As
filed with the Securities and Exchange Commission on September 13, 2024
Registration
Statement No. 333-______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
| LASER
PHOTONICS CORPORATION |
| (Exact
name of Registrant as specified in its charter) |
| Delaware |
|
3690 |
|
84-3628771 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(Primary
Standard Industrial
Classification
Code Number) |
|
(I.R.S.
Employer
Identification
No.) |
1101
N. Keller Road, Suite G
Orlando,
FL 32810
(407)
804-1000
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Wayne
Tupuola, CEO
1101
N. Keller Road, Suite G
Orlando,
FL 32810
(407)
804-1000
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Ernest
M. Stern, Esq.
CM
Law PLLC
1701
Pennsylvania Ave., N.W.
Suite
200
Washington,
D.C. 20006
(202)
580-6500
Approximate
Date of Proposed Sale to the Public: As soon as practicable after the effective date of this registration statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
| Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
| Non-accelerated
Filer |
☒ |
Smaller
reporting company |
☒ |
| |
|
Emerging
growth company |
☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☒
This
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date
as the commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not
soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED SEPTEMBER 13 2024
Preliminary
Prospectus
Up
to 3,000,000 Shares of Common Stock
Laser
Photonics Corporation
This
prospectus relates to the offer and resale by the selling stockholders (the “Selling Stockholders”) identified herein of
up to an aggregate of 3,000,000 shares (the “Shares”), of common stock, par value $0.001 per share (“Common Stock”),
of Laser Photonics Corporation (the “Company”, “we”, “us” or “our”), which consists of
(i) 1,500,000 shares of common stock issued pursuant to that certain Securities Purchase Agreement, dated August 16, 2024, by and between
the Company and the Selling Stockholders (such agreement, the “Securities Purchase Agreement”), and (ii) 1,500,000 shares
of common stock issuable upon the exercise of warrants issued pursuant to the Securities Purchase Agreement (the “Common Warrants”).
For additional information regarding the issuance of the Shares to the Selling Stockholders, see “The Private Placement”
beginning on page 9 of this prospectus.
The
Shares will be resold from time to time by the Selling Stockholders listed in the section titled “Selling Stockholders” beginning
on page 33.
The
Selling Stockholders, or their respective transferees, pledgees, donees or other successors-in-interest, will sell the Shares through
public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated
prices. The Selling Stockholders may sell any, all or none of the Shares offered by this prospectus, and we do not know when or in what
amount the Selling Stockholders may sell their Shares hereunder following the effective date of this registration statement. We provide
more information about how a Selling Stockholder may sell its Shares in the section titled “Plan of Distribution” on page
38.
We
are registering the Shares on behalf of the Selling Stockholders, to be offered and sold by them from time to time. While we will not
receive any proceeds from the sale of the Shares by the Selling Shareholders, we may receive cash proceeds equal to the total exercise
price of the Common Warrants to the extent that the Common Warrants are exercised for cash. However, we cannot predict when and in what
amounts or if the Common Warrants will be exercised for cash, and it is possible that the Common Warrants may expire and never be exercised
or be exercised, if at all, only on a cashless basis, in which each case we would not receive any cash proceeds. We have agreed to bear
all of the expenses incurred in connection with the registration of the Shares. The Selling Stockholders will pay or assume discounts,
commissions, fees of underwriters, selling brokers or dealer managers and similar expenses, if any, incurred for the sale of the Shares.
Our
common stock trades on the Nasdaq Capital Market (“Nasdaq”) under the symbol “LASE”. On September 5, 2024,
the last reported sales price of our common stock was $5.04 per share.
We
are an “emerging growth company” as defined under the federal securities laws, and, as such, we have elected to comply with
reduced reporting requirements for this prospectus and may elect to do so in future filings.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus to read about
factors you should consider before investing in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is September __, 2024
TABLE
OF CONTENTS
Prospectus
ABOUT
THIS PROSPECTUS
This
prospectus describes the general manner in which the Selling Stockholders may offer from time to time up to 3,000,000 Shares (i) issued
directly to the Selling Stockholders pursuant to the Securities Purchase Agreement or (ii) issuable upon the exercise of the Common Warrants
issued pursuant to the Securities Purchase Agreement. You should rely only on the information contained in this prospectus and the related
exhibits, any prospectus supplement or amendment thereto and the documents incorporated by reference, or to which we have referred you,
before making your investment decision. Neither we nor the Selling Stockholders have authorized anyone to provide you with different
information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus, any prospectus
supplement or amendments thereto do not constitute an offer to sell, or a solicitation of an offer to purchase, the Shares offered by
this prospectus, any prospectus supplement or amendments thereto in any jurisdiction to or from any person to whom or from whom it is
unlawful to make such offer or solicitation of an offer in such jurisdiction. You should not assume that the information contained in
this prospectus, any prospectus supplement or amendments thereto, as well as information we have previously filed with the U.S. Securities
and Exchange Commission, or the SEC, is accurate as of any date other than the date on the front cover of the applicable document.
If
necessary, the specific manner in which the Shares may be offered and sold will be described in a supplement to this prospectus, which
supplement may also add, update or change any of the information contained in this prospectus. To the extent there is a conflict between
the information contained in this prospectus and any prospectus supplement, you should rely on the information in such prospectus supplement,
provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date —
for example, a document incorporated by reference in this prospectus or any prospectus supplement — the statement in the document
having the later date modifies or supersedes the earlier statement.
Neither
the delivery of this prospectus nor any distribution of Shares pursuant to this prospectus shall, under any circumstances, create any
implication that there has been no change in the information set forth or incorporated by reference into this prospectus or in our affairs
since the date of this prospectus. Our business, financial condition, results of operations and prospects may have changed since such
date.
When
used herein, unless the context requires otherwise, references to “Laser Photonics”, the “Company”, “we”,
“our” or “us” refer to Laser Photonics Corporation, a Delaware corporation.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, any amendment and the information incorporated by reference into this prospectus, including the sections entitled “Risk
Factors”, contain “forward-looking statements” within the meaning of Section 21(E) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”).
These forward-looking statements include, without limitation: statements regarding the Business Combination, new products or services;
statements concerning litigation or other matters; statements concerning projections, predictions, expectations, estimates or forecasts
for our business, financial and operating results and future economic performance; statements of our management’s goals and objectives;
statements concerning our competitive environment, availability of resources and regulation; trends affecting our financial condition,
results of operations or future prospects; our financing plans or growth strategies; and other similar expressions concerning matters
that are not historical facts. Words such as “may”, “will”, “should”, “could”, “would”,
“predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”,
“intends”, “plans”, “believes” and “estimates,” and variations of such terms or similar
expressions, are intended to identify such forward-looking statements.
Forward-looking
statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the
times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available
at the time they are made and/or our management’s good faith belief as of that time with respect to future events. Our actual results
may differ materially from those expressed in, or implied by, the forward-looking statements due to a number of factors including, but
not limited to, those set forth under the heading “Risk Factors” in this prospectus, as well as other risks discussed in
documents that we file with the SEC.
Forward-looking
statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no
obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting
forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
You should review our subsequent reports filed with the SEC described in the sections of this prospectus and the accompanying prospectus
entitled “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference,” all of
which are accessible on the SEC’s website at www.sec.gov.
PROSPECTUS
SUMMARY
The
following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information
that may be important to you. You should read this entire prospectus carefully, including the sections entitled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial
statements and related notes included elsewhere in this prospectus. In this prospectus, unless otherwise noted, the terms “the
Company,” “Laser Photonics,” “we,” “us,” and “our” refer to Laser Photonics Corporation.
THE
COMPANY
Company
Overview
We
were formed under the law of Wyoming on November 8, 2019. We changed our domicile to Delaware on March 5, 2021. We are a vertically integrated
manufacturing company for photonics-based industrial products and solutions, primarily disruptive laser cleaning technologies.
We
are pioneering a new generation of laser blasting technologies focused on disrupting the sandblasting and abrasives blasting markets.
We offer a full portfolio of integrated laser blasting solutions for corrosion control, rust removal, de-coating, pre-welding and post-welding,
laser cleaning and surface conditioning. Our solutions span use cases throughout product lifecycles, from product fabrication to maintenance
and repair, as well as aftermarket operations. Our laser blasting solutions are applicable in most industries dealing with materials
processing, including automotive, aerospace, healthcare, consumer products, shipbuilding, heavy industry, machine manufacturing, nuclear
maintenance and de-commissioning and surface coating.
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.
We
initiated our sales effort in December 2019. By December 31, 2023, we had net revenues of $3.9 million. We are strategically positioned
to drive growth and innovation in the laser technology market by targeting three key customer segments: government entities, Fortune
1000 companies, and medium/small businesses. Each of these segments presents unique opportunities and challenges, and our business model
is designed to cater specifically to the needs and growth potential within each category.
For
government agencies, we provide highly specialized laser solutions that meet stringent regulatory and performance standards. This segment
benefits from our expertise in delivering reliable, durable, and effective laser systems for various applications, from defense and aerospace
to public infrastructure projects. Working with government clients not only solidifies our reputation as a trusted provider of advanced
laser technology but also paves the way for new contracts and collaborative projects.
Fortune
1000 companies represent another critical segment, where our laser technology can significantly enhance operational efficiency, precision,
and productivity. By addressing the unique challenges of large-scale industrial applications, we position ourselves as an essential partner
in the innovation strategies of these corporations. Our advanced laser solutions help these clients stay competitive and maintain high-quality
standards, driving repeat business and fostering long-term partnerships.
Medium
and small businesses constitute the third pivotal segment of our customer base. Recognizing the distinct needs and constraints of this
market, we launched the Service Partner Network (SPN). This initiative is designed to empower medium and small businesses by providing
them access to mobile demonstration units, enabling them to experience the advantages of our laser technology firsthand. The SPN serves
a dual purpose: it facilitates immediate equipment sales and acts as a catalyst for demonstrating the practical benefits and capabilities
of our products.
Through
the SPN, we also support entrepreneurs looking to start their own mobile laser cleaning or rental service businesses. Our marketing team
plays a crucial role in this ecosystem by generating and distributing leads to SPN members for a fee, thereby creating a continuous revenue
stream. This collaborative approach not only bolsters the success of our SPN partners but also promotes sustained long-term revenue growth
for us.
By
strategically targeting these three customer segments and leveraging the SPN to enhance our market penetration and product visibility,
we believe we are well-positioned for robust growth. Our comprehensive business model not only enhances customer engagement and satisfaction
across diverse markets but also solidifies our standing as an innovative leader in the laser technology industry.
We
market our products globally through our direct sales force which is located in the United States.
We
have a perpetual, worldwide exclusive license agreement with ICT Investments, LLC (“ICT Investments”) to sell the Laser Photonics™
branded equipment for laser cleaning and rust removal, in exchange for a royalty equal to 6.5% of the gross sales of the equipment incorporating
the licensor technology.
On
October 16, 2023, we entered into a license agreement with an affiliated company, Fonon Technologies, Inc., which is majority-owned by
ICT Investments, for an exclusive, worldwide, nontransferable license for high power turbo piercing (“Cold Cutting”) laser
cutting technology and any improvements to such technology to allow us to manufacture, sell, export and import products incorporating
such technology in return for our paying a license fee of $350,000 in cash and a one-time grant of 1,000,000 restricted shares of our
common stock to ICT Investments.
ICT
Investments, LLC currently owns approximately 36.2% of the outstanding shares of our common stock and Fonon Corporation currently owns
approximately 24.5% of the outstanding shares of our common stock, and collectively are our majority shareholders. Dmitriy Nikitin has
voting control of the Company through his ownership of all membership interests of ICT Investments, LLC which is the controlling entity
of Fonon Corporation and Fonon Technologies, Inc. On May 21, 2024 we entered into a license agreement with Fonon Corporation to receive
an exclusive, worldwide, sublicensable license to Fonon’s laser material processing equipment and technology, including all applications
of laser cutting, marking, engraving, laser welding, brazing, ablation, laser drilling, semiconductor chip marking, semiconductor and
flat panel display laser processing equipment, all other laser material processing equipment documented or existing in a form of knowhow
and/or trade secrets in return for 3,000,000 restricted shares of Laser Photonics common stock. Following the Private Placement, ICT
Investments, LLC, through its control of Fonon Corporation and Fonon Technologies, Inc., in the aggregate will own approximately __%
of our common stock and will have the voting power to decide all matters submitted to a vote of our shareholders, including the election
of our directors. Through our affiliation with ICT Investments, its portfolio companies and its customers, we have access to more than
1,500 high profile Fortune 5000 customer prospects as well as recognition as a global leader in manufacturing premium laser equipment.
In addition, through the expertise and reputation of our officers, Board members and advisors, we have the foundation of our technologically
advanced, disruptive laser systems specifically suited for most material processes with specific cleaning requirements and challenges.
Our
principal executive offices are located at 1101 N. Keller Rd., Suite G, Orlando, Florida 32810, and our telephone number is (407) 804-1000.
Growth
Strategy
Our
objective is to achieve a leadership position in our industry with a focus in growth technologies including laser welding, laser cutting,
laser cleaning, semiconductor, 3-D Printing, and anti-drone defense. The key elements of our growth strategy are:
Multi-market
and Multi-product Approach. We intend to develop and manufacture laser systems for a variety of markets to reduce the financial impact
that a downturn in any one market would have.
Accent
on Developing Standard Systems for Specific Markets. We expect to increase sales through an industry-recognized expertise in clearly
defined markets with substantial sales demand such as rust removal equipment for the shipbuilding industry, laser de-contamination equipment
for the nuclear industry and laser blasting cabinets for the general manufacturing industry.
Broaden
Customer Relationships. We expect to develop a global diversified customer base in a variety of industries. We seek to differentiate
ourselves from our competitors through superior product pricing, performance and service. We believe that a global presence and investments
in application engineering and support will create competitive advantages in serving multinational and local companies.
New
Product Development. We intend to target new applications early in the development cycle and drive adoption by leveraging our strong
customer relationships, engineering expertise and competitive production costs.
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. In addition to our attention to Fortune 1000 companies, we also 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 the laser equipment. As a result, we are developing a group of standardized laser cleaning
equipment that we have named the CleanTech™ laser blaster family of equipment that we believe represents a new generation of high
power laser cleaning and rust removal systems that will be affordable to more than a million small and mid-size companies.
Controlled
Company Exemption
ICT
Investments, LLC in the aggregate will control 55% of the voting power of our outstanding capital stock following this offering
and will have the power to elect a majority of our directors. Pursuant to Nasdaq’s listing standards, a company of which more than
50% of the voting power for the election of directors is held by an individual, a group or another company qualifies as a “controlled
company.” As a controlled company, we may elect not to comply with certain Nasdaq corporate governance requirements, including
the requirements to have (i) a board composed of a majority of independent directors; (ii) compensation of executive officers
determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; and (iii)
director nominees selected or recommended for our board either by a majority of the independent directors or a nominating committee comprised
solely of independent directors. If we cease to be a “controlled company” and our shares are listed on Nasdaq, we will be
required to comply with these standards and, depending on the independence determination with respect to our then-current directors,
we may be required to add additional directors to our board to achieve such compliance within the applicable transition periods. We intend
to comply with the Nasdaq corporate governance requirements for companies that are not controlled companies.
