| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements
and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant
estimates and assumptions include depreciation and the fair value of our stock, stock-based compensation, debt discount and the
valuation allowance relating to the Company’s deferred tax assets. Cash and Cash Equivalents Cash and cash equivalents consist of highly
liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents
are carried at cost, which approximates fair value. As of December 31, 2020, the Company had $326,714
of cash. Accounts Receivable Trade accounts receivable are recorded net of
allowance for expected uncollectible accounts. The Company extends credit to its customers in the normal course of business and
performs on-going credit evaluations of its customers. All accounts, or portions thereof, that are deemed uncollectible are written
off to bad debt expense, as incurred. In addition, most sales orders are not accepted without a substantial deposit. As of December
31, 2020, the Company’s ledger had $756,095 as an allowance/ provision for collectible accounts. Inventory Inventories are stated at the lower of cost
or net realizable value using the first-in first-out (FIFO) method. The Company has four principal categories of inventory: Sales demonstration inventory Equipment parts inventory Work in process inventory - Finished goods inventory At December 31, 2020, and December 31, 2019,
respectively, the Company’s inventory consisted of the following:
Dec 31, 20 Dec 31, 19
Inventory
Equipment Parts Inventory 690,069 0
Finished Goods Inventory 186,463
Sales Demo Inventory 1,281,564 495,150
Work in process Inventory 19,241 0
Total Inventory 2,172,327 495,150 Inventory is stated at the lower of cost
(first-in, first-out method) or market value. Inventory includes parts and components that may be specialized in nature and subject
to rapid obsolescence. Company maintain a reserve for excess or obsolete inventory items. Inventories are written off and charged
to cost of goods sold when identified as excess or obsolete. If future sales differ from these forecasts, the valuation of excess
and obsolete inventory may change and additional inventory provisions may be required. Because of our vertical integration, a
significant or sudden decrease in sales could result in a significant change in the estimates of excess or obsolete inventory
valuation. On December 31, 2020, the Company recorded
$63,323 in inventory obsolescence. No inventory was obsolete on December 31, 2019. Fixed Assets - Plant Machinery and Equipment Property and equipment are recorded at cost.
Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged
to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation
are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Machinery and Equipment Depreciation is provided over the estimated
useful lives of the related assets using the straight-line method for financial statement purposes. The Company will use other
depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property
and equipment categories are as follows:
Category
Economic Useful Life
Office furniture and fixtures 3-5 years
Machinery and equipment 5-7 years
Intangible Assets 7-12 years
Dec 31, 20 Dec 31, 19
Fixed Assets
Equipment and Furniture
Accumulated Depreciation (26,409 ) 0
Machinery & Equipment 804,934 0
R&D Equipment 31,053
Office Furniture and Computer Equipment 39,449 0
Total Fixed Assets 849,027 0 As of December 31, 2020, the Company recorded
$849,027of capital assets net of depreciation. Accordingly, depreciation as of December 31, 2020 was recorded at $26,409. Intangible Assets Intangible assets consist
primarily of capitalized equipment design documentation, software costs for equipment manufactured for sale, research and development,
as well as certain patent, trademark and license costs. Capitalized software and equipment design documentation development costs
are recorded in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 86, “Accounting for
the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed,” with costs amortized using the straight-line method
over a ten-year period. Patent, trademark and license costs are amortized using the straight-line method over their estimated useful
lives of 12 years. On an ongoing basis, management reviews the valuation of intangible assets to determine if there has been impairment
by comparing the related assets’ carrying value to the undiscounted estimated future cash flows and/or operating income from
related operations. The Company’s intangible
assets are deemed to have indefinite lives and, accordingly, are not amortized, but are evaluated for impairment at least annually,
but more often whenever changes in facts and circumstances occur which may indicate that the carrying value may not be recoverable.
The customer list was deemed to have a life of five years and will be amortized through December 2025. The Company employs various
core technologies across many different product families and applications in an effort to maximize the impact of our research and
development costs and increase economies of scale and to leverage its technology-specific expertise across multiple product platforms.
The technologies inherent in its laser equipment products include application documentation, proprietary and custom software developed
for operation of its equipment, specific knowledge of supply chain and, mostly important, equipment design documentation, consisting
of 3D engineering drawings, bills of materials, wiring diagrams, parts AutoCad drawings, software architecture documentation, etc.
