What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-15 · 303 added, 246 removed, 513 unchanged (52% of the section changed)

3 unchanged sentences

Index to the Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (unaudited)

Notes to the Unaudited Condensed Consolidated Financial Statements

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Common stock, par value $ 0.001 per share, 75,000,000 shares authorized;

64,771,817 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Treasury stock at cost ( 1,163,040 shares held at March 31, 2024 and December 31, 2023, respectively)

64,867,760 and 64,771,817 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Treasury stock at cost ( 1,133,040 and 1,163,040 shares held at June 30, 2024 and December 31, 2023, respectively)

Additional paid-in capital

Shares to be issued, common shares

Shares to be issued, common shares ( 25,197 and 41,463 shares, respectively)

Accumulated deficit

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of Revenue

2 unchanged sentences

Selling expense

Compensation - officers

Compensation - officers and directors

Research and development

5 unchanged sentences

( 1,071,486 )

( 2,698,947 )

( 2,312,460 )

Other Income (Expense):

1 unchanged sentence

Interest expense – related party

Gain on bargain purchase

Unrealized gain (loss) on marketable equity securities

Realized loss on marketable equity securities

Realized gain (loss) on marketable equity securities

Rental income

Other income (expense), net

Total other income

Total other income, net

$ ( 1,365,106 )

$ ( 1,018,166 )

$ ( 2,680,703 )

$ ( 2,132,409 )

Other comprehensive items

Foreign currency translation gain and (loss)

Foreign currency translation loss

Total comprehensive loss

1 unchanged sentence

$ ( 1,022,049 )

$ ( 2,688,979 )

$ ( 2,132,617 )

Weight Average Number of Common Shares Outstanding:

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2024 AND 2023

Treasury Stock

3 unchanged sentences

Total Stockholders’

Balance – December 31, 2023

Balance – March 31, 2024

$ ( 434,048 )

2 unchanged sentences

Stock based compensation – shares

Retirement of treasury stock

Other comprehensive income

1 unchanged sentence

( 1,365,106 )

Balance – June 30, 2024

$ ( 385,686 )

$ ( 25,262,873 )

Treasury Stock

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Balance – March 31, 2023

$ ( 18,978,271 )

Stock based compensation – options

Stock based compensation – shares

Purchase of treasury stock

Issued stock dividend

Other comprehensive income

( 1,018,166 )

Balance – June 30, 2023

$ ( 420,686 )

$ ( 19,996,437 )

Treasury Stock

7 unchanged sentences

Stock based compensation – options

Stock based compensation – shares

Retirement of treasury stock

Other comprehensive income

( 2,680,703 )

Balance – June 30, 2024

$ ( 385,686 )

$ ( 25,262,873 )

Treasury Stock

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Balance – December 31, 2022 *

$ ( 2,000,000 )

$ ( 17,864,028 )

Stock based compensation – options

Stock based compensation – cashless exercise options

Stock based compensation – shares

Purchase of treasury stock

Retirement of treasury stock

( 1,999,400 )

Issued stock dividend

Other comprehensive income

1 unchanged sentence

( 2,132,409 )

Balance – March 31, 2023

Balance – June 30, 2023

$ ( 420,686 )

$ ( 19,996,437 )

Retroactively applied to the stock split

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

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Lease liabilities

Other liabilities

Net cash flows used in operating activities

( 1,721,946 )

( 1,606,739 )

Cash flows from investing activities:

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Cash flows from financing activities:

Proceeds from short-term loan

Proceeds from third party loan

Proceeds from related party loan

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Note 1 – Organization and Operations

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was incorporated under the laws of the State of Nevada on December 4, 2012.

It is a universal smart instrument developer and manufacturer,

headquartered in Ontario, California, specializing in the development and commercialization of novel and proprietary universal smart technologies

and instruments.

Focus Universal Inc.

is also a provider of patented hardware and software design technologies for Internet of Things

(IoT) and 5G.

The Company has developed what it believes are five disruptive patented technology platforms with 26 patents and patents

pending in various phases and 8 trademarks pending in various phases to solve what it believes are the major problems facing hardware

The Company is a universal smart instrument developer and

manufacturer, headquartered in Ontario, California, specializing in the development and commercialization of novel and proprietary universal

smart technologies and instruments.

The Company is also a provider of patented hardware and software design technologies for Internet

of Things (IoT) and 5G.

