What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-04-01 · 171 added, 402 removed, 94 unchanged (86% of the section changed)

5 unchanged sentences

advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding

certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on

our behalf, whether in future filings with the Securities and Exchange Commission.

certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by us, or

on our behalf, whether in future filings with the Securities and Exchange Commission.

Forward-looking statements are statements not based

5 unchanged sentences

These uncertainties and contingencies can affect actual results and could cause actual results to differ materially

from those expressed in any forward-looking statements made by, or our behalf.

We disclaim any obligation to update forward-looking statements.

from those expressed in any forward-looking statements made by us, or on our behalf.

We disclaim any obligation to update forward-looking

Focus Universal Inc., a Nevada corporation (the

3 unchanged sentences

(2) universal smart instrumentation platform (“USIP”);

(3) ultra-narrowband technology;

(4) ultra-narrowband power line communication (“PLC”) technology;

and (5) natural integrated

programming language (“NIPL”).

main sources of revenue are derived from our sales of sensor devices and our wholesaling of various digital, analog, and quantum light

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

We source these products from

manufacturers in China and then sell them to a major U.S.

distributor, Hydrofarm, who resells our products directly to consumers through

its established retail distribution channels and, in some cases, places its own branding on our products.

For the year ended December

31, 2021, our primary source of revenue was from sales of these agricultural sensors and measurement equipment sold through Hydrofarm.

Hydrofarm was not our primary source of revenue for the year ended December 31, 2023.

While currently, we do not believe that inflation

will play a large role and have a large affect on our current business, as our business grows, inflation may play a larger role as our

need to procure supplies increases and our borrowing requirements increase as well.

As we begin to diversify away from both one single

sector and one single large customer, we also believe that market volatility in any single sector is also diminished significantly.

believe this should have a stabilizing affect on revenues.

However, as our new products begin to reach maturation and completion in development,

we do believe supply chain risk as our company needs for consistently procuring reliable inputs increases.

We also believe this may hold

the largest risk factor for cash flow as production increases.

For a greater description of our technologies, our business segments and

the products we are currently selling, see “Part I – Item 1.

Business” above.

Ubiquitor Wireless Universal Sensor Device

Our USIP technology is an advanced software and

hardware integrated instrumentation platform that uses a large-scale modular design approach.

The large-scale modular design approach

subdivides instruments into a foundation component (a USIP) and architecture-specific components (sensor nodes).

The USIP has an open

architecture, incorporating a variety of individual instrument functions, sensors, and probes from different industries and vendors.

platform features the ability to connect potentially thousands of different sensors or probes, addressing major limitations present in

traditional instrumentation systems.

The result of such integration is a smaller, cheaper, and faster circuit system design than those

currently offered in the instrumentation market.

The USIP, which is compatible with a significant

percentage of the instruments currently manufactured, consists of universal and reusable hardware and software.

The universal hardware

in the USIP is (i) a smartphone, computer, or any mobile device capable of running our software that includes a display and either hardware

controls or software control surfaces, and (ii) our Ubiquitor.

We have created and assembled prototype models

of the Ubiquitor in limited quantities and plan to expand our assembly in 2023.

Our prototype Ubiquitor is compatible with standard desktop

computers running Windows OS or MacOS and Android- or iOS-based mobile devices, and acts as a conduit that communicates with a group of

sensors or probes manufactured by different vendors in a manner that requires the user to have little or no knowledge of their unique

specifications.

The data readout is displayed on the computer or mobile device display.

We are designing the application software (the

“App”) to have a graphical representation of control and indicator elements common in traditional tangible instruments, such

as knobs, buttons, dials, and graphs, etc.

Our developers are designing and implementing a soft control touch screen interface that supports

real-time data monitoring and facilitates instrument control and operation.

The Company continues to devote a substantial

number of resources to research and development despite a slight decrease to the overall number year over year to bring the Ubiquitor

and its App to full production and distribution.

We anticipate that the sales and marketing involved with bringing the Ubiquitor to market

will require us to hire several new employees in order to gain traction in the market.

We intend to introduce the Ubiquitor in smart home

and commercial installations to reduce costs and increase functionality, as well as implement the Ubiquitor device in greenhouses and

other agricultural warehouses that require regulation of light, humidity, moisture, and other measurable scientific units required to

create optimal growing conditions.

(3) 5G ultra-narrowband technology;

(4) ultra-narrowband power line

communication (“PLC”) technology;

and (5) our financial reporting software.

Our main sources of revenue are derived from our

sales of sensor devices and our wholesaling of various digital, analog, and quantum light meters and filtration products, including fan

speed adjusters, carbon filters and HEPA filtration systems.

We source these products from manufacturers in China and then sell them to

distributor, Hydrofarm, which resells our products directly to consumers through its established retail distribution channels

and, in some cases, places its own branding on our products.

Hydrofarm was not our primary source of revenue for the years ended December

31, 2024 and 2023.

In 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.

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

beginning the production cycle.

Of note, smart wall touch light switches, digital control smart wall touch light switches, smart timers,

and smart controllers are ready for production.

Sourcing of electronic parts for these products is completed, the cost analysis of these

products is completed, and most of the tooling for production has been completed.

Currently, our Shenzhen subsidiary mainly focuses

on product development and commercialization.

An important electrode with a “Total Dissolved Solids” (“TDS”) meter

design, with applications in all solubility measurements, was completed and approved by our U.S.

management team.

The designs of our TDS

sensor, carbon dioxide sensor, new quantum PAR sensor and total dissolved oxygen sensors are also completed.

Our testing against the state-of-the-art

sensors on the market suggests to us that the new sensors are at least as good as the best quality sensors on the market.

believe that our sensors are much more cost effective.

Our software machine auto design team has also

made significant progress during 2024.

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.

We have developed a Microsoft®-based add-on software that aims to streamline and automate the financial 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 first quarter of 2025.

A cloud-based version

of this software is currently under the development.

We have completed an initial production run of

prototype Ubiquitor devices and intend to proceed into full-scale production.

The Ubiquitor’s sensor analytics system integrates

event-monitoring, storage and analytics software in a cohesive package that provides a holistic view of the sensor data it is reading.

For a description of the physical hardware, see illustrations in “Figures

5-10 in Part I - Item 1.

Business Section 5.

“Developing a universal smart instrumentation platform (“USIP”)”

We believe the Ubiquitor device can connect up to thousands of potential

sensor nodes integrate data using embedded software to display the data and all analytics onto a digital screen (desktop, smartphone or

mobile device displays) using a wired or Wi-Fi connection.

As disclosed in our patent application, we have already tested up to 256 sensor

instrument readouts.

Most types of nodes and probes can connect to the hardware.

If the sensor size is bigger than the standard probe

size, it is possible to simply use a USB cable to connect the probe and the hub.

All data and analytics are displayed on a single screen,

with tools that record and keep track of all measurements, and sort and display analytic information in easy-to-read charts.

The Ubiquitor is a general platform that collects

data in real time and is intended to be adapted to many industrial uses.

Also, we plan to design a full line of products

for the gardening industry by integrating the Ubiquitor device into a gardening system.

The system would include the Ubiquitor connected

to a light control node, temperature sensor, humidity sensor, digital light sensor, quantum PAR sensor, pH sensor, total dissolved solids

(“TDS”) sensor and carbon dioxide sensor.

We believe the combination of the Ubiquitor with these sensors would offer the same

features as a combination of dozens or even hundreds of different standalone instruments in the gardening industry.

The Ubiquitor-powered

gardening system would be used to replace these standalone devices and could offer another case study of the effectiveness of the application

of universal smart technology to such systems.

Research and Development Efforts of Power Line

Communication

Power Line Communication (“PLC”) is

a communication technology that enables sending data over existing power cables.

One advantage of this technology is that PLC does not

require substantial new investment for its communications infrastructure.

Rather, PLC utilizes existing power lines, thereby forming a

distribution network that penetrates most residential, commercial, and industrial premises.

Accordingly, connectivity via PLC is a cost-effective

and scalable interconnectivity approach for the IoT.

We believe PLC can be an integral part of our communication infrastructure for the

IoT, which enables reliable, real-time measurements, monitoring and control.

A large variety of appliances may be interconnected by transmitting

data through the same wires that provide electrical energy.

Our PLC technology uses an ultra-narrowband spectrum

channel of less than 1 KHz to establish a long-distance link between transmitter and receiver.

Thus, we believe that our proprietary ultra-narrowband

PLC technology will offer a promising alternative to wireless networks and provide the backbone communication infrastructure for IoT devices.

The primary design goal of the power line network

is electric power distribution, not data transmission.

The harsh electrical noise present on power lines and variations in equipment and

standards make data transmission over the power grid difficult.

These technological challenges have impeded, or even halted, progression

of PLC technology.

prototype Ubiquitor devices and intend to proceed into full-scale production during 2025.

During 2024, we presented the Ubiquitor several

trade shows including CES 2023 and 2024.

The Ubiquitor’s sensor analytics system integrates event-monitoring, storage and analytics

software in a cohesive package that provides a holistic view of the sensor data it is reading.

The Ubiquitor was first showcased at the

Consumer Technology Association’s CES 2024 trade show, which attracted significant interest from potential customers.

We have designed a full line of products for the

gardening industry by integrating the Ubiquitor device into a gardening system.

The system includes the Ubiquitor connected to a light

control node, temperature sensor, humidity sensor, digital light sensor, quantum PAR sensor, pH sensor, total dissolved solids (“TDS”)

sensor and carbon dioxide sensor.

We believe the combination of the Ubiquitor with these sensors will offer the same features as a combination

of dozens or even hundreds of different standalone instruments in the gardening industry.

We continue to build upon our existing research

and development with the intention of inventing an ultra-narrowband PLC technology that attempts to tackle two challenges:

1) overcoming

interference caused by electronic noise on the power line system;

and development with the intention of inventing an ultra-narrowband PLC technology that attempts to tackle:

1) overcoming interference

caused by electronic noise on the power line system;

and 2) bandwidth.

Preliminary internal testing suggests that we have

achieved significant noise rejection and interference suppression.

In our preliminary internal testing, we have been able to increase

bandwidth to 4 megabits per second with the potential for more, while simultaneously effectively dealing with electrical noise and interference.

Based on the promising results of our internal testing, we have begun designing a proprietary PLC microchip and have set an intended launch

date for 2023.

We believe that because residential and commercial

structures already include multiple power outlets, the power line infrastructure represents an excellent network to share data among intelligent

devices, particularly in the smart home installations that we are currently performing through AVX.

We plan to leverage the communications technology

of PLC to enhance the Ubiquitor and make the Ubiquitor a central component of the smart home and gardening systems we are currently developing.

The goal would be that our Ubiquitor would be used to send or receive control signals from a smart device, and control hundreds of devices

in near real time.

We intend to apply the same concept to commercial and industrial applications.

On December 23, 2021, Focus Universal (Shenzhen)

Technology Co.

LTD was founded as a mainland China office for manufacturing procurement expertise and support research and development

Focus Universal (Shenzhen) Technology Co.

LTD is designed to function as a branch office accessing high level ability to source

products and build relationships with manufacturers in the region and as a lower cost form of support research and development as engineers

are more plentiful in the region.

This last quarter of 2022, this office has continued to grow to double digit headcount and has also

begun to handle other online and simple phone marketing and marketing materials production activities, provided a cost and quality benefit

exists at the time.

Research and Development Efforts of 5G Cellular

Just like our ultra-narrowband technology can

be used to reduce noise in powerline communication technology, our internal research suggests that our ultra-narrowband technology can

be leveraged to create a type of 5G wireless communication technology that can achieve both low band 5G coverage and we believe 1 Gbps

high band speed.

We employ an ultra-narrow spectrum channel (<1KHz) to establish an ultra-long-distance link between the 5G base station

and the receiver which reduces noise and interference entering the bandwidth.

For a description of the ultra-narrowband technology

and the 5G applications, see “Part I - Item 1.

Business, Section 2.

“Creating a faster 5G cellular technology by using ultra-narrowband

technology” above.

Intellectual Property Protection

On November 4, 2016, we filed a U.S.

patent application

number 15/344,041 with the USPTO.

On March 5, 2018, we issued a press release announcing that the USPTO published an Issue Notification

Patent Application No.

9924295 entitled “Universal Smart Device,” which covers a patent application regarding the

Company’s Universal Smart Device.

The patent was issued on March 20, 2018.

Subsequent to our internal research and development

efforts, we filed with the USPTO on June 2, 2017, a patent application regarding a process for improving the spectral response curve of

a photo sensor.

The small and cost-effective multicolor sensor and its related software protected by the potential patent we believe could

achieve a spectral response that approximates an ideal photo response to measure optical measurement.

The patent was issued on February

On November 29, 2019, the Company filed an international

utility patent application filed through the patent cooperation treaty as application PCT/US2019/63880.

In April 2020, the Company was

notified that it received a favorable international search report from the International Searching Authority regarding this patent application,

which patents the Company’s PLC technology.

The World International Property Organization report cited only three category “A”

documents, indicating that the Company’s application met both the novelty and non-obviousness patentability requirements.

Consequently,

the Company is optimistic that the patent covering the claims for its PLC technology will be issued in due course and will allow the Company

to implement strong protections on the PLC technology worldwide.

On May 19, 2021, we filed thirteen provisional

patent applications with the USPTO that we had been researching and developing for years encompassing a broad spectrum of technology areas

including sensor technology, wired and wireless communications, power line communications, computer security, software solutions, interconnected

technological communications, smart home systems and methods for both home and hydroponic areas, dynamic password cipher, local file security,

payment card security, infrared sensor, and a method and apparatus for high data rate transmission.

In the fourth quarter of 2021, we hired the law

firm of Knobbe Martens, Olson & Bear, LLP based in Orange County, CA to serve as outside intellectual property counsel for the Company.

The firm is working on transferring the Company’s provisional patent applications to formal patent applications in addition to filing

new provisional patents.

In 2021, we filed 14 patents.

We filed 18 domestic patents in 2022 (plus two international patents in 2022),

and so far have filed 3 patents in 2023.

In addition, the Company’s patent number

11,488,468 was allowed and subsequently issued on November 1, 2022.

The patent, titled Sensor for Detecting the Proximity of an IEEE 802.11

Protocol Connectable Device.

There are several competitors we have identified

in the wireless sensor node industry, including traditional instruments or devices manufacturers such as Hanna Instruments and Extech

Hach developed and launched the SC1000 Multi-parameter

Universal Controller, a probe module for connecting a maximum to 32 digital sensors or analyzers.

However, we believe their current price

points are still cost prohibitive to consumers.

Monnit Corporation offers a range of wireless

and remote sensors.

Many of Monnit’s products are web-based wireless sensors that usually are not portable because of their power

Also, the sensors’ real-time updates are slow;

and we believe security of the web-based sensor data acquisition also

may be a concern.

In addition to purchasing the device, consumers usually have to pay monthly fees for using web-based services.

We are not trying to compete with traditional

instruments or device manufacturers because we utilize our Ubiquitor device in conjunction with our smartphone application, which we believe

will be a completely different product category.

IoT Installation Industry

There are several companies that compete with

AVX in smart home installations, including Vivint Smart Home, Crestron and Control4.

However, we believe we can distinguish ourselves

from our competitors by offering a substantially lower price.

An installation by Crestron ranges between $20,000 and $100,000 and by Control4

between $20,000 and $40,000.

The cheapest competitor we can identify in this sector is Vivint Smart Home, which costs less than $5,000

however, we understand that the Vivint Smart Home focuses on security systems only and that users have no other smart applications,

which our smart home product line would include.

Air Filtration Systems and Meter Products

The air filtration system and meter products industry

is a niche industry.

The global industrial air filtration market was valued at $23.83 billion by 2029 and analysts expect it to register

a CAGR of 7.2% because of the industrial need to control air quality across a range of industries.

[22] Air purification methods

are an effective way to control contaminants and improve indoor air quality and as a result, many national and local governments overseeing

indoor air quality and other emissions are enacting stricter workforce health and safety regulations in this area, which drives demand.

___________________

[22] Fortune, The global air filters market is projected to grow from

$14.68 billion in 2022 to $23.83 billion by 2029, exhibiting a CAGR of 7.2% in forecast period, 2022-2029, https://www.fortunebusinessinsights.com/industry-reports/air-filters-market-101676,

(last accessed March 7, 2023)

Market Potential

We believe universal wireless smart technology

will play a critical role for traditional instrument manufacturers, as currently simply the undertaking of an IoT project is too expensive

and difficult to develop for medium or smaller companies and carries 75% failure rate according to Cisco Systems [23] .

factor is the first consideration when deciding whether a company wants to develop smart wireless technologies and implement them in their

products or use them in their field testing.

We also hope to play a role in academic laboratories, particularly with smaller academic

laboratories that are sensitive to price.

Regarding the larger IoT industry statistics, overall enterprise IoT spending increased to $201

Billion in 2022, an increase of 21.5%.

The outlook for growth in 2023 is 18.5% from this large base of enterprise spending [24] .

More specifically, the IoT sensors market is projected to reach $26 Billion by 2026 from $11.1 Billion in 2022 [25] .

The IoT marketplace

size assessments usually include the hardware components and the software components which often contain a Software as a Service (SaaS)

Additionally, the rising need for reliable high bandwidth communication for IoT devices is expected to rise to $664.75 Billion

in 2028, spearheaded by the currently predominant services in the 5G category [26] .

We would also expect this market to grow with

the addition of new categories of services delivering reliable high bandwidth communication for IoT devices and would cannibalize and

expand the existing services where the new services proved to be more effective and efficient.

We also expect our recent

growth within our IoT Installation Services segment to bolster and complement our AVX Design and Integration and all other related installation

businesses of these IoT products.

While statistics regarding the IoT installation sectors are difficult to aggregate given that the work

is often are pieced off into various contractor service categories, the residential custom installation market ranges from $5.7B to $12.1B [27] ,

and we would expect the commercial and industrial installation markets to be larger than the residential for IoT devices.

Financial Reporting

We have launched a beta

version of our new SEC financial reporting automation software and are testing this new software product so that we can obtain marketing

data and feedback to our development team.

___________________

[23] Cisco Systems, Connected Futures, Executive Business Insights,

May 2017, The Journey to IOT Value, Challenges, Breakthroughs, and Best Practices, https://www.slideshare.net/CiscoBusinessInsights/journey-to-iot-value-76163389,

https://newsroom.cisco.com/c/r/newsroom/en/us/a/y2017/m05/cisco-survey-reveals-close-to-three-fourths-of-iot-projects-are-failing.html

[24] IoT Analytics, Market Insights for the Internet of Things, February

7, 2023, Global IoT market size to grow 19% in 2023—IoT shows resilience despite economic downturn, https://iot-analytics.com/iot-market-size/

[25] Markets and Markets, IoT Sensors Market by Sensor Type, Network

Technology, Vertical, Application, and Geography – Global Forecast -2026, https://www.marketsandmarkets.com/Market-Reports/sensors-iot-market-26520972.html

[26] Cision PRNewswire, Research and Markets, Global $664.75 Billion 5G Services Markets to 2028:

Rising Need for High Bandwidth to Provide Reliable Communication to IoT Devices is Expected to Boost Overall Market Growth, https://www.prnewswire.com/news-releases/global-664-75-billion-5g-services-markets-to-2028-rising-need-for-high-bandwidth-to-provide-reliable-

communication-to-iot-devices-is-expected-to-boost-overall-market-growth-301432173.html

How Big is the Custom Installation Market?, February 5,

2018, https://www.cepro.com/news/how_big_is_custom_installation_market/

Preliminary internal testing suggests that we have achieved significant

noise rejection and interference suppression.

In our preliminary internal testing, we have been able to increase bandwidth to 4 megabits

per second with the potential for more, while simultaneously effectively dealing with electrical noise and interference.

promising results of our internal testing, we have begun designing a proprietary PLC microchip and have set an intended launch date for

late 2025 or early 2026 pending further development work from the engineering department.

Two of our products are ready for commercialization.

These are our financial reporting software and universal smart technology for smart meters and automation.

We are currently looking for

distribution partners for both products.

While currently, we do not believe that inflation

will play a large role and have a large effect on our current business, as our business grows, inflation may play a larger role as our

need to procure supplies increases and our borrowing requirements increase as well.

As we begin to diversify away from a single sector

and a single large customer, we also believe that our exposure to market volatility in that sector will be diminished significantly.

believe this should have a stabilizing effect on revenues.

However, as our new products begin to reach maturity and completion, we do

believe our exposure to our supply chain risk will increase with our need for consistently procuring inputs and raw materials.

supply chain disruption is the largest risk factor for our cash flow as production increases.

For a greater description of our technologies,

our business segments and the products we are currently selling, see “Part I – Item 1.

Business ” above.

Results of Operations

1 unchanged sentence

December 31, 2023

Revenue in operating segments is primarily generated

from IoT product and IoT project construction and installation services.

The following tables summarize revenue from each segment.

Year Ended December 31, 2023

IoT Installation Services

Revenue - related party

Total revenue

Year Ended December 31, 2022

IoT Installation Services

Revenue - related party

Total revenue

Revenue, cost of revenue and gross profit

1 unchanged sentence

For the year ended December 31, 2023

Revenue – related party

Total Revenue

Cost of revenue

A summary of our revenue by product type for the

fiscal years ended December 31, 2024 and 2023 is as follows:

December 31, 2024

December 31, 2023

IoT Project Construction and Installation Services

Our consolidated gross revenue for the years ended

December 31, 2023 and 2022 was $1,052,198 and $353,619, respectively, which included revenue from related parties of $65,543 and $49,782,

respectively.

Revenue for the year ended December 31, 2023 increased $698,579 due to a sales increase from our acquisition of AT Tech

Systems and sales increase in AVX sales due to ramping up marketing efforts.

This increase of revenue was mainly a result of the increase

of IoT Installation Services being bolstered by additional resources such as increased headcount.

Cost of revenue for the year ended December 31, 2023

was $958,413, compared to $330,899 for the year ended December 31, 2022.

While the overall cost of revenue increased, as a percent of

revenue, costs went down because of higher margin contracts for IoT Installation Services being signed.

In addition to the increase in

revenue, gross profit increased to $93,785 for the year ended December 31, 2023, compared to $22,720 for the year ended December 31, 2022.

December 31, 2024, and 2023 was $398,137 and $440,543, respectively.

Revenue for the year ended December 31, 2024, decreased $42,406 due

to a sales decrease from construction contracts.

Cost of revenue for the year ended December 31, 2024, was $387,936, compared to $380,884

for the year ended December 31, 2023.

The overall increase in the cost of revenue was due to inventory reserve for the base LED panel

products sold in the current year.

This, combined with a decrease in gross profit, brought the total to $10,201 for the year ended December

31, 2024, compared to $59,659 for the year ended December 31, 2023.

Operating Expenses

15 unchanged sentences

$951,845 and $1,082,775 for the years ended December 31, 2024 and 2023, respectively.

The increase was due to increase in directors’ stock-based

compensation - options.

The decrease was attributed to a decline in stock

prices during the current year.

Research and development costs were $1,381,937

2 unchanged sentences

and development employee headcount in the Ontario, California headquarters and the Shenzhen, China subsidiary.

Professional fees were $705,234 during the year ended

December 31, 2023 compared to $896,385 during the year ended December 31, 2022.

The decrease in these professional fees compared to the

prior period was due to a decrease in new transaction-based legal paperwork for the Company (as much of this paperwork was completed earlier)

and a decrease in employment litigation legal fees.

Professional fees were $1,660,590 during the year

ended December 31, 2024 compared to $767,606 during the year ended December 31, 2023.

The increase in these professional fees compared

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

General and administrative expenses for the year

ended December 31, 2024 was $2,115,891, compared to $1,717,864 for the year ended December 31, 2023.

The relating decrease was due to

the following reasons:

a) Decreased number of general and administrative

employees in our headquarters due to outsourcing of work to third parties;

b) Relocated Focus Shenzhen office to lower lease

c) Obtained better insurance deal from another

insurance company.

Other Income (expense)

Other income of $244,665 incurred during the year

ended December 31, 2023, primarily consisted of interest income of $38,339, interest expense – related party of $38,333, unrealized

gain on marketable equity securities of $8,033, realized loss on marketable equity securities of $2,002, rental income of $160,910 and

other income of $77,718.

Other income of $278,709 incurred during the year ended December 31, 2022, primarily consisted of interest income

of $3,887, forgiveness of debt of $158,547, unrealized loss on marketable equity securities of $42,395, realized loss on marketable equity

securities of $21,205, rental income of $166,288 and other income of $13,587.

The increase of general and administrative

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

Other income of $3,278,375 incurred during the

year ended December 31, 2024, primarily consisted of gain on sale of property of $3,181,706, interest income of $40,852, interest expense

– related party of $89,098, unrealized loss on marketable equity securities of $12,075, rental income of $96,541 and other income

Other income of $241,551 incurred during the year ended December 31, 2023, primarily consisted of interest income of $38,339,

interest expense – related party of $38,333, unrealized gain on marketable equity securities of $8,033, realized loss on marketable

equity securities of $2,002, rental income of $160,910 and other income of $74,604.

Loss from discontinued operations, net of tax

was $278,263 during the year ended December 31,2024, compared to $7,907 during the year ended December 31,2023.

The decrease was due to

the discontinued operations of AT Tech Systems LLC in August 2024.

During the years ended December 31, 2024, and

10 unchanged sentences

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

$ (4,656,754 )

$ (3,528,762 )

Net cash provided by investing activities

Net cash provided by (used in) financing activities

Effect of exchange rate

Net change in cash

$ (3,915,172 )

Cash Flows from Operating Activities

Our net cash outflows from operating activities of

$3,528,762 for the year ended December 31, 2023, was primarily the result of our net loss of $4,718,142 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 an increase in accounts

receivable of $112,716, decrease in accounts receivable – related party of $34,507, increase in inventory of $178,299, increase

in other receivable of $20,519, decrease in prepaid expenses of $45,602, decrease in deposits of $8,336, decrease in operating lease right-of-use

asset of $325,329, increase in accounts payable and accrued liabilities of $215,531, increase in other current liabilities of $78,455,

and decrease in lease liabilities of $342,732.

Non-cash expense included add-backs of $26,631in bad debt expense, $167,983 in depreciation

expense, $8,033 in unrealized gain on marketable equity securities, $2,002 in realized loss on marketable equity securities, $431,813

in stock-based compensation – shares, and $515,490 in stock-based compensation – options.

Our net cash outflows from operating activities of

$2,957,983 for the year ended December 31, 2022, was primarily the result of our net loss of $4,926,937 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 an increase in accounts

receivable of $37,335, increase in accounts receivable – related party of $19,331, increase in inventory of $53,684, decrease in

other receivable of $13,057, decrease in prepaid expenses of $158,474, decrease in deposits of $4,035, decrease in operating lease right-of-use

asset of $139,754, decrease in accounts payable and accrued liabilities of $21,722, decrease in other current liabilities of $17,135,

decrease in lease liabilities of $117,245, and increase in other liabilities of $12,064.

Non-cash expense included add-backs of $136,337

in bad debt expense, $166,266 in depreciation expense, $42,395 in unrealized loss on marketable equity securities, $21,205 in realized

loss on marketable equity securities, $719,975 in stock-based compensation – shares, $849,043 in stock-based compensation - options,

and reduction in inventory fair value net realizable of $27,199.

Our net cash outflows from operating activities

of $4,656,754 for the year ended December 31, 2024, was primarily the result of our net loss of $3,200,138 and changes in our operating

assets and liabilities offset by the add-back of non-cash expenses, and operating activities from discontinued operations.

Our net cash outflows from operating activities

of $3,528,762 for the year ended December 31, 2023, was primarily the result of our net loss of $4,718,142 and changes in our operating

assets and liabilities offset by the add-back of non-cash expenses, and operating activities from discontinued operations.

We expect that cash flows from operating activities

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inflow from investing activities of $7,127,121.

That was primarily the result from the purchase of property and equipment of $20,620, purchase

of marketable securities of $43,644 and proceeds from sales of marketable securities of $118,410.

For the year ended December 31, 2022,

we had cash outflow from investing activities of $211,257.

That was primarily the result from the purchase of property and equipment of $18,687,

$42,187, purchase of marketable securities of $768,949 and proceeds from sales of marketable securities of $599,879.

and proceeds from sales of property of $7,145,808.

For the year ended December 31, 2023, we had cash inflow from investing activities

That was primarily the result from the purchase of property and equipment of $20,620, purchase of marketable securities of

$43,644 and proceeds from sales of marketable securities of $118,410.

Cash Flows from Financing Activities

For the year ended December 31, 2023, cash outflows

For the year ended December 31, 2024, cash inflows

from financing activities of $706,094.

That was primarily the result from related party loan of $1,000,000, and purchases of treasury

stock of $1,434,048.

For the year ended December 31, 2022, cash outflows from financing activities of $1,158,547.

That was primarily the

result from purchase of treasury stock of $1,000,000 and forgiveness of debt of $158,547.

That was primarily the result proceeds from third party loan of $350,000, proceeds from related

party loan of $1,101,000, repayment on related party loan of $2,101,000, repayment on third party loan of $350,000, stock issued for placement

agent 1,086,000, stock issued for private placement of $1,290,000 and purchases of treasury stock of $669,906.

For the year ended December

31, 2023, cash outflows from financing activities of $434,048.

That was primarily the result from related party loan of $1,000,000, and

purchases of treasury stock of $1,434,048.

Going Concern

The Company has assessed its ability to continue as

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

The Company has a

net loss of $4,718,142 and $4,926,937 for the years ended December 31, 2023 and 2022, respectively.

In addition, the Company had an accumulated

deficit of $22,582,170 and $17,864,028 as of December 31, 2023 and 2022, respectively, and negative cash flow from operating activities

of $3,528,762 and $2,957,983 for the years ended December 31, 2023 and 2022, respectively.

The Company has assessed its ability to continue

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

The Company has

a net loss of $3,200,138 and $4,718,142 for the years ended December 31, 2024 and 2023, respectively.

In addition, the Company had an

accumulated deficit of $25,782,308 and $22,582,170 as of December 31, 2024 and 2023, respectively, and negative cash flow from operating

activities of $4,656,754 and $3,528,762 for the years ended December 31, 2024 and 2023, respectively.

Substantial doubt about the Company’s

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the Company as a going concern.

The Company currently suffered recurring loss from operations, generated negative cash flow from operating

The Company currently suffered recurring losses from operations, generated negative cash flow from operating

activities, has an accumulated deficit and has not completed its efforts to establish a stabilized source of revenues sufficient to cover

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amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

At December 31, 2023, the Company had cash and cash

equivalents, and short-term investments, in the amount of $464,989.

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, subsequent to year end,

the Company has entered into an agreement 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.

Related Party Loan

On August 3, 2023, the Company submitted a written consent, and the Board

approved a loan amount between $1 million and $5 million.

On September 7, 2023, the Company entered into a loan agreement with Golden

Sunrise Investment LLC in the amount of $1,000,000.

This loan is secured against the Company’s property, which serves as collateral,

with a net book value of $4.5 million pledged.

At the time of entering the loan agreement, Golden Sunrise Investment LLC was owned by

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

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

The interest expense amount was $38,333 for

the year ended December 31, 2023.

There was no accrued interest as of December 31, 2023, and the total principal outstanding loan amount

was $1,000,000 as of December 31, 2023.

As a note, the interest rate increases to 15% as of the due date of loan on any unpaid principal

balance outstanding.

At December 31, 2024, the Company had cash and

cash equivalents, and short-term investments, in the amount of $3,613,978.

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.

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.

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.

Off-Balance Sheet Arrangements

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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-K

Item 7. Management’s Discussion and Analysis