewhere in this Report.

Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. 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.

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

The “Company,” “we,” “us,” or “our,” are references to the business of Laser Photonics Corporation, a Delaware corporation.

Overview

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.

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. The Company has integrated the Beamer assets into its operations and is actively fulfilling orders for both existing and new customers. The revenue contribution from Beamer is expected to increase meaningfully beginning in the third quarter of 2026 and beyond as the Company scales production and expands its customer pipeline in the industrial marking and traceability markets.

Our principal executive offices are located at 250 Technology Park, Lake Mary FL, 32746, and our telephone number is (407) 804 1000. Our website address is www.laserphotonics.com (http://www.laserphotonics.com). The Company’s annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), and other information related to the Company, are available, free of charge, on that website as soon as we electronically file those documents with, or otherwise furnish them to, the SEC. The Company’s website and the information contained therein, or connected thereto, are not and are not intended to be incorporated into this Quarterly Report on Form 10-Q.

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.

Factors and Trends That Affect Our Operations and Financial Results

In reading our financial statements, you should be aware of the following factors and trends that our management believes are important in understanding our financial performance.

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.

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.

Nasdaq Listing Compliance. On May 21, 2026, the Company received a notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating non-compliance with Nasdaq Listing Rule 5250(c)(1) due to the delayed filing of this Quarterly Report. The notice has no immediate effect on the listing or trading of the Company’s common stock. As of the filing date of this Quarterly Report, the Company believes it has regained compliance with the Listing Rule.

Net sales. Our net sales have historically fluctuated from quarter to quarter. The increase or decrease in sales from a prior quarter 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.

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.

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:

• As our products mature, we can experience additional competition which tends to decrease average selling prices and affects gross margin.
• 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.

General and administrative expenses. General and administrative expenses consist primarily of salaries and personnel-related costs, professional fees, insurance, SEC filing and compliance costs, public company expenses, and corporate overhead.

Sales and Marketing Expenses. Sales and marketing expenses consist primarily of personnel-related costs, advertising and promotional activities, customer acquisition efforts, travel, and commercial support functions.

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.

Results of Operations

Correction of previously reported amounts. As described in Note 2 to the condensed consolidated financial statements, the Company has corrected its accounting for the consideration transferred in connection with its March 2026 warrant inducement transaction, which was previously reported as a deemed dividend of $1,512,480 in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2026. That amount is now presented as a cost of the related equity offering charged against additional paid-in capital. The correction has no effect on net loss, basic or diluted net loss per share, total assets, total liabilities, total stockholders’ deficit or cash flows for any period presented.

Revenue. Net sales for the three months ended June 30, 2026, were $1,806,305, compared to $2,598,975 for the three months ended June 30, 2025, representing a decrease of $792,670, or 30.5%. Net sales for the six months ended June 30, 2026, were $2,721,858, compared to $4,889,257 for the six months ended June 30, 2025, a decrease of $2,167,399, or 44.3%. The decrease was primarily attributable to (i) lower equipment deliveries during the current periods, (ii) the timing of customer purchasing decisions, project execution schedules, and revenue recognition milestones, and (iii) the absence of affiliate revenue in the current periods compared to $391,818 recognized in the six months ended June 30, 2025. Second-quarter net sales increased $890,752, or 97.3%, over the first quarter of 2026, reflecting improved equipment delivery volume as the quarter progressed. Revenue may fluctuate from period to period based on customer purchasing cycles, project timing, equipment delivery schedules, and product mix.

Cost of Sales / Gross Profit (Loss). Cost of sales for the three months ended June 30, 2026, was $1,653,832, compared to $1,496,304 for the three months ended June 30, 2025, an increase of $157,528, or 10.5%. Gross profit was $152,473 for the three months ended June 30, 2026, reflecting a gross margin of 8.4%, compared to gross profit of $1,102,671 and a gross margin of 42.4% for the three months ended June 30, 2025. For the six months ended June 30, 2026, cost of sales was $2,957,836, compared to $2,886,096 for the six months ended June 30, 2025, an increase of $71,740, or 2.5%, and the Company recorded a gross loss of $235,978, reflecting a negative gross margin of 8.7%, compared to gross profit of $2,003,161 and a gross margin of 41.0% for the six months ended June 30, 2025. The deterioration in gross margin was primarily attributable to lower revenue volume and the resulting inability to absorb fixed manufacturing overhead and production costs, reduced production throughput, and changes in product mix, together with integration and facility-transition costs associated with the Beamer product line. The improvement from the negative gross margin of 42.4% recorded in the first quarter of 2026 to a positive gross margin of 8.4% in the second quarter reflects higher revenue volume and improved absorption of fixed manufacturing costs. Gross margins may fluctuate from period to period depending on sales volume, manufacturing utilization, customer mix, and timing of product deliveries.