The Company has developed what it believes are five disruptive patented technology platforms with 26 patents and

patents pending in various phases and 8 trademarks pending in various phases to solve what it believes are the major problems facing hardware

and software design and production within the industry today.

These technologies combined have the potential to reduce costs, product

These technologies combined have the potential to reduce costs, reduce product

development timelines and energy usage while increasing range, speed, efficiency, and security of the IoT and 5G networks.

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AVX, incorporated on June 16, 2000, in the state of California, is an IoT installation

and management company specializing in high performance and easy to use audio/video systems, home theaters, lighting control, automation

and integration.

Services provided by AVX include full integration of houses, apartments, commercial complexes, and office spaces with

audio, visual and control systems to fully integrate devices in the low voltage field, specializing in high end residential smart IoT

installation projects in areas throughout the Southern California area.

AVX’s services also include partial equipment upgrade and

installation.

AVX also markets and sells our IoT Products, such as high end LED, live wall panel products and cameras, under the Smart

On December 23, 2021, Focus Shenzhen was founded

as a mainland China office for manufacturing procurement expertise and support research and development activities.

Focus Shenzhen is

designed to function as a branch office accessing high level ability to source products and build relationships with manufacturers in

China and as a lower cost form of support, research and development as engineers bound in China.

During the third quarter of 2023, this

office continued to grow and increase its headcount to 28 employees.

Employees of Focus Shenzhen are added to the engineering staff, the

sales staff, and the marketing and market analysis staff in house to enhance the internal capabilities of the Company.

and management company specializing in high performance audio/video systems, home theaters, lighting control, automation and integration.

Services provided by AVX include full integration of houses, apartments, commercial complexes, and office spaces with audio, visual and

control systems to fully integrate devices in the low voltage field, specializing in high end residential smart IoT installation projects

in areas throughout the Southern California area.

AVX’s services also include partial equipment upgrade and installation.

markets and sells our IoT Products, such as high-end LED, live wall panel products and cameras, under the Smart AVX name.

December 23, 2021, Focus Shenzhen was founded as a mainland China office for manufacturing procurement expertise and research and development

support activities.

Focus Shenzhen is designed to function as a branch office accessing high level ability to source products and build

relationships with manufacturers in China and as a lower cost form of support, research and development as engineers bound in China.

As of January 6, 2023, AT Tech Systems is a subsidiary

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wholesalers, and provides clients with integrated network, security, and multimedia design solutions and technology systems.

(See Note 11)

The Company has completed integration throughout

its existing businesses, including key employees serving dual roles with its subsidiaries.

For example, Mr.

Anthony Tejeda serves as the

Company’s director of installation services, as the vice president of operations of AVX, and as chief operating officer of AT Tech

As of April 30, 2024, the Company founded a wholly owned subsidiary

named Lusher Inc.

was founded to develop, market, and commercialize automation software, titled One Touch Financial, initially

targeting the financial reporting software market sector.

As of the date of this filing, the Company has solely begun ongoing development

of the software and founded the subsidiary after board approval, as other business activities are only in the introductory phase.

May 11, 2024, the Company announced board approval for the eventual spin-off of Lusher to better prioritize the development of its SEC

Financial Reporting Automation Software while also allowing the management of Focus Universal Inc.

to better prioritize its core business.

The Company plans to demo the software at the beginning of September 2024, and plans a company roadshow in 3Q of 2024.

Note 2 – Summary of Significant Accounting Policies

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The unaudited condensed financial statements of

the Company for the three months ended March 31, 2024 and 2023 have been prepared in accordance with accounting principles generally accepted

the Company for the six months ended June 30, 2024 and 2023 have been prepared in accordance with accounting principles generally accepted

(“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation

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The Company currently has two operating segments

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company considers operating segments to be components

of the Company’s business for which separate financial information is available and evaluated regularly by Management in deciding

how to allocate resources and to assess performance.

Management reviews financial information presented on a consolidated basis for purposes

of allocating resources and evaluating financial performance.

Accordingly, the Company has determined that it has three operating and

reportable segments.

The Company consists of three types of operations.

(1) Focus and Focus Shenzhen collectively operate our “Corporate

and R&D” segment, which involves the non-specific financing, executive expense, operations and investor relations of our public

entity, and the general shared management and costs across the Company’s subsidiaries that spread across all functional categories

and research and development of technology products.

