What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-04-01 · 579 added, 579 removed, 623 unchanged (65% of the section changed)

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Report of Independent Registered Public Accounting Firm (PCAOB No.

Report of Independent Registered

Public Accounting Firm (PCAOB No.

Consolidated Balance Sheets as of December 31, 2024 and 2023

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Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Focus Universal Inc.

Ontario, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheets of Focus Universal Inc.

and Subsidiaries (the “Company”) as of December 31, 2023, and the related statements of operations,

stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles

generally accepted in the United States of America.

We have audited the accompanying consolidated

balance sheets of Focus Universal Inc.

and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related

statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years

then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated

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rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

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Accordingly, we express no such opinion.

Our audit included performing procedures to assess

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

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Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition — identification

of contractual terms in certain customer arrangements

Sale of Warehouse

As described in Note

2 to the consolidated financial statements, management applies FASB Topic 606, Revenue from Contacts with Customers (“ASC 606”)

to recognize revenue.

Management recognizes revenue upon transfer of control of promised goods or services to customers in an amount that

reflects the consideration the Company expects to receive in exchange for those goods or services.

The Company’s revenue is divided

into two sources, with one source being from project construction which is recognized over time using the percentage-of-completion method

under the cost approach.

Management is required to estimate the percentage of completion when determining the amount and timing of revenue

The principal considerations

for our determination that performing procedures over the percentage-of-completion method of recognition of revenue contracts and subsequent

payment collections is a critical audit matter as there are more significant risks associated with the percentage-of completion recognition

of this revenue.

This in turn led to significant effort in performing our audit procedures which were designed to evaluate whether the

contractual terms, the timing of revenue recognition were appropriately identified and determined by management and to evaluate the reasonableness

of management’s estimates.

Our audit procedures

included, among others, understanding the process relating to management’s revenue recognition process, examining transaction related

documents, testing of calculated percentage of completion of recorded revenue, and testing of receivables at balance sheet date including

testing of subsequent collections.

5 to the consolidated financial statements, the Company sold its warehouse and land during the year ended December 31, 2024 resulting

in a gain of $3,181,706, and subsequently entered into a short term lease agreement to rent the facility back from the buyer.

We identified

the recognition of the gain on sale of these assets as a critical audit matter due to the significance of this transaction to the Company’s

operations, and to the complex accounting relating to sale/leaseback transactions.

This in turn led to significant effort in performing

our audit procedures which were designed to evaluate the proper accounting and presentation of the sale/lease back transaction.

The primary audit procedures

we performed to address this critical audit matter included;

· Obtaining, examining and testing the underlying contractual documentation related to the sale transaction

· Obtaining and understanding the lease agreement

· Recalculating the gain recorded by the Company

· Ensuring the Company properly accounted for the recognition of the gain in accordance with current accounting

We have served as the Company’s auditor

& Company, P.A .

April 1, 2024

February 28, 2025

Los Angeles, CA.

Report of Independent Registered Public Accounting

To the shareholders and the board of directors

of Focus Universal, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Focus Universal, Inc.

(the “Company”) as of December 31, 2022 the related consolidated statement of operations,

stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2022 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles

generally accepted in the United States.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter

communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to

be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,

providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition — identification

of contractual terms in certain customer arrangements

As described in Note

2 to the consolidated financial statements, management applies FASB Topic 606, Revenue from Contacts with Customers (“ASC

606”) to recognize revenue.

Management recognizes revenue upon transfer of control of promised goods or services to customers in

an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

The Company’s

revenue is divided into two sources, with one source being from project construction which is recognized over time using the percentage-of-completion

method under the cost approach.

Management is required to estimate the percentage of completion when determining the amount and timing

of revenue recognition.

The principal considerations

for our determination that performing procedures over the percentage-of-completion method of recognition of revenue contracts and subsequent

payment collections is a critical audit matter as there are more significant risks associated with the percentage-of completion recognition

of this revenue.

This in turn led to significant effort in performing our audit procedures which were designed to evaluate whether the

contractual terms, the timing of revenue recognition were appropriately identified and determined by management and to evaluate the reasonableness

of management’s estimates.

Our audit procedures included, among others, understanding

of controls relating to management’s revenue recognition process, examining transaction related documents, confirming revenues and

outstanding receivables at the balance sheet date with a sample of the project construction customers, and testing collections subsequent

to the balance sheet date.

/s/ Reliant CPA PC

Reliant CPA PC

We have served as the Company’s auditor

Newport Beach, CA

March 31, 2023

FOCUS UNIVERSAL INC.

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Accounts receivable, net

Accounts receivable – related party

Inventories, net

Other receivables

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Marketable securities

Current assets of discontinued operations

Total Current Assets

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Accounts payable and accrued liabilities

Treasury stock payable

Related party loan

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Lease liability, current portion

Current liabilities of discontinued operations

Total Current Liabilities

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Additional paid-in capital

Shares to be issued, common shares ( 41,643 and 16,875 shares at December 31, 2023

and 2022, respectively)

Shares to be issued, common shares ( 5,681 and 4,164 shares at December 31, 2024 and 2023, respectively)

Accumulated deficit

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FOCUS UNIVERSAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS

OF OPERATIONS

For the years ended December 31,

Revenue - related party

Total Revenue

Cost of revenue

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Interest expense - related party

Forgiveness of debt

Gain on disposal of property

Unrealized gain (loss) on marketable equity securities

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Total other income

Loss from continuing operations before income taxes

( 2,921,875 )

( 4,710,235 )

Loss from discontinued operations, net of tax

$ ( 3,200,138 )

$ ( 4,718,142 )

Other comprehensive items

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$ ( 4,725,163 )

Basic and fully diluted net loss per shares:

Continuing operations:

Discontinued operations:

Weight Average Number of Common Shares Outstanding:

Basic and Diluted

Net Loss per common share:

Basic and Diluted

The accompanying notes are an integral part

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FOR THE YEARS ENDED DECEMBER 31, 2024 and 2023

Treasury stock

Additional Paid-In

Accumulated Other

Comprehensive

Total Stockholders'

Other Comprehensive

Stockholders’

Balance – December 31, 2022

$ ( 2,000,000 )

$ ( 17,864,028 )

Stock based compensation - options

Stock based compensation - cashless exercise option

Stock based compensation - shares

Purchase of treasury stock

( 2,000,000 )

Common stock issued for this period services

Common stock issued for prior services

Shares issued for cashless exercise of warrants

Retirement of treasury stock

( 1,999,940 )

Amendment stock purchase agreement – treasury stock

Issued stock dividend

Other comprehensive loss

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Stock based compensation - options

Stock based compensation - cashless exercise option

Stock based compensation - shares

Purchase of treasury stock

Retirement of treasury stock

( 1,999,400 )

Amendment stock purchase agreement – treasury stock

Issued stock dividend

Purchase of treasury stock

Stock issued for placement agent

Stock issued for private placement

Fair value of stock issued to placement agent as commitment fee

Stock based compensation related to discount on shares sold to related

Other comprehensive loss

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$ ( 25,782,308 )

*Retroactively applied to the stock split

The accompanying notes are an integral part

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

Cash flows from operating activities:

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

Gain on sale of warehouse

( 3,181,706 )

Bad debt expense

Inventories fair value net realizable

Inventory reserve

Depreciation expense

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Stock based compensation - options

Compensation cost related to sale of common shares to related parties

Fair value of shares issued as commitment fee

Changes in operating assets and liabilities:

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Other liabilities

Net cash flows used in operating activities

Net cash flows used in operating activities from continuing operations

( 4,709,454 )

( 3,476,062 )

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

Net cash used in operating activities

( 4,656,754 )

( 3,528,762 )

Cash flows from investing activities:

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Proceeds from sales of marketable securities

Net cash flows provided by (used in) investing

Proceeds from sales of property

Net cash flows provided by investing activities

Cash flows from financing activities:

Proceeds from third party loan

Proceeds from related party loan

Forgiveness of debt

Purchase of treasury stock

( 1,434,048 )

Repayment on related party loan

( 2,101,000 )

Net cash flows used in financing activities

Repayment on third party loan

Stock issued for placement agent

Stock issued for private placement

Purchase of treasury stock

( 1,434,048 )

Net cash flows provided by (used in) financing activities

Effect of exchange rate

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( 3,915,172 )

( 4,335,239 )

Cash beginning of year

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Supplemental disclosure of non-cash investing and financing activities:

Right-of-use assets obtained in exchange for operating

lease liabilities

Cashless exercise

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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incorporated under the laws of the State of Nevada on December 4, 2012 (“Inception”).

It is a universal smart instrument developer

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

The Company is a universal smart instrument

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

universal smart technologies and instruments.

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for Internet of Things (“IoT”) and 5G.

The company has developed five disruptive patented technology platforms with 26 patents and patents

pending in various phases and 8 trademarks pending in various phases to solve the major problems facing hardware and software design and

production within the industry today.

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

The Company has developed five disruptive patented technology platforms with 28 patents

and patents pending in various phases and 8 trademarks pending in various phases to solve the major problems facing hardware and software

design and production within the industry today.

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

and energy usage while increasing range, speed, efficiency, and security.

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wired stand-alone instruments at a fraction of their cost.

The company has multiple subsidiary units, including

The Company has multiple subsidiaries, including

Perfecular Inc.

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AVX”)), Focus Universal (Shenzhen) Technology Company LTD (“Focus Shenzhen”), Lusher Bioscientific, Inc.

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

Perfecular Inc.

a wholly owned subsidiary of Focus, was founded in September 2009

and is headquartered in Ontario, California, and is engaged in designing certain digital sensor products and sells 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 internet

of IoT installation and management company specializing in high performance and easy to use audio/video systems, home theaters, lighting

control, automation and integration.

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

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

smart IoT install projects in areas throughout the Southern California area.

AVX’s services also include partial equipment upgrade

and installation.

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

On December 23, 2021, Focus Shenzhen was founded as

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

Focus Shenzhen is designed

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

and as a lower cost form of support research and development as engineers are more plentiful in the region.

On January 5, 2022, the Company founded a wholly

owned subsidiary named Lusher Bioscientific, Inc.

Lusher Bioscientific was founded to market to the hydroponic and controlled agriculture

market and to assist in the product development of IoT technology products within this sector.

As of the date of this filing, Lusher’s

activities are in the introductory phase.

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

in commercial and industrial smart IoT install projects in areas throughout the Southern California area.

AT Tech Systems has several

clients from medical/dental facilities and commercial and industrial projects, including several with notable manufacturers and wholesalers,

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

The Company has completed

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

For example, Mr.

Tejeda serves as the Company’s director of installation services, as the vice president of operations of AVX, and as chief operating

officer of AT Tech Systems.

and until August, 2024, AT Tech Systems LLC (“AT Tech LLC”), which activities’ have since been discontinued.

a wholly owned subsidiary of Focus, was founded in September 2009 and is headquartered in Ontario, California, and is engaged in

designing certain digital sensor products and sells a broad selection of horticultural sensors and filters in North America and Europe.

AT Tech Systems was a subsidiary of Focus and

specialized in commercial and industrial smart IoT installation projects in areas throughout Southern California.

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 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)

Note 2 – Summary of Significant Accounting Policies

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The accompanying consolidated financial statements

include the accounts of the Company and its wholly-owned subsidiaries, Perfecular Inc., AVX Design & Integration, Focus Universal

(Shenzhen) Technology Co.

LTD, and Lusher Bioscientific.

include the accounts of the Company and its wholly-owned subsidiaries, Perfecular, AVX, Focus Shenzhen, Lusher, Lusher Inc.

Systems (collectively, the “Company,” “we,” “our,” or “us”).

All significant intercompany

transactions and balances have been eliminated.

Segment Reporting

The Company currently has two operating segments.

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

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

how to allocate resources and to assess performance.

Management reviews financial information presented on a consolidated basis for purposes

of allocating resources and evaluating financial performance.

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

reportable segments.