Sales and Marketing. Sales and marketing expenses for the three months ended June 30, 2026, were $817,609, compared to $338,025 for the three months ended June 30, 2025, an increase of $479,584, or 141.9%. For the six months ended June 30, 2026, sales and marketing expenses were $1,439,063, compared to $1,012,606 for the six months ended June 30, 2025, an increase of $426,457, or 42.1%. Sales and marketing expenses consist primarily of personnel-related costs, advertising, promotional activities, customer acquisition efforts, travel, and commercial support functions. The increase reflects expanded commercial headcount and promotional activity supporting the Beamer product line and the industrial marking and traceability markets, together with allocated personnel and facility costs.

General and Administrative. General and administrative expenses for the three months ended June 30, 2026, were $1,504,154, compared to $1,542,841 for the three months ended June 30, 2025, a decrease of $38,687, or 2.5%. For the six months ended June 30, 2026, general and administrative expenses were $3,142,987, compared to $3,177,805 for the six months ended June 30, 2025, a decrease of $34,818, or 1.1%. General and administrative expenses consist primarily of salaries and personnel-related costs, professional fees, insurance, SEC filing and compliance costs, public company expenses, and corporate overhead. General and administrative expenses remained substantially consistent with the prior-year periods, as increased professional fees incurred in connection with the Company’s capital-raising activities and delayed periodic filings were offset by reductions in other general and administrative costs.

Research and Development Costs. Research and development expense for the three months ended June 30, 2026, was $219,006, compared to $184,494 for the three months ended June 30, 2025, an increase of $34,512, or 18.7%. For the six months ended June 30, 2026, research and development expense was $346,087, compared to $347,963 for the six months ended June 30, 2025, substantially consistent with the prior-year period. Research and development activities remain focused on enhancing existing laser cleaning technologies and equipment and developing new products, systems, and applications, including integration of the Beamer laser marking platform. The Company expects research and development expenditures to fluctuate based on project timing, product development priorities, and resource allocation.

Operating Loss. Operating loss for the three months ended June 30, 2026, was $2,388,296, compared to $962,688 for the three months ended June 30, 2025, an increase of $1,425,608, or 148.1%. Operating loss for the six months ended June 30, 2026, was $5,164,115, compared to $2,535,213 for the six months ended June 30, 2025, an increase of $2,628,902, or 103.7%. The increase in operating loss was primarily attributable to lower revenue and the resulting compression in gross margin, combined with increased sales and marketing spending, partially offset by substantially consistent general and administrative expenses.

Interest Expenses, Net. Interest expense, net, for the three months ended June 30, 2026 was $434,789, compared with $811,214 for the three months ended June 30, 2025, a decrease of $376,425, or 46.4%. For the six months ended June 30, 2026, interest expense, net, was $819,640, compared with $919,412 for the six months ended June 30, 2025, a decrease of $99,772, or 10.9%. The decrease reflects the repayment during 2026 of the Company’s higher-cost note obligations, including the NPA Notes, the District 2 Note, the 2025 Term Loans, and related-party borrowings, partially offset by interest and amortization of debt discount on borrowings under the 2026 Term Loan.

Change in Fair Value of Derivative Liability The change in fair value of the derivative liability resulted in a loss of $98,193 for the three months ended June 30, 2026, and a gain of $116,193 for the six months ended June 30, 2026, compared to $nil in each of the corresponding prior-year periods. The amounts reflect changes in the estimated fair value of the Company’s derivative liability associated with the Hudson financing arrangement, driven by changes in the underlying valuation inputs during the periods. The carrying value of the derivative liability was $222,709 at June 30, 2026, compared to $124,516 at March 31, 2026, and $338,902 at December 31, 2025.

Total Other Expense. Total other expense for the three months ended June 30, 2026, was $890,142, compared to $811,214 for the three months ended June 30, 2025, an increase of $78,928, or 9.7%. For the six months ended June 30, 2026, total other expense was $1,060,607, compared to $919,412 for the six months ended June 30, 2025, an increase of $141,195, or 15.4%. Other expense in the current periods consisted of net interest expense on the Company’s outstanding debt obligations and a $357,160 charge recognized in connection with the registration payment arrangement entered into as part of the April 2026 warrant inducement, partially offset (for the six-month period) by the gain recognized from the change in fair value of the Company’s remaining derivative liability associated with the Hudson financing arrangement.