(2) Perfecular, AVX (doing business as and branded under Smart AVX) and Lusher jointly

operate the “IoT Products” segment, which involves the wholesale, marketing, and production of our universal smart instruments

and devices in the hydroponic and controlled agriculture segments and of our smart products into the commercial and home automation sectors.

(3) AVX (exclusive of the smart IoT Products sales under Smart AVX) and AT Tech Systems cooperatively run our “IoT Installation

in addition to our corporate overhead.

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company considers

operating segments to be components of the Company’s business for which separate financial information is available and evaluated

regularly by Management in deciding how to allocate resources and to assess performance.

Management reviews financial information presented

on a consolidated basis for purposes of allocating resources and evaluating financial performance.

Accordingly, the Company has determined

that it has two operating and reportable segments.

The Company consists of two types of operations, along with corporate overhead (which

includes research and development) as follow, (1) Perfecular, AVX (doing business as and branded under Smart AVX) and Lusher jointly operate

the “IoT Products” segment, which involves the wholesale, marketing, and production of our universal smart instruments and

devices in the hydroponic and controlled agriculture segments and of our smart products into the commercial and home automation sectors,

and (2) AVX (exclusive of the smart IoT Products sales under Smart AVX) and AT Tech Systems cooperatively run our “IoT Installation

Services” segment, which handles our IoT installation and management business specializing in high performance and easy to use audio/video

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of costs and expenses that are not readily apparent from other sources.

The actual results experienced by the

Company may differ materially and adversely from the Company’s estimates.

To the extent there are material differences between

the estimates and the actual results, future results of operations will be affected.

Significant estimates in the accompanying

financial statements include the lease term impacting right-of use asset and lease liability, useful lives of property and

equipment, allowance for doubtful accounts, inventory reserves, and the valuation allowance on deferred tax assets.

regularly evaluates its estimates and assumptions.

The actual results experienced by the Company

may differ materially and adversely from the Company’s estimates.

To the extent there are material differences between the estimates

and the actual results, future results of operations will be affected.

Significant estimates in the accompanying financial statements

include the lease term impacting right-of use asset and lease liability, useful lives of property and equipment, allowance for doubtful

accounts, inventory reserves, and the valuation allowance on deferred tax assets.

The Company regularly evaluates its estimates and assumptions.

Allowance for doubtful accounts

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that the Company’s estimate of the allowance for doubtful accounts will change.

As of March 31, 2024 and December 31, 2023, allowance

As of June 30, 2024 and December 31, 2023, allowance

for doubtful accounts amounted to $ 262,543 and $ 249,603 , respectively.

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Major customers

Three customers accounted for 69 % of the total

revenue for the three months ended March 31, 2024 and four customers accounted for 59 % of the total revenue for the three months ended

March 31, 2023.

One customer accounted for 31 % of the total accounts receivable as of March 31, 2024 and one customer accounted for 43 %

of the total accounts receivable as of December 31, 2023.

For the three months ended of June 30, 2024 and

2023, the Company’s revenue received from the following companies were set out as below:

Concentration of risk

Three months ended June 30,

_________________

Revenue had not exceeded 10% or more of the Company’s consolidated revenue of the Company.

For the six months ended of June 30, 2024 and

2023, the Company’s revenue received from the following companies were set out as below:

Six months ended June 30,

_________________

Revenue had not exceeded 10% or more of the Company’s consolidated revenue of the Company.

As of June 30, 2024 and December 31, 2023, the

Company’s accounts receivable from the following companies were set out as below:

June 30, 2024

December 31, 2023

_________________

Accounts receivable had not exceeded 10% or more of the Company’s consolidated accounts receivable of the Company.

Major vendors

No major vendor accounted more than 10% of total

purchase during three months ended March 31, 2024 and 2023.

purchase during six months ended June 30, 2024 and 2023.

Share-based Compensation

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The following table summarize financial assets

and liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:

and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

Schedule of financial assets

and liabilities measured at fair value

March 31, 2024 (unaudited)

June 30, 2024 (unaudited)

Marketable securities:

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The Company’s other comprehensive

loss for the three months ended March 31, 2024 and 2023 was comprised of foreign currency translation adjustments.

loss for the six months ended June 30, 2024 and 2023 was comprised of foreign currency translation adjustments.