ABOUT
THIS OFFERING
This
prospectus relates to the offer and resale by the Selling Stockholders of up to 3,000,000 Shares. All of the Shares, if and when sold,
will be sold by the Selling Stockholders.
| Shares
offered by the Selling Stockholders: |
|
Up
to 3,000,000 shares of our common stock. |
| |
|
|
| Common
stock outstanding before the offering: |
|
12,270,427
shares of common stock. |
| |
|
|
Common
stock to be outstanding
after
the offering
assuming
the issuance of the maximum number of Shares issuable upon exercise of the Common Warrants:
|
|
15,270,4271 |
Use
of proceeds:
|
|
We
will not receive any of the proceeds from any sale of the Shares by the Selling Stockholders. Any proceeds that we receive from the
exercise of the Common Warrants will be used for working capital, capital expenditures, product development, and other general corporate
purposes, including investments in sales and marketing in the United States and internationally. See “Use of Proceeds.” |
| |
|
|
Risk
factors:
|
|
See
the section titled “Risk Factors” beginning on page 11 and the other information included in this prospectus for a discussion
of factors you should carefully consider before deciding to invest in our common stock. |
| |
|
|
| Trading
symbol: |
|
Our
common stock is listed on Nasdaq under the symbol “LASE”. |
| |
|
|
Lock-ups:
|
|
We
and our directors and officers and shareholders owning at least 5% of the outstanding common stock have agreed with the Placement
Agent (defined below) not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock
or securities convertible into common stock for a period of period of the later of 60 days after August 19, 2024 (the closing of
the Private Placement) or the effectiveness of this Registration Statement. |
| (1) |
The
number of shares of common stock that will be outstanding after this offering is based on 15,270,427 shares of common stock outstanding
as of August 30, 2024, and excludes 1,666,667 shares reserved for future issuance under our 2019 Stock Incentive Plan (“2019
Plan”) and the underwriters’ warrants to purchase up to180,000 shares in connection with our IPO in September 2022. |
Except
as otherwise indicated herein, all information in this prospectus reflects or assumes no exercise of the 180,000 warrants outstanding
as of August 30, 2024, but, unless otherwise indicated, assumes or gives effect to the exercise of all Common Warrants in full.
Implications
of Being an Emerging Growth Company
As
a company with less than $1.235 billion in revenue during our most recently completed fiscal year, we qualify as an “emerging growth
company” as defined in Section 2(a) of the Securities Act of 1933, as amended, which we refer to as the Securities Act, as modified
by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified
reduced disclosure and other requirements that are otherwise applicable, in general, to public companies that are not emerging growth
companies. These provisions include:
| |
● |
Reduced
disclosure about our executive compensation arrangements; |
| |
|
|
| |
● |
No
non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; |
| |
|
|
| |
● |
Exemption
from the auditor attestation requirement in the assessment of our internal control over financial reporting; and |
| |
|
|
| |
● |
Reduced
disclosure of financial information in this prospectus, limited to two years of audited financial information and two years of selected
financial information. |
As
a smaller reporting company, each of the foregoing exemptions is currently available to us. We may take advantage of these exemptions
for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company
if we have more than $1.235 billion in annual revenues as of the end of a fiscal year, if we are deemed to be a large-accelerated filer
under the rules of the Securities and Exchange Commission, or if we issue more than $1.0 billion of non-convertible debt over a three-year-period.
Notwithstanding
the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed
issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than
$75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still
considered a “smaller reporting company”, at such time as we cease being an “emerging growth company”, the disclosure
we will be required to provide in our SEC filings will increase but will still be less than it would be if we were not considered either
an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth
companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their
filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requiring
that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial
reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required
to provide two years of audited financial statements in annual reports.
THE
PRIVATE PLACEMENT
On
August 16, 2024, the Company entered into a private placement transaction (the “Private Placement”), pursuant to the Securities
Purchase Agreement with the Selling Stockholders for aggregate gross proceeds of $3 million before deducting fees to the Placement Agent
and other expenses payable by the Company in connection with the Private Placement. Under the Private Placement, the Company issued an
aggregate of 1,500,000 units (the “Units”) at a purchase price of $2.00 per Unit. Each Unit consists of (i) one share of
common stock and (ii) one Common Warrant to purchase one share of Common Stock, subject to adjustment as set forth under the terms of
the Common Warrants. The Common Warrant will be exercisable on the earlier of six months after issuance or stockholder approval and will
expire 5.5 years from issuance.
The
Company also entered into a placement agent agreement (the “Placement Agent Agreement”) with Aegis, dated August 16, 2024,
pursuant to which Aegis agreed to serve as the exclusive placement agent (the “Placement Agent”) for the Company on a “best
efforts” basis in connection with the Private Placement. The Company agreed to pay Aegis a cash placement fee equal to 8.0% of
the gross cash proceeds received in the Private Placement and to pay for certain expenses of the Private Placement incurred by Aegis.
Pursuant to the Placement Agent Agreement, without the prior written consent of the Purchasers, the Company will not, for a period of
60 days after the later of the Release Date (as defined in the Securities Purchase Agreement) (a) offer, sell, issue, or otherwise transfer
or dispose of, directly or indirectly, any equity of the Company or any securities convertible into or exercisable or exchangeable for
equity of the Company; (b) file or caused to be filed any registration statement with the Commission relating to the offering of any
equity of the Company or any securities convertible into or exercisable or exchangeable for equity of the Company; or (c) enter into
any agreement or announce the intention to effect any of the actions described in subsections (a) or (b) hereof.
Concurrently
with the Placement Agent Agreement and the Securities Purchase Agreement, on August 16, 2024, the Company and the Purchasers entered
into a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement,
the Company is required to file a resale registration statement (the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) to register for resale of the shares issuable upon exercise of the Common Warrants within 15 days
after the Closing Date (the “Filing Date”). Under the terms of the Registration Rights Agreement, the Registration Statement
must be declared effective within 15 days after the Filing Date or 45 days following the Filing Date if the Registration Statement is
reviewed by the SEC. The Company will be obligated to pay certain liquidated damages to the Purchasers if the Company fails to file the
Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, or
if the Company fails to maintain the effectiveness of the Registration Statement.
The
Common Warrants will be exercisable at any time or times upon the earlier of the date Stockholder Approval (as defined below) is obtained
or six months from the issuance date of August 19, 2024, have an initial exercise price of $4.34 per share of Common Stock and a termination
date of February 18, 2030. The exercise price and number of shares of Common Stock issuable upon exercise of the Common Warrants are
subject to adjustment upon future dilutive issuances and stock combination events, including stock dividends, stock splits, rights offerings
and pro rata distributions following the date of the Securities Purchase Agreement. Whenever on or after the subscription date, as long
as the Common Warrant is outstanding, the Company issues or sells any Common Stock for a consideration per share less than a price equal
to the exercise price in effect immediately prior to such issue or sale or deemed issuance or sale (the “Base Price”), then
immediately after such dilutive issuance, the exercise price then in effect shall be reduced to the Base Price that shall not be less
than the Floor Price that, following Stockholder Approval, is defined as $0.652, a price equal to 20% of the Nasdaq Minimum Price prior
to pricing on the date of the Securities Purchase Agreement, as defined in Nasdaq Listing Rule 5635(d)(1)(A)
Pursuant
to the Securities Purchase Agreement, the Company must hold a special meeting of stockholders at the earliest practicable date after
the date of the Securities Purchase Agreement, but in no event later than 60 days after the closing date of the Private Placement, for
the purpose of obtaining stockholder approval (the “Stockholder Approval”), to solicit proxies from its stockholders in connection
therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall
vote their proxies in favor of such proposal. Within ten business days following the closing date of the Private Placement, the Company
shall file with the SEC this Proxy Statement for the purpose of obtaining Stockholder Approval. From the date of the Securities Purchase
Agreement until six months from the Release Date (as defined below), the Company is prohibited from effecting or entering into an agreement
to effect any issuance by the Company or any of its subsidiaries of shares of Common Stock or Common Stock Equivalents (defined as any
securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation,
any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Stock.as defined below) (or a combination of units thereof) involving
a Variable Rate Transaction (defined as a transaction in which the Company (i) issues or sells any shares of Common Stock or Common Stock
Equivalents either (A) at a conversion price, exercise price or exchange rate or other price 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 debt or equity 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, other than in connection with customary anti-dilution adjustments resulting from future
stock splits, stock dividends or similar transactions, or (ii) issues or sells any amortizing convertible security that amortizes prior
to its maturity date, whereby it is required to or has the option to (or the investor in such security has the option to require the
Company to) make such amortization payments in Common Stock (whether or not such payments in stock are subject to certain equity conditions)
or (iii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit or “at-the-market”
offering, whereby it may sell securities at a future determined price, regardless of whether Shares pursuant to such agreement have actually
been issued and regardless of whether such agreement is subsequently canceled, provided that any issuance of shares upon the exercise
of the Common Warrants issuable under the Securities Purchase Agreement will not be deemed a Variable Rate Transaction).
Summary
of Risk Factors
An
investment in our securities involves a high degree of risk. The occurrence of one or more of the events or circumstances described in
the section titled “Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affect
our business, financial condition and operating results. In that event, the trading price of our securities could decline, and you could
lose all or part of your investment. Such risks include, but are not limited to:
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We
have a limited operating history with financial results that may not be indicative of future performance. |
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We
are competing in highly competitive market and to compete effectively we must be able to adapt to technology changes and to implement
innovative technology applications. |
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ICT
Investments, LLC currently owns approximately 36.2% of the outstanding shares of our common stock Fonon Corporation currently owns
approximately 24.5% of the outstanding shares of our common stock and Fonon Technologies, Inc. owns approximately 8%. Dmitriy Nikitin
has voting control of the Company through his ownership of all membership interests of ICT Investments, LLC, which is the majority
shareholder of Fonon Corporation and Fonon Technologies, Inc., and will be able to exert significant control over matters subject
to stockholder approval. |
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We
depend on the U.S. Government for a portion of our business which we expect to increase and changes in government defense spending
could have adverse consequences on our financial position, results of operations and business. |
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As
a U.S. defense contractor, we are vulnerable to security threats and other disruptions that could negatively impact our business. |
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If
we engage in any business in foreign countries, we would be exposed to geo-political and economic factors, regulatory requirements
and other risks associated with doing business in foreign countries. |
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Current
uncertainty in global economic conditions, including regional conflicts and inflation, could adversely affect our revenue and business. |
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We
are subject to cyber security risks and risks of data loss or other security breaches. |
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Our
success may depend on our ability to obtain and protect the proprietary information on which we base our laser-based cleaning equipment.
The patent application process is expensive and time-consuming, and we and our current or future licensors and licensees may not
be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.
It is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable aspects
of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection
on them. |
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As
a “controlled company” we may take advantage of certain corporate governance exemptions afforded to a “controlled
company” under the rules of Nasdaq. |
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If
we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable
outcome in that litigation could harm our business. |
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Some
provisions of our certificate of incorporation and bylaws may deter takeover attempts, which may inhibit a takeover that stockholders
consider favorable and limit the opportunity of our stockholders to sell their shares at a favorable price. |
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Our
indemnification of our officers and directors may cause us to use corporate resources to the detriment of our stockholders. |
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Provisions
in our certificate of incorporation and bylaws and Delaware law may have the effect of discouraging lawsuits against our directors
and officers. |
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We
restated our previously issued consolidated financial statements and identified material weaknesses in our internal controls over
financial reporting. |
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If
we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately
or prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely
impact the trading price of our common stock. |
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If
our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares. If we do
not retain our listing on Nasdaq and if the price of our common stock is less than $5.00 per share, our common stock will be deemed
a penny stock. |
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Future
issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock could cause the
market price of our common stock to decline and would result in the dilution of your holdings. |
RISK
FACTORS
Investing
in our common stock involves a high degree of risk. Prospective investors should carefully consider the risks described below, together
with all of the other information included or referred to in this prospectus, before purchasing shares of our common stock. There are
numerous and varied risks that may prevent us from achieving our goals. If any of these risks actually occurs, our business, financial
condition or results of operations may be materially adversely affected. In such case, the trading price of our common stock could decline
and investors in our common stock could lose all or part of their investment.
Risks
related to our business and our industry
We
may need to raise additional capital.
We
expect to raise additional funds during the next 12 months if we are not able to generate sufficient revenues from operations and our
capital resources are insufficient to continue to commercialize, market and sell our products. We cannot be certain that funding
will be available on acceptable terms or at all. To the extent that we raise additional funds by issuing equity securities, our stockholders
may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that may impact our ability
to conduct business or return capital to investors. If we are unable to raise additional capital if required or on acceptable terms,
we may have to significantly scale back, delay or discontinue the development and/or commercialization of our laser-based cleaning products,
restrict our operations or obtain funds by entering into agreements on unattractive terms.
There
is substantial doubt about our ability to continue as a going concern. We have a history of annual net losses which may continue and
which may negatively impact our ability to achieve our business objectives, and we received a going concern qualification in our 2023
audit.
For
the year ended December 31, 2023, we recorded a loss from operations of $3,348,235 and a net loss of $3,318,171 and a loss from operations
of $2,076,807 and a net loss of $2,094,064 for the year ended December 31, 2022. Our independent registered public accounting firm, in
their report to our December 31, 2023, financial statements, expressed substantial doubt about our ability to continue as a going concern
due to our recurring losses from operations. There can be no assurance that our future operations will result in net income. Our failure
to increase our revenues or improve our gross margins will harm our business. We may not be able to generate profitability on a quarterly
or annual basis in the future. If our revenues grow more slowly than we anticipate, our gross margins fail to improve or our operating
expenses exceed our expectations, our operating results will suffer.
If
our proposed marketing efforts are unsuccessful, we may not earn enough revenue to become profitable.
Our
success will depend on investment in marketing resources and the successful implementation of our marketing plan. Our marketing plan
may include attendance at trade shows and making private demonstrations, advertising and promotional materials and advertising campaigns
in print and/or broadcast media. We cannot give any assurance that our marketing efforts will be successful. If they are not, revenue
may not be sufficient to cover our fixed costs and we may not become profitable.
We
have a large amount of intangible assets, and if these assets become impaired, our earnings would be adversely affected.
We
have a substantial amount of intangible assets, representing approximately 31% of our total assets as of March 31, 2024, and 25% on a
pro forma basis for giving effect to this offering. While we amortize our intangible assets, they may be subject to impairment testing.
If we have any significant impairment to our intangible assets, it may have a material adverse effect on our reported financial results
for the period in which the charge is taken and could result in a decrease in the market price of our common stock.
We
may be unable to respond to rapid technology changes and innovative products.
In
a constantly changing and innovative technology market with frequent new product introductions, enhancement and modifications, we may
be forced to implement and develop new technologies into our products for anticipation of changing customer requirements that may significantly
impact costs in order to retain or enhance our competitive position in existing and new markets.
There
is intense competition in our market.
We
face intense competition from other manufacturers of crystalline silicon laser modules, thin-film laser modules and solar thermal and
concentrated fiber laser systems. By entering this sector, our management is aware that failure to compete with direct market leading
companies and new entrants will affect overall business and the product. Therefore, if we are able to more quickly innovate and implement
applications and technologies, we will be able to offer better pricing and commercial business strategies management to businesses purchasing
fiber laser systems. Competitive factors in this market are all related to product performance, price, customer service, training platforms,
reputation, sales and marketing effectiveness, all factors on which we believe we can compete successfully but will need greater financial
resources to do so.
Future
acquisitions may be unsuccessful and may negatively affect operations and financial condition.
We
plan to grow organically but opportunistically pursue potential acquisitions of complementary businesses. Should we acquire other companies,
the integration of businesses, personnel, product lines and technologies can be difficult, time consuming and subject to significant
risks. Any difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses and decrease
our revenue and results of operations.
If
we are unable to hire additional personnel, we will have trouble growing our business.
Our
future success depends on our ability to attract, retain and motivate highly skilled technical, marketing, management, accounting and
administrative personnel. We plan to hire additional personnel in all areas of our business as we grow. Competition for qualified personnel
is intense. As a result, we may be unable to attract and retain qualified personnel. We may also be unable to retain the employees that
we currently employ or to attract additional technical personnel. The failure to retain and attract the necessary personnel could seriously
harm our business, financial condition and results of operations.
We
face a higher risk of failure because we cannot accurately forecast our future revenues and operating results.
The
rapidly changing nature of the markets in which we compete makes it difficult to accurately forecast our revenues and operating results.