Net Loss. Net loss for the three months ended June 30, 2026, was $3,278,437, or $(0.08) per basic and diluted share, compared to net loss of $1,773,902, or $(0.12) per basic and diluted share, for the three months ended June 30, 2025, representing an increase of $1,504,535, or 84.8%. Net loss for the six months ended June 30, 2026, was $6,224,721, or $(0.19) per basic and diluted share, compared to net loss of $3,454,625, or $(0.24) per basic and diluted share, for the six months ended June 30, 2025, representing an increase of $2,770,096, or 80.2%. The increase in net loss was primarily attributable to lower revenues, negative gross margin performance, and the $357,160 registration payment arrangement charge, partially offset by lower net interest expense.

Liquidity and Capital Resources

The following is a summary of the Company’s cash flows provided by (and used in) operating, investing, and financing activities for the six-month periods ended on June 30, 2026, and June 30, 2025.

As of June 30, 2026, the Company had cash of $2,156,631, total current assets of $4,600,859, and total current liabilities of $7,708,679. The Company’s working capital deficit was $3,107,820, compared with a working capital deficit of $7,344,637 as of December 31, 2025. The improvement in working capital was primarily attributable to the Company’s February 2026 public offering, proceeds received from warrant exercises and the March and April 2026 warrant inducement transactions, and the repayment of outstanding debt obligations during the period.

Operating Activities

Net cash used in operating activities was $4,735,656 for the six months ended June 30, 2026, compared with $2,192,704 for the six months ended June 30, 2025. Operating cash outflows during the current period were primarily driven by the Company’s net loss of $6,224,721, partially offset by non-cash items including depreciation and amortization, stock-based compensation expense, amortization of debt discount and deferred financing costs, financing costs recognized as additional note principal on default, and the change in fair value of derivative liabilities. Working capital changes included movements in accounts receivable, inventories, contract liabilities, deferred revenue, and accounts payable.

Investing Activities

Net cash used in investing activities was $97,974 for the six months ended June 30, 2026, compared with $22,560 for the six months ended June 30, 2025. Investing activity during the current period consisted of purchases of property and equipment.

Financing Activities

Net cash provided by financing activities was $6,339,922 for the six months ended June 30, 2026, compared with $1,759,915 for the six months ended June 30, 2025. Financing activity during the current period was primarily attributable to net proceeds from the Company’s February 2026 public offering, proceeds received from warrant exercises and the March and April 2026 warrant inducement transactions, and borrowings under financing arrangements. These inflows were partially offset by offering and transaction costs, repayments of outstanding debt obligations, and repayments of related-party borrowings. Financing transactions completed during the period strengthened liquidity and contributed to the improvement in working capital. The Company continues to require additional liquidity to support operations, strategic initiatives, and working capital requirements. Management expects to continue evaluating debt and equity financing alternatives to support future operations and growth objectives. While management believes additional actions are available to improve liquidity, there can be no assurance that financing will be available on acceptable terms, or at all

Off-Balance Sheet Arrangements

As of June 30, 2026, the Company did not maintain any material off-balance sheet arrangements, including obligations under guarantee contracts, retained or contingent interests in transferred assets, obligations under certain derivative instruments, or obligations arising from variable interest entities.

The Company is a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934 and is not required to provide the information required by this Item. Notwithstanding this exemption, the Company provides the following disclosure.

Interest Rate Risk

The Company’s debt obligations primarily bear fixed interest rates and management does not believe changes in market interest rates had a material impact on the Company’s financial position, results of operations, or cash flows during the three and six months ended June 30, 2026.

Derivative Instruments and Foreign Currency Risk

The Company has outstanding warrants that were evaluated under ASC 815-40. With the exception of the warrant issued to Hudson Global Ventures, LLC, which is classified as a derivative liability and carried at fair value of $222,709 as of June 30, 2026, all remaining outstanding warrants — including the Series A-1 through Series A-6 warrants and the placement agent warrants issued during 2026 — are classified as equity instruments and are not accounted for as derivative liabilities. The fair value of the derivative liability is measured using Level 3 inputs and is sensitive to changes in the Company’s common stock price and expected volatility. Changes in fair value resulted in a loss of $98,193 for the three months ended June 30, 2026, and a gain of $116,193 for the six months ended June 30, 2026.

We do not currently have any sales, own any assets, or operate any facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes was not material to our financial condition or results of operations as of June 30, 2026.

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, under the supervision and with the participation of the Company’s management, including its principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended).

Management concluded that disclosure controls and procedures were not effective as of June 30, 2026, due to the material weaknesses in internal control over financial reporting described below. Certain of these material weaknesses were previously identified and disclosed in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2025 and 2024 and have not yet been fully remediated. In addition, during the quarter ended June 30, 2026, management identified an additional material weakness relating to controls over the authorization and issuance of the Company’s equity securities, as described below.