Revenue Recognition

Revenue from the Company is recognized under

Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration

and includes the following elements:

Revenue from the Company is recognized under Topic

606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and

includes the following elements:

executed contracts with the Company’s customers that it believes are legally enforceable;

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on actual units produced.

A summary of our revenue by product type for the

three months ended March 31, 2024 and 2023 is as follows:

A summary of our revenue by product type for

the three months ended June 30, 2024 and 2023 is as follows:

Schedule of revenue by product type

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

IoT Project Construction and Installation Services

A summary of our revenue by product type for the

six months ended June 30, 2024 and 2023 is as follows:

June 30, 2024

June 30, 2023

IoT Project Construction and Installation Services

Research and development

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Schedule of anti-dilutive shares

Three Months Ended March 31,

Six Months Ended June 30,

Stock options

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is the Renminbi (“RMB”).

For financial reporting purposes, the financial

statements of the Company’s Chinese subsidiary, which are prepared using the RMB, are translated into the Company’s reporting

currency, USD.

For financial reporting purposes, the

financial statements of the Company’s Chinese subsidiary, which are prepared using the RMB, are translated into the

Company’s reporting currency, USD.

Assets and liabilities are translated using the exchange rate on the balance sheet date.

Revenue and expenses are translated

using average exchange rates prevailing during each reporting period.

Stockholders’ equity is translated at historical exchange

Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive loss in stockholders’

Revenue and expenses are translated using average exchange rates prevailing during each reporting period.

Stockholders’ equity

is translated at historical exchange rates.

Adjustments resulting from the translation are recorded as a separate component of

accumulated other comprehensive loss in stockholders’ equity.

Transactions denominated in currencies other than

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Schedule of exchange rates

Average Rate for the Three Months Ended

Average Rate for the Six Months Ended

China Yuan (RMB)

1 unchanged sentence

Exchange Rate at

March 31, 2024

June 30, 2024

December 31, 2023

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as a going concern for a period of one year from the date of the issuance of these condensed consolidated financial statements.

has a net loss of $ 1,315,597 and $ 1,114,243 for the three months ended March 31, 2024 and 2023, respectively.

In addition, the Company

had an accumulated deficit of $ 23,897,767 and $ 22,582,170 as of March 31, 2024 and December 31, 2023, respectively, and negative cash

flow from operating activities of $ 892,089 and $ 838,535 for the three months ended March 31, 2024 and 2023, respectively.

doubt about the Company’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate,

has a net loss of $ 2,680,703 and $ 2,132,409 for the six months ended June 30, 2024 and 2023, respectively.

In addition, the Company had

an accumulated deficit of $ 25,262,873 and $ 22,582,170 as of June 30, 2024 and December 31, 2023, respectively, and negative cash flow

from operating activities of $ 1,721,946 and $ 1,606,739 for the six months ended June 30, 2024 and 2023, respectively.

Substantial doubt

about the Company’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate,

indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year from the financial

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ability to continue as a going concern.

At March 31, 2024, the Company had cash and

At June 30, 2024, the Company had cash and

cash equivalents, and short-term investments, in the amount of $ 40,644 .

The ability to continue as a going concern is dependent on

the Company attaining and maintaining profitable operations in the future and raising additional capital to meet its obligations and

repay its liabilities arising from normal business operations when they come due.

Since inception, the Company has funded its

operations primarily through equity and debt financings, and it expects to continue to rely on these sources of capital in the

In addition, subsequent to year end, the Company has entered into a letter of intent from a secondary buyer to potentially

sell its land and buildings which upon completion, would provide additional working capital to the Company.

No assurance can be

given that the sale of the land and building will occur, or any future financing will be available or, if available, that it will be

on terms that are satisfactory to the Company.

Even if the Company is able to obtain additional financing, it may contain undue

restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity

financing, or grant unfavorable terms in future licensing agreements.

The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future

and raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they

Since inception, the Company has funded its operations primarily through equity and debt financings, and it expects to

continue to rely on these sources of capital in the future.

In addition, subsequent to June

30, 2024, the Company has sold its land and buildings which provided additional working capital to the Company.

For more information

on the sale of the land and buildings please see Note 11.

No assurance can be given that any future financing will be available or,

if available, that it will be on terms that are satisfactory to the Company.

Even if the Company is able to obtain additional

financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our

stockholders, in case of equity financing, or grant unfavorable terms in future licensing agreements.