Furthermore, we expect our revenues and operating results to fluctuate in the future due to a number of factors, including the following:
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unexpected
delays in introducing new products; |
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increased
expenses, whether related to sales and marketing, or administration; and |
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Our
products may suffer defects.
Our
products may suffer defects that may lead to substantial product liability, damage or warranty claims. Given our complex platforms and
systems within our product, errors and defects may be related to flight and/or communications. Such an event could result in significant
expenses arising from product liability and warranty claims, and reduce sales, which could have a material adverse effect on business,
financial condition and results of operations.
We
will need to increase the size of our organization, and we may experience difficulties in managing growth, which would hurt our financial
performance.
We
will need to expand our employee infrastructure for managerial, operational, financial and other resources in addition to employees hired
from other companies which we may acquire. Future growth will impose significant added responsibilities on members of management, including
the need to identify, recruit, maintain and integrate additional employees. Our future financial performance and our ability to commercialize
our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
To
manage our future growth, we will need to continue to improve our management, operational and financial controls and our reporting systems
and procedures. All of these measures will require significant expenditures and will demand the attention of management. If we do not
continue to enhance our management personnel and our operational and financial systems and controls in response to growth in our business,
we could experience operating inefficiencies that could impair our competitive position and could increase our costs more than we had
planned. If we are unable to manage growth effectively, our business, financial condition and operating results could be adversely affected.
Our
business depends on experienced and skilled personnel, and if we are unable to attract and integrate skilled personnel, it will be more
difficult for us to manage our business and complete contracts.
The
success of our business depends on the skill of our personnel. Accordingly, it is critical that we maintain, and continue to build, a
highly experienced management team and specialized workforce, including sales professionals. Competition for personnel, particularly
those with expertise in government consulting and a security clearance is high and identifying candidates with the appropriate qualifications
can be costly and difficult. We may not be able to hire the necessary personnel to implement our business strategy given our anticipated
hiring needs, or we may need to provide higher compensation or more training to our personnel than we currently anticipate. In addition,
our ability to recruit, hire and indirectly deploy former employees of the U.S. Government is subject to complex laws and regulations,
which may serve as an impediment to our ability to attract such talent.
Our
business is labor intensive and our success depends on our ability to attract, retain, train and motivate highly skilled employees, including
employees who may become part of our organization in connection with our acquisitions. The increase in demand for consulting, technology
integration and managed services has further increased the need for employees with specialized skills or significant experience in these
areas. Our ability to expand our operations will be highly dependent on our ability to attract a sufficient number of highly skilled
employees and to retain our employees and the employees of companies that we have acquired. We may not be successful in attracting and
retaining enough employees to achieve our desired expansion or staffing plans. Furthermore, the industry turnover rates for these types
of employees are high and we may not be successful in retaining, training or motivating our employees. Any inability to attract, retain,
train and motivate employees could impair our ability to adequately manage and complete existing projects and to accept new client engagements.
Such inability may also force us to increase our hiring of independent contractors, which may increase our costs and reduce our profitability
on client engagements. We must also devote substantial managerial and financial resources to monitoring and managing our workforce. Our
future success will depend on our ability to manage the levels and related costs of our workforce.
In
the event we are unable to attract, hire and retain the requisite personnel and subcontractors, we may experience delays in completing
contracts in accordance with project schedules and budgets, which may have an adverse effect on our financial results, harm our reputation
and cause us to curtail our pursuit of new contracts. Further, any increase in demand for personnel may result in higher costs, causing
us to exceed the budget on a contract, which in turn may have an adverse effect on our business, financial condition and operating results
and harm our relationships with our customers.
Insurance
and contractual protections may not always cover lost revenue, increased expenses or liquidated damages payments, which could adversely
affect our financial results.
Although
we maintain insurance and intend to obtain warranties from suppliers, obligate subcontractors to meet certain performance levels and
attempt, where feasible, to pass risks we cannot control to our customers, the proceeds of such insurance, warranties, performance guarantees
or risk sharing arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be
required in the future.
Internal
system or service failures could disrupt our business and impair our ability to effectively provide our services and products to our
customers, which could damage our reputation and adversely affect our revenues and profitability.
Any
system or service disruptions, including those caused by ongoing projects to improve our information technology systems and the delivery
of services, if not anticipated and appropriately mitigated, could have a material adverse effect on our business including, among other
things, an adverse effect on our ability to bill our customers for work performed on our contracts, collect the amounts that have been
billed and produce accurate financial statements in a timely manner. We are also subject to system failures, including network, software
or hardware failures, whether caused by us, third-party service providers, cyber security threats, natural disasters, power shortages,
terrorist attacks or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediation
costs, subject us to claims and damage our reputation. In addition, the failure or disruption of our communications or utilities could
cause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurance
may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and,
as a result, our future results could be adversely affected.
Our
financial performance could be adversely affected by decreases in spending on technology products and services by our public sector customers.
Our
sales to our public sector customers are impacted by government spending policies, budget priorities and revenue levels. An adverse change
in government spending policies (including budget cuts at the federal level), budget priorities or revenue levels could cause our public
sector customers to reduce their purchases or to terminate or not renew their contracts with us, which could adversely affect our business,
results of operations or cash flows.
Our
business could be adversely affected by the loss of certain vendor partner relationships and the availability of their products.
We
purchase products from vendors on a global basis as components to include in our finished laser-based cleaning equipment. In the event
we were to lose one of our significant vendor partners, our business could be adversely affected.
We
expect to enter into joint ventures, teaming and other arrangements, and these activities involve risks and uncertainties.
We
expect to enter into joint ventures, teaming and other arrangements. These activities involve risks and uncertainties, including the
risk of the joint venture or applicable entity failing to satisfy its obligations, which may result in certain liabilities to us for
guarantees and other commitments, the challenges in achieving strategic objectives and expected benefits of the business arrangement,
the risk of conflicts arising between us and our partners and the difficulty of managing and resolving such conflicts, and the difficulty
of managing or otherwise monitoring such business arrangements.
Our
business and operations expose us to numerous legal and regulatory requirements and any violation of these requirements could harm our
business.
We
are subject to numerous federal, state and foreign legal requirements on matters as diverse as data privacy and protection, employment
and labor relations, immigration, taxation, anticorruption, import/export controls, trade restrictions, internal and disclosure control
obligations, securities regulation and anti-competition. Compliance with diverse and changing legal requirements is costly, time-consuming
and requires significant resources. We are also focused on expanding our business in certain identified growth areas, such as energy
and environment, which are highly regulated and may expose us to increased compliance risk. Violations of one or more of these diverse
legal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against us
or our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligations
related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant
monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability
to compete for certain work and allegations by our customers that we have not performed our contractual obligations.
As
a manufacturer of laser cleaning equipment our future success depends on our ability to effectively balance manufacturing production
with market demand and reducing our manufacturing cost per watt.
Our
ability to generate the profits we aim to achieve will depend, in part, on our ability to respond to market demand and add new manufacturing
capacity in a cost-effective manner. In addition, we must continue to increase the efficiency of our manufacturing process to compete
successfully and generate the returns to our stockholders, attract growth capital and a qualify for and maintain a listing on an exchange.
Our failure to do so could threaten our long-term viability.
We
depend on the U.S. Government for a portion of our business which we expect to increase and changes in government defense spending could
have adverse consequences on our financial position, results of operations and business.
Approximately
15% of our U.S. revenues from inception to date, have been from sales and services rendered directly or indirectly to the U.S. Government
which we expect to grow to 25% in the next 12 months. Our current contracts for the U.S. Army, Navy and the Air Force are defense related
awards and our anticipated future revenues from the U.S. Government are expected to result from contracts awarded under various U.S.
Government programs, primarily defense-related programs with the Department of Defense (DoD) and other departments and agencies. Cost
cutting including through consolidation and elimination of duplicative organizations and insurance has become a major initiative for
DoD. The funding of our programs is subject to the overall U.S. Government budget and appropriation decisions and processes which are
driven by numerous factors, including geo-political events and macroeconomic conditions. The overall level of U.S. defense spending increased
in recent years for numerous reasons, including increases in funding of operations in Iraq and Afghanistan. However, with the winding
down of both wars, defense spending levels are becoming increasingly difficult to predict and are expected to be affected by numerous
factors. Such factors include priorities of the presidential administration and the Congress, and the overall health of the U.S. and
world economies and the state of governmental finances.
The
Budget Control Act of 2011 enacted 10-year discretionary spending caps which are expected to generate over $1 trillion in savings for
the U.S. Government, a substantial portion of which comes from DoD baseline spending reductions. In addition, the Budget Control Act
of 2011 provides for additional automatic spending cuts (referred to as “sequestration”) totaling $1.2 trillion over nine
years. These reduction targets will further reduce DoD and other federal agency budgets. Although the Office of Management and Budget
has provided guidance to agencies on implementing sequestration cuts, there remains much uncertainty about how exactly sequestration
cuts will be implemented and the impact those cuts will have on contractors supporting the government. Given the potential impasse over
raising the debt ceiling, we are not able to predict the impact of budget cuts, including sequestration, on our company or our financial
results. However, we expect that budgetary constraints and concerns related to the national debt will continue to place downward pressure
on DoD spending levels and that implementation of the automatic spending cuts without change will reduce, delay or cancel funding for
certain of our contracts - particularly those with unobligated balances - and programs and could adversely impact our operations, financial
results and growth prospects.
Significant
reduction in defense spending could have long-term consequences for our size and structure. In addition, reduction in government priorities
and requirements could impact the funding, or the timing of funding, of our programs, which could negatively impact our results of operations
and financial condition. In addition, we are involved in U.S. Government programs, which are classified by the U.S. Government and our
ability to discuss these programs, including any risks and disputes and claims associated with and our performance under such programs,
could be limited due to applicable security restrictions.
Our
financial performance is dependent on our ability to perform on our current and future expected U.S. Government contracts, which are
subject to termination for convenience, which could harm our financial performance.
We
believe that our financial performance will be dependent on our performance under our existing U.S. Government contracts and contracts
we may enter into with the U.S. Government in the future. Government customers have the right to cancel any contract for its convenience.
An unanticipated termination of, or reduced purchases under, one of our major contracts whether due to lack of funding, for convenience
or otherwise, or the occurrence of delays, cost overruns and product failures could adversely impact our results of operations and financial
condition. If one of our U.S. Government contracts were terminated for convenience, we would generally be entitled to payments for our
allowable costs and would receive some allowance for profit on the work performed. If one of our contracts were terminated for default,
we would generally be entitled to payments for our work that has been accepted by the government. A termination arising out of our default
could expose us to liability and have a negative impact on our ability to obtain future contracts and orders. Furthermore, on contracts
for which we are a subcontractor and not the prime contractor, the U.S. Government could terminate the prime contract for convenience
or otherwise, irrespective of our performance as a subcontractor.
Our
failure to comply with a variety of complex procurement rules and regulations could result in our being liable for penalties, including
termination of our current and anticipated U.S. Government contracts, disqualification from bidding on future U.S. Government contracts
and suspension or debarment from U.S. Government contracting that could adversely affect our financial condition.
We
must comply with laws and regulations relating to the formation, administration and performance of our one existing and anticipated future
U.S. Government contracts, which affect how we do business with our customers and may impose added costs on our business. U.S. Government
contracts generally are subject to the Federal Acquisition Regulation (FAR), which sets forth policies, procedures and requirements for
the acquisition of goods and services by the U.S. Government, department-specific regulations that implement or supplement DFAR, such
as the DOD’s Defense Federal Acquisition Regulation Supplement (DFARS) and other applicable laws and regulations. We are also subject
to the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with certain contract
negotiations; the Procurement Integrity Act, which regulates access to competitor bid and proposal information and government source
selection information, and our ability to provide compensation to certain former government officials; the Civil False Claims Act, which
provides for substantial civil penalties for violations, including for submission of a false or fraudulent claim to the U.S. Government
for payment or approval; the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submission
of a false or fraudulent claim to the U.S. Government for payment or approval; and the U.S. Government Cost Accounting Standards, which
impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. Government contracts. These regulations
impose a broad range of requirements, many of which are unique to government contracting, including various procurement, import and export,
security, contract pricing and cost, contract termination and adjustment, and audit requirements. A contractor’s failure to comply
with these regulations and requirements could result in reductions to the value of contracts, contract modifications or termination,
and the assessment of penalties and fines and lead to suspension or debarment, for cause, from government contracting or subcontracting
for a period of time. In addition, government contractors are also subject to routine audits and investigations by U.S. Government agencies
such as the Defense Contract Audit Agency (“DCAA”) and Defense Contract Management Agency. These agencies review a contractor’s
performance under its contracts, cost structure and compliance with applicable laws, regulations and standards. The DCAA also reviews
the adequacy of and a contractor’s compliance with its internal control systems and policies, including the contractor’s
purchasing, property, estimating, compensation and management information systems. During the term of any suspension or debarment by
any U.S. Government agency, contractors can be prohibited from competing for or being awarded contracts by U.S. Government agencies.
The termination of any of our significant Government contracts or the imposition of fines, damages, suspensions or debarment would adversely
affect our business and financial condition.
The
U.S. Government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time.
Our
industry has experienced, and we expect it will continue to experience, significant changes to business practices as a result of an increased
focus on affordability, efficiencies, and recovery of costs, among other items. U.S. Government agencies may face restrictions or pressure
regarding the type and amount of services that they may obtain from private contractors. Legislation, regulations and initiatives dealing
with procurement reform, mitigation of potential conflicts of interest and environmental responsibility or sustainability, as well as
any resulting shifts in the buying practices of U.S. Government agencies, such as increased usage of fixed price contracts, multiple
award contracts and small business set-aside contracts, could have adverse effects on government contractors, including us. Any of these
changes could impair our ability to obtain new contracts or renew our existing contracts when those contracts are recompeted. Any new
contracting requirements or procurement methods could be costly or administratively difficult for us to implement and could adversely
affect our future revenues, profitability and prospects.
We
may incur cost overruns as a result of fixed priced government contracts which would have a negative impact on our operations.
As
we pursue additional U.S. Government contracts in addition to the one U.S. Government contract we now have for the U.S. Army, we expect
to have to perform under fixed price contracts such as multi-award, multi-year IDIQ task order based contracts, which generally provide
for fixed price schedules for products and services, have no pre-set delivery schedules, have very low minimum purchase requirements,
are typically competed among multiple awardees and could force us to carry the burden of any cost overruns. Due to their nature, fixed-priced
contracts inherently have more risk than cost reimbursable contracts. If we are unable to control costs or if our initial cost estimates
are incorrect, we can lose money on these contracts. In addition, some of these fixed price contracts will likely have provisions relating
to cost controls and audit rights, and if we fail to meet the terms specified in those contracts, we may not realize their full benefits.
Lower earnings caused by cost overruns and cost controls would have a negative impact on our results of operations should we receive
awards of such contracts. The U.S. Government has the right to enter into contracts with other suppliers, which may be competitive with
our IDIQ contracts. We anticipate that it may also perform fixed priced contracts under which we agree to provide specific quantities
of products and services over time for a fixed price. Since the price competition to win both IDIQ and fixed price contracts is intense
and the costs of future contract performance cannot be predicted with certainty, there can be no assurance as to the profits, if any,
that we will realize over the term of such contracts.
Misconduct
of employees, subcontractors, agents and business partners could cause us to lose existing contracts or customers and adversely affect
our ability to obtain new contracts and customers and could have a significant adverse impact on our business and reputation.