Intangible assets were received from a related party, ICT Investments, and therefore transferred and booked by Laser Photonics
Corp. at their historical cost. Historically, ICT
Investments acquired IP through various acquisitions and business combinations as a part of its ordinary line of business, mainly
concentrated within the photonics industries. A variety of IP was accumulated within the 2000 to 2020 time frame and compiled from
IP of various portfolio companies, acquired for cash in various public auctions, and contributed in a normal cause of business
in different entities and start-ups. Historical IP costs are typically reflected mostly in reviewed financial statements and from
purchase receipts, which form the historical base of Intellectual Property invested or contributed, or sold to a to a selected
company. In addition, on December
3, 2021 intangible assets were tested for fair market value and an impairment analysis of intangible assets was conducted, which
can be found in the attachments to this Annual Report on Form 10-K. To perform a fair market evaluation of its portfolio assets
the Company is using the practical studies and recommendations published by the leading financial auditing institutions such as
Ernst & Young and Deloitte, in particular the “25% Rule” method income approach:
Intangible Assets December 2020 December 2019
Customer Relationships 211,000 0.00
Equipment Design Documentation 2,675,000.00 0.00
Operational Software & Website 298,280 0.00
Total Intangible Assets 3,184,280 0.00 As of December 31, 2020, the Company had $3,184,279
of intangible property. ICT Asset Purchase During the year 2020, the
Company purchased from ICT Investments additional assets, consisting of inventories, certain capital manufacturing equipment, office
and computer equipment, intangible assets consisting of 3D engineering design documentation, manufacturing database, customer relationship
database with populated CRM, valued in total at $$4,787,109 which the Company will use in its business, in exchange for 29,270,502 shares
of its common stock. The Company
intends to focus on the business of design and manufacture of various industrial grade laser material processing equipment, first
being laser blasting and cleaning equipment and later introducing another laser- based material processing applications, systems
and technologies. ICT asset sales for Laser Photonics Corp stock
Sales Demo Inventory $ 786,413
Equipment and Furniture: Machinery & Equipment : $ 819,136
Intangible Assets: Customer relationship Database $ 211,000
Intangible Assets: Equipment Design Documentation $ 2,675,000
Intangible Assets: Operational Software & Website $ 294,560
Total non-cash asset purchase $ 4,786,109
Stock issued for purchase of assets from ICT Investments (at par) $ 266,092
Additional paid in capital $ 4,520,018
Total non-cash consideration $ 4,786,109 Historically, ICT Investments
acquired capital and intangible assets through various acquisitions and business combinations as a part of its ordinary line of
business, mainly concentrated within the photonics industries. Most of ICT assets were accumulated within the 2000 to 2020 time
frame and compiled from the assets of various portfolio companies, acquired for cash in various public auctions, and contributed
in the ordinary course of business in different entities and start-ups. Historical asset costs are typically reflected mostly in
reviewed financial statements and from purchase receipts, which form the historical base of assets invested, contributed or sold
to a to a selected company. Some of the capital assets or sales demo inventories were recently acquired or manufactured by ICT
portfolio companies. In that case the sale price to Laser Photonics Corp. was determined either at historical cost or equipment
sales at market prices in the ordinary course of business for the respective piece of equipment or machinery. Laser Photonics Stock Price Evaluation Generally, the basis of
value can be different depending on the purpose of the valuation being performed. Laser Photonics Corp. normally uses more than
one approach in order to arrive at a supportable share price valuation range. To perform a stock price evaluation of its portfolio
assets the Company is using the practical studies and recommendations published by the leading financial auditing institutions
such as Ernst & Young and Deloitte. By comparing the two methods
used to establish the stock price the Company has used the lesser of the two. Method #1 Income Approach The income approach focuses
on the income-producing capability of the business or asset. This approach assumes that the value is measured by the present worth
of the net economic benefit to be received over the specific EBITDA multiples common for a specific industry. In the photonics
industry this value it typically determined as 7-10. The methodology usually adopted is the discounted cash flow methodology (DCF).