The Company consists of three types of operations.

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

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

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

and research and development of technology products.

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

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

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

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

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.

Asset information by operating segment is not

presented as the chief operating decision maker does not review this information by segment.

The reporting segments follow the same accounting

policies used in the preparation of the Company’s consolidated financial statements.

Use of Estimates

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apparent from other sources.

The actual results experienced by the Company may

differ materially and adversely from the Company’s estimates.

The actual results experienced by the Company

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

To the extent there are material differences between the estimates

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evaluates its estimates and assumptions.

Segment Reporting

The Company’s management team is provided

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

addition, substantially all of the Company’s revenue and long-lived assets are attributable to operations in the United States for

all periods presented.

The Company currently has two operating segments.

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

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

how to allocate resources and to assess performance.

Management reviews financial information presented on a consolidated basis for purposes

of allocating resources and evaluating financial performance.

Accordingly, the Company has determined that it has two operating and reportable

The Company consists of two types of operations.

(1) AVX and Smart AVX (inclusive of the smart IoT Products sales under Smart

AVX) cooperatively run our “LED and IoT Installation Services” segment, which handles our LED and IoT installation and management

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

automation, and integration.

This includes the Focus and Focus Shenzhen collectively operate our “Corporate and R&D” segment

focused on R&D development for the IoT, which involves the non-specific financing, executive expense, operations and investor relations

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

categories and research and development of these IoT technology products and of our smart products into the commercial and home automation

(2) Perfecular and Lusher jointly operate the SEC Financial Software segment, which involves the development, marketing, and

production of our SEC Financial Reporting AI-Driven Automation Software package and also includes our universal smart instruments and

devices in the hydroponic and controlled agriculture segments.

Asset information by operating segment is not

presented as the chief operating decision maker does not review this information by segment.

The reporting segments follow the same accounting

policies used in the preparation of the Company’s consolidated financial statements.

The Company considers all highly liquid investments

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

As of December 31, 2023 and 2022, allowance for doubtful

accounts amounted to $ 249,603 and $ 222,972 , respectively.

As of December 31, 2024 and 2023, allowance for

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

Concentrations of Credit Risk

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loss by investing its cash with high credit quality financial institutions.

Major customers

For the years ended of December 31, 2024 and 2023,

the Company’s revenue received from the following customers and were set out as below:

Schedule of concentrations of credit risk

For the years ended December 31,

_________________

Revenue for the year ended had not exceeded 10% or more of the consolidated revenue.

Major vendors

For the years ended of December 31, 2024 and 2023,

the Company’s purchase from the following vendors and were set out as below:

For the years ended December 31,

Purchase for the year ended had not exceeded 10% or more of the consolidated purchase.

Inventory consists primarily of parts and finished

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Estimated useful lives are as follows:

Schedule of estimated useful lives of property, plant and equipment

Schedule of estimated useful lives, property and equipment

Long-Lived Assets

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paid in capital, on a first-in first-out basis.

The Company does not recognize a gain or loss to income from the purchase and sale of

treasury stock.

Share-based Compensation

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for both employee and non-employee awards is generally recognized on a straight- line basis over the requisite service period of the award.

The Company accounts for warrants as either equity-classified

or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance

in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability

pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether

the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net

cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly

period end date while the warrants are outstanding.

For issued or modified warrants that meet all

of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the

time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required

to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Changes in the estimated fair

value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

The fair value of the warrants is estimated

using a Black-Scholes pricing model.

The Company does not have any outstanding warrants as of December 31, 2023 and 2022,

respectively.

Stock Dividends

The Company issued a fifty percent (50%) stock

dividend 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 stock held.

The Company follows 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.

Company also adheres 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.

The retroactive treatment is based on a fifty percent (50%)

stock dividend of the Company’s common stock to its shareholders on March 23, 2023.

The Company does not capitalize its retained

earnings, and there is no impact to the Company’s overall equity or its total assets.

The Company follows paragraph ASC 505-20-25 in

treating stock dividends as a stock split when the stock dividend is greater than 25% of the shares then outstanding.

On March 23, 2023,

and April 3, 2023, the Company issued 2,159,216 shares of common stock as 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 followed paragraph ASC 260-10-55-12, wherein

it retroactively adjusted all share amounts and its statement of stockholders’ equity for all presented periods to incorporate the

alteration in capital structure.

Fair Value of Financial Instruments

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Pricing inputs that are generally unobservable inputs and not corroborated by market data.

The following table summarize financial

assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022:

Schedule of fair value assets and liabilities measured on recurring basis

The following table summarize financial assets

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

Schedule of fair value of assets

and liabilities measured on recurring basis

December 31, 2024

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Transactions involving related parties cannot

be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist.

be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not

Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated

on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

We believe the related party loan approximates its fair value based on interest rate of the loan.

However, it is not practical to determine the

fair value of advances from stockholders, if any, due to their related party nature.

the related party loan approximates its fair value based on interest rate of the loan.

Comprehensive Income (Loss)

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net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity.

The Company other comprehensive

Other comprehensive

loss for the years ended December 31, 2024 and 2023 was comprised of foreign currency translation adjustments.

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Company’s revenue category, is summarized below:

Product sales –

revenue is recognized at the time of sale upon the delivery of the equipment to the customer and completion of performance obligation.

Product sales – revenue is recognized at the time of sale upon the delivery of the equipment to the customer and completion of performance obligation.

Service sales – revenue is recognized based on the service been provided and the agreed upon performance obligation has been completed to the customer.

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on actual units produced.

Currently, the software segment is not generating any revenue.

A summary of our revenue by product type for

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labor and product incurred to provide product sales, service sales and project sales.

Advertising Expenses

During the years ended December 31, 2024 and 2023, the Company incurred

advertising costs of $ 15,125 and $ 0 , respectively.

Research and development

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Stock options

Subsequent Events

The Company follows the guidance in ASC 855-10-50

for the disclosure of subsequent events.

The Company will evaluate subsequent events through the date when the financial statements were

Pursuant to ASU 2010-09, the Company as an SEC filer considers its financial statements issued when they are widely distributed

to users, such as through filing them on EDGAR.

Foreign Currency Translation and Transactions

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other comprehensive loss in stockholders’ equity.

denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing

at the dates of the transactions.

The resulting exchange difference, presented as foreign currency transaction loss, is included in the

accompanying consolidated statements of operations.

Transactions denominated in currencies other

than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions.

The resulting exchange difference, presented as foreign currency transaction loss, is included in the accompanying consolidated statements

of operations.

The exchange rates used for consolidated financial statements are as follows:

of exchange rates foreign currency

Schedule of exchange rates foreign currency

Average Rate for the Year Ended

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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.

Substantial doubt about the Company’s

ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable

that the Company will be unable to meet its obligations as they become due within one year from the financial statement issuance date.

The accompanying consolidated financial statements have been prepared in conformity with U.S.

GAAP, which contemplate continuation of

the Company as a going concern.

The Company currently suffered recurring loss 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

operating costs over an extended period of time.

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 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 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 statement issuance date.

The accompanying

consolidated financial statements have been prepared in conformity with U.S.

GAAP, which contemplate continuation of the Company as a

going concern.

The Company currently suffered recurring loss 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 operating

costs over an extended period of time.

These conditions raise substantial doubt as to its ability to continue as a going concern.

These unaudited condensed consolidated financial statements do not include adjustments relating to the recoverability and classification

of reported asset 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.

consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset 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, 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.

Note 3 – Recent Accounting Pronouncement

In June 2016, the FASB issued Accounting

Standards Update (“ASU”) No.

2016-13, (Topic 326), Financial Instruments – Credit Losses:

Measurement of Credit

Losses on Financial Instruments which amends the current accounting guidance and requires the use of the new forward-looking

“expected loss” model, rather than the “incurred loss” model, which requires all expected losses to be

determined based on historical experience, current conditions and reasonable and supportable forecasts.

This guidance amends the

accounting for credit losses for most financial assets and certain other instruments including trade and other receivables,

held-to-maturity debt securities, loans and other instruments.

In November 2019, the FASB issued ASU No.

2019-10 to postpone the

effective date of ASU No.

2016-13 for public business entities eligible to be smaller reporting companies defined by the Securities

and Exchange Commission to fiscal years.

The Company adopted ASU No.

2016-13 on January 1, 2024 which did not have a material

impact on its financial position and results of operations.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic

Improvements to Reportable Segment Disclosure, which is intended to improve reportable segment disclosure requirements, primarily

through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision

maker and included in each reported measure of a segment’s profit or loss.

The update also requires all annual disclosures about

a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single 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 permitted.

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

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

Management does not believe that any other

recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements.

As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

In November 2023, the FASB issued ASU 2023-07,

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure, which is intended to improve reportable segment disclosure

requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief

operating decision maker and included in each reported measure of a segment’s profit or loss.

The update also requires all annual

disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single

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

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.

In November 2024, FASB issued ASU 2024-03 Income

Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement

The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other

things, specific information about certain costs and expenses including purchases of inventory;

employee compensation;

and depreciation

and amortization expense for each caption on the income statement where such expenses are included.

The update is effective for annual

reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is

permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods

presented in the financial statements.

We are currently evaluating the provisions of this guidance and assessing the potential impact

on our financial statement disclosures.

Management does not believe that any other recently

issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements.

As new accounting

pronouncements are issued, we will adopt those that are applicable under the circumstances.

Note 4 – Inventory

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Finished goods

Inventory reserve

Note 5 – Property and Equipment

10 unchanged sentences

31, 2024 and 2023 amounted to $ 73,611 and $ 167,983 , respectively.

Note 6– Related Party Transactions

Revenue generated from Vitashower Corp., a company

owned by the Chief Executive Officer’s wife, amounted to $ 0 and $ 41,536 for the years ended December 31, 2023 and 2022, respectively.

The accounts receivable balance due from Vitashower Corp.

amounted to $ 0 and $ 34,507 as of December 31, 2023 and 2022, respectively.

Service revenue generated from the installation

of home security equipment by AT Tech and AVX for one of the Company’s directors, amounted to $ 65,543 and $ 8,246 for the year ended

December 31, 2023 and 2022, respectively.

Note 7 – 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.

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 net proceeds of $ 7,145,808 after closing costs, 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 $ 314,442 of closing costs resulting in a gain of $ 3,181,706

from the sale of the property.

On July 8, 2024, the Company entered into a twelve-month Standard Industrial/Commercial Single-Tenant Lease

with the buyer 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 $16,804 (See Note 8).

Note 6– Related Party Loans

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 cost of $4.5 million pledged.

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

1 unchanged sentence

The loan has 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.

The interest rate increases to 15% as of the due date of loan on any unpaid

principal balance outstanding.

Note 8 – Business Concentration and Risks

Major customers

One customer accounted for 43 % of the total accounts

receivable as of December 31, 2023, and this customer accounted for 22 % of the total revenue as of December 31, 2023.

Four customers accounted for 11 % of the total

accounts receivable as of December 31, 2022, and those customers accounted for 49 % of total revenue for the year ended December 31, 2022.

Major vendors

No major vendor accounted more than 10 % of total

purchases during the year ended December 31, 2023, One vendor, Tianjin Guanglee, accounted for 65 % of total accounts payable as of December

and this vendor accounted for 22 % of total purchases during the year ended December 31, 2022.

Of subsequent note, Tianjin Guanglee

was once owned by the Chief Executive Officer, as fully disclosed in our annual report in 2017.

In 2018, the Chief Executive Officer transferred

ownership of the entity to an unrelated third party in a transaction not considered a related party transaction per the relevant guidelines.

On March 5, 2024, the Company

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

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

The principal of $ 1,300,000 and interest of $ 28,208

were paid off on July 3, 2024 from the proceeds of the sale of the building.

As of December 31, 2024, principal and interest under this

loan was $ 0 .

The interest expense amount was $ 77,208 for the year ended December 31, 2024.

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

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

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

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

Sunrise Investment LLC.

During the year, the principal loan amount has been increased from $ 300,000 to $ 801,000 .

The interest expense

amount was $ 19,501 for the year ended December 31, 2024.

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

As of December 31,

2024, principal and interest under this loan was $ 0 .

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”).

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 each.

The interest amount for the year ended December

31, 2024 was $ 4,897 , and the total principal of $ 300,000 and interest were paid off on December 31, 2024.

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

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

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

amount have a due date of July 19, 2024 .

The interest expense amount was $ 500 for the year ended December 31, 2024.

The principal and

interest were paid off on July 19, 2024.

As of December 31, 2024, principal of $ 50,000 and interest under this loan was $ 0 .

Note 8 – Leases

The Company recorded its operating lease

cost of $ 143,097

and $ 209,738

for the years ended December 31, 2023 and 2022, respectively.

This is included in general and administrative expenses.

On December 7, 2021, Focus Shenzhen entered into

a thirty-eight month commercial lease with a third party for an approximately 5,895 square foot office space.

The lease commenced on December

25, 2021 and was scheduled to end on February 28, 2025.

The monthly rent was RMB70,097 (approximately $9,915) 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 terms, which is 10%.

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

This lease was terminated on February 22, 2023.

On January 16, 2023, Focus Shenzhen entered into

a thirty-six month commercial lease with a third party for an approximately 2,017 square foot office space.

The lease commenced on February

1, 2023 and will end on January 31, 2026.

The monthly rent is RMB29,974 (approximately $4,240) 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 terms, which is 10%.

Lease expense for this lease is

recognized on a straight-line basis over the lease term.

On February 22, 2023, Focus Shenzhen entered into

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

The lease commenced on March

31, 2023 and will end on February 28, 2026.

The monthly rent is RMB35,246 (approximately $4,985) 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 terms, which is 10%.

Lease expense

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

Operating lease right-of-use assets represent

the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation

to make lease payments arising from the lease.

As of December 31, 2023 and 2022, operating lease right-of use assets and lease liabilities

were as follows:

Schedule of operating right-of-use asset and liability

Operating lease right-of-use assets

Operating Leases

The Company recorded its operating lease cost

of $ 143,097 and $ 143,097 for the years ended December 31, 2024 and 2023, respectively.

This is included in general and administrative

On January 16, 2023, Focus Universal (Shenzhen)

Technology Co.

LTD entered into a thirty-six month commercial lease with a third party for an approximately 2,017 square foot office space.

The lease commenced on February 1, 2023, and will end on January 31, 2026.

The monthly rent is RMB29,974 (approximately $4,172) 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

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

On February 22, 2023, Focus Universal (Shenzhen)

Technology Co.

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 $4,906)

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.

Operating lease right-of-use assets represent the Company’s right

to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising

from the lease.

As of December 31, 2024 and 2023, operating lease right-of use assets and lease liabilities were as follows:

Schedule of operating lease right of use assets and lease liabilities

December 31, 2024

December 31, 2023

Operating lease right-of-use assets, net

3 unchanged sentences

Schedule of lease term and discount rate

December 31, 2024

December 31, 2023

Weighted average remaining lease term:

1 unchanged sentence

1.08 to 1.25 years

2.08 to 2.25 years

Weighted average discount rate:

4 unchanged sentences

Year ending December 31, 2026

Total minimum lease payment

1 unchanged sentence

Present value of future minimum lease payments

Short-term leases

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

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

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

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

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.

Note 9 – Stockholders’ Equity

Shares authorized

At formation, the total number of shares of all

classes of stock that the Company is authorized to issue is seventy-five million ( 75,000,000 ) shares of common stock, par value $ 0.001

On March 23, 2023, the Company issued a fifty

percent (50%) stock dividend 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 stock held.

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

shares (for consideration of $ 357,340 ,

based on their fair value on grant date) to employees based on their Restricted Stock Award Agreements (see

Employee stock-based compensation below).

As of December 31, 2023, there was unvested amortization of 153,000

shares which will be amortized to expense over the next three years.

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

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

On April 3, 2023, the Company issued 2,327 shares

to round up the stock dividend effective on March 23, 2023.

On April 4, 2022, the Company issued 181,724 shares

of its common stock to Boustead Securities LLC (“Boustead”), which were for the warrants exercised by Boustead on September

The warrants were issued to Boustead in connection with the Company’s initial public offering with an exercise price of

The shares issued to Boustead were valued at $ 1,776,044 upon the cashless exercise option of the warrants.

On May 2, 2022, the Company issued 48,941 shares

to consultants in exchange for professional services rendered.

The shares were valued at $ 154,709 based on the closing price of the Company’s

common stock on the dates that the shares were deemed earned, according to the terms of the related agreements.

On August 17, 2022, the Company issued 82,347

shares to two board members who exercised their options.

The board members exercised a combined 107,500 options, and the shares were valued

at $ 652,501 upon the cashless exercise option of the options.

On August 22, 2022, the Company issued 93,750

shares (value of $ 642,789 , based on their share price on grant date of $7.44) to employees based on the Restricted Stock Award

Agreement (see Employee stock-based compensation).

Stock Dividend

On March 23, 2023, the Company issued 2,159,216

shares of common stock as a dividend 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 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.

adhered to paragraph ASC 260-10-55-12, and retroactively adjusted the common shares outstanding and its statement of stockholders’

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

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 of 375,000 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 $ 3.20 .

The net proceeds from the Offering, after deducting placement agent discounts, commissions,

and estimated offering expenses payable by the Company, was approximately $ 1,086,000 .

On September 18, 2024, the Company completed the

sale of 430,000 shares of Common Stock (the “Shares”) in a private placement to certain eligible investors for an aggregate

purchase price of $ 1,290,000 , or $3.00 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 100,000 shares of the Company’s Common Stock for $300,000 in cash

to each of these individuals (for an aggregate sale of 200,000 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.

The Company determined

that the officer and director were granted an inherent compensation/benefit since the trading price at the issuance date was $4.70.

such, the Company recorded stock compensation cost of $ 340,000 related to the issuance of these shares during the year ended December

On November 16, 2024, the Company entered into

a securities purchase agreement with Alumni Capital LP (“Alumni Capital”) relating to the offer and sale of 200,000 shares

of Common Stock (the “Common Stock”), par value $ 0.001 per share, offered by a prospectus supplement and accompanying prospectus.

Pursuant to the securities purchase agreement with Alumni Capital, the Company may offer and sell up to $ 20,000,000 in shares of its Common

Stock, from time to time at a purchase price of 91% of the previous 5 Business Days’ VWAP, as defined in the agreement.

has also agreed to pay Alumni Capital an upfront commitment fee in shares of Common Stock equal to 1.25% of the full $ 20,000,000 commitment

amount, as defined in the agreement, which shall count towards the life of the securities purchase agreement, divided by the VWAP for

the trading day immediately prior to the shares being issued.

The Company issued 105,175 shares of common stock valued at $ 250,000 to

Alumni Capital which was recorded as a finance cost during the year ended December 31, 2024.

On January 31, 2025, we effected a 10 for 1 reverse

stock split of the Company’s authorized stock, and issued and outstanding shares of Common Stock by filing a Certificate of Change

pursuant to pursuant to Nevada Revised Statutes (“NRS”) Section 78.209.

As a result of the reverse split, the Company is authorized

to issue 15,000,000 common shares (the Company’s authorized common shares were reduced in the same ratio (10-for-1) as its outstanding

Common Stock shares were reduced).

All share and per share amounts were retroactively adjusted to reflect this split as if it occurred

at the earliest period presented.

Treasury stock

On August 10, 2022, the Company entered a

stock purchase agreement (the “Stock Purchase Agreement”) with a private shareholder to repurchase 400,000 shares

(600,000 shares after a fifty percent stock dividend adjustment on March 23, 2023) of its common stock for $2,000,000.

shareholder transferred the shares on October 4, 2022, forming a binding agreement, which the Company placed in treasury;

October 6, 2022, the Company wired the first $1,000,000 of the purchase price.

Subsequently, on July 14, 2023, the Company entered

into an amendment to the Stock Purchase Agreement that increased the number of shares of its common stock the Company would purchase

shares and revised the total purchase price of the shares to $ 1,965,000

resulting in a $35,000 change in our obligation to purchase Treasury stock.

The remaining $ 965,000

was paid on July 14, 2023.

Upon receipt of the additional 900,000

shares, the Company also placed them in treasury.

As of January 17, 2023, the Company retired the initial 400,000

shares (600,000 shares after a fifty percent stock dividend adjustment on March 23, 2023) and restored them to the status of

authorized and unissued shares.

On August 10, 2022, the Company entered a stock

purchase agreement (the “Stock Purchase Agreement”) with a private shareholder to repurchase 60,000 shares of its common stock

for $2,000,000.

The private shareholder transferred the shares on October 4, 2022, which the Company placed in treasury;

and on October

6, 2022, the Company wired the first $1,000,000 of the purchase price.

Subsequently, on July 14, 2023, the Company entered into an amendment

to the Stock Purchase Agreement that increased the number of shares of its common stock the Company would purchase to 130,000 shares and

revised the total purchase price of the shares to $ 1,965,000 resulting in a $35,000 change in our obligation to purchase Treasury stock.

The remaining $ 965,000 was paid on July 14, 2023.

Upon receipt of the additional 90,000 shares, the Company also placed them in treasury.

As of January 17, 2023, the Company retired the initial 60,000 shares and restored them to the status of authorized and unissued shares.

On June 11, 2024, the Company retired 3,000 shares

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

As part of the Company’s repurchase program,

1 unchanged sentence

average price of $ 1.77 and placed them in treasury.

As of December 31, 2023 and 2022, the Company

had 1,163,040 and 600,000 treasury shares, respectively.

The intention of the Company is to retire the additional 900,000 shares obtained

pursuant to the amendment to the Stock Purchase Agreement along with the additional 263,040 shares repurchased during the year ended December

Employee stock-based compensation

During the year 2024, the Company repurchased 243,304 shares of its common stock for

$ 669,906 in the public market at average price of $ 2.78 and placed them in treasury.

As of December 31, 2024, 348,968 shares remain as

treasury shares.

Employee compensation

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 year ended December

31, 2023, an aggregate of 4,146 shares with a fair value of $ 74,473 vested during the period and were recognized as compensation costs.

During the year ended December 31, 2024, an aggregate of 9,011 shares with a fair value of $ 59,953 vested during the period and were recognized

as compensation costs.

During the year ending December 31, 2024, 7,494 shares with a fair value of $ 108,856 that previously vested were

As of December 31, 2024, 5,681 shares of common stock with a fair value of $ 25,573 remain vested but not issued.

On February 11, 2022 (the “Vesting Date”),

the Company entered into a restricted stock award agreement (the “Award Agreement”) with eight employees for 280,000 shares

the Company entered into a restricted stock award agreements (the “Award Agreement”) with eight employees for 28,000 shares

of the Company’s common stock subject to the terms and to the fulfillment of the conditions set forth in the Company’s equity

3 unchanged sentences

shares will vest on each anniversary of the Vesting Date until the fourth anniversary of the Vesting Date.

There were 51,000 shares granted

as of February 13, 2023.

The fair value of the above employee compensation was $ 357,340 as of December 31, 2023.

In November 2021, the Company entered into a one-year

employment agreement with the then VP of Finance and Head of Investor Relations of the Company, pursuant to which the Company awarded

a 15,000-share bonus consisting of shares of the Company’s common stock, which will be granted in blocks of 3,750 shares for every

quarter certain performance metrics are achieved.

The share price will be determined based on the closing price as of the last day of

each quarter.

Pursuant to the terms of the employment agreement, if the Company determined it was satisfied with the performance of the

VP, his position would be promoted to Chief Financial Officer after the one-year anniversary.

In November 2022, the Company entered into

an amendment agreement to amend the performance metrics and extend the term.

As of December 31, 2023, 15,000 shares have vested, collectively

valued at $ 27,862 .

In October 2022, the Company entered into an employee

agreement with the VP of the Company, pursuant to which the Company awarded a 15,000-share bonus consisting of shares of the Company’s

common stock, which will be granted in blocks of 3,750 shares every quarter.

As of December 31, 2023, 15,000 shares have vested, collectively

valued at $ 27,861 .

During the year ended December 31, 2023, the Company

entered into employment contracts with three employees of its engineering staff.

These employment contracts contained provisions for a

total bonus of restricted stock grants valued at $50,000 based on the share price upon the date of completion of the performance metrics

described in the employment contracts.

The fair value of the above employee compensation was $18,750 (approximately 11,643 shares) as

of December 31, 2023.

During the years ended December 31, 2023 and 2022,

the total employee stock-based compensation amount for all employees in the company was $ 431,813 and $ 711,975 , respectively.

The initial fair value of the

awards on the date of grant was determined to be $ 2,942,800 which is being amortized over the 5 year vesting period.

During the year ended

December 31, 2023, the Company amortized $ 357,340 leaving an unamortized balance of $ 1,072,020 at December 31, 2023.

During the year ended

December 31, 2024 the Company amortized $ 357,340 of this amount leaving an unamortized balance of $ 714,680 at December 31, 2024.

December 31, 2024, 20,400 of the shares had been vested.

Stock options

On December 30, 2022, each member of the

Board was granted 22,500

options to purchase shares at $ 4.27

per share with a fair value of $ 533,611 .

These shares fully vested during 2023.

As of December 31, 2023, there were 513,874 options

granted, 513,874 options vested, 0 options unvested, and 513,874 outstanding stock options.

On December 30, 2022, each member of the Board

was granted 22,500 options to purchase shares at $ 4.27 per share with a fair value of $ 533,611 at the date of grant.

shares fully vested during 2023.

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

granted 2,250 options to purchase shares at $ 15.00 per share with a fair value of $ 29,595 .

The options vest monthly over 1 year, and may

be exercised during a 10 -year term.

In the aggregate, 11,250 options were granted with a fair value of $ 147,975 .

During the year ended

December 31, 2024, the Company recognized $ 147,975 of compensation cost relating to the vesting of these options.

For the years ended December 31, 2024 and 2023,

the Company’s stock option compensation expenses amounted to $ 147,975 and $ 515,490 , respectively.

The fair value of the stock options listed above

was determined using the Black-Scholes option pricing model with the following assumptions:

Schedule of fair value of the stock options activity

The fair value of the stock options issued during

the periods was determined using the Black-Scholes option pricing model with the following assumptions:

Schedule of assumptions

December 31, 2024

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Outstanding at December 31, 2022

Vested at December 31, 2021

Exercisable at December 31, 2021

Cancelled or forfeited

Outstanding at December 31, 2023

Vested at December 31, 2022

Exercisable at December 31, 2022

Cancelled or forfeited

Outstanding at December 31, 2024

Vested as of December 31, 2023

Exercisable at December 31, 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 December 31, 2024 and 2023 consist of the following:

Schedule of discontinued operations

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 loss from discontinued operations presented

in the statement of operations for the years ended December 31, 2024 and 2023 as follows:

For the Years Ended December 31,

Cost of Revenue

Gross Profit (loss)

Operating Expenses:

Selling expense

General and administrative

Total Operating Expenses

Loss from Operations

Other Income:

Other income, net

Total other income, net

$ ( 278,263 )

Total operating cash flows from discontinued operations

were $ 52,700 and $ ( 52,700 ) , respectively, for the years ended December 31, 2024 and 2023, respectively.

Note 11 – Segment reporting

The Company currently has two operating segments.

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

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

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

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

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

our smart instruments into the commercial and home automation sectors.

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

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

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

and integration.

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

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

how to allocate resources and to assess performance.

Management reviews financial information presented on a consolidated basis for purposes

of allocating resources and evaluating financial performance.

Accordingly, the Company has determined that it has two operating and reportable

The Company consists of two types of operations.

(1) AVX and Smart AVX (inclusive of the smart IoT Products sales under Smart

AVX) cooperatively run our “LED and IoT Installation Services” segment, which handles our LED and IoT installation and management

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

automation, and integration.

This includes the Focus and Focus Shenzhen collectively operate our “Corporate and R&D” segment

focused on R&D development for the IoT, which involves the non-specific financing, executive expense, operations and investor relations

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

categories and research and development of these IoT technology products and of our smart products into the commercial and home automation

(2) Perfecular and Lusher jointly operate the SEC Financial Software segment, which involves the development, marketing, and

production of our SEC Financial Reporting AI-Driven Automation Software package and also includes our universal smart instruments and

devices in the hydroponic and controlled agriculture segments.

Asset information by operating segment is not

presented as the chief operating decision maker does not review this information by segment.

The reporting segments follow the same accounting

policies used in the preparation of the Company’s consolidated financial statements.

The management team reviews financial information

on a consolidated level and allocates resources based on net loss, which also serves as the key metric for evaluating financial performance.

The following tables summarize the financial information

of each operating segment of the Company for the year ended December 31, 2024:

Schedules of segment reporting

Year Ended December 31, 2023

IoT Installation Services

Revenue - related party

Total revenue

Schedule of segment reporting

For the Year ended December 31, 2024

Perfecular & Lusher

Corporate & IoT

Cost of revenue

Gross profit (loss)

Operating expenses

Selling expense

Compensation – officers and directors

Research and development

Professional fees

General and administrative

Total operating expense

Income (loss) from operations

Loss from operations

( 5,928,312 )

( 6,200,251 )

Total other income (expense)

Net income (loss)

Total other income

Loss from discontinued operations, net of tax

$ ( 270,610 )

$ ( 2,929,528 )

$ ( 3,200,138 )

The following tables summarize the financial information

of each operating segment of the Company for the year ended December 31, 2023:

Year Ended December 31, 2022

IoT Installation Services

Revenue - related party

Total revenue

For the Year ended December 31, 2023

Perfecular & Lusher

Corporate & IoT

Cost of revenue

Operating expenses

Selling expense

Compensation – officers and directors

Research and development

Professional fees

General and administrative

Total operating expense

2 unchanged sentences

( 4,951,786 )

Total other income (expense)

$ ( 4,336,687 )

Total other income

Loss from discontinued operations, net of tax

$ ( 239,794 )

1 unchanged sentence

$ ( 4,718,142 )

Note 12 – Commitments and Contingencies

Note 12 – Contingencies

Pending Litigation

6 unchanged sentences

termination, retaliation and various other provisions of the California Labor Code, and various other claims under California state law.