Misconduct
could include fraud or other improper activities such as falsifying time or other records and violations of laws, including the Anti-Kickback
Act. Other examples could include the failure to comply with our policies and procedures or with federal, state or local government procurement
regulations, regulations regarding the use and safeguarding of classified or other protected information, legislation regarding the pricing
of labor and other costs in government contracts, laws and regulations relating to environmental, health or safety matters, bribery of
foreign government officials, import-export control, lobbying or similar activities, and any other applicable laws or regulations. Any
data loss or information security lapses resulting in the compromise of personal information or the improper use or disclosure of sensitive
or classified information could result in claims, remediation costs, regulatory sanctions against us, loss of current and future contracts
and serious harm to our reputation. Although we have implemented policies, procedures and controls to prevent and detect these activities,
these precautions may not prevent all misconduct, and as a result, we could face unknown risks or losses. Our failure to comply with
applicable laws or regulations or misconduct by any of our employees, subcontractors, agents or business partners could damage our reputation
and subject us to fines and penalties, restitution or other damages, loss of security clearance, loss of current and future customer
contracts and suspension or debarment from contracting with federal, state or local government agencies, any of which would adversely
affect our business, reputation and our future results.
We
may fail to obtain and maintain necessary security clearances, which may adversely affect our ability to perform on certain anticipated
U.S. government contracts and depress our potential revenues.
Many
U.S. Government programs require contractors to have security clearances. Depending on the level of required clearance, security clearances
can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain necessary security clearances, we
may not be able to win new business, and our existing clients could terminate their contracts with us or decide not to renew them. To
the extent we are not able to obtain and maintain facility security clearances or engage employees with the required security clearances
for a particular contract, we may not be able to bid on or win new contracts, or effectively rebid on expiring contracts, as well as
lose existing contracts, which may adversely affect our operating results and inhibit the execution of our growth strategy.
Our
future revenues and growth prospects could be adversely affected by our dependence on other contractors.
If
other contractors with whom we have contractual relationships either as a prime contractor or subcontractor eliminate or reduce their
work with us, or if the U.S. Government terminates or reduces these other contractors’ programs, does not award them new contracts
or refuses to pay under a contract our financial and business condition may be adversely affected. Companies that do not have access
to U.S. Government contracts may perform services as our subcontractor and that exposure could enhance such companies’ prospect
of securing a future position as a prime U.S. Government contractor which could increase competition for future contracts and impair
our ability to perform on contracts.
We
may have disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor,
customer concerns about the subcontractor, our failure to extend existing task orders or issue new task orders under a subcontract, our
hiring of a subcontractor’s personnel or the subcontractor’s failure to comply with applicable law. Current uncertain economic
conditions heighten the risk of financial stress of our subcontractors, which could adversely impact their ability to meet their contractual
requirements to us. If any of our subcontractors fail to timely meet their contractual obligations or have regulatory compliance or other
problems, our ability to fulfill our obligations as a prime contractor or higher tier subcontractor may be jeopardized. Significant losses
could arise in future periods and subcontractor performance deficiencies could result in our termination for default. A termination for
default could eliminate a revenue source, expose us to liability and have an adverse effect on our ability to compete for future contracts
and task orders, especially if the customer is an agency of the U.S. Government.
Our
business may be exposed to potential geo-political and economic factors, regulatory requirements and other risks if we were to conduct
business in foreign countries in the future.
In
the future, we intend to engage in additional foreign operations which pose complex management, foreign currency, legal, tax and economic
risks, which we may not adequately address. These risks differ from and potentially may be greater than those associated with our domestic
business.
International
business is sensitive to changes in the priorities and budgets of international customers and geo-political uncertainties, which may
be driven by changes in threat environments and potentially volatile worldwide economic conditions, various regional and local economic
and political factors, risks and uncertainties, as well as U.S. foreign policy. Our international sales are subject to U.S. laws, regulations
and policies, including the International Traffic in Arms Regulations (ITAR) and the Foreign Corrupt Practices Act (see below) and other
export laws and regulations. Due to the nature of our products, we must first obtain licenses and authorizations from various U.S. Government
agencies before we are permitted to sell our products outside of the U.S. We can give no assurance that we will be successful in obtaining
the necessary licenses or authorizations or that certain sales will not be prevented or delayed. Any significant impairment of our ability
to sell products outside of the U.S. could negatively impact our results of operations and financial condition.
International
sales are also subject to local government laws, regulations and procurement policies and practices which may differ from U.S. Government
regulations, including regulations relating to import-export control, investments, exchange controls and repatriation of earnings, as
well as to varying currency, geo-political and economic risks. International contracts may include industrial cooperation agreements
requiring specific in-country purchases, manufacturing agreements or financial support obligations, known as offset obligations, and
provide for penalties if we fail to meet such requirements. International contracts may also be subject to termination at the customer’s
convenience or for default based on performance and may be subject to funding risks. We may also be exposed to risks associated with
using foreign representatives and consultants for international sales and operations and teaming with international subcontractors, partners
and suppliers in connection with international programs. As a result of these factors, we could potentially experience award and funding
delays on international programs and could incur losses on such programs, which could negatively impact our results of operations and
financial condition.
We
may also be subject to a number of other risks including:
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the
absence in some jurisdictions of effective laws to protect our intellectual property rights; |
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multiple
and possibly overlapping and conflicting tax laws; |
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restrictions
on movement of cash; |
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the
burdens of complying with a variety of national and local laws; |
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political
instability; |
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currency
fluctuations; |
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longer
payment cycles; |
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restrictions
on the import and export of certain technologies; |
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price
controls or restrictions on exchange of foreign currencies; and |
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trade
barriers. |
International
operations are subject to special U.S. government laws and regulations, such as the Foreign Corrupt Practices Act, and regulations and
procurement policies and practices, including regulations to import-export control, which may expose us to liability or impair our ability
to compete in international markets.
International
operations are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, and other laws that prohibit improper payments or offers
of payments to foreign governments and their officials and political parties by U.S. and other business entities for the purpose of obtaining
or retaining business. We expect to have operations and deal with governmental customers in countries known to experience corruption,
including certain countries in the Middle East and in the future, the Far East. Our activities in these countries could create the risk
of unauthorized payments or offers of payments by one of our employees, consultants or contractors that could be in violation of various
laws including the FCPA, even though these parties are not always subject to our control. We are also subject to import-export control
regulations restricting the use and dissemination of information classified for national security purposes and the export of certain
products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work.
As
a U.S. defense contractor, we are vulnerable to security threats and other disruptions that could negatively impact our business.
As
a U.S. defense contractor, we face certain security threats, including threats to our information technology infrastructure, attempts
to gain access to our proprietary or classified information, and threats to physical security. These types of events could disrupt our
operations, require significant management attention and resources, and could negatively impact our reputation among our customers and
the public, which could have a negative impact on our financial condition, results of operations and liquidity. We are continuously exposed
to cyber-attacks and other security threats, including physical break-ins. Any electronic or physical break-in or other security breach
or compromise may jeopardize security of information stored or transmitted through our information technology systems and networks. This
could lead to disruptions in mission-critical systems, unauthorized release of confidential or otherwise protected information and corruption
of data. Although we have implemented policies, procedures and controls to protect against, detect and mitigate these threats, we face
advanced and persistent attacks on our information systems and attempts by others to gain unauthorized access to our information technology
systems are becoming more sophisticated. These attempts include covertly introducing malware to our computers and networks and impersonating
authorized users, among others, and may be perpetrated by well-funded organized crime or state sponsored efforts. We seek to detect and
investigate all security incidents and to prevent their occurrence or recurrence. We continue to invest in and improve our threat protection,
detection and mitigation policies, procedures and controls. In addition, we work with other companies in the industry and government
participants on increased awareness and enhanced protections against cyber security threats. However, because of the evolving nature
and sophistication of these security threats, which can be difficult to detect, there can be no assurance that our policies, procedures
and controls have or will detect or prevent any of these threats and we cannot predict the full impact of any such past or future incident.
Although we work cooperatively with our customers and other business partners to seek to minimize the impacts of cyber and other security
threats, we must rely on the safeguards put in place by those entities. Any remedial costs or other liabilities related to cyber or other
security threats may not be fully insured or indemnified by other means. Occurrence of any of these security threats could expose us
to claims, contract terminations and damages and could adversely affect our reputation, ability to work on sensitive U.S. Government
contracts, business operations and financial results.
Difficult
conditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations.
Our
results of operations may be materially affected by conditions in the global capital markets and the economy generally, both in the U.S.
and elsewhere around the world. Weak economic conditions sustained uncertainty about global economic conditions, concerns about future
U.S. budgetary cuts, or a prolonged or further tightening of credit markets could cause our customers and potential customers to postpone
or reduce spending on technology products or services or put downward pressure on prices, which could have an adverse effect on our business,
results of operations or cash flows. In the event of extreme prolonged adverse market events, such as a global credit crisis, we could
incur significant losses.
The
Russia Ukraine conflict, the war in Gaza and other geopolitical tensions, as well as the related international response, have exacerbated
inflationary pressures, including causing increases in the price for goods and services and exacerbated global supply chain disruptions,
which have resulted in, and may continue to result in, shortages in materials and services and related uncertainties. We cannot predict
any future trends in the rate of inflation or other negative economic factors or associated increases in our operating costs and how
that may impact our business. To the extent we are unable to recover higher operating costs resulting from inflation or otherwise mitigate
the impact of such costs on our business, our revenues and gross profit could decrease, and our financial condition and results of operations
could be adversely affected.
Risks
Related to Our Intellectual Property
Our
success may depend on our ability to obtain and protect the proprietary information on which we base our laser-based cleaning equipment.
Intellectual
property (“IP”) that is important to the development of our laser cleaning products, requires us to:
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obtain
valid and enforceable patents; |
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protect
trade secrets; and |
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operate
without infringing upon the proprietary rights of others. |
We
will be able to protect our proprietary technology from unauthorized use by third parties only to the extent that such proprietary rights
are covered by valid and enforceable patents or are effectively maintained as trade secrets. Any non-confidential disclosure to or misappropriation
by third parties of our confidential or proprietary information could enable competitors to quickly duplicate or surpass our technological
achievements, thus eroding our competitive position in our market.
The
patent application process, also known as patent prosecution, is expensive and time-consuming, and we and our current or future licensors
and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in
a timely manner. It is also possible that we or our current licensors, or any future licensors or licensees, will fail to identify patentable
aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection
on them. Therefore, these and any of our patents and applications may not be prosecuted and enforced in a manner consistent with the
best interests of our business. It is possible that defects of form in the preparation or filing of our patents or patent applications
may exist, or may arise in the future, for example with respect to proper priority claims or inventorship. If we or our current licensors
or licensees, or any future licensors or licensees, fail to establish, maintain or protect such patents and other intellectual property
rights, such rights may be reduced or eliminated. If our current licensors or licensees, or any future licensors or licensees, are not
fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could
be compromised. If there are material defects in the form or preparation of our patents or patent applications, such patents or applications
may be invalid and unenforceable. Any of these outcomes could impair our ability to prevent competition from third parties, which may
harm our business.
The
patent applications that we may own or license may fail to result in issued patents in the United States or in other countries. Even
if patents do issue on such patent applications, third parties may challenge the validity, enforceability or scope thereof, which may
result in such patents being narrowed, invalidated or held unenforceable. For example, U.S. patents can be challenged by any person before
the new USPTO Patent Trial and Appeals Board at any time within the one year period following that person’s receipt of an allegation
of infringement of the patents. Patents granted by the European Patent Office may be similarly opposed by any person within nine months
from the publication of the grant. Similar proceedings are available in other jurisdictions, and in the United States, Europe and other
jurisdictions third parties can raise questions of validity with a patent office even before a patent has granted. Furthermore, even
if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others
from designing around our claims. If the breadth or strength of protection provided by the patents and patent applications we hold or
pursue with respect to our product candidates is successfully challenged, then our ability to commercialize such product candidates could
be negatively affected, and we may face unexpected competition that could harm our business. Further, if we encounter delays in our clinical
trials, the period of time during which we or our collaborators could market our product candidates under patent protection would be
reduced.
The
degree of future protection of our proprietary rights is uncertain. Patent protection may be unavailable or severely limited in some
cases and may not adequately protect our rights or permit us to gain or keep our competitive advantage. For example:
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we
might not have been the first to invent or the first to file the inventions covered by each of our pending patent applications and
issued patents; |
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others
may be able to make, use, sell, offer to sell or import products that are similar to our products or product candidates but that
are not covered by the claims of our patents; others may independently develop similar or alternative technologies or duplicate any
of our technologies; |
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the
proprietary rights of others may have an adverse effect on our business; |
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any
proprietary rights we do obtain may not encompass commercially viable products, may not provide us with any competitive advantages
or may be challenged by third parties; |
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any
patents we obtain or our in-licensed issued patents may not be valid or enforceable; or |
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we
may not develop additional technologies or products that are patentable or suitable to maintain as trade secrets. |
If
we or our current licensors or licensees, or any future licensors or licensees, fail to prosecute, maintain and enforce patent protection
for our product candidates, our ability to develop and commercialize our product candidates could be harmed and we might not be able
to prevent competitors from making, using and selling competing products. This failure to properly protect the intellectual property
rights relating to our product candidates could harm our business, financial condition and operating results. Moreover, our competitors
may independently develop equivalent knowledge, methods and know-how.
Even
where laws provide protection, costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary
rights, and the outcome of such litigation would be uncertain. If we or one of our collaborators were to initiate legal proceedings against
a third party to enforce a patent covering the product candidate, the defendant could assert an affirmative defense or counterclaim that
our patent is not infringed, invalid and/or unenforceable. In patent litigation in the United States, defendant defenses and counterclaims
alleging non-infringement, invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure
to meet any of several statutory requirements, including lack of novelty, anticipation or obviousness, and lack of written description,
definiteness or enablement. Patents may be unenforceable if someone connected with prosecution of the patent withheld material information
from the USPTO, or made a misleading statement, during prosecution. The outcomes of proceedings involving assertions of invalidity and
unenforceability are unpredictable. It is possible that prior art of which we and the patent examiner were unaware during prosecution
exists, which would render our patents invalid. Moreover, it is also possible that prior art may exist that we are aware of, but that
we do not believe are relevant to our current or future patents, that could nevertheless be determined to render our patents invalid.
If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability of our patents covering one of our product
candidates, we would lose at least part, and perhaps all, of the patent protection on such product candidate. Such a loss of patent protection
would harm our business. Moreover, our competitors could counterclaim in any suit to enforce our patents that we infringe their intellectual
property. Furthermore, some of our competitors have substantially greater intellectual property portfolios, and resources, than we do.
Our
ability to stop third parties from using our technology or making, using, selling, offering to sell or importing our products is dependent
upon the extent to which we have rights under valid and enforceable patents that cover these activities. If any patent we currently or
in the future may own or license is deemed not infringed, invalid or unenforceable, it could impact our commercial success. We cannot
predict the breadth of claims that may be issued from any patent applications we currently or may in the future own or license from third
parties.
To
the extent that consultants or key employees apply technological information independently developed by them or by others to our product
candidates, disputes may arise as to who has the proprietary rights to such information and product candidates, and certain of such disputes
may not be resolved in our favor. Consultants and key employees that work with our confidential and proprietary technologies are required
to assign all intellectual property rights in their inventions and discoveries created during the scope of their work to our company.
However, these consultants or key employees may terminate their relationship with us, and we cannot preclude them indefinitely from dealing
with our competitors.
If
we are unable to prevent disclosure of our trade secrets or other confidential information to third parties, our competitive position
may be impaired.
We
also may rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.
Our ability to stop third parties from obtaining the information or know-how necessary to make, use, sell, offer to sell or import our
products or practice our technology is dependent in part upon the extent to which we prevent disclosure of the trade secrets that cover
these activities. Trade secret rights can be lost through disclosure to third parties. Although we use reasonable efforts to protect
our trade secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or
willfully disclose our trade secrets to third parties, resulting in loss of trade secret protection. Moreover, our competitors may independently
develop equivalent knowledge, methods and know-how, which would not constitute a violation of our trade secret rights. Enforcing a claim
that a third party is engaged in the unlawful use of our trade secrets is expensive, difficult and time-consuming, and the outcome is
unpredictable. In addition, recognition of rights in trade secrets and a willingness to enforce trade secrets differs in certain jurisdictions.
If
we are sued for infringing intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome
in that litigation could harm our business.