This approach, and the financial models which are required to support it, are becoming increasingly important given the current
focus upon cash metrics in the optimization of capital investments. A financial model is developed
to generate cash flows using input assumptions for capital and operating expenditure, feedstock costs, feed-in tariff or electricity
price, governmental policy support, output utilization and taxation. The resulting cash flows are then discounted at a rate which
reflects the overall risk of the project. It is critically important that cash flow analysis is underpinned by robust financial
models. Variations of the income approach, including
‘excess earnings’ and ‘relief from royalty’ methods, are commonly used to value stock price to that matter. Method #2 Free Equity Approach This approach relies upon
the principle of substitution, which proposes that a prudent investor will pay no more for stock in a business than the cost based
on the Shareholder Equity shown in the Company’s balance sheet. While the FE method is an
important metric, it suffers from a significant weakness: it does not reflect the fact that many transactions include portfolios
of assets at various stages of their life. That is why it is practical to use this method in conjunction with other methods as
a validation technique for determining the value of a stock. The table below summarizes
the three stock price valuation methods as applied to the Company:
Method 1 Method 2
Income Approach Cost Approach
DCF Value Free Equity
Number of Shares Issued and Outstanding 29,270,502 29,270,502
EBITDA 1,219,141
EBITDA Multiple 7.00
Free Equity 5,286,620
LPC Stock Price Value 0.29 0.18 As of December 31, 2020,
the Company’s stock was valued by Method #1 at $0.29 and by Method #2 at $0.18. Selecting the smallest valuation between
the two methods, the Company arrived at a valuation of $0.18 for the Company’s stock which was used as a basis for purchasing
ICT Investments’ assets in exchange for shares of the Company stock. Long-Lived Assets Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Impairment is measured by
comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from use
of the assets and their ultimate disposition. In instances where impairment is determined to exist, the Company writes down the
asset to its fair value based on the present value of estimated future cash flows. Liabilities Liabilities Consist of Current Liabilities
and Long Term Liabilities.
Dec 31, 20 Dec 31, 19
Liabilities
Current Liabilities
Accounts Payable 55,756 5,280
Deferred Revenue 779,128 0
Lease liability current portion 181,199 0
Sales Tax Liability 12,665 0
Total Current Liabilities 1,028,749 5,280
Long Term Liabilities 1,169,373 0
Total Liabilities 2,198,122 5,280 As of December 31, 2020, and December 31, 2019,
total liabilities were recorded at $2,198,122 and $5,280, respectively. Current Liabilities Our current liabilities consist of accounts payable and deferred
revenue. Sales Tax Liability Sales tax liability is created when the Company
sells equipment and services to another entity located in the State of Florida. Currently the sales tax rate in the Company’s
County of business is 6.5%. As of December 31, 2020, our sales tax liability was recorded at $12,665 compared to $0 recorded at
December 31, 2019. Accounts Payable Accounts payable consist of short-term liability
to our vendors and sub-contractors, who extend credit terms to the Company or deliver goods or services with delayed payment terms.
As of December 31, 2020, and December 31, 2019, our accounts payable were recorded at $55.756 and $0, respectively. Deferred Revenue The Company requires deposits on most sales
orders. These deposits are recorded as deferred revenue until such time as the revenue recognition criteria for that project are
order is completed. As of December 31, 2020, the Company’s other deferred revenue liabilities were recorded at $779,128. Long Term Liabilities Our long-term liabilities include a promissory
note to ICT in the principal amount of $439,990 bearing 6% annual interest with a maturity date of January 31, 2023 and . This
Note may be prepaid in whole or in part. As of December 31, 2020, the unpaid principal amount of the Note was $399,347.
December 31, 2020 December 31, 2019
(Unaudited)
Long Term Liabilities
PPP Loan 198,750 0
Lease Liability less Current 43,855 0
Notes 926,768 0
Total Long Term Liabilities 1,169,373 0 Our long term liabilities include a PPP Loan
from Axiom Bank, promissory notes to ICT, and long term lease liability. The Notes to ICT may be prepaid in whole or in part. In January 2020, the Company issued a promissory
note to ICT in the principal amount of $439,990 bearing 6% annual interest with a maturity date of January 31, 2023. This Note
may be prepaid in whole or in part. As of December 31st, 2020, the unpaid principal amount of the Note was $181,330. In October 2020, the Company issued a
second promissory note to ICT in the principal amount of $745,438 bearing 6% annual interest with a maturity date of December 31,
2023. This Note may be prepaid in whole or in part. As of December 31, 2020, the unpaid principal amount of the Note was $689,926. As of December 31, 2020, the total unpaid principal
amount of the Notes was $926,768. Liquidity and Capital Resources For the year ended December 31, 2020,
the Company’s liquidity needs were met through the financing activity and ongoing support of the ICT Investments. The following is a summary of the Company’s
cash flows provided by (used in) operating, investing and financing activities:
Year ended December 31,
2020 2019
Net cash provided by Operating Activities (1,328,899 ) (505,506 )
Net cash provided by Investing Activities (4,256,015 ) 0
Net cash provided by Financing Activities 5,911,628 505,506 As of December 31, 2020, the Company had $ 3,255,136
in current assets, comprised of $ 326,713 in cash, $756,095 in accounts receivable and $2,172,327 in inventory, compared to $495,150
in current assets, all of which was inventory, at December 31, 2019. Current liabilities at December 31, 2020, totaled $1,028,749
compared to $5,280 at December 31, 2019. As a result, on December 31, 2020, the Company
had $2,226,387 in total working capital:
Year Ended December 31,
2020 2019
Cash And Cash Equivalents 326,713 0
Working Capital (excluding cash and cash equivalents) 1,899,674 489,870
Total Working Capital 2,226,387 489,870 Net Earnings/Loss per Share Basic earnings/loss per share is calculated
by dividing the loss attributable to stockholders by the weighted-average number of shares outstanding for the period. Diluted
loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock that shared in the earnings (loss) of the Company. Diluted
earnings/ loss per share is computed by dividing the earnings/loss available to stockholders by the weighted average number of
shares outstanding for the period and dilutive potential shares outstanding unless such dilutive potential shares would result
in anti-dilution. As of December 31, 2020, the Company recorded $0.01 net income per
share. 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, the Company 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 recognize
as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance
obligation is satisfied. Refunds and returns, which are minimal, are
recorded as a reduction of revenue. Payments received by customers prior to our satisfying the above criteria are recorded as unearned
income in the combined balance sheets. All revenues were reported net of any sales
discounts or taxes. Promissory Notes In January 2020, the Company issued a promissory
note to ICT in the principal amount of $439,990 bearing 6% annual interest with a maturity date of January 31, 2023. This Note
may be prepaid in whole or in part. As of December 31, 2020, the unpaid principal amount of the Note was $181,330. In October 2020, the Company issued a second
promissory note to ICT in the principal amount of $745,438 bearing 6% annual interest with a maturity date of December 31, 2023.
This Note may be prepaid in whole or in part. As of December 31, 2020, the unpaid principal amount of the Note was $689,926. Fair Value of Financial Instruments The Company applies the accounting guidance
under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain
related FASB staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair
value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most
advantageous market in which it would transact business and considers assumptions that marketplace participants would use when
pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance also establishes a fair value hierarchy
for measurements of fair value as follows:
- Level 1 - quoted market prices in active markets for identical assets or liabilities.
- Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
- Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amount of the Company’s financial
instruments approximates their fair value as of December 31, 2020, due to the short-term nature of these instruments. Going Concern The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the
satisfaction of liabilities in the normal course of business. Tax Loss Carryforwards The Company recognizes deferred tax assets and
liabilities for the tax effects of differences between the financial statement and tax basis of assets and liabilities. A valuation
allowance is established to reduce the deferred tax assets if it is more likely than not that a deferred tax asset will not be
realized. Off-Balance Sheet Arrangements During the quarter ended December 31, 2020,
the Company did not engage in any off-balance sheet arrangements as defined in item 303(a)(4) of the SEC’s Regulation
S-K. The Company does not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material
to investors. Recent Accounting Pronouncements In June 2014, FASB issued Accounting Standards
Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The update
removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic
915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties
(Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about
the risks and uncertainties related to the company’s current activities. Furthermore, the update removes an exception provided
to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which
may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in
a company in the development stage. The update is effective for the annual reporting periods beginning after December 15,
2014, including interim periods therein. Early application with the first annual reporting period or interim period for which the
entity’s financial statements have not yet been issued (Public business entities) or made available for issuance (other entities).
The Company adopted this pronouncement for the year ended December 31, 2014. In June 2014, FASB issued Accounting Standards
Update (“ASU”) No. 2014-12, “Compensation – Stock Compensation ( Topic 718 ); Accounting for Share-Based
Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”.
The amendments in this ASU apply to all reporting entities that grant their employees share-based payments in which the terms of
the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments
require that a performance target that affects vesting and that could be achieved after the requisite service period be treated
as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance
conditions that affect vesting to account for such awards. For all entities, the amendments in this ASU are effective for annual
periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.
Entities may apply the amendments in this ASU either (a) prospectively to all awards granted or modified after the effective
date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest
annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is
adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial
statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective
transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This updated guidance is
not expected to have a material impact on our results of operations, cash flows or financial condition. Company are currently reviewing
the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition. In August 2014, the FASB issued Accounting
Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) –
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance
in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability
to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance.
In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments
require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain
principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term
substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles
for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt
is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures
when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial
statements are issued (or available to be issued). Company are currently reviewing the provisions of this ASU to determine if there
will be any impact on our results of operations, cash flows or financial condition. All other newly issued accounting pronouncements
but not yet effective have been deemed either immaterial or not applicable. |