Note 3 – Recent Accounting Pronouncement

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Note 4 – Inventory

At March 31, 2024 and December 31, 2023, inventory

At June 30, 2024 and December 31, 2023, inventory

consisted of the following:

Schedule of inventory

March 31, 2024

June 30, 2024

December 31, 2023

1 unchanged sentence

Note 5 – Property and Equipment

At March 31, 2024 and December 31, 2023, property and equipment consisted

At June 30, 2024 and December 31, 2023, property and equipment consisted

of the following:

Schedule of property and equipment

March 31, 2024

June 30, 2024

December 31, 2023

Building improvement

Furniture and fixture

Furniture and fixtures

Less accumulated depreciation

Property and equipment, net

Depreciation expense for the three months ended

March 31, 2024 and 2023 amounted to $ 35,330 and $ 42,041 , respectively.

Depreciation expense for the six months ended

June 30, 2024 and 2023 amounted to $ 67,354 and $ 84,616 , respectively.

Note 6 – Related Party Loan

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which serves as collateral, with a cost of $4.5 million pledged.

At the time of entering the loan agreement, Golden Sunrise

Investment LLC was owned by two of the Company’s shareholders who collectively owned approximately 19 % of the Company’s outstanding

At the time of entering the loan agreement, Golden Sunrise Investment

LLC was owned by two of the Company’s shareholders who collectively owned approximately 19 % of the Company’s outstanding shares.

The loan has an annual interest rate of 12 % and the principal amount has a due date of September 7, 2024 .

On March 5, 2024, the

Company entered into an addendum to the loan agreement with Golden Sunrise Investment LLC, a related party obtaining an additional secured

loan amount of $ 300,000 at an annual interest rate of 12 % which is due September 7, 2024.

The interest expense amount was $ 33,000 for

the three months ended March 31, 2024.

There was no accrued interest as of March 31, 2024, and the total principal outstanding loan amount

was $ 1,300,000 as of March 31, 2024.

On March 5, 2024, the Company

entered into an addendum to the loan agreement with Golden Sunrise Investment LLC, a related party obtaining an additional secured loan

amount of $ 300,000 at an annual interest rate of 12 % which is due September 7, 2024 .

The interest expense amount was $ 72,000 for the six

months ended June 30, 2024.

The loan accrued interest of $ 26,000 as of June 30, 2024, and the total principal outstanding loan amount

was $ 1,300,000 as of June 30, 2024.

The interest rate increases to 15% as of the maturity date of the loan on any unpaid principal balance

The principal and interest were paid off on July 3, 2024.

On April 2, 2024, the Company entered into a two-year

loan agreement with the Company’s CEO Desheng Wang for the amount of $ 300,000 .

The loan has an annual interest rate of 12 % and the

principal and interest amount have a due date of April 1, 2026 , as consistent with the previous and separate loan agreement with Golden

Sunrise Investment LLC.

Until June 30, 2024, the principal loan amount has been increased from $ 300,000 to $ 801,000 .

The interest expense

amount was $ 17,098 for the six months ended June 30, 2024.

The principal and interest were paid off on July 9, 2024.

Note 7 – Short-Term Loan

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Lender in 12 equal installment payments of $ 25,408 .11 beginning on the Due Date.

The interest amount for the three months ended March

31, 2024 was $ 816 , and the total principal outstanding loan amount was $ 250,000 as of March 31, 2024.

The interest amount for the six months ended June 30,

2024 was $ 2,041 , and the total principal outstanding loan amount was $ 175,000 as of June 30, 2024.

On June 18, 2024, the Company enter into a one-month

loan agreement with a third party for the amount of $ 50,000 .

The loan has an annual interest rate of 12 % and the principal and interest

amount have a due date of July 19, 2024 .

The accrued interest was $ 200 for the six months ended June 30, 2024, and the total principal

outstanding loan amount was $ 50,000 as of June 30, 2024.

The principal and interest were paid off on July 19, 2024.

Note 8 – Lease

The Company recorded its operating lease expense

of $ 27,687 and $ 46,080 for the three months ended March 31, 2024 and 2023, respectively.

This is included in general and administrative

The Company recorded an operating lease expense

of $ 56,625 and $ 81,069 for the six months ended June 30, 2024 and 2023, respectively.

This is included in general and administrative expenses.

On January 16, 2023, Focus Universal (Shenzhen)

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Lease expense for the lease is recognized on a straight-line basis over the lease term.