Our
commercial success depends significantly on our ability to operate without infringing, violating or misappropriating the patents and
other proprietary rights of third parties. Our own technologies we acquire or develop may infringe, violate or misappropriate the patents
or other proprietary rights of third parties, or we may be subject to third-party claims of such infringement. Numerous U.S. and foreign
issued patents and pending patent applications owned by third parties, exist in the fields in which we are developing our product candidates.
Because some patent applications may be maintained in secrecy until the patents are issued, because publication of patent applications
is often delayed, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that
we were the first to invent the technology or that others have not filed patent applications for technology covered by our pending applications.
We may not be aware of patents that have already issued that a third party might assert are infringed by our product candidates. It is
also possible that patents of which we are aware, but which we do not believe are relevant to our product candidates, could nevertheless
be found to be infringed by our product candidates. Moreover, we may face patent infringement claims from non-practicing entities that
have no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect. In the future, we may agree
to indemnify our manufacturing partners against certain intellectual property claims brought by third parties.
Intellectual
property litigation involves many risks and uncertainties, and there is no assurance that we will prevail in any lawsuit brought against
us. Third parties making claims against us for infringement, violation or misappropriation of their intellectual property rights may
seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize
our product candidates. Further, if a patent infringement suit were brought against us, we could be forced to stop or delay research,
development, manufacturing or sales of the product or product candidate that is the subject of the suit. Defense of these claims, regardless
of their merit, would cause us to incur substantial expenses and would be a substantial diversion of resources from our business. In
the event of a successful claim of any such infringement, violation or misappropriation, we may need to obtain licenses from such third
parties and we and our partners may be prevented from pursuing product development or commercialization and/or may be required to pay
damages. We cannot be certain that any licenses required under such patents or proprietary rights would be made available to us, or that
any offer to license would be made available to us on commercially reasonable terms. If we cannot obtain such licenses, we and our collaborators
may be restricted or prevented from manufacturing and selling products employing our technology. These adverse results, if they occur,
could adversely affect our business, results of operations and prospects, and the value of our shares.
We
may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming
and unsuccessful.
The
defense and prosecution of contractual or intellectual property lawsuits, USPTO interference or derivation proceedings, European Patent
Office oppositions and related legal and administrative proceedings in the United States, Europe and other countries, involve complex
legal and factual questions. As a result, such proceedings may be costly and time-consuming to pursue and their outcome is uncertain.
Litigation
may be necessary to:
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protect
and enforce our patents and any future patents issuing on our patent applications; |
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enforce
or clarify the terms of the licenses we have granted or may be granted in the future; |
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protect
and enforce trade secrets, know-how and other proprietary rights that we own or have licensed, or may license in the future; or |
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determine
the enforceability, scope and validity of the proprietary rights of third parties and defend against alleged patent infringement. |
Competitors
may infringe our intellectual property. As a result, we may be required to file infringement claims to stop third-party infringement
or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming. In addition, in an infringement
proceeding, a court may decide that a patent of ours is not valid or is unenforceable or may refuse to stop the other party from using
the technology at issue on the grounds that our patent claims do not cover its technology or that the factors necessary to grant an injunction
against an infringer are not satisfied. An adverse determination of any litigation or other proceedings could put one or more of our
patents at risk of being invalidated, interpreted narrowly, or amended such that they do not cover our product candidates. Moreover,
such adverse determinations could put our patent applications at risk of not issuing or issuing with limited and potentially inadequate
scope to cover our product candidates or to prevent others from marketing similar products.
Interference,
derivation or other proceedings brought at the USPTO, may be necessary to determine the priority or patentability of inventions with
respect to our patent applications or those of our licensors or potential collaborators. Litigation or USPTO proceedings brought by us
may fail or may be invoked against us by third parties. Even if we are successful, domestic or foreign litigation or USPTO or foreign
patent office proceedings may result in substantial costs and distraction to our management. We may not be able, alone or with our licensors
or potential collaborators, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect
such rights as fully as in the United States.
Furthermore,
because of the substantial amount of discovery required in connection with intellectual property litigation or other proceedings, there
is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or other proceedings.
In addition, during the course of this kind of litigation or proceedings, there could be public announcements of the results of hearings,
motions or other interim proceedings or developments or public access to related documents. If investors perceive these results to be
negative, the market price for our common stock could be significantly harmed.
Some
of our competitors may be able to sustain the costs of patent-related disputes, including patent litigation, more effectively than we
can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation
of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.
We
may not be able to enforce our intellectual property rights throughout the world.
Filing,
prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive. The
requirements for patentability may differ in certain countries, particularly in developing countries. Moreover, our ability to protect
and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws. Additionally,
laws of some countries outside of the United States do not afford intellectual property protection to the same extent as the laws of
the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain
foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents
and other intellectual property rights. This could make it difficult for us to stop the infringement of our patents or the misappropriation
of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner
must grant licenses to third parties. Consequently, we may not be able to prevent third parties from practicing our inventions in all
countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection
to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection,
if our ability to enforce our patents to stop infringing activities is inadequate. These products may compete with our products, and
our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Proceedings
to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts
and resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property rights in major markets
for our products, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may
wish to market our products. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.
Risks
Related to Investing in Our Common Stock
We
are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certain
if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We
are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as
long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are
applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act (2) reduced disclosure obligations regarding executive compensation
in this Form S-1 and our periodic reports and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, as an
emerging growth company, we are only required to provide two years of audited financial statements and two years of selected financial
data in this Form S-1. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that
status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of any September 30
before that time or if we have total annual gross revenue of $1.235 billion or more during any fiscal year before that time, in which
cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible
debt during any three-year period before that time, we would cease to be an emerging growth company immediately. Even after we no longer
qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take
advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these
exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our stock price may be more volatile.
Our
independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over
financial reporting until the later of our second annual report or the first annual report required to be filed with the SEC following
the date upon which we are no longer an “emerging growth company” as defined in the JOBS Act.
Under
the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards
apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore,
will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Because
the Company is a “smaller reporting company,” we may take advantage of certain scaled disclosures available to us, resulting
in holders of our securities receiving less Company information than they would receive from a public company that is not a smaller reporting
company.
We
are a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
As a smaller reporting company, we may take advantage of certain of the scaled disclosures available to smaller reporting companies and
will be able to take advantage of these scaled disclosures for so long as (i) our common shares held by non-affiliates is less than $250
million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100 million during the
most recently completed fiscal year and our common shares held by non-affiliates is less than $700 million measured on the last business
day of our second fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investors
to analyze the Company’s results of operations and financial prospectus in comparison with other public companies.
As
a smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other
issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
We have elected to adopt the accommodations available to smaller reporting companies. Until we cease to be a smaller reporting company,
the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public
companies.
If
investors consider our common shares less attractive as a result of our election to use the scaled-back disclosure permitted for smaller
reporting companies, there may be a less active trading market for our common shares and our share price may be more volatile.
Our
largest stockholder beneficially owns a significant number of shares of our common stock. That stockholder’s interests may conflict
with other stockholders, who may be unable to influence management and exercise control over our business.
Our
largest stockholder, ICT Investments, LLC, the controlling entity of Fonon Corporation and Fonon Technologies, Inc., will beneficially
own approximately 55% of our shares of common stock and has significant voting control over our common stock. As a result, ICT Investments,
LLC is able to: elect or defeat the election of our directors, amend or prevent amendment to our certificates of incorporation or bylaws,
effect or prevent a merger, sale of assets or other corporate transaction, and control the outcome of any other matter submitted to the
stockholders for vote. Accordingly, other stockholders may be unable to influence management and exercise control over our business.
Future
issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock could cause the market
price of our common stock to decline and would result in the dilution of your holdings.
Future
issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock could cause the market
price of our common stock to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations
of lock-up agreements, on the price of our common stock. In all events, future issuances of our common stock would result in the dilution
of your holdings. In addition, the perception that new issuances of our securities could occur could adversely affect the market price
of our common stock.
Because
we are a “controlled company” within the meaning of the Nasdaq listing rules, our stockholders may not have certain corporate
governance protections that are available to stockholders of companies that are not controlled companies.
So
long as more than 50% of the voting power for the election of our directors is held by an individual, a group or another company, we
will qualify as a “controlled company” within the meaning of Nasdaq’s corporate governance standards. Following the
consummation of this offering, ICT Investments, LLC will control approximately 55% of the voting power of our outstanding capital stock.
As a result, we are a “controlled company” within the meaning of Nasdaq’s corporate governance standards, and we may
elect to not comply with requirements that would otherwise require us to have: (i) a majority of independent directors; (ii) compensation
of our executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent
directors; and (iii) director nominees selected or recommended for our board either by a majority of the independent directors or a nominating
committee comprised solely of independent directors. Because we are a “controlled company”, our stockholders may not have
these corporate governance protections that are available to stockholders of companies that are not controlled companies. Notwithstanding
our qualification as a “controlled company,” we intend to comply with the Nasdaq corporate governance requirements for companies
that are not controlled companies. ICT Investments may also have its interest in us diluted as a result of future equity issuances or
their own actions in selling shares of our common stock, in each case, which could result in a loss of the “controlled company”
exemption under the Nasdaq listing rules. We would then be required to comply with those provisions of the Nasdaq listing requirements.
We
do not intend to pay cash dividends to our stockholders, so you will not receive any return on your investment in our Company prior to
selling your interest in the Company.
We
paid a one-time cash dividend for the year ended December 31, 2021 in the amount of $310,280. We currently intend to retain any future
earnings for funding growth and, therefore, do not expect to pay any cash dividends in the foreseeable future. If we determine that we
will pay cash dividends to the holders of our common stock, we cannot assure that such cash dividends will be paid on a timely basis.
The success of your investment in our Company will likely depend entirely upon any future appreciation. As a result, you will not receive
any return on your investment prior to selling your shares in our Company and, for the other reasons discussed in this “Risk Factors”
section, you may not receive any return on your investment even when you sell your shares in our Company.
Some
provisions of our certificate of incorporation and bylaws may deter takeover attempts, which may inhibit a takeover that stockholders
consider favorable and limit the opportunity of our stockholders to sell their shares at a favorable price.
Under
our certificate of incorporation, our Board of Directors may issue additional shares of common or preferred stock. Our Board of Directors
has the ability to authorize “blank check” preferred stock without future stockholder approval. This makes it possible for
our Board of Directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt
to acquire us by means of a merger, tender offer, proxy contest or otherwise, including a transaction in which our stockholders would
receive a premium over the market price for their shares and/or any other transaction that might otherwise be deemed to be in their best
interests, and thereby protects the continuity of our management and limits an investor’s opportunity to profit by their investment
in our business. Specifically, if in the due exercise of its fiduciary obligations, the Board of Directors were to determine that a takeover
proposal was not in our best interest, shares could be issued by our Board of Directors without stockholder approval in one or more transactions
that might prevent or render more difficult or costly the completion of the takeover by:
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diluting
the voting or other rights of the proposed acquirer or insurgent stockholder group, |
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putting
a substantial voting bloc in institutional or other hands that might undertake to support the incumbent Board of Directors, or |
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effecting
an acquisition that might complicate or preclude the takeover. |
Our
indemnification of our officers and directors may cause us to use corporate resources to the detriment of our stockholders.
Our
certificate of incorporation eliminates the personal liability of our directors for monetary damages arising from a breach of their fiduciary
duty as directors to the fullest extent permitted by Delaware law. This limitation does not affect the availability of equitable remedies,
such as injunctive relief or rescission. Our certificate of incorporation requires us to indemnify our directors and officers to the
fullest extent permitted by Delaware law, including in circumstances in which indemnification is otherwise discretionary under Delaware
law.
Under
Delaware law, we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant
or respondent in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person:
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conducted
himself or herself in good faith, reasonably believed, in the case of conduct in his or her official capacity as our director or
officer, that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed
to our best interests; and |
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in
the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful. |
These
persons may be indemnified against expenses, including attorneys’ fees, judgments, fines, including excise taxes, and amounts paid
in settlement, actually and reasonably incurred, by the person in connection with the proceeding. If the person is found liable to the
corporation, no indemnification will be made unless the court in which the action was brought determines that the person is fairly and
reasonably entitled to indemnity in an amount that the court will establish.
Insofar
as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling us under the
above provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
Our
bylaws include a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with us, remove current management or to be acquired by a third party.
Our
bylaws require that, unless we consent in writing to the selection of an alternative forum, either (i) the Court of Chancery of the State
of Delaware is to be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting
a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (c) any action
asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware or our bylaws or (d) any
action or proceeding asserting a claim governed by the internal affairs doctrine or (ii) the federal district court in the State of Delaware
will be the exclusive forum for a cause of action arising under the Securities Act and the Exchange Act. In addition, our bylaws could
make it more difficult for a third party to acquire us or to remove current management through provisions that preclude cumulative voting
in the election of directors and that allow our bylaws to be adopted, amended or repealed by our board of directors.
This
exclusive forum provision will apply to other state and federal law claims including actions arising under the Securities Act (although
our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder).
Section 22 of the Securities Act, however, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce
any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to
whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.
Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented
to the foregoing provisions. This forum selection provision in our bylaws may limit our stockholders’ ability to obtain a favorable
judicial forum for disputes with us. It is also possible that, notwithstanding the forum selection clause included in our bylaws, a court
could rule that such a provision is inapplicable or unenforceable.
The
obligations associated with being a public company require significant resources and management attention, which may divert us from our
business operations.
We
are subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act. The Exchange Act requires that we file annual,
quarterly and current reports with respect to our business and financial condition, proxy statement, and other information. The Sarbanes-Oxley
Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting.
Our Chief Executive Officer and Chief Financial Officer will need to certify that our disclosure controls and procedures are effective
in ensuring that material information we are required to disclose in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms. We may need to hire additional
financial reporting, internal controls and other financial personnel in order to develop and implement appropriate internal controls
and reporting procedures. As a result, we will incur significant legal, accounting and other expenses. Furthermore, the need to establish
the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy,
which could prevent us from improving our business, results of operations and financial condition. We have made, and will continue to
make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations
as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. In addition,
we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements. We anticipate that
these costs will materially increase our selling, general and administrative expenses.
If
we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately
or prevent fraud. Any further inability to report and file our financial results accurately and timely could harm our reputation and
adversely impact the trading price of our common stock.
Effective
internal controls are necessary for us to provide reliable financial reports and prevent fraud. As described in the next risk factor,
we have determined that material weaknesses in our internal control over financial reporting existed and that our internal controls were
not effective as of any of December 31, 2021, March 31, 2022, June 30, 2022, and December 31, 2023. If we cannot provide reliable financial
reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed,
and our business and reputation with investors may be harmed. With each prospective acquisition we may make we will conduct whatever
due diligence is necessary or prudent to assure us that the acquisition target can comply with the internal controls requirements of
the Sarbanes-Oxley Act. Notwithstanding our diligence, certain internal controls deficiencies may not be detected at acquired entities.
As a result, any internal control deficiencies may adversely affect our financial condition, results of operations and access to capital.
We
restated our previously issued consolidated financial statements and identified material weaknesses in our internal controls over financial
reporting.
We
determined that a restatement of our December 31, 2021, audited financial statements was required after discussions among management
and our former independent registered public account firm, BF Borgers, CPA PC, due to the incorrect presentation of the Statement of
Cash Flows, inconsistent with the requirements of ASC 230-10-45 and ASC 842-20-45-5.
As
part of the restatement and review processes, we identified material weaknesses in our internal control over financial reporting and
concluded that our internal controls were not effective at any of December 31, 2022, March 31, 2023 June 30, 2023,
December 31, 2023, March 31, 2024 and June 30, 2024.
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected
and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
We continue to evaluate steps to remediate our material weaknesses. These remediation measures may be time consuming and costly and there
is no assurance that these initiatives will ultimately have the intended effects.
