What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-07 compared with 2024-11-07 · 351 added, 510 removed, 407 unchanged (68% of the section changed)

3 unchanged sentences

Index to the Financial Statements

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

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

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

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

Condensed Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2025 and 2024 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (unaudited)

Notes to the Unaudited Condensed Consolidated Financial Statements

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

Current Assets:

Accounts receivable, net

Other receivables

Inventories, net

Prepaid expenses

Marketable securities

Current assets of discontinued operations

Deposits – current portion

Total Current Assets

4 unchanged sentences

Accounts payable and accrued liabilities

Related party loan

Short-term loan

Other current liabilities

Lease liability, current portion

Current liabilities of discontinued operations

Total Current Liabilities

1 unchanged sentence

Lease liability, less current portion

Other liability

Total Non-Current Liabilities

3 unchanged sentences

Common stock, par value $ 0.001 per share, 15,000,000 shares authorized;

72,917,760 and 64,771,817

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

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

7,472,981 and 7,153,647 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Treasury stock at cost ( 380,638 and 348,968 shares held at March 31, 2025 and December 31, 2024, respectively)

( 1,200,167 )

( 1,055,592 )

Additional paid-in capital

9 unchanged sentences

FOCUS UNIVERSAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30,

Nine Months Ended September 30,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended March 31,

Cost of revenue

9 unchanged sentences

( 1,213,906 )

( 4,192,206 )

( 3,445,679 )

Other Income (Expense):

1 unchanged sentence

Interest (expense) - related party

Gain on disposed of property

Gain on bargain purchase

Unrealized gain (loss) on marketable equity securities

Realized loss on marketable equity securities

Unrealized loss on marketable equity securities

Rental income

Other income (expense), net

Total other income (expense)

Income (loss) from continuing operations

( 1,029,227 )

Total other income

Loss from continuing operations

( 1,251,378 )

Income (loss) from discontinued operations, net of tax

Net Income (Loss)

( 1,210,834 )

Loss from discontinued operations, net of tax

$ ( 1,251,378 )

2 unchanged sentences

Foreign currency translation loss

Total comprehensive income (loss)

$ ( 968,272 )

Total comprehensive loss

$ ( 1,257,746 )

$ ( 1,316,586 )

Weighted Average Number of Common Shares Outstanding:

Fully diluted

Basic net income (loss) per share:

Continuing operations

Discontinued operations

Basic net income (loss) per share

Fully diluted net income (loss) per share:

Basic and fully diluted net loss per share:

Continuing operations

Discontinued operations

Fully diluted net income (loss) per share

Weighted Average Number of Common Shares Outstanding:

Basic and Diluted

The accompanying notes are an integral part

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER

30, 2024 AND 2023

Treasury Stock

Shares to be issued Common

Accumulated Other

Comprehensive

Stockholders'

Balance - June 30, 2024

$ ( 385,686 )

$ ( 25,262,873 )

Stock based compensation - options

Stock based compensation - shares

Stock issued for placement agent

Stock issued for private placement

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

Other comprehensive income

Balance - September 30, 2024

$ ( 385,686 )

$ ( 23,820,946 )

Treasury Stock

Shares to be issued Common

Accumulated Other

Comprehensive

Stockholders'

Balance - June 30, 2023

$ ( 420,686 )

$ ( 19,996,437 )

Stock based compensation - options

Stock based compensation - shares

Amendment stock purchase agreement - treasury stock

Other comprehensive income

Balance - September 30, 2023

$ ( 385,686 )

$ ( 20,964,470 )

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

Treasury Stock

Shares to be issued Common

Accumulated Other

Comprehensive

1 unchanged sentence

Balance – December 31, 2024

$ ( 434,048 )

$ ( 22,582,170 )

Stock based compensation - options

Stock based compensation - shares

Retirement of treasury stock

Stock issued for placement agent

Stock issued for private placement

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

Purchase of treasury stock

Stock split rounding up

Other comprehensive income

( 1,238,776 )

Balance - September 30, 2024

$ ( 385,686 )

$ ( 23,820,946 )

Treasury Stock

Shares to be issued Common

Accumulated Other

Balance – March 31, 2025

Shares to be issued

Comprehensive

4 unchanged sentences

Stock based compensation - options

Stock based compensation - cashless exercise options

Stock based compensation - shares

Purchase of treasury stock

Retirement of treasury stock

( 1,999,400 )

Amendment stock purchase agreement - treasury stock

Other comprehensive income

Issued stock dividend

( 1,315,597 )

Balance - September 30, 2023

Balance – March 31, 2024

$ ( 434,048 )

$ ( 23,897,767 )

Retroactively applied to the stock split

The accompanying notes are an integral part

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

2 unchanged sentences

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

Gain on sale of building

( 3,181,706 )

Bad debt expense

Depreciation expense

Amortization of intangible assets

Unrealized (gain) loss on marketable equity securities

Realized loss on marketable equity securities

Gain on bargain purchase

Unrealized loss on marketable equity securities

Stock-based compensation – shares

Stock based compensation related to discount on shares sold to related

Stock based compensation – options

1 unchanged sentence

Accounts receivable

Accounts receivable - related party

Other receivable

4 unchanged sentences

Lease liabilities

Other liabilities

Net cash flows used in operating activities from continuing operations

1 unchanged sentence

( 1,018,884 )

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

Net cash flows provided by operating activities from discontinued operations

Net cash flows used in operating activities

( 1,220,049 )

( 2,603,545 )

Cash flows from investing activities:

Purchase of property and equipment

Purchase of marketable securities

Proceeds from sales of marketable securities

Proceeds from sale of property

Net cash flows provided by investing activities

Net cash flows used in investing activities

Cash flows from financing activities:

1 unchanged sentence

Proceeds from related party loan

Repayment on related party loan

( 2,101,000 )

Repayment on third party loan

Stock issued for placement agent

Stock issued for private placement

Purchases of treasury stock

( 1,385,686 )

Net cash flows provided by (used in) financing activities

7 unchanged sentences

Cash paid for interest

Supplemental disclosure of non-cash investing and financing activities:

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

Cashless exercise of options

The accompanying notes are an integral part

2 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

Note 1 – Organization and Operations

Focus Universal Inc.

(the “Company”)

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

The Company is a universal smart instrument developer and

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

smart technologies and instruments.

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

of Things (IoT) and 5G.

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

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

and software design and production within the industry today.

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

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

(“Focus” or the

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

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.

Focus Universal Inc.

is also a provider of patented hardware and software design technologies

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

The Company has developed what it believes are five disruptive patented technology

platforms with 28 patents and patents pending in various phases and 8 trademarks pending in various phases to solve what it believes are

the major problems facing hardware and software design and production within the industry today.

These technologies combined have the

potential to reduce costs, product development timelines and energy usage while increasing range, speed, efficiency, and security of the

IoT and 5G networks.

The smartphone or other mobile device serves as the foundation, where the user can see the sensor readouts and together

with the Ubiquitor device, performs the functions of multiple traditional scientific and engineering instruments.

The Company believes

this product could replace the traditional, wired stand-alone instruments at a fraction of their cost.

The Company has multiple subsidiaries, including

Perfecular Inc.

(“Perfecular”), Focus Universal (Shenzhen) Technology Company LTD (“Focus Shenzhen”), AVX Design

& Integration, Inc.

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

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

Perfecular, a wholly owned subsidiary of Focus that

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

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

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

California, is an IoT installation and management company specializing in high performance audio/video systems, home theaters, lighting

(“Perfecular”), AVX Design & Integration, Inc.

(“AVX,” also doing business as Smart AVX (“Smart

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

(together “Lusher”), and until August, 2024, AT Tech Systems LLC (“AT Tech LLC”), which activities’

have since been discontinued.

Perfecular, 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 IoT installation and management company specializing in high performance audio/video systems, home theaters, lighting

control, automation and integration.

11 unchanged sentences

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

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

of Focus specializing in commercial and industrial smart IoT installation projects in areas throughout Southern California.

AT Tech Systems

has several clients including medical/dental facilities and commercial and industrial projects, and several notable manufacturers and

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

5, 2024, the company and the segment manager of AT Tech Systems LLC reached a tentative oral agreement to terminate his employment and

the employment of his two direct report team members.

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

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

(See Note 10)

The Company has completed integration throughout

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

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

On January 5, 2022, the Company founded a wholly

owned subsidiary named Lusher Bioscientific.

On April 30, 2024, the Company founded a wholly

owned subsidiary named Lusher Inc.

1 unchanged sentence

Financial, initially targeting the financial reporting software market sector.

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

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

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

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

to better prioritize its

core business.

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.

Note 2 – Summary of Significant Accounting Policies

1 unchanged sentence

The unaudited condensed financial statements of

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

accepted in the U.S.

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

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

Accordingly, they do not include all the information and footnotes

required by GAAP for complete financial statements.

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

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

results of operations.

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

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

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

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

the Company for the three months ended March 31, 2025 and 2024 have been prepared in accordance with accounting principles generally accepted

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

S-K for scaled disclosures for smaller reporting companies.

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

by GAAP for complete financial statements.

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

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

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

balance sheet information as of December 31, 2024 was derived from the audited financial statements included in the Company’s financial

statements as of and for the years ended December 31, 2024 and 2023 contained in the Company’s Annual Report on Form 10-K filed

with the Securities and Exchange Commission, or the SEC, on February 28, 2025.

These financial statements should be read in conjunction

7 unchanged sentences

been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Segment Reporting

The Company currently has one operating segment

in addition to our corporate overhead.

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

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

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

Management reviews financial information presented

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

Previously, the Company identified

two operating and reportable segments:

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

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

controlled agriculture, commercial, and home automation sectors;

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

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

home theaters, lighting control, automation, and integration.

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

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

Use of Estimates

8 unchanged sentences

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

The actual results experienced by the Company

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

To the extent there are material differences between the estimates

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

Significant estimates in the accompanying financial statements

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

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

The Company regularly evaluates its estimates and assumptions.

actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

To the extent there

are material differences between the estimates and the actual results, future results of operations will be affected.

Significant estimates

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

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

The Company regularly

evaluates its estimates and assumptions.

Allowance for doubtful accounts

3 unchanged sentences

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

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

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

As of March 31, 2025 and December 31, 2024, allowance

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

Concentrations of Credit and Business Risk

4 unchanged sentences

Major customers

For the three months ended of September 30, 2024

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

Schedule of concentrations of credit and

business risk

Three months ended September 30,

_________________

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

For the nine months ended of September 30, 2024

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

Nine months ended September 30,

_________________

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

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

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

September 30, 2024

For the three months ended of March 31, 2025 and

2024, the Company’s revenue received from the following companies were set out as below:

Schedule of concentrations of credit risk

Three months ended March 31,

As of March 31, 2025 and December 31, 2024, the

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

March 31, 2025

December 31, 2024

_________________

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

Major vendors

No major vendor accounted more than 10% of total

purchase during nine months ended September 30, 2024 and 2023.

Two major vendors accounted for more than 98%

of our total purchases during the three months ended March 31, 2025 and no major vendor accounted more than 10% of total purchase during

the three months ended March 31, 2024.

Share-based Compensation

31 unchanged sentences

The following table summarize financial assets

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

Schedule of financial assets

and liabilities measured at fair value

September 30, 2024 (unaudited)

and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:

Schedule of fair value of assets

and liabilities measured on recurring basis

March 31, 2025 (unaudited)

Marketable securities:

12 unchanged sentences

The Company’s other comprehensive

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

loss for the three months ended March 31, 2025 and 2024 was comprised of foreign currency translation adjustments.

Revenue Recognition

19 unchanged sentences

on actual units produced.

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

one operating and reportable segment which is IoT Products.

The Company discontinued operations of AT Tech Systems in August 2024, and added the operations of Lusher to

service the financial reporting software sector, so the Company currently retains two operating and reportable segments which are (1)

Perfecular and Lusher and (2) Corporate and IoT Products.

Research and development

14 unchanged sentences

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

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

Accordingly, diluted loss per share is

the same as basic loss for all periods presented.

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

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

As of each period end, all potentially dilutive

instruments would be anti-dilutive.

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

The following

potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive.

Schedule of anti-dilutive shares

Nine Months Ended September 30,

Three Months Ended March 31,

Stock options

17 unchanged sentences

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

Schedule of exchange rates

Average Rate for the Nine Months Ended

September 30,

Schedule of exchange rates foreign currency

Average Rate for the Three Months Ended

China Yuan (RMB)

1 unchanged sentence

Exchange Rate at

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

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 condensed consolidated financial statements.

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

In addition, the Company

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

flow from operating activities of $ 3,658,901 and $ 2,603,545 for the nine months ended September 30, 2024 and 2023, respectively.

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

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 condensed consolidated financial statements.

The Company has a net loss

of $ 1,251,378 for the three months ended March 31, 2025.

In addition, the Company had an accumulated deficit of $ 27,033,686 as of March

31, 2025, and negative cash flow from operating activities of $ 1,220,049 for the three months ended March 31, 2025.

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.

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

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

ability to continue as a going concern.

At September 30, 2024, the Company had cash and

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

The ability to continue as a going concern is dependent on

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

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

Since inception, the Company has funded its operations primarily

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

In addition, before

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

For more information

on the sale of the land and buildings please see Note 5.

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

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

Even if the Company is able to obtain additional financing,

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

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

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

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.

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

report on the Company’s consolidated financial statements for the year ended December 31, 2024, has also expressed substantial

doubt about the Company’s ability to continue as a going concern.

At March 31, 2025, the Company had cash and cash

equivalents, and short-term investments, in the amount of $ 2,217,268 .

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.

Even if the Company is able to obtain

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

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

No assurance can be given that any future

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

Note 3 – Recent Accounting Pronouncement

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 Expenses.

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

We are currently evaluating the provisions of this guidance and assessing the potential impact on our financial statement

Management does not believe that any other recently

3 unchanged sentences

Note 4 – Inventory

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

At March 31, 2025 and December 31, 2024, inventory

consisted of the following:

Schedule of inventory

September 30, 2024

March 31, 2025

December 31, 2024

Finished goods

Inventory reserve

Note 5 – Property and Equipment

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

consisted of the following:

At March 31, 2025 and December 31, 2024, property and equipment consisted

of the following:

Schedule of property and equipment

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Property and equipment, net

Depreciation expense for the nine months ended

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

On July 3, 2024, the Company completed a purchase

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

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

Schedule of net book value of the sales of the property

Building improvement

Total carrying amount

Accumulated depreciation

Net book value

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

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

of which $ 1,481,208

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

In addition, the Company incurred

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

from the sale of the property.

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

14,004 square foot office and warehouse space.

Depreciation expense for the three months ended

March 31, 2025 and 2024 amounted to $ 5,453 and $ 35,330 , respectively.

On July 8, 2024, the Company entered into a twelve-month

Standard Industrial/Commercial Single-Tenant Lease with a third party for an approximately 14,004 square foot office and warehouse space.

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

The monthly rent is $16,804.

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

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

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

On March 5, 2024, the Company

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

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

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

months ended September 30, 2024.

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

of the sale of the building.

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

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

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

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

Sunrise Investment LLC.

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

The interest expense

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

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

Note 7 – Short-Term Loans

On January 2, 2024, the board of directors

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

million with one or more lenders.

The Company accepted the first $ 300,000

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

loaned $ 300,000

to the Company (the “Principal Amount”).

The Loan has an annual 3 %

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

On the Due Date, the Company will

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

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

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

as of September 30, 2024.

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

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

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 nine months ended September 30, 2024.

The principal

and interest were paid off on July 19, 2024.

Note 8 – Lease

The Company entered into a First Lease

Amendment on March 21, 2025, extending the lease until January 31, 2026, with no changes to the original terms.

Note 6 – Leases

The Company recorded an operating lease expense

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

of $ 80,210 and $ 27,687 for the three months ended March 31, 2025 and 2024, respectively.

This is included in general and administrative

10 unchanged sentences

Technology Co.

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

LTD 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 $5,025)

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

The incremental borrowing rate for a lease is the rate of

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

similar term, which is 10%.

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

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

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

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

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

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

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

4 unchanged sentences

due upon execution of the lease.

The Company entered into a First Lease Amendment on March 21, 2025, extending the lease until January

31, 2026, with no other changes to the original terms.

Operating lease right-of-use assets represent

1 unchanged sentence

to make lease payments arising from the lease.

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

lease liabilities were as follows:

As of March 31, 2025 and December 31, 2024, operating lease right-of use assets and lease

liabilities were as follows:

Schedule of operating lease right of use assets and lease liabilities

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

Schedule of lease term and discount rate

September 30, 2024

March 31, 2025

December 31, 2024

5 unchanged sentences

Operating lease

The minimum future lease payments are as follows:

Schedule of minimum future lease payments

Year ending December 31, 2025

Year ending December 31, 2026

Total minimum lease payment

imputed interest

Present value of future minimum lease payments

Note 7 – Stockholders’ Equity

Stock Dividend

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

The Company followed paragraph ASC 505-20-25

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

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

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

and outstanding.

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

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

In prior years, the Company entered into

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

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

shares with a fair value of $ 54,828

vested during the period and were recognized as compensation costs.

As of December 31, 2023, 41,463

shares with a fair value of $ 74,476

vested under these agreements.

These shares were not issued.

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

shares with a fair value of $ 108,856

that previously vested were issued.

As of September 30, 2024, 42,167

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

remain vested but not issued.

On September 15, 2024, the Company entered into

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

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

common stock, par value $ 0.001

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

In the Offering, an aggregate

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

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

The purchase price of

each Common Share was $ 0.32 .

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

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

On September 18, 2024, the Company completed the

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

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

As part of the offering, Dr.

Desheng Wang, Chief

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

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

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

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

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

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

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

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.

An additional 309,281 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.

Treasury stock

On August 10, 2022, the Company entered a stock

purchase agreement (the “Stock Purchase Agreement”) with a private shareholder to repurchase 600,000 shares of its common

stock for $2,000,000.

The private shareholder transferred the shares on October 4, 2022, forming a binding agreement, 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 1,300,000 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 900,000 shares,

the Company also placed them in treasury.

As of January 17, 2023, the Company retired the initial 600,000 shares and restored them to

the status of authorized and unissued shares.

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

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

As of September 30, 2024, all of the previously

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

During the three months ended March 31, 2025,

the Company repurchased 31,670 shares of its common stock for $ 144,575 in the public market at average price of $4.91 and placed them

As of March 31, 2025 and December 31, 2024, 380,638 and 348,968 shares remain as treasury shares, respectively.

all purchased as part of publicly announced plans or program and currently, as also noted in the previous 10-K filing.

Employee compensation

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

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

incentive plan.

In prior years, the Company entered into several employment

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

During the period ended March 31, 2025,

4,953 shares with a fair value of $ 13,905 that previously vested were issued.

During the period ended March 31, 2025, an aggregate of

1,350 shares with a fair value of $ 5,627 vested during the period and were recognized as compensation costs.

As of March 31, 2025, 2,078

shares of common stock with a fair value of $ 17,295 remain vested but not issued.

On February 11, 2022 (the “Vesting

Date”), the Company entered into a restricted stock award agreements (the “Award Agreement”) with eight employees

for 42,000 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 incentive plan.

The first 20% of the restricted shares were granted and vested on February 11, 2022.

An additional 20% of the restricted

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

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.

As of December 31,

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

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

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

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

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

additional 20% of the restricted shares will vest on each anniversary of the Vesting Date until the fourth anniversary of the

Vesting Date.

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, 2024, the Company amortized $ 357,340

of this amount leaving an unamortized balance of $ 714,680

at December 31, 2024.

During the period ended March 31, 2025, 5,100 shares of common stock vested and the Company amortized $ 89,335

of this amount leaving an unamortized balance of $ 625,345

at March 31, 2025.

As of March 31, 2025, 20,400

of the shares had been vested.

Stock options

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

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

The options vest monthly over 1 year, and may

be exercised during a 10 -year term.

On January 2, 2025, each member of the Board was granted

2,250 options to purchase shares at $ 3.45 per share with a fair value of $ 6,854 .

The options vest monthly over one (1) year, and may be

exercised during a 10 -year term.

In the aggregate, 13,500 options were granted with a fair value of $ 41,124 .

During the nine months

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

unvested which will be amortized over the remainder of 2024.

For the nine months ended September 30, 2024 and

During the three months ended

March 31, 2025, the Company recognized $ 10,284 of compensation cost relating to the vesting of these options and $ 30,840 remained unvested

which will be amortized over the remainder of 2025.

For the three months ended March 31, 2025 and

2024, the Company’s stock option compensation expenses amounted to $ 10,284 and $ 36,995 , respectively.

2 unchanged sentences

Schedule of assumptions

September 30, 2024

March 31, 2025

Risk-free interest rate

3 unchanged sentences

The following is a summary of the option activity

from December 31, 2023 to September 30, 2024:

from December 31, 2024 to March 31, 2025:

Schedule of option activity

5 unchanged sentences

Cancelled or forfeited

Outstanding at September 30, 2024

Vested as of September 30, 2024

Exercisable as of September 30, 2024

Outstanding at March 31, 2025

Exercisable as of March 31, 2025

Based on the closing fair market value of $4.17 per

share on March 31, 2025, intrinsic value of $ 2,027 was attributed to exercisable but not exercised common stock options at March 31, 2025.

Note 8 – Discontinued Operation

3 unchanged sentences

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

The carrying amount of assets and liabilities

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

Schedule of discontinued operations

September 30,

Current assets of discontinued operations:

Accounts receivable, net

Prepaid expenses

Total current assets of discontinued operations

Current liabilities of discontinued operations:

Accounts payable and accrued liabilities

Other current liabilities

Total current liabilities of discontinued operations

The income (loss) from discontinued operations

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

Discontinued operations - Statement of Operations

Three Months Ended September 30,

Nine Months Ended September 30,

presented in the statement of operations for the three months ended March 31, 2025 and 2024 as follows:

Schedule of discontinued operations

Three Months Ended March 31,

Cost of Revenue

Gross Profit (loss)

Operating Expenses:

Selling expense

General and administrative

Total Operating Expenses

Income (loss) from Operations

Loss from Operations

Other Income (Expense):

Interest income (expense), net

Other income (expense), net

Other income, net

Total other income, net

Net Income (Loss)

$ ( 104,763 )

Total operating cash flows from discontinued

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

Total operating cash flows from discontinued operations

were $ 0 and $ 126,795 , respectively, for the three months ended March 31, 2025 and 2024.

Note 9 – 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 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 Executive Officer 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 three months ended March 31, 2025:

Schedule of segment reporting

For the Three Months ended March 31, 2025

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

Loss from operations

( 1,155,254 )

( 1,271,527 )

Total other income

$ ( 116,272 )

$ ( 1,135,106 )

$ ( 1,251,378 )

The following tables summarize the financial information

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

For the Three Months ended March

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

Loss from operations

( 1,161,268 )

( 1,213,906 )

Total other income

Loss from discontinued operations

$ ( 1,263,294 )

$ ( 1,315,597 )

Note 10 – Contingencies

8 unchanged sentences

As of the date of this quarterly report, the Company

was involved in the following material legal proceeding.

On August 26, 2024, a former software engineer

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

and other violations of the California Labor Code.

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

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

However, litigation and investigations

are inherently uncertain.

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

handling the matter.

The Company vigorously disputes these allegations.

has resolved certain material legal proceedings described in Note 11.

Note 11 – Subsequent Events

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

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

Documents have not yet been completed

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

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

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

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

The company plans to maintain these as treasury shares

until certain retirement.

On April 28, 2025 Alumni Capital purchased 94,825

of our common shares for $381,224, based on our Equity Line of Credit (ELOC) Purchase Agreement, dated November 16, 2024.

The price for

these shares was $4.02 based on a 9% discount of the lowest of the 5-day VWAP of $4.41 from the closing date on May 6, 2025, accessible

via the Bloomberg terminal.

The Company repurchased 31,670 shares of its common

stock for $144,575 with our broker Paulson Securities in the public market at an average price of $4.91 and placed them in treasury.

these shares were purchased as part of publicly announced plans or program and currently, as also noted in the previous 10-K filing.

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 sought unspecified

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

On April 25, 2025, the Company and the software engineer entered into

a confidential settlement agreement which concluded this matter and releases all claims against the Company.

This new impact has been

accounted for in these financial statements.

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 Company

and CFO Irving Kau.

The complaint alleged a variety of items including breach of contract and declaratory relief.

On April 10, 2025,

the Company, Mr.

Kau, and MGR Real Estate, Inc.

entered into a confidential settlement agreement which concluded this matter and releases

all claims against the Company.

This reduced impact has been accounted for in these financial statements.

The Company has evaluated all other subsequent

2 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-Q

Item 1. Financial Statements