Material Weaknesses in Internal Control Over Financial Reporting

As previously disclosed in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2025 and 2024, management identified the following material weaknesses in internal control over financial reporting, each of which remained unremediated as of June 30, 2026:

• Continuing Weakness: The system of internal controls failed to identify multiple journal entries that were identified by the external auditor.
• Continuing Weakness: Lack of a formal control process related to the identification and approval of related party transactions.

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• Continuing Weakness: The Company is not able to fully maintain segregation of duties within its financial operations due to its reliance on limited personnel in the finance function.
• Continuing Weakness: As a smaller company, the Company lacks sufficient resources to perform the internal audit function.
• Continuing Weakness: Documentation of all proper accounting procedures is not yet complete.

In addition, during the quarter ended June 30, 2026, management identified the following additional material weaknesses:

• Newly Identified Weakness: The Company did not maintain effective controls over the authorization and issuance of its equity securities in connection with warrant and other complex financing transactions. During the quarter ended June 30, 2026, shares of common stock were issued upon the exercise of Series A-4, Series A-5, and Series A-6 warrants before those warrants had become exercisable — exercisability being conditioned on receipt of the stockholder approval required under applicable Nasdaq Listing Rules, which was obtained on June 26, 2026 — and certain of those shares were issued without registration under the Securities Act of 1933, as amended, or an appropriate restrictive legend. As a result, the Company did not have effective controls at the time of this transaction to ensure that its equity securities were issued only after the underlying instruments had become exercisable in accordance with their terms and in compliance with applicable securities laws, the governing warrant agreements, and applicable stock exchange listing requirements. This one-time occurence created a reasonable possibility that a material misstatement of the Company’s financial statements would not be prevented or detected on a timely basis, and could expose the Company to noncompliance with securities laws and Nasdaq listing requirements in the future.
• Newly Identified Weakness: The Company did not maintain effective controls over the identification and application of the accounting guidance applicable to non-routine equity and warrant transactions. Management’s initial application of the accounting for the Company’s March 2026 warrant inducement transaction did not reflect the guidance in ASC 815-40-35-14 through 35-18 applicable to modifications of equity-classified warrants, and the resulting presentation of a deemed dividend and of loss per share attributable to common shareholders in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2026 required correction. In addition, the Company did not identify and record on a timely basis the registration payment arrangement arising under its March 2026 warrant inducement agreements. This control deficiency created a reasonable possibility that a material misstatement of the Company’s financial statements would not be prevented or detected on a timely basis.

Remediation Activities

Management continued to implement remediation activities during the six months ended June 30, 2026 intended to address the material weaknesses described above, including: (i) enhancing financial close and reporting processes by implementing additional levels of review over manual journal entries, formalizing account reconciliation procedures, and requiring documented supervisory approval of all non-routine and significant adjustments; (ii) adopting and enforcing a formal written policy and control framework for the identification, review, approval, and disclosure of related party transactions, including periodic related-party questionnaires and review by the Audit Committee; (iii) strengthening the finance and internal control environment by augmenting finance personnel and reassigning responsibilities to improve segregation of duties, engaging qualified third-party professionals to assist with internal audit-type procedures and ongoing monitoring where internal resources are limited, and completing and maintaining comprehensive documentation of key accounting policies, procedures, and internal controls; and (iv) with respect to the material weakness identified during the quarter ended June 30, 2026, implementing additional controls over the authorization and issuance of equity securities, including requiring documented legal and accounting review, prior to any issuance of shares upon the exercise or conversion of warrants or other convertible instruments, to confirm that the instrument is then exercisable or convertible in accordance with its terms and that all conditions to exercisability — including any required stockholder approval, registration, and legending requirements — have been satisfied; establishing a pre-issuance approval checklist involving the Company’s finance function, outside securities counsel, and the Company’s transfer agent; and improving coordination among the Company’s finance function, legal advisors, placement agents, and transfer agent in connection with financing transactions. The controls described in (iv) had not operated for a sufficient period to be tested for operating effectiveness as of June 30, 2026, and the related material weakness had not been remediated as of that date. Management will continue to monitor the effectiveness of these remediation efforts.

Notwithstanding the material weaknesses described above, management performed additional review and validation procedures, including expanded technical accounting review and executive-level review of significant financing and equity transactions, and concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, the financial condition, results of operations, and cash flows of the Company in conformity with U.S. GAAP.

Changes in Internal Controls over Financial Reporting

Other than the identification of the material weakness described above and the related remediation activities, and the ongoing remediation activities associated with the previously identified material weaknesses, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.