Any
failure to maintain effective internal controls could adversely impact our ability to report our financial position and results from
operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding
of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations
by Nasdaq, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective
internal controls could also cause investors to lose confidence in our reported financial information which could have a negative effect
on the trading price of our stock.
We
can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses or that any
additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain
adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening
our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or
errors or to facilitate the fair presentation of our consolidated financial statements.
Our
stock price may be volatile.
The
market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors,
many of which are beyond our control, including the following:
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our
ability to execute our business plan and complete prospective acquisitions; |
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changes
in our industry; |
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competitive
pricing pressures; |
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our
ability to obtain working capital financing; |
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additions
or departures of key personnel; |
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limited
“public float” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative
pricing pressure on the market price for our common stock; |
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sales
of our common stock (particularly following consummation of this offering); |
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operating
results that fall below expectations; |
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regulatory
developments; |
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economic
and other external factors; |
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period-to-period
fluctuations in our financial results; |
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our
inability to develop or acquire new or needed technologies; |
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the
public’s response to press releases or other public announcements by us or third parties, including filings with the SEC; |
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changes
in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or
failure of those analysts to initiate or maintain coverage of our common stock; |
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the
development and sustainability of an active trading market for our common stock; and |
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any
future sales of our common stock by our officers, directors and significant stockholders. |
In
addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of
our common stock.
If
our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.
The
SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price per share of less than $5.00, other than securities registered on certain national securities exchanges
or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. If we do not retain a listing on the Nasdaq Capital Market and
if the price of our common stock is less than $5.00 per share, our common stock will be deemed a penny stock. The penny stock rules require
a broker-dealer, before effecting a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document containing specified information. In addition, the penny stock rules require that, before effecting any such transaction
in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure
statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability
statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common
stock, and therefore stockholders may have difficulty selling their shares.
FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
In
addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment
to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to
recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer’s financial status, tax status, investment objectives and other information. The FINRA requirements
may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing
the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock,
reducing a stockholder’s ability to resell shares of our common stock.
If
securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business,
our share price and trading volume could decline.
The
trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish
about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares
or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or
fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading
volume to decline.
Offers
or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
If
our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period
under Rule 144, or shares issued upon the exercise of outstanding options, it could create a circumstance commonly referred to as an
“overhang” and, in anticipation of which, the market price of our common stock could fall. The existence of an overhang,
whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through
the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
Sales
of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely affect
the price of our common stock and impair our ability to raise capital through the sale of shares.
Any
substantial sale of stock by existing stockholders could depress the market value of our stock, thereby devaluing the market price and
causing investors to risk losing all or part of their investment.
ICT
Investments is the beneficial owner of a majority of our outstanding shares. We can make no prediction as to the effect, if any, that
sales of shares, or the availability of shares for future sale, will have on the prevailing market price of our shares of common stock.
Sales of substantial amounts of shares in the public market, or the perception that such sales could occur, could depress prevailing
market prices for the shares. Such sales may also make it more difficult for us to sell equity securities or equity-related securities
in the future at a time and price which it deems appropriate.
EMERGING
GROWTH COMPANY STATUS
We
are and we will remain an “emerging growth company” as defined under the “JOBS Act until the earliest to occur of (i)
the last day of the fiscal year during which our total annual revenues equal or exceed $1.235 billion (subject to adjustment for inflation),
(ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have,
during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are
deemed a “large accelerated filer” (with at least $700 million in public float) under the Exchange Act.
As
an “emerging growth company”, we may take advantage of specified reduced disclosure and other requirements that are otherwise
applicable generally to public companies.
These
provisions include:
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only
two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly
reduced “Management’s Discussion and Analysis” disclosure; |
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reduced
disclosure about our executive compensation arrangements; |
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no
requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and |
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exemption
from the auditor attestation requirement in the assessment of our internal control over financial reporting. |
We
have taken advantage of some of these reduced burdens, and thus the information we provide stockholders may be different from what you
might receive from other public companies in which you hold shares.
Notwithstanding
the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed
issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than
$75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still
considered a “smaller reporting company”, at such time as we cease being an “emerging growth company”, the disclosure
we will be required to provide in our SEC filings will increase but will still be less than it would be if we were not considered either
an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth
companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their
filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting
firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased
disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial
statements in annual reports.
MARKET,
INDUSTRY AND OTHER DATA
This
prospectus contains statistical data, estimates, and forecasts that are based on independent industry publications or other publicly
available information, as well as other information based on our internal sources. This information involves a number of assumptions
and limitations and is inherently imprecise, and you are cautioned not to give undue weight to these estimates. The industry in which
we operate, as well as projections, assumptions, and estimates of our future performance and the future performance of the industry in
which we operate, are subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the
section titled “Risk Factors” and elsewhere in this prospectus, that could cause results to differ materially from those
expressed in these publications and reports.
We
own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business.
This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective
owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended
to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks
and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but such references are not
intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the
applicable licensor to these trademarks, service marks and trade names.
Market
Information
Shares
of our Common Stock are listed on Capital Market under the symbol “LASE”. The last reported sales price of the shares of
Common Stock on the Nasdaq Capital Market on]August 30, 2024, was $3.42.
Holders
As
of August 30, 2024, we had approximately 20 registered holders of our Common Stock.
Legal
Proceedings
We
expect from time to time to be the subject of various claims, lawsuits and other legal and administrative proceedings arising in the
ordinary course of business. As of the date of this report we are not subject to any legal threats, proceedings or lawsuits of any nature.
None of our executive officers or directors have (i) been involved in any bankruptcy proceedings within the last five years, (ii) been
convicted in or has pending any criminal proceedings (other than traffic violations and other minor offenses), (iii) been subject to
any order, judgment or decree enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or
banking activity or (iv) been found to have violated any Federal, state or provincial securities or commodities law and such finding
has not been reversed, suspended or vacated.
SELLING
STOCKHOLDERS
The
common stock being offered by the Selling Stockholders are those previously issued to the Selling Stockholders, and those issuable to
the Selling Stockholders, upon exercise of the Common Warrants. For additional information regarding the issuances of those shares of
common stock and the Common Warrants, see “Private Placement” above. We are registering the shares of common stock to permit
the Selling Stockholders to offer the Shares for resale from time to time. Except for the ownership of the shares of common stock and
the Common Warrants, the Selling Stockholders have not had any material relationship with us within the past three years.
The
table below lists the Selling Stockholders and other information regarding the beneficial ownership of the shares of common stock by
each of the Selling Stockholders. The second column lists the number of shares of common stock beneficially owned by each selling stockholder,
based on its ownership of the shares of common stock and the Common Warrants, as of August 30, 2024, assuming the issuance of the maximum
amount of Shares issuable upon exercise of the Common Warrants held by the Selling Stockholders on that date, without regard to any limitations
on exercises. The third column lists the shares of common stock being offered by this prospectus by the Selling Stockholders.
In
accordance with the terms of a registration rights agreement with the Selling Stockholders, this prospectus generally covers the resale
of the sum of (i) the number of shares of common stock issued to the selling stockholders in the “Private Placement” described
above and (ii) the maximum number of shares of common stock issuable upon exercise of the related Common Warrants, determined as if the
outstanding Common Warrants were exercised in full as of the trading day immediately preceding the date this registration statement was
initially filed with the SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to
adjustment as provided in the registration rights agreement, without regard to any limitations on the exercise of the Common Warrants
(and assuming the issuance of the maximum amount of Shares issuable upon exercise of such Common Warrants). The fourth column assumes
the sale of all of the common stock offered by the Selling Stockholders pursuant to this prospectus.
Under
the terms of the Common Warrants, a selling stockholder may not exercise the Common Warrants to the extent such exercise would cause
such Selling Stockholder, together with its affiliates and attribution parties, to beneficially own a number of shares of Common Stock
which would exceed 4.99% or 9.99%, as applicable, of our then outstanding Common Stock following such exercise, excluding for purposes
of such determination shares of common stock issuable upon exercise of the Common Warrants that have not been exercised. The number of
common stock in the table below does not reflect this limitation. The Selling Stockholders may sell all, some or none of their Common
Stock in this offering. See “Plan of Distribution.”‘
| Selling Stockholder | |
Number of Shares of Common Stock Beneficially Owned Prior to Offering(1) | | |
Maximum Number of Shares of Common Stock to be Sold Pursuant to This Prospectus | | |
Number of Shares of Common Stock Beneficially Owned After Offering(2) | |
| Bigger Capital Fund LP3 | |
| 0 | | |
| 350,000 | | |
| 0 | |
| District 2 Capital Fund4 | |
| 0 | | |
| 250,000 | | |
| 0 | |
| Altium Growth Fund, LP5 | |
| 0 | | |
| 250,000 | | |
| 0 | |
| Iroquois Capital Investment Group LLC6 | |
| 0 | | |
| 225,000 | | |
| 0 | |
| Iroquois Master Fund LTD7. | |
| 0 | | |
| 375,000 | | |
| 0 | |
| Anson Investments Master Funds LP8 | |
| 0 | | |
| 500,000 | | |
| 0 | |
| L1 Capital Global Opportunities Master Fund9 | |
| 0 | | |
| 250,000 | | |
| 0 | |
| Efrat Investments LLC10 | |
| 0 | | |
| 100,000 | | |
| 0 | |
| Empery Tax Efficient III, LP11 | |
| 72,836 | | |
| 72,836 | | |
| 0 | |
| Empery Tax Efficient, LP12 | |
| 25,748 | | |
| 25,748 | | |
| 0 | |
| Empery Asset Master, LTD13 | |
| 151,416 | | |
| 151,416 | | |
| 0 | |
| Intracoastal Capital LLC14 | |
| 0 | | |
| 250,000 | | |
| 0 | |
| S.H.N. Financial Investments LTD15 | |
| 0 | | |
| 200,000 | | |
| 0 | |
| (1) | Under
applicable SEC rules, a person is deemed to beneficially own securities which the person
has the right to acquire within 60 days through the exercise of any option or warrant or
through the conversion of a convertible security. Also under applicable SEC rules, a person
is deemed to be the “beneficial owner” of a security with regard to which the
person directly or indirectly, has or shares (a) voting power, which includes the power to
vote or direct the voting of the security, or (b) investment power, which includes the power
to dispose, or direct the disposition, of the security, in each case, irrespective of the
person’s economic interest in the security. Each listed selling stockholder has the
sole investment and voting power with respect to all shares of common stock shown as beneficially
owned by such selling stockholder, except as otherwise indicated in these footnotes. |
| (2) | Represents
the amount of shares in the event all of the registered securities are sold during the offering. |
| (3) | Bigger
Capital Fund GP, LLC (“Bigger GP”) is a general partner of Bigger Capital Fund,
LP (“Bigger Capital”). Michael Bigger is the managing member of Bigger GP. Therefore,
Mr. Bigger and Bigger GP may be deemed to be the beneficial owner, and have the shared power
to dispose of or direct the disposition, of the shares reported as beneficially owned by
Bigger Capital. The address of Bigger Capital is 11700 West Charleston BLVD. #170-659, Las
Vegas, Nevada 89135. |
| (4) | District
2 Capital LLC (“District 2”) is the investment manager of District 2 Capital
Fund LP (“District 2 CF”). Michael Bigger is the managing member of District
2 and District 2 Holdings LLC (“District 2 Holdings”), which is the managing
member of District 2 GP LLC (“District 2 GP”), the general partner of District
2 CF. Therefore, Mr. Bigger, District 2, District 2 Holdings and District 2 CF may be deemed
to be the beneficial owner, and have the shared power to dispose of or direct the disposition,
of the shares reported as beneficially owned by District 2 CF. The address of District 2
CF is 14 Wall Street, Huntington, NY, 11743. |
| (5) | Altium
Capital Management, LP, the investment manager of Altium Growth Fund, LP, has voting and
investment power over these securities. Jacob Gottlieb is the managing member of Altium Capital
Growth GP, LLC, which is the general partner of Altium Growth Fund, LP. Each of Altium Growth
Fund, LP and Jacob Gottlieb disclaims beneficial ownership over these securities. The principal
address of Altium Capital Management, LP is 152 West 57th Street, 20th Floor, New York, NY
10019 |
| (6) | Mr.
Richard Abbe is the managing member of Iroquois Capital Investment Group LLC. Mr. Abbe has
voting control and investment discretion over securities held by Iroquois Capital Investment
Group LLC. The address for Iroquois Capital Investment Group LLC and Mr. Abbe is 2 Over Hill
Rd., Suite 500, Scarsdale, New York 10583. |
| (7) | Iroquois
Capital Management L.L.C. is the investment manager of Iroquois Master Fund, Ltd. Iroquois
Capital Management, LLC has voting control and investment discretion over securities held
by Iroquois Master Fund. As Managing Members of Iroquois Capital Management, LLC. Richard
Abbe and Kimberly Page make voting and investment decisions on behalf of Iroquois Capital
Management, LLC in its capacity as investment manager to Iroquois Master Fund Ltd. As a result
of the foregoing, Mr. Abbe and Mrs. Page may be deemed to have beneficial ownership (as determined
under Section 13(d) of the Securities Exchange Act) of the securities held by Iroquois Capital
Management and Iroquois Master Fund. The address for Iroquois Master Fund Ltd., Mr. Abbe
and Mrs. Page is c/o Iroquois Capital Management, LLC, 2 Overhill Road, Suite 400, Scarsdale,
New York 10583. |
| (8) | Anson
Advisors Inc and Anson Funds Management LP, the Co-Investment Advisers of Anson Investments
Master Fund LP (“Anson”), hold voting and dispositive power over the shares held
by Anson. Tony Moore is the manager of Anson Management GP LLC, which is the general partner
of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors of Anson Advisors
Inc. Mr. Moore, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership of these shares
except to the extent of their pecuniary interest therein. The principal business address
of Anson is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104,
Cayman Islands. |
| (9) | David
Feldman holds voting and dispositive control over the shares held by L1 Capital Global Opportunities
Master Fund. L1 (“L1 Capital”) and as such may be deemed to be the beneficial
owner of the securities held by L1 Capital.
The address of L1 Capital is 1688 Meridian Avenue, Level
6, Miami Beach, FL 33139. |
| (10) | Pinny
Rotter has voting and dispositive powers over the shares held by Efrat Investments LLC. Pinny
Rotter disclaims beneficial ownership over the shares held by Efrat Investments LLC. The
address of Efrat Investments LLC is 54 Lenox Avenue, Clifton, NJ 07012. |
| (11) |
Empery Asset Management LP, the authorized agent
of Empery Tax Efficient III, LP (“ETE III”), has discretionary authority to vote and dispose of the shares held by ETE III
and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery
Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by ETE III. ETE III, Mr.
Hoe and Mr. Lane each disclaim any beneficial ownership of these shares. The address of ETE III is c/o Empery Asset Management,
LP, One Rockefeller Plaza, Suite 1205, New York, NY 10020.
|
| (12) | Empery
Asset Management LP, the authorized agent of Empery Tax Efficient, LP (“ETE”),
has discretionary authority to vote and dispose of the shares held by ETE and may be deemed
to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as
investment managers of Empery Asset Management LP, may also be deemed to have investment
discretion and voting power over the shares held by ETE. ETE, Mr. Hoe and Mr. Lane each disclaim
any beneficial ownership of these shares.
The address of ETE is c/o Empery Asset Management, LP, One Rockefeller Plaza,
Suite 1205, New York, NY 10020. |
| (13) | Empery
Asset Management LP, the authorized agent of Empery Asset Master Ltd (“EAM”), has
discretionary authority to vote and dispose of the shares held by EAM and may be deemed to
be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment
managers of Empery Asset Management LP, may also be deemed to have investment discretion
and voting power over the shares held by EAM. EAM, Mr. Hoe and Mr. Lane each disclaim any
beneficial ownership of these shares.
