What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-15 · 217 added, 223 removed, 410 unchanged (52% of the section changed)

21 unchanged sentences

However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to

time with the Securities and Exchange Commission, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.

time with the Securities and Exchange Commission, particularly the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any

Current Reports on Form 8-K.

Narrative Description of the Business

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and quantum light meters and filtration products, including fan speed adjusters, carbon filters and HEPA filtration systems.

In an effort to continually develop our product

lines, we plan to phase out the traditional, lower-margin products and are preparing to launch a new line of products that have been in

development for several years.

These newer technology products will be released in phases, and we intend that increasing amounts of technology

will be layered upon these products.

Additionally, we plan to continue to increase our efforts in protecting more intellectual property

and have continued to develop technologies for long-term growth.

We have developed products in both the controlled agriculture industry

and home automation industries, taking advantage of our existing relationships in both sectors.

We are building a U.S.

sales team to market our

product lines.

The team has already begun marketing our current Smart AVX-branded large format multimedia touch screens, surveillance

camera system (cameras and network video recorders (NVRs)), indoor and outdoor LED screens, and Focus Universal-branded VOIP phone service

an effort to continually develop our product lines, we plan to phase out the traditional, lower-margin products, such as the first-generation

digital light meter, and are preparing to launch a new line of products

that have been in development for several years.

These newer technology products will be released in phases, and we intend that increasing

amounts of technology will be layered upon these products.

Additionally, we plan to continue to increase our efforts in protecting more

intellectual property and have continued to develop technologies for long-term growth.

We have developed products in both the controlled

agriculture industry and home automation industries, taking advantage of our existing relationships in both sectors.

We are building a U.S.-based sales team to market

our Smart AVX-branded product lines.

The team has already begun marketing our current large format multimedia touch screens, surveillance

camera system (cameras and network video recorders (NVRs)), indoor and outdoor LED screens, and Focus Universal-branded voice over internet

protocol (VOIP) phone service systems for use in commercial and corporate settings.

Our products on the home automation front are

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Our software machine auto design team has also

made significant progress.

With mathematical and graphical environments having been created, our team is focusing on developing the 3D

user interface machine auto design.

made significant progress during the last period.

Having the mathematical and graphical environments created, our team is focused on developing

the 3D-user interface machine auto design.

Our public reporting automation software is completed and currently undergoing extensive testing.

Reports on Forms 10-Q and 10-K are time-consuming, complex processes that require each company’s financial team to gather and translate

large amounts of data from multiple sources.

The time and expertise required to complete the process is a substantial burden.

SEC reporting deadlines are firm and inflexible.

This reality can interfere with other reporting timelines and leave a time-strapped team

scrambling for the resources needed to meet all its reporting requirements.

We have developed a Microsoft®-based add-on software that

aims to streamline and automate the SEC reporting preparation process.

We believe the software will significantly simplify the Form 10-Q

and Form 10-K preparation processes and make creating, editing and managing documents both simple and accurate.

We are planning to commercialize

this software in the fourth quarter of 2024 or the first quarter of 2025.

A cloud-based version of this software is also under the development.

As reports on Forms 10-Q and 10-K are time-consuming, complex processes that require each company’s financial team to gather and

translate large amounts of data from multiple sources, the time and expertise required to complete the process is a substantial burden

for any company, large or small.

Meanwhile, SEC reporting deadlines are firm and inflexible.

This conflict can interfere with other reporting

and internal timelines and leave teams time-strapped and scrambling for the resources needed to meet any reporting requirements.

developed a Microsoft®-based add-on software that aims to streamline and automate the SEC reporting preparation process.

the software will significantly simplify the Form 10-Q and Form 10-K preparation processes and make creating, editing and managing documents

both simple and accurate.

We are planning to commercialize this software in the fourth quarter of 2024 or the first quarter of 2025.

cloud-based version of this software is also under the development.

Beyond IoT products, as a developer of a Natural

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We sell these devices in various sizes.

