The Company announced the signing of the asset purchase agreement on 10/31/24

Laser Photonics Corporation (LPC) (NASDAQ: LASE), a leading global developer of industrial laser systems for cleaning and other material processing applications, today shared an interview with Carlos Sardinas, VP of Finance for LPC, where he speaks on the Company’s recently announced acquisition of the assets of Control Micro Systems, Inc. (CMS). Key messages from the interview included:

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  • LPC is diversifying into a new, recession-resistant vertical with attractive growth characteristics;
  • Due to financial challenges, the prior owner under-invested in the business, particularly sales and marketing, and therefore, LPC believes CMS’ products were under-monetized as well;
  • CMS counts several of the top 20 largest global pharmaceutical manufacturers as customers;
  • LPC will combine the engineering and customer support talent previously employed by CMS and LPC’s existing sales and marketing programs with the goal of creating substantial synergies.

See below for a full transcript of the interview:

1. Please explain to investors what CMS does.

Sardinas: CMS specializes in developing custom precision laser solutions for several markets; however, the business that was especially attractive to us was their laser solutions for the healthcare industry, specifically pharmaceutical drug delivery, where they address two very attractive applications: controlled-release tablet production and packaging compliance. With its laser drilling systems, CMS has established itself as a critical supplier for laser systems that create microscopic apertures in tablets, allowing for precise control over drug release rates.

2. Why were these assets especially attractive to LPC from a business, technology and market perspective?

Sardinas: There are several reasons. First, this is a huge, growing industry. According to Grandview Research, the broader market for controlled-release pharmaceuticals was $49.5 billion in 2023 and is expected to grow at a CAGR of nearly 11% through 2030. While the market for CMS’ laser systems that create precise holes in the pharmaceuticals is a tiny fraction of this market, this shows that the demand for these drug delivery methods will continue to grow, and we believe CMS is well-positioned to capture this growth.

Second, not only does this diversify our business into a new growth market, but pharmaceuticals tend to be a recession-proof, or at least highly recession-resistant industry, so we don’t expect to see much cyclicality.

The third is synergies. We believe these assets were significantly under-monetized and had become neglected after being acquired in 2022. The acquiring Company was saddled with debt and did not invest in growth initiatives like sales and marketing due to its debt load. Despite this, CMS generated more revenue (unaudited) than LPC did in 2023. We believe with the proper investment in sales and marketing programs, an area of strength for LPC, we can accelerate growth.

Finally, we see additional benefits as we acquired existing customer programs with over $2 million in unbilled contracted revenue that we can now turn into cash flow to reinvest in the business. Also, while not technically part of the deal, we hired most of the former CMS employees, who bring engineering and customer support talent to LPC.

3. Who are CMS’ previous major customers?

Sardinas: CMS has several of the top 20 largest global pharmaceutical manufacturers as its customers, including 2 in the top 10. As we invest in sales and marketing, we hope to penetrate these customers further while expanding this list in the coming years.

4. What was the purchase price for the acquisition of CMS?

Sardinas: We paid $1.05 million for the assets consisting of $950,000 in cash and $100,000 in LPC stock.

5. Finally, what are the next steps following the acquisition?

Sardinas: Laser Photonics is set to close the asset purchase agreement over the next week. As we attain control of the assets and develop our game plan, we will provide investors with relevant updates. Thank you.

About Laser Photonics Corporation

Laser Photonics is a vertically integrated manufacturer and R&D Center of Excellence for industrial laser technologies and systems. Laser Photonics seeks to disrupt the $46 billion, centuries-old sand and abrasives blasting markets, focusing on surface cleaning, rust removal, corrosion control, de-painting and other laser-based industrial applications. Laser Photonics’ new generation of leading-edge laser blasting technologies and equipment also addresses the numerous health, safety, environmental and regulatory issues associated with old methods. As a result, Laser Photonics has quickly gained a reputation as a leader in industrial laser systems with a brand that stands for quality, technology and product innovation. Currently, world-renowned and Fortune 1000 manufacturers in the aerospace, automotive, defense, energy, maritime, nuclear, and space industries are using Laser Photonics’ unique-to-industry systems. For more information, visit https://www.laserphotonics.com.

Cautionary Note Concerning Forward-Looking Statements

This press release contains forward-looking statements within the meaning of applicable securities laws. These statements are based on current expectations as of the date of this press release and involve risks and uncertainties that may cause results and uses of proceeds to differ materially from those indicated by these forward-looking statements. We encourage readers to review the “Risk Factors” in our Registration Statement for a comprehensive understanding. Laser Photonics Corp. undertakes no obligation to revise or update any forward-looking statements, except as required by applicable laws or regulations, to reflect events or circumstances after the date of this press release.

Investor Relations Contact: Brian Siegel, IRC, MBA Senior Managing Director Hayden IR (346) 396-8696 laser@haydenir.com

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