On June 1, 2024, Focus Universal (Shenzhen) Technology

LTD entered into a twelve-month commercial lease with a third party for an approximately 1,701 square foot office space as a sales-focused

The lease commenced on June 1, 2024 and will end on May 31, 2025.

The monthly rent is RMB8,000 (approximately $1,001).

Operating lease right-of-use assets represent

1 unchanged sentence

to make lease payments arising from the lease.

As of March 31, 2024 and December 31, 2023, operating lease right-of use assets and lease

As of June 30, 2024 and December 31, 2023, operating lease right-of use assets and lease

liabilities were as follows:

Schedule of operating lease right of use assets and lease

March 31, 2024

June 30, 2024

December 31, 2023

4 unchanged sentences

Schedule of lease term and discount rate

March 31, 2024

June 30, 2024

December 31, 2023

5 unchanged sentences

Operating lease

The minimum future lease payments are as follows:

Schedule of minimum future lease payments

Year ending December 31, 2024

Year ending December 31, 2025

Year ending December 31, 2026

Total minimum lease payment

imputed interest

Present value of future minimum lease payments

Note 9 – Stockholders’ Equity

2 unchanged sentences

of the Company’s common stock to its shareholders for a stock dividend of one share of common stock for every two shares of common

The Company followed paragraph ASC 505-20-25

in treating its stock dividend as a stock split due to the stock dividend being greater than 25% of the shares then outstanding.

such, on March 23, 2023 and April 3, 2023, the Company issued 21,592,164

stock dividends to its shareholders for a stock dividend of one share of common stock for every two shares of common stock issued

and outstanding.

The Company adhered to paragraph ASC 260-10-55-12, wherein it retroactively adjusted its statement of

stockholders’ equity for all presented periods to incorporate the alteration in capital structure.

On February 13, 2023, the Company issued 62,250

shares with a fair value of $ 149,404 to employees based on their Restricted Stock Award Agreements (see Employee stock-based compensation

On February 21, 2023, the Company issued 10,857

shares to a prior board member who exercised his options with cashless exercise.

The Company followed paragraph ASC 505-20-25 in

treating its stock dividend as a stock split due to the stock dividend being greater than 25% of the shares then outstanding.

on March 23, 2023 and April 3, 2023, the Company issued 21,592,164 stock dividends to its shareholders for a stock dividend of one share

of common stock for every two shares of common stock issued and outstanding.

The Company adhered to paragraph ASC 260-10-55-12, wherein

it retroactively adjusted its statement of stockholders’ equity for all presented periods to incorporate the alteration in capital

In prior years, the Company entered into several employment agreements

that require the issuance of common shares for services that vest on a quarterly basis.

During the period ended June 30, 2024, an aggregate

of 58,496 shares with a fair value of $ 50,348 vested during the period and were recognized as compensation costs.

As of December 31, 2023,

41,463 of shares with a fair value of $ 74,476 that vested under these agreements were not issued.

During the period ending June 30, 2024,

16,446 shares with a fair value of $ 58,508 that previously vested were issued during the period.

As of June 30, 2024, 25,197 shares of

common stock with a fair value of $ 15,968 remained issuable.

Treasury stock

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the status of authorized and unissued shares.

On June 11, 2024, the Company retired 30,000 shares

with a cost of $ 48,362 and restored them to the status of authorized and unissued shares.

Employee compensation

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2023 the unamortized amount of the award was $ 1,072,020 .

During the three months ended March 31, 2024 the Company amortized $ 89,335 of

this amount leaving an unamortized balance of $ 982,685 at March 31, 2024.

As of March 31, 2024, 135,000 of the shares had been vested

and 88,000 of the shares had been forfeited.

The company has entered into two employment

agreements that require the annual award of 15,000 shares of common stock to each of these employees to be vested on a quarterly

During the period ended March 31, 2024, 7,500 shares of common stock with a fair value of $ 3,075 had vested.

In addition, the

Company entered into another employment contract that contained provisions for a total bonus of restricted stock grants valued at

$ 50,000 based on the share price upon the date of completion of the performance metrics described in the employment contracts.

During the period the employee earned 6,098 shares with a fair value of $ 2,500 during the period ended March 31, 2024.

31, 2024, 55,241 shares of common stock earned under these contracts have vested but not been issued.