Trial for this matter is set for October 30, 2024 and discovery is currently ongoing.

AVX intends to contest this matter and disputes

that the other defendants are proper parties to the litigation.

However, since litigation and investigations are inherently uncertain,

the outcome may have a material impact on the Company.

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

We have conducted written discovery,

depositions, and expert discovery.

We have a motion for summary judgment set to be heard on June 17, 2025.

Trial for this matter is set

for August 6, 2025.

AVX intends to vigorously contest this matter.

Further, AVX disputes that the other defendants are proper parties

to the litigation.

However, litigation and investigations are inherently uncertain, but the outcome could have a material impact on the

Similarly, on or about April 14, 2020, Devesa

2 unchanged sentences

Los Angeles, State of California.

The Complaint alleges claims including discrimination, wrongful termination,

retaliation and various other provisions of the California Labor Code, and various other claims under California state law.

The complaint

seeks unspecified economic and non-economic losses, as well as attorneys’ fees.

Trial is set for May 8, 2024.

AVX intends to vigorously

contest this matter and disputes that the other defendants are proper parties to the litigation.

However, since litigation and investigations

are inherently uncertain, the outcome may have a material impact on the Company.

The Complaint alleges claims including discrimination, wrongful termination, retaliation and various

other provisions of the California Labor Code, and various other claims under California state law.

The complaint seeks unspecified economic

and non-economic losses, as well as attorneys’ fees.

We have conducted written discovery, depositions, and expert discovery.

for this matter is set for August 13, 2025.

AVX intends to vigorously contest this matter.

Further, AVX disputes that the other defendants

are proper parties to the litigation.

However, litigation and investigations are inherently uncertain, but the outcome could have a material

impact on the Company.

On August 26, 2024, a former software engineer

filed an action against Perfecular Inc., a wholly owned subsidiary of 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’ fees.

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

foregoing matters.

The case has currently been stayed until a status conference on September 17, 2025, which is when the expected trial

date will be set.

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.

On October 28, 2024, MGR Real Estate, Inc.

California corporation, filed an action in the Superior Court of the State of California, County of San Bernardino, against the

The complaint alleges a variety of things including breach of contract and declaratory relief.

The complaint is in

connection with a listing agreement executed between the Company and the plaintiff, which plaintiff alleges gave it exclusive rights

to list and sale the property located at 2311 E.

Locust St., Ontario, CA 91761 (the “Premises”).

The complaint seeks

damages in a minimum amount of $ 373,025 ,

plus interest at a rate of 10% per annum.

The Company is negotiating a resolution and if such resolution falls through then the

Company intends to contest this matter.

Management believes it has made a provision for the probable settlement of the outcome in

these financial statements.

However, since litigation and investigations are inherently uncertain, the outcome may have a material

impact on the Company.

Note 13 – Income taxes

53 unchanged sentences

Note 14 – Subsequent Events

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 of 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 payment begin on February 4, 2024 (“Due Date”) whereby the Company will pay Lender

in 12 equal payments of $25,408.11 beginning on the Due Date.

On January 9, 2024, the Lender transferred the Principal Amount to the Company.

On February 22, 2024, Focus

Universal Inc.

(the “Company”) entered into an agreement (the “Agreement”) with 620Magnolia LLC (the “Buyer”)

to sell and leaseback the Company’s warehouse located at 2311 E.

Locust Street, Ontario, California 91761 (the “Property”).

The purchase price for the Property is $7,100,000 with $3,550,000 paid directly to the Company in cash, and the remaining $3,550,000 to

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

The Agreement allows for a contingency period of thirty-five

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

Additional contingencies are set

forth in the Agreement and the closing date will occur 30 days after their satisfaction or waiver.

In addition, on February 22,

2024, the Company entered into a Standard Industrial/Commercial Single-Tenant Lease (the “Lease”) with the Buyer to lease

the Property for two years commencing at the close of escrow and ending on April 30, 2026.

Base monthly rent is $39,585, with a total

of $316,680 due upon execution of the lease.

On March 5, 2024, the Company entered into an addendum

to the loan agreement with Golden Sunrise Investment LLC, a related party obtaining an additional secured loan amount of $300,000 at an

annual interest rate of 12%.

On January 28, 2025, the Company filed a Certificate

Change pursuant to Nevada Revised Statutes (“NRS”) 78.209 with the Secretary of State of the State of Nevada to effect a 1-for-10

reverse stock split of the Company’s (i) authorized common stock shares and (ii) issued and outstanding common stock shares.

reverse stock split became effective on January 31, 2025.

All common stock shares, options, warrants and securities convertible or exercisable

into common stock shares have been adjusted to give retroactive effect to this reverse stock split for all periods presented.

An additional 65,947 common stock shares were

included in the Company’s issued and outstanding shares as a result of rounding-up fractional shares into whole shares as a result

of the reverse stock split.

On February 20, 2025, the Company received formal

written confirmation from The Nasdaq Stock Market, LLC ("Nasdaq"), confirming that Nasdaq has determined that for the last 13

consecutive business days, from January 31, 2025, to February 19, 2025, the closing bid price of the Company's shares has been at $1.00

per share or greater.

Accordingly, the Company has regained compliance with Listing Rule 5550(a)(2).

The Company has regained compliance

with Nasdaq's minimum bid price requirement, noting that this matter is now closed.

The Company has evaluated all other subsequent

4 unchanged sentences

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 8. Financial Statements and Supplementary Data