The address of EAM is c/o Empery Asset Management, LP, One Rockefeller Plaza,
Suite 1205, New York, NY 10020. |
| (14) | Mitchell
P. Kopin (“Mr. Kopin”) and Daniel B. Asher (“Mr. Asher”), each of
whom are managers of Intracoastal Capital LLC (“Intracoastal”), have shared voting
control and investment discretion over the securities reported herein that are held by Intracoastal.
As a result, each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as
determined under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) of the securities reported herein that are held by Intracoastal.
The address of Intracoastal Capital LLC is address is 245 Palm Trail, Delray Beach, FL
33483. |
| (15) | The
shares will be directly held by S.H.N. Financial Investments Ltd., an Israeli corporation
(“S.H.N.”), and may be deemed to be indirectly beneficially owned by Mr. Hadar
Shamir and Mr. Nir Shamir who each own 50% of the company and have shared voting and dispositive
power over the common shares. Mr. Hadar Shamir and Mr. Nir Shamir disclaim beneficial ownership
of the securities except to the extent of their respective pecuniary interests therein. The
address of S.H.N. is c/o S.H.N. Financial Investments Ltd., 3 Arik Einstein Street, Herzilya,
Israel. |
USE
OF PROCEEDS
We
will not receive any of the proceeds from the sale of the Shares by the Selling Stockholders pursuant to this prospectus. However, we
may receive cash proceeds equal to the total exercise price of the Common Warrants to the extent that they are exercised using cash.
Any proceeds that we receive from the exercise of the Common Warrants will be used for inventory purchases, artist costs for upcoming
festivals, transaction cost, expanded sales, marketing, partial prepayment of an outstanding note and general working capital.
The
Selling Stockholders will pay any agent’s commissions and expenses they incur for brokerage, accounting, tax or legal services
or any other expenses that they incur in disposing of the shares of Common Stock. We will bear all other costs, fees and expenses incurred
in effecting the registration of the shares of Common Stock covered by this prospectus and any prospectus supplement. These may include,
without limitation, all registration and filing fees, SEC filing fees and expenses of compliance with state securities or “blue
sky” laws.
We
cannot predict when or if the Common Warrants will be exercised, and it is possible that the Common Warrants may expire and never be
exercised. In addition, the Common Warrants are exercisable on a cashless basis in certain circumstances.
As a result, we may never receive meaningful, or any, cash proceeds from the exercise of the Common Warrants, and we cannot plan on any
specific uses of any proceeds we may receive beyond the purposes described herein.
See
“Plan of Distribution” elsewhere in this prospectus for more information.
DIVIDEND
POLICY
We
paid a one-time cash dividend for the year ended December 31, 2021, in the amount of $310,280. We currently intend to retain all available
funds and any future earnings, if any, and do not expect to pay any dividends in the foreseeable future. Any future determination to
declare cash dividends will be made at the discretion of our Board of Directors, subject to applicable laws, and will depend on a number
of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business
conditions, and other factors that our Board of Directors may deem relevant.
DESCRIPTION
OF SECURITIES THAT THE SELLING STOCKHOLDERS ARE OFFERING
General
The
following description of our securities and certain provisions of our amended and restated certificate of incorporation and amended and
restated bylaws are summaries and are qualified by reference to the amended and restated certificate of incorporation and our bylaws
that will be in effect on the closing of this offering. Copies of these documents have been filed with the SEC as exhibits to our registration
statement, of which this prospectus forms a part. The descriptions of the Shares and preferred stock reflect changes to our capital structure
that will be in effect on the closing of this offering.
Our
authorized capital stock consists of 100,000,000 shares of our Common Stock, $0.001 par value per share, and 10,000,000 shares of undesignated
preferred stock $0.001 par value per share.
As
of August 30, 2024, there were 15,270,427 shares of our common stock outstanding, held by 20 stockholders of record.
Our
Board of Directors is authorized, without stockholder approval, to issue additional shares of our capital stock.
Common
Stock
As
of August 30, 2024, we had 15,270,427 shares of Common Stock outstanding and 100,000,000 shares of Common Stock authorized. Holders of
shares of Common Stock have the right to cast one vote for each share of Common Stock in their name on the books of our company, whether
represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including election of directors. There
is no right to cumulative voting in election of directors. Except where a greater requirement is provided by statute, by our certificate
of incorporation, or by our bylaws, the presence, in person or by proxy duly authorized, of the one or more holders of a majority of
the outstanding shares of our common stock constitutes a quorum for the transaction of business. The vote by the holders of a majority
of outstanding shares is required to effect certain fundamental corporate changes such as liquidation, merger, or amendment of our certificate
of incorporation.
There
are no restrictions in our certificate of incorporation or bylaws that prevent us from declaring dividends. We have not declared any
dividends, and we do not plan to declare any dividends in the foreseeable future.
Holders
of shares of our common stock are not entitled to preemptive or subscription or conversion rights, and no redemption or sinking fund
provisions are applicable to our common stock. All outstanding shares of common stock are fully paid and non-assessable.
Preferred
Stock
Our
Board of Directors also has the authority to designate the rights and preferences, including but not limited to the voting rights, redemption
rights, conversion rights and right to payment of dividends, of our preferred stock. Under our certificate of incorporation, we have
10,000,000 authorized shares of “blank check” preferred.
Authorized
but Unissued Shares
The
authorized but unissued shares of common stock are available for future issuance without stockholder approval, subject to any limitations
imposed by the listing standards of any exchange on which our shares are listed. These additional shares may be used for a variety of
corporate finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common
stock could make more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or
otherwise.
Special
Meeting of Stockholders; Advance Notice Requirements for Stockholder Proposals and Director Nominations; Stockholder Action; Forum Selection
Our
certificate of incorporation and bylaws provide that, except as otherwise required by law, special meetings of the stockholders can only
be called by chairperson of the Board, the chief executive officer, the president, the secretary or a majority of the authorized number
of directors. In addition, our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual
meeting of stockholders, including proposed nominations of candidates for election to our Board of Directors. Stockholders at an annual
meeting may only consider proposals or nominations specified in the notice of the meeting or brought before the meeting by or at the
direction of our Board of Directors, or by a stockholder of record on the record date for the meeting who is entitled to vote at the
meeting and who has delivered timely written notice in proper form to our secretary of the stockholder’s intention to bring such
business before the meeting. These provisions could have the effect of delaying until the next stockholder meeting stockholder actions
that are favored by the holders of a majority of our outstanding voting securities. Further, our bylaws require that, unless we consent
in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is to be the sole and exclusive forum
for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty
owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim arising pursuant
to any provision of the General Corporation Law of the State of Delaware or our bylaws or (iv) any action or proceeding asserting a claim
governed by the internal affairs doctrine. This forum selection provision in our Bylaws may limit our stockholders’ ability to
obtain a favorable judicial forum for disputes with us.
Limitations
of Liability and Indemnification
Delaware
Law
Section
145 of the Delaware General Corporation Law provides for, under certain circumstances, the indemnification of our officers, directors,
employees and agents against liabilities that they may incur in such capacities. Below is a summary of the circumstances in which such
indemnification is provided.
In
general, the statute provides that any director, officer, employee or agent of a corporation may be indemnified against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred in a proceeding (including
any civil, criminal, administrative or investigative proceeding) to which the individual was a party by reason of such status. Such indemnity
may be provided if the indemnified person’s actions resulting in the liabilities: (i) were taken in good faith; (ii) were reasonably
believed to have been in or not opposed to our best interests; and (iii) with respect to any criminal action, such person had no reasonable
cause to believe the actions were unlawful. Unless ordered by a court, indemnification generally may be awarded only after a determination
of independent members of the Board of Directors or a committee thereof, by independent legal counsel or by vote of the stockholders
that the applicable standard of conduct was met by the individual to be indemnified.
The
statutory provisions further provide that to the extent a director, officer, employee or agent is wholly successful on the merits or
otherwise in defense of any proceeding to which he or she was a party, he or she is entitled to receive indemnification against expenses,
including attorneys’ fees, actually and reasonably incurred in connection with the proceeding.
Indemnification
in connection with a proceeding by us or in our right in which the director, officer, employee or agent is successful is permitted only
with respect to expenses, including attorneys’ fees actually and reasonably incurred in connection with the defense. In such actions,
the person to be indemnified must have acted in good faith, in a manner believed to have been in our best interests and must not have
been adjudged liable to us, unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability, in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expense which the Court of Chancery or such other court shall deem proper. Indemnification
is otherwise prohibited in connection with a proceeding brought on our behalf in which a director is adjudged liable to us, or in connection
with any proceeding charging improper personal benefit to the director in which the director is adjudged liable for receipt of an improper
personal benefit.
Delaware
law authorizes us to reimburse or pay reasonable expenses incurred by a director, officer, employee or agent in connection with a proceeding
in advance of a final disposition of the matter. Such advances of expenses are permitted if the person furnishes to us a written agreement
to repay such advances if it is determined that he or she is not entitled to be indemnified by us.
The
statutory section cited above further specifies that any provisions for indemnification of or advances for expenses does not exclude
other rights under our certificate of incorporation, by-laws, resolutions of our stockholders or disinterested directors, or otherwise.
These indemnification provisions continue for a person who has ceased to be a director, officer, employee or agent of the corporation
and inure to the benefit of the heirs, executors and administrators of such persons.
The
statutory provision cited above also grants us the power to purchase and maintain insurance policies that protect any director, officer,
employee or agent against any liability asserted against or incurred by him or her in such capacity arising out of his or her status
as such. Such policies may provide for indemnification whether or not the corporation would otherwise have the power to provide for it.
Our
bylaws include an indemnification provision under which we have the power to indemnify our directors, officers, former directors and
officers, employees and other agents (including heirs and personal representatives) against all costs, charges and expenses actually
and reasonably incurred, including an amount paid to settle an action or satisfy a judgment to which a director or officer is made a
party by reason of being or having been our director or officer. Our bylaws further provide for the advancement of all expenses incurred
in connection with a proceeding upon receipt of an undertaking by or on behalf of such person to repay such amounts if it is determined
that the party is not entitled to be indemnified under our bylaws. No advance will be made by us to a party if it is determined that
the party acting in bad faith. These indemnification rights are contractual, and as such will continue as to a person who has ceased
to be a director, officer, employee or other agent, and will inure to the benefit of the heirs, executors and administrators of such
a person.
At
present, we do not maintain directors’ and officers’ liability insurance in order to limit the exposure to liability for
indemnification of directors and officers, including liabilities under the Securities Act; however, we are in the process of obtaining
such insurance.
Certificate
of Incorporation
Our
certificate of incorporation contains provisions that limit the liability of our current and former directors for monetary damages to
the fullest extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for
monetary damages for any breach of fiduciary duties as directors, except liability for:
| |
● |
any
breach of the director’s duty of loyalty to the corporation or its stockholders; |
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|
|
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● |
any
act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
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|
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● |
unlawful
payments of dividends or unlawful stock repurchases or redemptions; or |
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|
|
| |
● |
any
transaction from which the director derived an improper personal benefit. |
Such
limitation of liability does not apply to liabilities arising under federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
Our
certificate of incorporation authorizes us to indemnify our directors, officers, employees, and other agents to the fullest extent permitted
by Delaware law.
PLAN
OF DISTRIBUTION
Each
Selling Stockholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any
or all of their securities covered hereby on the principal trading market or any other stock exchange, market or trading facility on
which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may
use any one or more of the following methods when selling securities:
| ● |
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| |
|
| ● |
block
trades in which the broker-dealer will attempt to sell the securities as agent, but may position and resell a portion of the block
as principal to facilitate the transaction; |
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|
| ● |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
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|
| ● |
an
exchange distribution in accordance with the rules of the applicable exchange; |
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| ● |
privately
negotiated transactions; |
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|
| ● |
settlement
of short sales; |
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|
| ● |
in
transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated
price per security; |
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|
| ● |
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| |
|
| ● |
a
combination of any such methods of sale; or |
| |
|
| ● |
any
other method permitted pursuant to applicable law. |
The
Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available,
rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in
excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or
markdown in compliance with FINRA Rule 2121.
In
connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they
assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan
or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option
or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer
or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the securities.
The
Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company
has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under
the Securities Act.
We
agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders
without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar
effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule
of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable
state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is
complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M,
prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the
Common Stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders
and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).
DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITY
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
LEGAL
MATTERS
The
validity of the shares of common stock being offered by this prospectus will be passed upon for us by CM Law PLLC
EXPERTS
The
financial statements as of December 31, 2023 and 2022 and for the years then ended included in this prospectus have been audited by Fruci
& Associates II, PLLC, an independent registered public accounting firm, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered
by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all the information set
forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and
regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement,
including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents
of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration
statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract
or document filed as an exhibit is qualified in all respects by the filed exhibit. The SEC maintains an internet website that contains
reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.
We
are subject to the information reporting requirements of the Exchange Act, and we file reports, proxy statements, and other information
with the SEC. These reports, proxy statements and other information is available at www.sec.gov.
We
also maintain a website at www.laserphotonics.com. Information contained in, or accessible through, our website is not a part of this
prospectus, and the inclusion of our website address in this prospectus is only as an inactive textual reference.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC permits us to “incorporate by reference” into this prospectus the information contained in documents that we file with
the SEC, which means that we can disclose important information to you by referring you to those documents. Information that is incorporated
by reference is considered to be part of this prospectus and you should read it with the same care that you read this prospectus. Information
that we file later with the SEC will automatically update and supersede the information that is either contained, or incorporated by
reference, in this prospectus, and will be considered to be a part of this prospectus from the date those documents are filed. We have
filed with the SEC and incorporate by reference in this prospectus, except as superseded, supplemented or modified by this prospectus,
the documents listed below (excluding those portions of any Current Report on Form 8-K that are not deemed “filed” pursuant
to the General Instructions of Form 8-K):
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● |
our
Annual Report on Form
10-K/A for the fiscal year ended December 31, 2023, filed with the SEC on August 28, 2024 (Amendment No. 1) and September
12, 2024 (“Amendment No. 2); |
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our
Quarterly Report on Form
10-Q for the quarter ended June 30, 2024, filed with the SEC on August 29, 2024 and Form 10-Q/A filed September 12, 2024; |
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● |
our
Current Reports on Forms 8-K filed with the SEC on February 7, 2024, April 11, 2024, April 22, 2024, May 13, 2024, June 11, 2024,
June 27, 2024, August 21, 2024, August 23, 2024, August 26, 2024, August 27, 2024, August 29, 2024, and September 4, 2024
(except for Item 7.01 of any Current Report on Form 8-K which are not deemed “filed” for purposes of Section 18 of the
Exchange Act and are not incorporated by reference in this prospectus); and |
We
also incorporate by reference into this prospectus additional documents that we may file with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date hereof but before the completion or termination of this offering (excluding any information
not deemed “filed” with the SEC).
Any
statement contained in a previously filed document is deemed to be modified or superseded for purposes of this prospectus to the extent
that a statement contained in this prospectus or in a subsequently filed document incorporated by reference herein modifies or supersedes
the statement, and any statement contained in this prospectus is deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in a subsequently filed document incorporated by reference herein modifies or supersedes the
statement.
We
will provide, without charge, to each person to whom a copy of this prospectus is delivered, including any beneficial owner, upon the
written or oral request of such person, a copy of any or all of the documents incorporated by reference herein, including exhibits. Requests
should be directed to:
Laser
Photonics Corporation
1101
N. Keller Road
Suite
G-2
Orlando,
FL 32810
(407)
804-1000
For
other ways to obtain a copy of these filings, please refer to “Where You Can Find More Information” above.
3,000,000
Units
(Common
Stock and Warrants)
LASER
PHOTONICS CORPORATION
PROSPECTUS
September
12, 2024
Through
and including ______ 2024 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether
or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to
deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Unless
otherwise indicated, all references to “Laser Photonics,” the “Company,” “we,” “our,”
“us,” or similar terms refer to Laser Photonics Corporation and its subsidiaries.
Item
13. Other Expenses of Issuance and Distribution.
The
following table sets forth an estimate of the fees and expenses relating to the issuance and distribution of the securities being registered
hereby, other than underwriting discounts and commissions, all of which shall be borne by the registrant. All of such fees and expenses,
except for the SEC registration fee, are estimated:
| SEC registration fee | |
$ | 1,514,38 | |
| Transfer agent and registrar fees and expenses | |
$ | 5,000 | |
| Legal fees and expenses | |
$ | 50,000 | |
| Printing fees and expenses | |
$ | 5,000 | |
| Accounting fees and expenses | |
$ | 10,000 | |
| Miscellaneous fees and expenses | |
$ | 7500 | |
| Total | |
$ | 79,014.38 | |
Item
14. Indemnification of Directors and Officers.
Section
145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s Board of Directors to grant, indemnity
to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities, including
reimbursement for expenses incurred, arising under the Securities Act. Our amended and restated certificate of incorporation that will
be in effect on the closing of this offering permits indemnification of our directors, officers, employees, and other agents to the maximum
extent permitted by the Delaware General Corporation Law, and our amended and restated bylaws that will be in effect on the closing of
this offering provide that we will indemnify our directors and officers and permit us to indemnify our employees and other agents, in
each case to the maximum extent permitted by the Delaware General Corporation Law.
At
present, there is no pending litigation or proceeding involving a director or officer of Laser Photonics regarding which indemnification
is sought, nor is the registrant aware of any threatened litigation that may result in claims for indemnification.
We
maintain insurance policies that indemnify our directors and officers against various liabilities arising under the Securities Act of
1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
that might be incurred by any director or officer in his capacity as such.
The
underwriters will be obligated, under certain circumstances, under the underwriting agreement filed as Exhibit 1.1 hereto, to indemnify
us and our officers and directors against liabilities under the Securities Act.
Item
15. Recent Sales of Unregistered Securities.
Set
forth below is information regarding shares of common stock issued, and options granted, since January 1, 2021:
On
July 24, 2022, we granted 25,000 Incentive Stock Options (‘ISOs’) to Tim Schick, CFA. The options vested over four years
and were exercisable at $5.00 per share. These options were cancelled when Tim Schick was terminated as our CFO on March 27, 2023. As
part of his 2023 termination arrangements, we issued in April 2023 25,000 shares of Common Stock as compensation for services that Mr.
Schick provided to the Company. These shares of Common Stock were recorded at a fair value based on the market price of the Company’s
stock on the date of the termination agreement.
On
December 12, 2022,: 180,000 warrants were issued to the following members of Alexander Capital, the Underwriter of our IPO. The warrants
are exercisable at $6.00 per share, between March 28, 2023, and September 29, 2027:
On
February 2, 2024, 17,000 Shares of Common Stock were issued to Jade Barnwell, our former CFO, under the terms of her employment agreement.
On
October 4, 2022, we entered into a marketing agreement with TraDigital Marketing Group under which we issued 350,000 shares of our Common
sSock in full satisfaction of the balance due on that agreement, reflected in Accrued Expenses at December 31, 2022 in the amount of
$829,500 ($2.37 per share, our closing stock price on the date of that agreement).
During
the year ended December 31, 2023, we paid $350,000 and issued 1,000,000 to Fonon Technologies, Inc. (“FTI”), a company controlled
by ICT Investments, for a worldwide, exclusive license for all commercial and noncommercial applications of FTI’s know-how and
trade secrets for High Power Turbo Piercing (“Cold Cutting”) laser cutting equipment and technology under the terms of a
License Agreement dated October 18, 2023.
The
offer, sale and issuance of the securities described in the paragraphs above were deemed to be exempt from registration under the Securities
Act in reliance on Rule 506 of Regulation D in that the issuance of securities to the accredited investors did not involve a public offering.
Each of the recipients of the securities in this transaction acquired the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions.
Each of the recipients of these securities in this transaction was an accredited investor under Rule 501 of Regulation D.
Item
16. Exhibits and Financial Statement Schedules.
(a)
Exhibits.
See
the Exhibit Index on the page immediately preceding the signature page for a list of exhibits filed as part of this registration statement
on Form S-1, which Exhibit Index is incorporated herein by reference.
(b)
Financial Statement Schedules.
All
financial statement schedules are omitted because the information required to be set forth therein is not applicable or is shown in the
consolidated financial statements or the notes thereto.
Item
17. Undertakings.
The
undersigned Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act
(ii)
To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective Registration Statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration Statement;
provided,
however, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement or is contained in a form of
prospectus filed pursuant to Rule 427(b) that is part of this Registration Statement.
(2)
That, for the purposes of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser:
(i)
Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of this Registration Statement as of the
date the filed prospectus was deemed part of and included in the Registration Statement; and
(ii)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on
Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required
by section 10(a) of the Securities Act shall be deemed to be part of and included in this Registration Statement as of the earlier of
the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering
described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter,
such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede
or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made
in any such document immediately prior to such effective date.
The
Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the indemnification provisions described herein, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
EXHIBIT
INDEX
| Exhibit
Number |
|
Exhibit
Description |
| 1.1 |
|
Form of Underwriting Agreement (incorporated by reference to exhibit 1.1 of Registrant’s Form S-1 filed August 31, 2022) |
| 3.1† |
|
Certificate of Incorporation (incorporated by reference to exhibit 3.1 of Registrant’s Form 10-12G/A filed April 30, 2020) |
| 3.2† |
|
Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to exhibit 3.3 of Registrant’s Form 10-12G/A filed April 30, 2020) |
| 3.3† |
|
Bylaws (incorporated by reference to exhibit 3.2 of Registrant’s Form 10-12G/A filed April 30, 2020) |
| 4.1† |
|
Form of Common Stock Purchase Warrant of Laser Photonics Corporation (filed as exhibit to the Registrant’s Current Report on Form 8-K with SEC on August 23, 2024). |
| 5.1* |
|
Opinion of CM Law PLLC |
| 10.1+† |
|
2019 Stock Incentive Plan (incorporated by reference to exhibit 10.1 of Registrant’s Form S-1 filed November 16, 2021) |
| 10.2+† |
|
Forms of Option Agreement, Stock Option Grant Notice, and Notice of Exercise under 2019 Stock Incentive Plan (incorporated by reference to exhibit 10.2 of Registrant’s Form S-1 filed November 16, 2021). |
| 10.3† |
|
Exclusive License Agreement, dated January 1, 2020, between Laser Photonics Corporation and ICT Investments, LLC (incorporated by reference to exhibit 10.3 of Registrant’s Form S-1 filed November 16, 2021) |
| 10.4† |
|
Transfer & Registrar Agreement, dated November 19, 2021, between Laser Photonics Corporation and Direct Transfer LLC (incorporated by reference to exhibit 10.4 of Registrant’s Form S-1/A filed February 7, 2022) |
| 10.5† |
|
Commercial Sublease Agreement, dated December 1, 2019, between ICT Investments, LLC and Laser Photonics Corporation (incorporated by reference to Exhibit 10.2 to the Form 10-12G/A filed by the Registrant on April 30, 2020) |
| 10.6† |
|
Assignment of Lease Agreement between Fonon Technologies, Inc. and Laser Photonics Corporation, DBA name of Fonon Laser Technologies, LLC, effective March 4, 2019 (incorporated by reference to exhibit 10.6 of Registrant’s Form S-1/A filed August 1, 2022) |
| 10.7† |
|
Amendment to Lease Agreement, dated September 28, 2021, between David & Harrell, LLC and Laser Photonics Corporation, DBA name of Fonon Laser Technologies, LLC (incorporated by reference to exhibit 10.7 of Registrant’s Form S-1/A filed August 1, 2022) |
| 10.8+† |
|
Offer Letter of Employment Carlos Sardinas dated April 8, 2024 (incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed by on May 13, 2024) |
10.19†
|
|
Securities Purchase Agreement, dated August 16, 2024, between Laser Photonics Corporation and certain Purchasers who are signatories thereto (filed as an exhibit to the Registrant’s Current Report on Form 8-K on August 23, 2024).
|
| 10.20† |
|
Registration
Rights Agreement, dated August 16, 2024, between Laser Photonics Corporation and certain Purchasers who are signatories thereto (filed
as an exhibit to the Registrant’s Current Report on Form 8-K dated August 23, 2024). |
| 10.21† |
|
Placement Agent Agreement (filed as an exhibit to the Registrant’s Current Report on Form 8-K on August 23, 2024). |
| 16.1† |
|
Letter submitted to the Securities and Exchange Commission dated June 11, 2024 (incorporated by reference to Exhibit 16.1 to the Registrant’s Current Report on Form 8-K filed June 11, 2024) |
| 23.1* |
|
Consent of Fruci & Associates II, PLLC, independent registered public accounting firm |
| 23.2* |
|
Consent of CM Law PLLC (included in Exhibit 5.1) |
| 24.1 |
|
Power of Attorney (set forth on Signature Page) |
| 107* |
|
Filing Fee Table |
*
Provided herewith.
+
Indicates a management contract or compensatory plan.
†
Previously filed.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in Orlando, Florida, on September 13, 2024.
| |
LASER
PHOTONICS CORPORATION |
| |
|
|
| |
By: |
/s/
Wayne Tupuola |
| |
|
Wayne
Tupuola |
| |
|
President
and CEO |
POWER
OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Wayne Tupuola as their true and
lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for them and in their name, place and stead,
in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to
sign any registration statement for the same offering covered by this registration statement that is to be effective on filing pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, and all post-effective amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Wayne Tupuola |
|
President
and CEO (Principal Executive |
|
September
13, 2024 |
| Wayne
Tupuola |
|
Officer)
and Director |
|
|
| |
|
|
|
|
| /s/
Carlos Sardinas |
|
VP,
Finance |
|
September
13, 2024 |
| Carlos
Sardinas |
|
(Principal
Financial and Accounting Officer) |
|
|
| |
|
|
|
September
13, 2024 |
| /s/
Tim Miller |
|
Director |
|
|
| Tim
Miller |
|
|
|
|
| |
|
|
|
|
| /s/
Troy Parkos |
|
Director |
|
September
13, 2024 |
| Troy
Parkos |
|
|
|
|
| |
|
|
|
|
| /s/
Carlos M. Gonzalez |
|
Director |
|
September
13, 2024 |
| Carlos
M. Gonzalez |
|
|
|
|
Exhibit 5.1
September 13, 2024
Laser Photonics Corporation
1101 N. Keller Rd.
Suite G
Orlando, Florida 32810
| |
Re: |
Registration
Statement on Form S-1 |
Gentlemen:
We have acted as
counsel for Laser Photonics Corporation., a Delaware corporation (the “Company”),
in connection with the resale Registration Statement on Form S-1 (as amended from time to time the “Registration
Statement”), relating to the registration under the Securities Act of 1933, as amended (the “Act”),
of up to 1,500,000 (i) previously issued and outstanding shares of common stock of the Company, par value $.001 per share (the “Common
Stock”), held by current shareholders of the Company (the “Selling
Stockholders”), and (ii) shares of Common Stock, all of which are authorized but heretofore unissued, to be offered
and sold by the Company, issuable upon exercise of the warrants held by the Selling Stockholders (collectively, the “Warrants”)
(the “Warrant Shares”). Unless
otherwise indicated, capitalized terms used herein shall have the meanings ascribed thereto in the Registration Statement.
As such counsel, we have examined
such matters of fact and questions of law as we have considered appropriate for purposes of this letter. With your consent, we have relied
upon certificates and other assurances of officers of the Company and others as to factual matters without having independently verified
such factual matters. We are opining herein as to the General Corporation Law of the State of Delaware, and we express no opinion with
respect to any other laws.
Based upon the foregoing and subject
to the limitations, qualifications and assumptions set forth herein, we are of the opinion that:
| |
1. |
The shares of Common Stock held by the Selling Stockholders have been duly authorized and issued; and |
| |
2. |
The Warrant Shares have been duly authorized and, if duly issued and sold against the payment therefor in accordance with the terms of the Warrants, would be validly issued, fully paid and nonassessable. |
Our opinions are subject to: (i)
the effect of bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors; and (ii) the effect of general principles of equity, whether considered in a proceeding in equity or
at law (including the possible unavailability of specific performance or injunctive relief), concepts of materiality, reasonableness,
good faith and fair dealing, and the discretion of the court before which a proceeding is brought. We express no opinion or confirmation
as to federal or state securities laws, tax laws, antitrust or trade regulation laws, insolvency or fraudulent transfer laws, antifraud
laws, compliance with fiduciary duty requirements, pension or employee benefit laws, FINRA rules or stock exchange rules (without limiting
other laws excluded by customary practice).
This opinion is for your benefit
in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable
provisions of the Act. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our
firm in the Prospectus under the heading “Legal Matters.” In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.
| |
Very truly yours, |
| |
|
| |
CM Law PLLC |
| |
|
| |
/s/ CM Law PLLC |
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED ACCOUNTING FIRM
We
consent to the incorporation by reference in this Registration Statement to Form S-1, our audit report dated April 16, 2024, except for
certain items disclosed in Note 7, as to which the date is August 27, 2024, with respect to the balance sheets of Laser Photonics Corp.
as of December 31, 2023 and 2022, and the related statements of operations, stockholders’ equity (deficit), and cash flows for
each of the years in the two-year period ended December 31, 2023.
Our
report relating to those financial statements includes an emphasis of matter paragraph regarding substantial doubt as to the Company’s
ability to continue as a going concern.
We
also consent to the reference to us under the heading “Experts” in such Registration Statement.
Spokane,
Washington
September
13, 2024
Exhibit
107
Calculation
of Filing Fee Table
Form
S-1
(Form
Type)
Laser
Photonics Corporation
(Exact
Name of Registrant as Specified in its Charter)
| | |
Security
Type | |
Security
Class Title | |
Fee
Calculation or Carry Forward Rule | | |
Amount
Registered | | |
Proposed
Maximum Offering Price Per Security | | |
Maximum
Aggregate Offering Price (1) | | |
Fee
Rate | | |
Amount
of Registration Fee (2) | |
| Fees to be Paid | |
Equity | |
Shares of common stock, par value
$.001 per share (“Common Stock”) | |
| 457 | (o) | |
| 1,500,000 | | |
$ | 3.42 | | |
$ | 5,130,000 | | |
$ | 0.00014760 | | |
$ | 757.18 | |
| | |
Equity | |
Common Stock issuable upon
exercise of warrants | |
| 457 | (g) | |
| 1,500,000 | | |
| 3.42 | | |
| 5,130,000 | | |
$ | 0.00014760 | | |
$ | 757.18 | |
| | |
Other | |
to purchase Common Stock
(3) | |
| 457 | (g) | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
Total Offering Amount | |
| |
| | | |
| | | |
| | | |
| 10,260,000 | | |
| | | |
| | |
| | |
Fee Due | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 1,514.38 | |
| (1) |
Pursuant
to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this registration statement shall be
deemed to cover additional securities (i) to be offered or issued in connection with any provision of any securities purported to
be registered hereby pursuant to terms which provide for a change in the amount of securities being offered or issued to prevent
dilution resulting from stock splits, stock dividends, or similar transactions and (ii) of the same class as the securities covered
by this registration statement issued or issuable prior to completion of the distribution of the securities covered by this registration
statement as a result of a split of, or a stock dividend on, the registered securities. |
| |
|
| (2) |
Estimated
solely for the purpose of computing the amount of the registration fee pursuant to Rules 457(o) under the Securities Act. |
| |
|
| (3) |
In
accordance with Rule 457(g) under the Securities Act, because the shares of the Selling Stockholders common stock underlying the
Selling Stockholder’s warrants are registered hereby, no separate registration fee is required with respect to the warrants. |
Grafico Azioni Laser Photonics (NASDAQ:LASE)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Laser Photonics (NASDAQ:LASE)
Storico
Da Gen 2024 a Gen 2025