During the three months ended March 31, 2024 and

2023, the total employee stock-based compensation amount for all employees in the Company was $ 94,910 and $ 149,404 , respectively.

During the six months ended June 30, 2024 the Company amortized $ 178,670 of this

amount leaving an unamortized balance of $ 893,350 at June 30, 2024.

As of June 30, 2024, 186,000 of the shares had been vested and 132,000

of the shares had been forfeited.

Stock options

On January 2, 2024, each member of the Board

was granted 22,500 options to purchase shares at $ 1.50 per share with a fair value of $ 29,595 .

The options vest on a monthly basis

over 1 year, and have a 10 year life.

On January 2, 2024, each member of the Board was

granted 22,500 options to purchase shares at $ 1.50 per share with a fair value of $ 29,595 .

The options vest monthly over 1 year, and may

be exercised during a 10 -year term.

In the aggregate, 112,500 options were granted with a fair value of $ 147,975 .

During the three

months ended March 31, 2023, the Company recognized $ 36,995 of compensation cost relating to the vesting of these options and

$ 110,980 remained unvested which will be amortized over the remainder of 2024.

For the three months ended March 31, 2024 and

During the six months

ended June 30, 2024, the Company recognized $ 73,990 of compensation cost relating to the vesting of these options and $ 73,990 remained

unvested which will be amortized over the remainder of 2024.

For the six months ended June 30, 2024 and 2023,

the Company’s stock option compensation expenses amounted to $ 73,990 and $ 266,806 , respectively.

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Schedule of assumptions

March 31, 2024

June 30, 2024

Risk-free interest rate

3 unchanged sentences

The following is a summary of the option activity

from December 31, 2023 to March 31, 2024:

from December 31, 2023 to June 30, 2024:

Schedule of option activity

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Cancelled or forfeited

Outstanding at March 31, 2024

Vested as of March 31, 2024

Exercisable as of March 31, 2024

Outstanding at June 30, 2024

Vested as of June 30, 2024

Exercisable as of June 30, 2024

Note 10 – Segment reporting

The Company currently has three operating segments.

First, Focus and Focus Shenzhen collectively operate our “Corporate and R&D” segment, which involves the non-specific

financing, executive expense, operations and investor relations of our public entity, and the general shared management and costs across

the Company’s subsidiaries that spread across all functional categories and research and development of technology products.

Perfecular, AVX (doing business as Smart AVX) and Lusher jointly operate the “IoT Products” segment, which involves the wholesale,

marketing, and production of our universal smart instruments and devices in the hydroponic and controlled agriculture segments and of

our smart instruments into the commercial and home automation sectors.

And third, AVX (exclusive of the smart IoT Products sales under

Smart AVX) and AT Tech Systems cooperatively run our “IoT Installation Services” segment, which handles our IoT installation

and management business specializing in high performance and easy to use audio/video systems, home theaters, lighting control, automation,

and integration.

The following tables summarize the financial

information of each operating segment of the Company for the three months ended March 31, 2024:

The Company currently has two operating segments

in addition to our corporate overhead, which involves the non-specific financing, executive expense, operations and investor relations

of our public entity, and the general shared management and costs across the Company’s subsidiaries.

First, Perfecular, AVX (doing

business as Smart AVX) and Lusher jointly operate the “IoT Products” segment, which involves the wholesale, marketing, and

production of our universal smart instruments and devices in the hydroponic and controlled agriculture segments and of our smart instruments

into the commercial and home automation sectors.

And second, AVX (exclusive of the smart IoT Products sales under Smart AVX) and AT Tech

Systems cooperatively run our “IoT Installation Services” segment, which handles our IoT installation and management business

specializing in high performance and easy to use audio/video systems, home theaters, lighting control, automation, and integration.

The following tables summarize the financial information

of each operating segment of the Company for the six months ended June 30, 2024:

Schedule of operating segment

For the Three Months Ended March 31, 2024

For the Six Months Ended June 30, 2024

IoT Installation Services

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$ ( 124,688 )

$ ( 2,680,703 )

The following tables summarize the financial information

of each operating segment of the Company for the three months ended March 31, 2023:

For the Three Months Ended March 31, 2023

of each operating segment of the Company for the six months ended June 30, 2023:

For the Six Months Ended June 30, 2023

IoT Installation Services

8 unchanged sentences

Note 11 – Subsequent Events

On April 2, 2024, the Company entered into a two

year loan agreement with the Company’s CEO Desheng Wang for the amount of $300,000.