Digital light meter.

We provide a handheld

digital light meter that is used to measure luminance in fc units, or foot-candles.

Quantum par meter .

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is integrating its own Smart AVX- branded IoT equipment to connect devices across platform systems

and to facilitate unified collaboration across audiovisual technologies, digital media technologies, security and surveillance technologies

and to facilitate unified collaboration across audio-visual technologies, digital media technologies, security and surveillance technologies

and communication technologies.

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installation and maintenance by utilizing technology that integrates our five core technologies.

We have integrated our branded products across

the following strategic sub-sectors:

LED Audio-visual Panel Products, large format Smart Multimedia Touch Screens, Pan Tilt Zoom (“PTZ”)

Dome Cameras and Network Video Recorders (“NVRs”), and VOIP Phone Services.

We have integrated our Smart AVX-branded products

across the following strategic sub-sectors:

LED Audio-visual Panel Products, large format Smart Multimedia Touch Screens, Pan Tilt Zoom

(“PTZ”) Dome Cameras and Network Video Recorders (“NVRs”), and VOIP Phone Services.

LED Audio-visual Panel Products.

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Large Format Smart Multimedia Touch Screens.

Smart AVX-branded large format touch screens deliver interactive solutions

for a wide variety of industries and applications, including education, healthcare, commercial, residential and government applications.

While interacting with a touch display is commonplace in public-consumer spaces, we integrate large format Smart touch screens in small

business, commercial applications such as dental offices and other business scenarios.

These market applications continue to be underserved

with touch-enabled devices, and our installation engineers and design staff can customize solutions for unique business and commercial

application projects.

The Company, through the Smart AVX brand, offers a myriad of customized choices and a long list of options within

the current touch screen technology in a refined product.

Our products allow future integration of our core platform technologies, such

as the LED digital displays, the Ubiquitor, PTZ Dome Cameras and VOIP Phone Systems, allowing for pinch, zoom, scrolling, and videoconferencing

within the touch screen format.

Pan Tilt Zoom (PTZ)

Dome Cameras and Network Video Recorders (NVRs).

Smart AVX-branded large format touch screens deliver interactive solutions for a wide variety of industries and applications, including education, healthcare, commercial, residential and government applications.

While interacting with a touch display is commonplace in public-consumer spaces, we integrate large format Smart touch screens in small business, commercial applications such as dental offices and other business scenarios.

These market applications continue to be underserved with touch-enabled devices, and our installation engineers and design staff can customize solutions for unique business and commercial application projects.

The Company, through the Smart AVX brand, offers a myriad of customized choices and a long list of options within the current touch screen technology in a refined product.

Our products allow future integration of our core platform technologies, such as the LED digital displays, the Ubiquitor, PTZ Dome Cameras and VOIP Phone Systems, allowing for pinch, zoom, scrolling, and videoconferencing within the touch screen format.

Pan Tilt Zoom (PTZ) Dome Cameras and Network Video Recorders (NVRs).

Dome security

cameras are easily recognizable for their circular, dome encasing.

Smart AVX-branded dome surveillance cameras are highly

versatile and can be used in both indoor and outdoor environments, providing wide coverage for nearly any use condition.

Smart AVX-branded

dome security cameras have a vandal-proof dome casing, an infrared camera for night vision capabilities, and a sturdy metal base

to protect against damage or tampering, making the cameras an integrated solution for reliable surveillance in many use conditions.

The cameras are PTZ, meaning that they are built with mechanical parts that allow for swiveling left to right, tilting up and

down, and zooming in and out of a scene.

They’re typically used to monitor wide open areas requiring a 180- or 360-degree view

and are often deployed in guard stations where personnel can operate them through a remote controller.

Depending on the camera or

software, they can also be set to automatically follow motion-triggered activity to a pre-set schedule.

PTZ cameras are generally

implemented in tandem with a large surveillance system, in which the PTZ tracks movement while a fixed camera takes detailed shots.

Pan Tilt Zoom (PTZ) Dome Cameras and Network Video Recorders (NVRs).

Dome security cameras are easily recognizable for their circular, dome encasing.

Smart AVX-branded dome surveillance cameras are highly versatile and can be used in both indoor and outdoor environments, providing wide coverage for nearly any use condition.

Smart AVX-branded dome security cameras have a vandal-proof dome casing, an infrared camera for night vision capabilities, and a sturdy metal base to protect against damage or tampering, making the cameras an integrated solution for reliable surveillance in many use conditions.

The cameras are PTZ, meaning that they are built with mechanical parts that allow for swiveling left to right, tilting up and down, and zooming in and out of a scene.

They’re typically used to monitor wide open areas requiring a 180- or 360-degree view and are often deployed in guard stations where personnel can operate them through a remote controller.

Depending on the camera or software, they can also be set to automatically follow motion-triggered activity to a pre-set schedule.

PTZ cameras are generally implemented in tandem with a large surveillance system, in which the PTZ tracks movement while a fixed camera takes detailed shots.

VOIP Phone Services.

Voice over Internet Protocol (VoIP), also called IP telephony, is a method and group of technologies for voice calls for the delivery of voice communication sessions over Internet Protocol (IP) networks, such as the Internet.

Focus Universal Inc.

plans to provide daily use VOIP services in an integrated fashion to the existing commercial customer base, allowing for extensive usage in small business, commercial applications such as dental offices and other business scenarios.

Focus Universal Corporate Services

The Company plans to provide daily use VOIP services in an integrated fashion to the existing commercial customer base, allowing for extensive usage in small business, commercial applications such as dental offices and other business scenarios.

Lusher Corporate Services, One Touch Financial

Financial reporting is the process by

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An annual report on Form 10-K is a comprehensive

report filed annually by a publicly traded company information such as its history, organizational structure, financial statements, earnings

per share, subsidiaries, executive compensation, and other relevant data.

report filed annually by a publicly traded containing company information such as its history, organizational structure, financial statements,

earnings per share, subsidiaries, executive compensation, and other relevant data.

The quarterly report on Form 10-Q is

a comprehensive report of a company’s quarterly performance that must be submitted by all public companies to the SEC on a quarterly

a comprehensive report of a company’s quarterly performance that must be submitted by public companies to the SEC on a quarterly

The quarterly report on Form 10-Q is generally submitted with unaudited financial statements including condensed financial statements,

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information they contain, reports on Forms 10-K and 10-Q can become time-consuming, especially given the complex processes that require

a company’s finance team to gather large amounts of data from multiple sources.

The time and expertise required to complete the

process is a substantial burden.

a company’s internal teams to gather large amounts of data across multiple sources.

The time and expertise required to complete

the process is a substantial burden.

SEC reporting deadlines are firm and inflexible.

These reporting requirements can interfere with other

reporting timelines and leave a time-strapped team scrambling for the resources needed to meet all of their mandated reporting requirements.

These reporting requirements can interfere with

other reporting timelines and leave a time-strapped team scrambling for the resources needed to meet mandated reporting requirements.

Delays and mistakes in SEC financial

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SEC review, enforcement actions, and penalties.

Late filings can often lead to a drop in the company’s stock price and a decrease in investor confidence.

Late, inaccurate, or incomplete filings can often lead to a drop in the company’s stock price and a decrease in investor confidence.

However, it is critically important

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Office software packages are widely used in all report

While this software can do an excellent job on word processing, it often fails in the creation of the rigorously formatted

tables and spreadsheets needed to populate the requisite financial information in the reports.

While current software can do an excellent job on word processing, it often fails in the creation of the rigorously formatted

tables and spreadsheets needed to populate requisite financial information in report.

Furthermore, because of the frequent incompatibility

between programs in office software packages, the formatted tables required by financial reporting standards that are created by spreadsheets

programs are destroyed when they are transferred a word processing file.

between programs from software packages, the formatted tables required by financial reporting standards that are created by spreadsheets

programs are mismatched, incomplete, or even destroyed when they are transferred via word processing files.

Human data entry of hundreds or thousands

of financial numbers in the financial report imposes another challenge and presents risk of human error.

This risk is compounded by the

frequent requirement to update or revise these hundreds or thousands of numbers during the reviewing and auditing processes before submission.

of financial numbers in the financial report imposes another challenge and presented by regularly occurring human error.

compounded by a frequent requirement to update or revise these hundreds or thousands of numbers during the time-constrained review processes

and auditing processes prior to submission.

Given the complexity and volume of data

Companies are looking for solutions that not only save cost, and reduce the time and effort required to report in a timely manner

involved, companies are looking for solutions that not only save cost, and reduce the time and effort required to report in a timely manner

but also improve accuracy and compliance.

We have has developed an automated software solution to address these challenges effectively

and efficiently in the following ways:

We have developed an automated software solution to address these challenges effectively and

efficiently in the following ways:

Data Entry Automation:

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automated data entry function reduces the risk of human errors and saves time.

It is able to extract data from various sources and populate

financial reports accurately.

It can extract data from various sources and populate financial

reports accurately.

Validation Checks:

Our software includes

built-in validation checks to ensure that the data is accurate and compliant with regulatory requirements.

It also helps in identifying

potential errors early in the reporting process.

Our One Touch Financial

Software includes built-in validation checks to ensure that the data is accurate and compliant with regulatory requirements.

It also helps

in identifying potential errors early in the reporting process.

Formatted Table Creation:

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Security and Compliance:

data is critical, especially when dealing with sensitive financial data.

Our software adheres to industry standards and regulations to

ensure data security and compliance with reporting requirements.

Security of data

is critical, especially when dealing with sensitive financial data.

Our software adheres to industry standards and regulations to ensure

data security and compliance with reporting requirements.

The Company plans to demo the software

this month as the development for the software has progressed.

The company plans for a company roadshow in 3Q of 2024 to update the community

regarding these new developments.

IoT Installation Services under AVX (Residential)

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Smart Home IoT Installations.

Beyond standard doorbells and thermostats, we, through our AVX subsidiary, provide customized and high-end IoT

Smart home solutions to upgrade the standard home to an integrated home platform.

AVX utilizes its existing tech-savvy installation staff

to integrate the Smart AVX line of IoT products for a customized home solution with designed smart home services.

AVX meets client safety

concerns and meshes modern convenience for a complete solution for homeowners to easily control their homes’ digital input and output

points with wired, integrated systems throughout the installation.

PTZ dome cameras give wide view home security through the network

providing the views of four cameras with in the installation space of a single camera.

LED digital displays and large format multimedia

touch screens provide state-of-the art output displays for eye catching and high-end centerpieces for homeowners.

With the suite of Smart

AVX home devices and the AVX professional installation team, design and customized creation within a high-end home system can be standard

for the customer base.

These installations include integration of home VOIP phone systems, network and computer system integration, multimedia

display systems, door access control systems, voice and data cabling, security alarm systems, PC upgrade and software installations, home

audio-visual control center design and installation and systems integration, home security data backup systems, home network design and

installation, HDTV signal and reception boost, and multi-room audio and ambient music phone systems.

Beyond standard doorbells and thermostats, we, through our AVX subsidiary, provide customized and high-end IoT Smart home solutions to upgrade the standard home to an integrated home platform.

AVX utilizes its existing tech-savvy installation staff to integrate the Smart AVX line of IoT products for a customized home solution with designed smart home services.

AVX meets client safety concerns and meshes modern convenience for a complete solution for homeowners to easily control their homes’ digital input and output points with wired, integrated systems throughout the installation.

PTZ dome cameras give wide view home security through the network providing the views of four cameras within the installation space of a single camera.

LED digital displays and large format multimedia touch screens provide state-of-the art output displays for eye catching and high-end centerpieces for homeowners.

With the suite of Smart AVX home devices and the AVX professional installation team, design and customized creation within a high-end home system can be standard for the customer base.

These installations include integration of home VOIP phone systems, network and computer system integration, multimedia display systems, door access control systems, voice and data cabling, security alarm systems, PC upgrade and software installations, home audio-visual control center design and installation and systems integration, home security data backup systems, home network design and installation, HDTV signal and reception boost, and multi-room audio and ambient music phone systems.

Smart Commercial and Industrial Installations.

We through the acquired AT Tech Systems company brand also design and

build IoT technologies to fit unique business requirements.

Utilizing the aforementioned IoT product solutions within the designed platform

for a business system, AT Tech Systems provides IoT installations and integrations for industries including security and surveillance,

smart commercial and industrial, healthcare, broadcast media and entertainment, manufacturing, food retail, and industrial warehousing.

AT Tech Systems design and installation experts have decades of hands-on experience in integrated systems of smart sensor devices, IoT

data management platforms, client applications and analytics for complete end-to-end IoT commercial solutions.

AT Tech Systems excels

in the area of IoT interoperability, utilizing the Smart AVX-branded products such as the LED digital displays, large format multimedia

Smart touch screens, PTZ dome Cameras, and VOIP phone systems.

These installations include integration of the commercial grade phone fax

and extension VOIP systems, networking and computer system integration for commercial application, multimedia and conferencing display

systems, industrial office and commercial access control systems, voice and data cabling, security and surveillance perimeter alarm systems,

PC upgrade and software installations, office and commercial control center design and installation systems, automatic data backup systems,

server design and installation, HDTV signal and reception boost, ambient client music systems, and multi-room and facility audio phone

We through the acquired AT Tech Systems company brand also design and build IoT technologies to fit unique business requirements.

Utilizing the aforementioned IoT product solutions within the designed platform for a business system, AT Tech Systems provides IoT installations and integrations for industries including security and surveillance, smart commercial and industrial, healthcare, broadcast media and entertainment, manufacturing, food retail, and industrial warehousing.

AT Tech Systems design and installation experts have decades of hands-on experience in integrated systems of smart sensor devices, IoT data management platforms, client applications and analytics for complete end-to-end IoT commercial solutions.

AT Tech Systems excels in the area of IoT interoperability, utilizing the Smart AVX-branded products such as the LED digital displays, large format multimedia Smart touch screens, PTZ dome Cameras, and VOIP phone systems.

These installations include integration of the commercial grade phone fax and extension VOIP systems, networking and computer system integration for commercial application, multimedia and conferencing display systems, industrial office and commercial access control systems, voice and data cabling, security and surveillance perimeter alarm systems, PC upgrade and software installations, office and commercial control center design and installation systems, automatic data backup systems, server design and installation, HDTV signal and reception boost, ambient client music systems, and multi-room and facility audio phone systems.

Research and Development Efforts of Power Line

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to protect its PLC technology.

In the fourth quarter of 2021, we hired the law

firm of Knobbe, Martens, Olson & Bear, LLP (“Knobbe Martens”) to serve as outside intellectual property counsel for the

The firm is working on converting the Company’s provisional patent applications to formal nonprovisional patent applications

and expanding existing patent portfolios.

In addition, Knobbe Martens is working on filing four previously unfiled patents and pursuing

patent coverage in Europe and Australia.

In addition, in May 2022, the Company engaged Chang & Hale, LLP as suggested by our counsel

at Knobbe Martens to assist with two new patents, noting that Knobbe Martens still remains our main IP counsel.

Currently, the Company

has 18 pending U.S.

nonprovisional patent applications and 9 issued U.S.

In 2021, we hired the law firm of Knobbe, Martens,

Olson & Bear, LLP (“Knobbe Martens”) to serve as outside intellectual property counsel for the Company.

The firm is working

on converting the Company’s provisional patent applications to formal nonprovisional patent applications and expanding existing

patent portfolios.

In addition, Knobbe Martens is working on filing four previously unfiled patents and pursuing patent coverage in Europe

and Australia.

In addition, in May 2022, the Company engaged Chang & Hale, LLP as suggested by our counsel at Knobbe Martens to assist

with two new patents, noting that Knobbe Martens still remains our main IP counsel.

Currently, the Company has 18 pending U.S.

nonprovisional

patent applications and 9 issued U.S.

As a result of our primary IP attorney switching firms from Knobbe Martens to Dority Manning,

Focus Universal Inc, hired Dority Manning on July 16, 2024 to serve as outside intellectual property counsel for the Company.

The Company’s patent number 11,488,468 was

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Results of Operations

For the three months ended March 31, 2024 compared to the three

months ended March 31, 2023

For the three months ended June 30, 2024 compared to the three

months ended June 30, 2023

Revenue, cost of revenue and gross profit

For the three

June 30, 2024

For the three

June 30, 2023

Cost of revenue

Gross Profit (Loss)

Our consolidated gross revenue for the three months

ended June 30, 2024 and 2023 was $19,753 and $215,391, respectively.

Revenue for the three months ended June 30, 2024 decreased $195,638

due to a sales decrease from our IoT installation service due to a reduction in the number of projects in 2024.

Cost of revenue for the three months ended June

30, 2024 was $31,834, compared to $149,259 for the three months ended June 30, 2023.

In addition to the decrease in revenue, gross profit

(loss) decreased to $(12,081) compared to $66,132 three months ended June 30, 2024 and 2023, respectively.

This decrease in revenue was

also the result of the sales decrease from our IoT installation services and reduction in the number of active projects in 2024.

The major components of our cost and operating

expenses for the three months ended June 30, 2024 and 2023 are outlined in the table below:

For the three

June 30, 2024

For the three

June 30, 2023

Selling expense

Compensation – officers and directors

Research and development

Professional fees

General and administrative

Total operating expenses

Selling expenses for the three months ended June

30, 2024 was $35,640, compared to $63,075 for the three months ended June 30, 2023.

Selling expense incurred was mainly from third party

advertising fees and marketing related fees.

The decrease of selling expense was due to a decrease in advertising fees.

– officers and directors were $55,255 and $253,403 for the three months ended June 30, 2024 and 2023, respectively.

and development costs were $296,248 and $342,992 for the three months ended June 30, 2024 and 2023, respectively.

Professional fees were $354,421 during the three

months ended June 30, 2024, compared to $116,565 during the three months ended June 30, 2023.

The increase in these professional fees

compared to the prior period was due to an increase in professional legal fees for prior employment litigation.

General and administrative expenses for the three

months ended June 30, 2024 was $625,492 compared to $361,583 during the three months ended June 30, 2023.

The increase of general and

administrative expenses was primarily due to an increase in the number of office employees in 2024.

Other Income (expense)

Other income for the three months ended June 30,

2024 was $14,031, compared to $53,320 for the three months ended June 30, 2023.

The decrease was due to increased interest expense.

the three months ended June 30, 2024 and 2023, we incurred net losses of $1,365,106 and $1,018,166 respectively, due to the factors discussed

For the six months ended June 30, 2024 compared to the six months

ended June 30, 2023

Revenue, cost of revenue and gross profit

Revenue in operating segments is primarily generated

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The following tables summarize revenue from each segment.

For the Three Months Ended March 31, 2024

For the Six Months Ended June 30, 2024

IoT Installation Services

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Gross Profit (Loss)

For the Three Months Ended March 31, 2023

For the Six Months Ended June 30, 2023

IoT Installation Services

Cost of revenue

For the three

March 31, 2024

For the three

March 31, 2023

June 30, 2024

June 30, 2023

Cost of revenue

Gross Profit (Loss)

Our consolidated gross revenue for the three months

ended March 31, 2024 and 2023 was $219,158 and $236,095, respectively.

Revenue for the three months ended March 31, 2024 decreased $16,937

Our consolidated gross revenue for the six months

ended June 30, 2024 and 2023 was $238,911 and $451,486, respectively.

Revenue for the six months ended June 30, 2024 decreased $212,575

due to a sales decrease from our IoT installation service due to a reduction in the number of projects in 2024.

Cost of revenue for the three months ended March

31, 2024 was $219,357, compared to $180,744 for the three months ended March 31, 2023.

Cost of revenue for the six months ended June

30, 2024 was $251,191, compared to $330,003 for the six months ended June 30, 2023.

In addition to the decrease in revenue, gross profit

decreased to $199 compared to $55,351 three months ended March 31, 2024 and 2023, respectively.

(loss) decreased to $(12,280) compared to $121,483 six months ended June 30, 2024 and 2023, respectively.

The major components of our cost and operating

expenses for the three months ended March 31, 2024 and 2023 are outlined in the table below:

For the three

March 31, 2024

For the three

March 31, 2023

expenses for the six months ended June 30, 2024 and 2023 are outlined in the table below:

June 30, 2024

June 30, 2023

Selling expense

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Total operating expenses

Selling expenses for the three months ended March

31, 2024 was $39,285, compared to $11,859 for the three months ended March 31, 2023.

Selling expense incurred was mainly from third party

advertising fees and marketing related fee.

The increase of selling expense was due to an increase in advertising fees.

Selling expenses for the six months ended June

30, 2024 was $74,925, compared to $74,934 for the six months ended June 30, 2023.

Compensation – officers and directors were

$56,793 and $307,534 for the three months ended March 31, 2024 and 2023, respectively.

$112,048 and $560,937 for the six months ended June 30, 2024 and 2023, respectively.

Research and development costs were $639,525 and

$276,481 for the three months ended March 31, 2024 and 2023, respectively.

$619,473 for the six months ended June 30, 2024 and 2023, respectively.

The increase was due to an increase in the number of research

and development patent fees.

Professional fees were $352,611 during the three

months ended March 31, 2024, compared to $257,399 during the three months ended March 31, 2023.

The increase in these professional fees

compared to the prior period was due to an increase in professional legal fees for prior employment litigation.

General and administrative expenses for the three

months ended March 31, 2024 was $527,645 compared to $443,052 during the three months ended March 31, 2023.

Professional fees were $707,032 during the six

months ended June 30, 2024, compared to $373,964 during the six months ended June 30, 2023.

The increase in these professional fees compared

to the prior period was due to an increase in professional legal fees for prior employment litigation.

General and administrative expenses for the six

months ended June 30, 2024 was $1,153,137 compared to $804,635 during the six months ended June 30, 2023.

The increase of general and

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Other Income (expense)

Other income for the three months ended March

31, 2024 was $4,213, compared to $126,731 for the three months ended March 31, 2023.

The decrease was due to decreased other income and

unrealized gain on marketable equity securities.

During the three months ended March 31, 2024 and

Other income for the six months ended June 30,

2024 was $18,244, compared to $180,051 for the six months ended June 30, 2023.

The decrease was due to increased interest expense during

During the six months ended June 30, 2024 and

2023, we incurred net losses of $2,680,703 and $2,132,409 respectively, due to the factors discussed above.

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selected cash flow information:

For the three months ended March 31, 2024

For the three months ended March 31, 2023

For the six months ended June 30, 2024

For the six months ended June 30, 2023

Net cash used in operating activities

$ (1,721,946 )

$ (1,606,739 )

Net cash provided by (used in) investing activities

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Our net cash outflows from operating activities

of $892,089 for the three months ended March 31, 2024 was primarily the result of our net loss of $1,315,597 and changes in our operating

of $1,721,946 for the six months ended June 30, 2024 was primarily the result of our net loss of $2,680,703 and changes in our operating

assets and liabilities offset by the add-back of non-cash expenses.

The change in operating assets and liabilities includes a decrease

in accounts receivable of $72,605, an increase in inventory of $125,286, a decrease in other receivable of $20,435, an increase in prepaid

expense of $14,041, a decrease in operating lease right-of-use asset of $21,039, an increase in accounts payable and accrued liabilities

of $268,420, an increase in other current liabilities of $68,957, and an increase in lease liabilities of $64,960.

Non-cash expense included

add-backs of $7,629 in bad debt expense, $35,330 in depreciation expense, $1,475 in unrealized loss on marketable securities, $94,910

in stock-based compensation - shares, and $36,995 in stock option compensation.

Our net cash outflows from operating activities

of $838,535 for the three months ended March 31, 2023 was primarily the result of our net loss of $1,114,243 and changes in our operating

of $1,606,739 for the six months ended June 30, 2023 was primarily the result of our net loss of $2,132,409 and changes in our operating

assets and liabilities offset by the add-back of non-cash expenses.

The change in operating assets and liabilities includes a decrease

in accounts receivable of $8,832, a decrease in accounts receivable – related party of $34,507, a decrease in inventories of $13,109,

an increase in prepaid expense of $80,511, a decrease in deposit of $8,617, an increase in operating lease right-of-use asset of $16,075,

a decrease in accounts payable and accrued liabilities of $20,011, an increase in other current liabilities of $98,838, and a decrease

in lease liabilities of $50,885.

Non-cash expense included add-backs of $5,114 in bad debt expense, $42,041 in depreciation expense, $28,741

in amortization of intangible assets, $14,901 in realized loss on marketable securities, $149,404 in stock-based compensation - shares,

and $133,403 in stock option compensation, reduces of $32,570 in unrealized gain on marketable equity securities and $61,747 in gain on

bargain purchase.

We expect that cash flows from operating activities

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Cash Flows from Investing Activities

For the three months ended March 31, 2024 we had

For the six months ended June 30, 2024 we had

cash outflow from investing activities of $9,743 from the purchase of property and equipment.

For the three months ended March 31, 2023,

For the six months ended June 30, 2023,

we had cash inflow from investing activities of $40,889.

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Cash Flows from Financing Activities

For the three months ended March 31, 2024, we

had cash inflows of $550,000 due to proceeds from third party and related party loan amount of $600,000 and repayment on third party loan

For the six months ended June 30, 2024, we had

cash inflows of $1,326,000 due to proceeds from third party and related party loan amount of $1,451,000 and repayment on third party loan

amount of $125,000.

For the three months ended March 31, 2023, we had cash outflows of $1,000,000 due to purchase of treasury stock.

For the six months ended June 30, 2023, we had cash outflows of $1,420,686 due to purchase of treasury stock.

Going Concern

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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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be unable to continue as a going concern.

At March 31, 2024, the Company had cash and cash

The Company’s independent registered public accounting firm, in its report on the Company’s

consolidated financial statements for the year ended December 31, 2023, has also expressed substantial doubt about the Company’s

ability to continue as a going concern.

At June 30, 2024, the Company had cash and cash

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

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and debt financings, and it expects to continue to rely on these sources of capital in the future.

In addition, subsequent to year end,

the Company has entered into a letter of intent with a secondary buyer to sell its land and buildings which upon completion, will 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 Company’s

independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended

December 31, 2023, has also expressed substantial doubt about the Company’s ability to continue as a going concern.

In addition, subsequent to June 30,

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

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.

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.

Off-Balance Sheet Arrangements

As of March 31, 2024, we did not have any off-balance-sheet arrangements,

As of June 30, 2024, we did not have any off-balance-sheet arrangements,

as defined in Item 303(a)(4)(ii) of Regulation SK.

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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 2. Management’s Discussion and Analysis