What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-14 · 399 added, 298 removed, 518 unchanged (57% of the section changed)

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Index to the Financial Statements

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)

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

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

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

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

Notes to the Unaudited Condensed Consolidated Financial Statements

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CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets:

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Prepaid expenses

Marketable equity securities

Marketable securities

Current assets of discontinued operations

Total Current Assets

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Lease liability, current portion

Current liabilities of discontinued operations

Total Current Liabilities

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

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)

72,917,760 and 64,771,817

shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

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

Additional paid-in capital

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

Shares to be issued, common shares

Accumulated deficit

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FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

Gross Profit (loss)

Operating Expenses

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Interest (expense) - related party

Gain on disposed of property

Gain on bargain purchase

Unrealized gain (loss) on marketable equity securities

Realized gain (loss) on marketable equity securities

Realized loss on marketable equity securities

Rental income

Other income (expense), net

Total other income, net

Total other income (expense)

Income (loss) from continuing operations

( 1,029,227 )

( 3,205,319 )

Income (loss) from discontinued operations, net of tax

Net Income (Loss)

$ ( 968,033 )

$ ( 1,238,776 )

$ ( 3,100,442 )

Other comprehensive items

Foreign currency translation loss

Total comprehensive loss

$ ( 1,372,393 )

Total comprehensive income (loss)

$ ( 968,272 )

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$ ( 3,100,889 )

Weight Average Number of Common Shares Outstanding:

Basic and Diluted

Net Loss per common share:

Basic and Diluted

Weighted Average Number of Common Shares Outstanding:

Fully diluted

Basic net income (loss) per share:

Continuing operations

Discontinued operations

Basic net income (loss) per share

Fully diluted net income (loss) per share:

Continuing operations

Discontinued operations

Fully diluted net income (loss) per share

The accompanying notes are an integral part

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

30, 2024 AND 2023

Treasury Stock

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Balance – March 31, 2024

Accumulated Other

Comprehensive

Stockholders'

Balance - June 30, 2024

$ ( 385,686 )

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Stock based compensation - shares

Retirement of treasury stock

Stock issued for placement agent

Stock issued for private placement

Stock based compensation related to discount on shares sold to related parties

Other comprehensive income

( 1,365,106 )

Balance – June 30, 2024

Balance - September 30, 2024

$ ( 385,686 )

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Treasury Stock

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Balance – March 31, 2023

Accumulated Other

Comprehensive

Stockholders'

Balance - June 30, 2023

$ ( 420,686 )

$ ( 19,996,437 )

Stock based compensation - options

Stock based compensation - shares

Purchase of treasury stock

Issued stock dividend

Amendment stock purchase agreement - treasury stock

Other comprehensive income

( 1,018,166 )

Balance – June 30, 2023

Balance - September 30, 2023

$ ( 385,686 )

1 unchanged sentence

Treasury Stock

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Accumulated Other

Comprehensive

Stockholders'

Balance - December 31, 2023

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Retirement of treasury stock

Stock issued for placement agent

Stock issued for private placement

Stock based compensation related to discount on shares sold to related parties

Other comprehensive income

1 unchanged sentence

( 1,238,776 )

Balance – June 30, 2024

Balance - September 30, 2024

$ ( 385,686 )

1 unchanged sentence

Treasury Stock

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Accumulated Other

Comprehensive

Stockholders'

Balance - December 31, 2022 *

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( 1,999,400 )

Issued stock dividend

Amendment stock purchase agreement - treasury stock

Other comprehensive income

Issued stock dividend

( 3,100,442 )

Balance – June 30, 2023

Balance - September 30, 2023

$ ( 385,686 )

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

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Adjustments to reconcile net loss to net cash from operating activities:

Gain on sale of building

( 3,181,706 )

Bad debt expense

1 unchanged sentence

Amortization of intangible assets

Unrealized gain on marketable equity securities

Unrealized (gain) loss on marketable equity securities

Realized loss on marketable equity securities

1 unchanged sentence

Stock-based compensation – shares

Stock option compensation – options

Stock based compensation related to discount on shares sold to related

Stock based compensation – options

Changes in operating assets and liabilities:

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Other liabilities

Net cash flows used in operating activities from continuing operations

( 3,724,122 )

( 2,469,664 )

Net cash flows provided by (used in) operating activities from discontinued

Net cash flows used in operating activities

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Purchase of marketable securities

Proceeds from sale of marketable securities

Net cash flows provided by (used in) investing activities

Proceeds from sales of marketable securities

Proceeds from sale of property

Net cash flows provided by investing activities

Cash flows from financing activities:

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Proceeds from related party loan

Repayment on related party loan

( 2,101,000 )

Repayment on third party loan

Purchase of treasury stock

Stock issued for placement agent

Stock issued for private placement

Purchases of treasury stock

( 1,385,686 )

Net cash flows provided by (used in) financing activities

( 1,420,686 )

Effect of exchange rate

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Cash paid for interest

Supplemental disclosure for noncash financing activities:

Supplemental disclosure of non-cash investing and financing activities:

Right-of-use assets obtained in exchange for operating lease liabilities

Cashless exercise of options

The accompanying notes are an integral part

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

Note 1 – Organization and Operations

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(“AVX,” also doing business as Smart AVX (“Smart AVX”)), Lusher Bioscientific, Inc.

and AT Tech Systems LLC (“AT Tech Systems”).

Perfecular, a wholly owned subsidiary of Focus that was founded in September

2009 and is headquartered in Ontario, California, is engaged in designing digital sensor products and selling a broad selection of horticultural

sensors and filters in North America and Europe.

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

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.

and up through August 21, 2024, AT Tech Systems LLC (“AT Tech Systems”).

Perfecular, a wholly owned subsidiary of Focus that

was founded in September 2009 and is headquartered in Ontario, California, is engaged in designing digital sensor products and selling

a broad selection of horticultural sensors and filters in North America and Europe.

AVX, incorporated on June 16, 2000, in the state of

California, is an IoT installation 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.

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

the Smart AVX name.

On 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 abound 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.

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.

The Company discontinued operations of AT Tech Systems on August 21, 2024 with a

termination cost of $ 22,000 and is now presenting these operations as discontinued.

(See Note 10)

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

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.

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

As of 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.

Note 2 – Summary of Significant Accounting Policies

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The unaudited condensed financial statements of

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

S-K for scaled disclosures for smaller reporting companies.

Accordingly, they do not include all the information and footnotes required

by GAAP for complete financial statements.

However, such information reflects all adjustments (consisting solely of normal recurring adjustments),

which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and results of

Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year.

balance sheet information as of December 31, 2023 was derived from the audited financial statements included in the Company’s financial

statements as of and for the years ended December 31, 2023 and 2022 contained in the Company’s Annual Report on Form 10-K filed

with the Securities and Exchange Commission, or the SEC, on April 1, 2024.

These financial statements should be read in conjunction with

the Company for the nine months ended September 30, 2024 and 2023 have been prepared in accordance with accounting principles generally

accepted in the U.S.

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

and Regulation S-K for scaled disclosures for smaller reporting companies.

Accordingly, they do not include all the information and footnotes

required by GAAP for complete financial statements.

However, such information reflects all adjustments (consisting solely of normal recurring

adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and

results of operations.

Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal

The balance sheet information as of December 31, 2023 was derived from the audited financial statements included in the Company’s

financial statements as of and for the years ended December 31, 2023 and 2022 contained in the Company’s Annual Report on Form 10-K

filed with the Securities and Exchange Commission, or the SEC, on April 1, 2024.

These financial statements should be read in conjunction

with that report.

The accompanying unaudited condensed consolidated

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Segment Reporting

The Company currently has two operating segments

The Company currently has one operating segment

in addition to our corporate overhead.

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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

systems, home theaters, lighting control, automation, and integration.

Previously, the Company identified

two operating and reportable segments:

(1) the "IoT Products" segment, jointly operated by Perfecular, AVX (under the Smart

AVX brand), and Lusher, which focuses on the wholesale, marketing, and production of universal smart instruments and devices for the hydroponic,

controlled agriculture, commercial, and home automation sectors;

and (2) the "IoT Installation Services" segment, run by AVX

(excluding Smart AVX IoT Products) and AT Tech Systems, specializing in IoT installation and management, including audio/video systems,

home theaters, lighting control, automation, and integration.

However, following the Company’s discontinued operations of AT Tech

Systems in August 2024, the Company now has only one operating and reportable segment which is “IoT Products.”

Use of Estimates

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

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

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

As of September 30, 2024 and December 31, 2023,

allowance for doubtful accounts amounted to $ 278,201 and $ 249,603 , respectively.

Concentrations of Credit and Business Risk

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Major customers

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,

For the three months ended of September 30, 2024

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

Schedule of concentrations of credit and

business risk

Three months ended September 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,

For the nine months ended of September 30, 2024

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

Nine months ended September 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

As of September 30, 2024 and December 31, 2023,

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

September 30, 2024

December 31, 2023

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No major vendor accounted more than 10% of total

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

purchase during nine months ended September 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 June 30, 2024 and December 31, 2023:

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

Schedule of financial assets

and liabilities measured at fair value

June 30, 2024 (unaudited)

September 30, 2024 (unaudited)

Marketable securities:

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The Company’s other comprehensive

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

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

Revenue Recognition

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on actual units produced.

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

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

Due to the Company discontinuing operations of AT Tech Systems in August 2024, the Company currently only have

one operating and reportable segment which is IoT Products.

Research and development

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Research and development costs primarily consist of efforts to refine existing product models and develop new product models.

Basic and Diluted Net Income (Loss) Per Share

Basic and Fully Diluted Net Income (Loss) Per Share

Net income (loss) per share is computed pursuant

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number of shares outstanding during the period.

Diluted EPS is computed by dividing net income

(loss) by the weighted average number of shares of stock and potentially outstanding shares of stock during the period to reflect the

potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

Due to the net loss incurred by the Company, potentially

dilutive instruments would be anti-dilutive.

Accordingly, diluted loss per share is the same as basic loss for all periods presented.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion

would be anti-dilutive.

Fully diluted EPS is computed by dividing net

income (loss) by the weighted average number of shares of stock and potentially outstanding shares of stock during the period to reflect

the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants,

unless these shares are covered by anti-dilutive protections.

The denominator comprises the Company’s weighted average number of

outstanding shares to extent the related shares are dilutive and, if dilutive, and other contracts to issue shares of common stock and

stock options.

As a result, they are included in the fully diluted EPS computation to the extent that the effect would be dilutive.

As of each period end, all potentially dilutive instruments would be anti-dilutive.

Accordingly, diluted loss per share is

the same as basic loss for all periods presented.

The following potentially dilutive shares were excluded from the shares used to

calculate diluted earnings per share as their inclusion would be anti-dilutive.

Schedule of anti-dilutive shares

Six Months Ended June 30,

Nine Months Ended September 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 rates.

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

accumulated other comprehensive loss in stockholders’ equity.

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’

Transactions denominated in currencies other than

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Schedule of exchange rates

Average Rate for the Six Months Ended

Average Rate for the Nine Months Ended

September 30,

China Yuan (RMB)

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Exchange Rate at

June 30, 2024

September 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 $ 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,

has a net loss of $ 1,238,776 and $ 3,100,442 for the nine months ended September 30, 2024 and 2023, respectively.

In addition, the Company

had an accumulated deficit of $ 23,820,946 and $ 22,582,170 as of September 30, 2024 and December 31, 2023, respectively, and negative cash

flow from operating activities of $ 3,658,901 and $ 2,603,545 for the nine months ended September 30, 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,

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 June 30, 2024, the Company had cash and

At September 30, 2024, the Company had cash and

cash equivalents, and short-term investments, in the amount of $ 5,368,273 .

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.

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 future.

In addition, before

September 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 5.

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.

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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reportable segment to provide all the disclosures required by ASC 280, Segment Reporting, including the significant segment expense disclosures.

This standard will be effective for the Company on January 1, 2024 and interim periods beginning in fiscal year 2025, with early adoption

The updates required by this standard should be applied retrospectively to all periods presented in the financial statements.

The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows.

This standard became effective for the Company on January 1, 2024.

The adoption of this standard did not have a material impact on its

results of operations, financial position or cash flows.

Management does not believe that any other recently

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Note 4 – Inventory

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

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

consisted of the following:

Schedule of inventory

June 30, 2024

September 30, 2024

December 31, 2023

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Note 5 – Property and Equipment

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

of the following:

At September 30, 2024 and December 31, 2023, property and equipment

consisted of the following:

Schedule of property and equipment

June 30, 2024

September 30, 2024

December 31, 2023

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Property and equipment, net

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

Depreciation expense for the nine months ended

September 30, 2024 and 2023 amounted to $ 72,738 and $ 127,171 , respectively.

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 net book value of the sales of the property consisted of the following:

Schedule of net book value of the sales of the property

Building improvement

Total carrying amount

Accumulated depreciation

Net book value

The purchase price for the property was $ 7,460,250 .

The Company received proceeds of $ 7,145,808 ,

of which $ 1,481,208

was paid directly to settle certain outstanding debt and accrued interest and other amounts owed.

In addition, the Company incurred

of closing costs resulting in a gain of $ 3,181,706

from the sale of the property.

July 8, 2024, the Company entered into a twelve-month Standard Industrial/Commercial Single-Tenant Lease with a third party for an approximately

14,004 square foot office and warehouse space.

The lease commenced on July 4, 2024 and will end on July 31, 2025.

The monthly rent is

Note 6 – Related Party Loans

On September 7, 2023, the Company entered into

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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.

The interest expense amount was $ 77,208 for the nine

months ended September 30, 2024.

The principal of $ 1,300,000 and interest of $ 28,208 were paid off on July 3, 2024 from the processed

of the sale of the building.

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

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The interest expense

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

amount was $ 19,501 for the nine months ended September 30, 2024.

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

Note 7 – Short-Term Loan

On January 2, 2024, the board of directors of

the Company authorized the Company to enter into a revolving credit facility or series of promissory notes for up to $ 5 million with one

or more lenders.

The Company accepted the first $ 300,000 tranche on January 9, 2024 (the “Loan”) with a third-party private

lender (the “Lender”) whereby the Lender loaned $ 300,000 to the Company (the “Principal Amount”).

an annual 3 % compound interest rate and note payments begins on February 4, 2024 (“Due Date”) whereby the Company will pay

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

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

Note 7 – Short-Term Loans

On January 2, 2024, the board of directors

of the Company authorized the Company to enter into a revolving credit facility or series of promissory notes for up to $ 5

million with one or more lenders.

The Company accepted the first $ 300,000

tranche on January 9, 2024 (the “Loan”) with a third-party private lender (the “Lender”) whereby the Lender

loaned $ 300,000

to the Company (the “Principal Amount”).

The Loan has an annual 3 %

compound interest rate and note payments begins on February 4, 2024 (“Due Date”).

On the Due Date, the Company will

begin to pay Lender in 12 equal monthly installment payments of $ 25,408 .11

The interest amount for the nine months ended September 30, 2024 was $ 3,265 ,

and the total principal outstanding loan amount was $ 100,000

as of September 30, 2024.

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

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

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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.

The interest expense amount was $ 500 for the nine months ended September 30, 2024.

The principal

and interest were paid off on July 19, 2024.

Note 8 – Lease

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.

of $ 146,523 and $ 104,156 for the nine months ended September 30, 2024 and 2023, respectively.

This is included in general and administrative

On January 16, 2023, Focus Universal (Shenzhen)

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Technology Co.

LTD entered into a thirty-six month commercial lease with a third party for an approximately 3,449 square foot office space.

LTD entered into a thirty-six month commercial lease with a third party for an approximately 3,449 square foot office

The lease commenced on March 31, 2023 and will end on February 28, 2026.

The monthly rent is RMB35,246 (approximately $4,851) with approximately

an 11.1% to 12.5% increase rate in each additional year.

The incremental borrowing rate for a lease is the rate of interest the Company

would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is

The monthly rent is RMB35,246 (approximately $5,025)

with approximately an 11.1% to 12.5% increase rate in each additional year.

The incremental borrowing rate for a lease is the rate of

interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under

similar term, which is 10%.

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

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The monthly rent is RMB8,000 (approximately $1,141).

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.

Operating lease right-of-use assets represent

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to make lease payments arising from the 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

June 30, 2024

As of September 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 liabilities

September 30, 2024

December 31, 2023

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Schedule of lease term and discount rate

June 30, 2024

September 30, 2024

December 31, 2023

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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.

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.

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 structure.

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.

period ended September 30, 2024, an aggregate of 75,466

shares with a fair value of $ 54,828

vested during the period and were recognized as compensation costs.

As of December 31, 2023, 41,463

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.

shares with a fair value of $ 74,476

vested under these agreements.

These shares were not issued.

During the period ending September 30, 2024, 74,943

shares with a fair value of $ 108,856

that previously vested were issued.

As of September 30, 2024, 42,167

shares of common stock with a fair value of $ 20,448

remain vested but not issued.

On September 15, 2024, the Company entered into

a placement agency agreement (the “Placement Agency Agreement”), with Univest Securities, LLC (the “Placement Agent”).

Pursuant to the Placement Agency Agreement, the Placement Agent agrees to use its reasonable best efforts to sell the Company’s

common stock, par value $ 0.001

per share (the “Common Stock”) in a registered direct offering (the “Offering”).

In the Offering, an aggregate

shares of Common Stock (the “Common Shares”) of the Company will be sold to a certain institutional purchaser, pursuant

to a securities purchase agreement, dated September 15, 2024 (the “Securities Purchase Agreement”).

The purchase price of

each Common Share was $ 0.32 .

The net proceeds from the Offering, after deducting placement agent discounts, commissions, and estimated offering expenses payable by

the Company, are approximately $ 1,086,000 .

On September 18, 2024, the Company completed the

sale of 4,300,000 shares of Common Stock (the “Shares”) in a private placement to certain eligible investors for an aggregate

purchase price of $ 1,290,000 , or $0.30 per share (the “Private Placement”).

As part of the offering, Dr.

Desheng Wang, Chief

Executive Officer, Secretary, and Director of the Company, and Dr.

Edward Lee, Chairman of the Board of the Company entered into a Subscription

Agreements pursuant to which the Company agreed to issue and sell 1,000,000 shares of the Company’s Common Stock for $300,00 in

cash to each of these individuals (for an aggregate sale of 2,000,000 shares for proceeds of $ 600,000 in cash.) The Subscription Agreements

contain customary representations and warranties and was exempt from registration under Section 4(a)(2) of the Securities Act.

determined that the officer and director were granted an inherent compensation/benefit since the trading price at the issuance date was

As such, the Company recorded stock compensation cost of $ 340,000 .

Treasury stock

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

As of September 30, 2024, all of the previously

repurchased shares have been restored to the status of authorized and unissued and 1,133,040 shares remain as treasury shares.

Employee compensation

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

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.

During the nine months ended September 30, 2024 the Company amortized $ 268,005

of this amount leaving an unamortized balance of $ 804,015 at September 30, 2024.

As of September 30, 2024, 186,000 of the shares had been

vested and 102,000 of the shares had been forfeited.

Stock options

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

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

During the nine months

ended September 30, 2024, the Company recognized $ 110,985 of compensation cost relating to the vesting of these options and $ 36,990 remained

unvested which will be amortized over the remainder of 2024.

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

For the nine months ended September 30, 2024 and

2023, the Company’s stock option compensation expenses amounted to $ 110,985 and $ 400,208 , respectively.

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Schedule of assumptions

June 30, 2024

September 30, 2024

Risk-free interest rate

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The following is a summary of the option activity

from December 31, 2023 to June 30, 2024:

from December 31, 2023 to September 30, 2024:

Schedule of option activity

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Weighted Average Remaining Contractual Life

Aggregate Intrinsic Value

Intrinsic Value

Outstanding at December 31, 2023

Cancelled or forfeited

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 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 Six Months Ended June 30, 2024

IoT Installation Services

Outstanding at September 30, 2024

Vested as of September 30, 2024

Exercisable as of September 30, 2024

Note 10 – Discontinued Operation

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.

The Company discontinued operations of AT Tech Systems on August 21, 2024 with a termination cost of $ 22,000 .

The carrying amount of assets and liabilities

of discontinued operations as of September 30, 2024 and December 31, 2023 consist of the following:

Schedule of discontinued operations

September 30,

Current assets of discontinued operations:

Accounts receivable, net

Prepaid expenses

Total current assets of discontinued operations

Current liabilities of discontinued operations:

Accounts payable and accrued liabilities

Other current liabilities

Total current liabilities of discontinued operations

The income (loss) from discontinued operations

presented in the statement of operations for the three and nine months ended September 30, 2024 and 2023 as follows:

Discontinued operations - Statement of Operations

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of Revenue

Gross Profit (loss)

Total operating expense

Operating Expenses:

Selling expense

General and administrative

Total Operating Expenses

Income (loss) from Operations

( 2,637,653 )

( 2,698,947 )

Total other income (expense)

Other Income (Expense):

Interest income (expense), net

Other income (expense), net

Total other income, net

Net Income (Loss)

$ ( 277,823 )

$ ( 124,688 )

$ ( 2,680,703 )

The following tables summarize the financial information

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

Cost of revenue

Total operating expense

Loss from operations

( 2,290,714 )

( 2,312,460 )

Total other income (expense)

$ ( 2,109,231 )

$ ( 2,132,409 )

Total operating cash flows from discontinued

operations were $ 65,221 and $ ( 133,881 ), respectively, for the nine months ended September 30, 2024 and 2023.

Note 11 – Contingencies

In the normal course of business or otherwise,

the Company may become involved in legal proceedings.

The Company will accrue a liability for such matters when it is probable that a

liability has been incurred and the amount can be reasonable estimated.

When only a range of possible loss can be established, the most

probable amount in the range is accrued.

The accrual for a litigation loss contingency might include, for example, estimates of potential

damages, outside legal fees and other directly related costs expected to be incurred.

As of the date of this quarterly report, the Company

was involved in the following material legal proceeding.

On August 26, 2024, a former software engineer

filed an action against the Company in the Superior Court for the County of San Bernardino, State of California alleging wrongful termination

and other violations of the California Labor Code.

The complaint seeks unspecified economic and non-economic losses, as well as attorneys’

The Company is investigating and intends to vigorously defend itself in the foregoing matters.

However, litigation and investigations

are inherently uncertain.

The Company does possess EPLI insurance, and the legal team as selected by the insurance company is currently

handling the matter.

The Company vigorously disputes these allegations.

Note 12 – Subsequent Events

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.

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.

On October 17, 2024, the Company repurchased 1,300,000

shares of common stock from two of the Company’s shareholders for an aggregate amount of $390,000.

Documents have not yet been completed

to date, and the Company is currently calculating the accounting effects of this transaction.

As of October 30, 2024, and after September 30,

2024, the Company also repurchased an additional 409,831 common shares from the open market for consideration of $102,639 at an average

price of $0.25 in the open window under the Company’s active 10b-18 plan.

The company plans to maintain these as treasury shares

until certain retirement.

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