The loan has an annual interest rate of 12%

and the principal and interest amount has a due date of April 1, 2026, as consistent with the previous and separate loan agreement with

Golden Sunrise Investment LLC.

On April 5, 2024, the Company hired Warren Wang

as Vice President and Chief Strategy Officer.

Wang’s employment agreement is for a term of 2 years, and he will receive a base

compensation of $10,000 per month for providing investor outreach and investor relations services for the Company.

On May 7, 2024, the Company entered into a purchase

On July 3, 2024, the Company completed a purchase

agreement (the “Purchase Agreement”) with a third-party purchaser (the “Buyer”) to sell the Company’s warehouse.

The purchase price for the Property is $7,460,250 with $2,611,088 paid directly to the Company in cash, and the remaining $4,849,162 will

be financed by the Buyer and paid to the Company upon approval of the financing.

The Purchase Agreement allows for a contingency period

of thirty days and includes a requirement for Buyer to deposit $100,000 into escrow, which has been satisfied.

Additional contingencies

are set forth in the Purchase Agreement and the closing date will occur thirty days after their satisfaction or waiver.

On April 26, 2024, the Company issued a press

release announcing a planned spinoff of its wholly owned subsidiary Lusher Inc.

along with a presentation about its core business, which

is a provider of patented hardware and software design technologies for Internet of Things (IoT) and 5G.

The company had previously dedicated

resources and employees toward development of this software, which has been expensed.

On May 9, 2024, Focus

Universal Inc., received a letter from the Listing Qualifications Department of the Nasdaq Stock Market.

The May 9, 2024, letter notified

the Company that based on the Staff’s review of the Company’s Market Value of Publicly Held Shares, the Company’s MVPHS

has fallen below the required minimum of $15,000,000 for the last 32 consecutive business days.

Therefore, the Company no longer meets

the Nasdaq Listing Rule 5450(b)(2)(C) and 5450(b)(3)(C).

The notification received has no immediate effect on the Company’s Nasdaq

In accordance with Nasdaq Listing Rule 5810(c)(3)(A) and 5810(c)(3)(C), the Company has been provided an initial period of 180

calendar days, or until November 5, 2024, to regain compliance with the MVPHS Rules.

If, at any time before the Compliance Date, the Company’s

MVPHS closes at $15,000,000 or more for a minimum of ten consecutive business days, the Staff will provide written confirmation of compliance

to the Company and this matter will be closed with respect to the MVPHS Rules.

As of April 30, 2024, the Company founded a wholly

owned subsidiary named Lusher Inc.

This company Lusher Inc.

was founded to develop, market, and commercialize automation software initially

for the financial reporting software market sector.

As of the date of this filing, the Company has solely begun ongoing development of

the software and founded the subsidiary after board approval, as other business activities are only in the introductory phase.

The purchase price for the Property is $7,460,250.

The Company received $5,664,939 after $1,795,310 was charged to pay off existing loans,

broker commissions, county taxes, title / escrow charges, and existing tenant security deposit.

Within this adjusted purchase payment,

the Company paid off the Golden Sunrise Investment LLC loan with the principal and interest amount of $1,327,353.

The Company is

currently calculating the accounting effects of this transaction.

On July 8, 2024, the Company entered into a Standard

Industrial/Commercial Single-Tenant Lease (the “Lease”) with the Veena Asset Management, LLC to lease the same Focus Universal

premises located at 2311 East Locust Court, Ontario, CA 91761 back for one year commencing at the close of escrow of the Purchase Agreement

and ending on July 31, 2025 for 14,004 square foot office and warehouse space.

Base monthly rent is $16,804, with a total of $58,812 due

upon execution of the lease.

On July 9, 2024, the Company repaid the loans

it entered into with the Company’s CEO with the principal and interest repayment amounts of $820,501.

On July 19, 2024, the Company paid off a third-party

loan with the principal and interest amount of $50,500.

On August 5, 2024, the Company and the segment manager of AT Tech Systems

LLC reached a tentative oral agreement to terminate his employment and the employment of his two direct report team members.

negotiations are still tentative, the Company expects there will be a termination or severance cost of at most $40,000.

Management is

currently evaluating how to replace the personnel necessary to run AT Tech Systems LLC.

The Company has evaluated all other subsequent

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements