What changed in this filing

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Item 1. Financial Statements

2025-08-12 compared with 2025-05-07 · 368 added, 315 removed, 443 unchanged (61% of the section changed)

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Index to the Financial Statements

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)

Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited)

Notes to the Unaudited Condensed Consolidated Financial Statements

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Prepaid expenses

Other receivable

Marketable securities

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

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 )

7,218,838 and 7,153,647 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Treasury stock at cost ( 39,574 and 348,968 shares held at June 30, 2025 and December 31, 2024, respectively)

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

( 27,033,686 )

( 25,782,308 )

Accumulated other comprehensive loss

1 unchanged sentence

Total Liabilities and Stockholders' Equity

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements

FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended March 31,

AND COMPREHENSIVE LOSS

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

Gross Profit (Loss)

Operating Expenses

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Loss from Operations

( 1,271,527 )

( 1,213,906 )

Other Income (Expense):

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Interest (expense) - related party

Unrealized loss on marketable equity securities

Unrealized gain (loss) on marketable equity securities

Rental income

Other income (expense), net

Other income, net

Total other income

Loss from continuing operations

( 1,251,378 )

( 1,210,834 )

Loss from discontinued operations, net of tax

$ ( 1,251,378 )

$ ( 1,315,597 )

Other comprehensive items

1 unchanged sentence

Total comprehensive loss

$ ( 1,257,746 )

$ ( 1,316,586 )

Basic and fully diluted net loss per share:

Basic net income loss per share:

Continuing operations

Discontinued operations

Basic net loss per share

Weighted Average Number of Common Shares Outstanding:

Basic and Diluted

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

Basic and Fully Diluted

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements

FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025

Treasury Stock

Shares to be issued Common

Shares to be issued

Comprehensive

Stockholders'

Balance – March 31, 2025

$ ( 1,200,167 )

$ ( 27,033,686 )

Stock based compensation - options

Stock based compensation - shares

Purchase of treasury stock

Retirement of treasury stock

( 1,055,242 )

Stock issued for cash

Other comprehensive income

( 1,505,648 )

Balance – June 30, 2025

$ ( 173,838 )

$ ( 28,539,334 )

to be issued Common

Comprehensive

Stockholders'

Balance – March 31, 2024

$ ( 434,048 )

$ ( 23,897,767 )

Stock based compensation - options

Stock based compensation - shares

Retirement of treasury stock

Other comprehensive income

( 1,365,106 )

Balance – June 30, 2024

$ ( 385,686 )

$ ( 25,262,873 )

to be issued Common

Comprehensive

Stockholders'

Balance – December 31, 2024

$ ( 1,055,592 )

$ ( 25,782,308 )

Stock based compensation - options

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Stock split rounding up

Retirement of treasury stock

( 1,055,242 )

Stock issued for cash

Other comprehensive income

Balance – March 31, 2025

Shares to be issued

( 2,757,026 )

Balance – June 30, 2025

$ ( 173,838 )

$ ( 28,539,334 )

to be issued Common

Comprehensive

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Stock based compensation - shares

Retirement of treasury stock

Other comprehensive income

1 unchanged sentence

( 2,680,703 )

Balance – March 31, 2024

Balance – June 30, 2024

$ ( 385,686 )

$ ( 25,262,873 )

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements

FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

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Bad debt expense

Inventory reserve

Depreciation expense

Unrealized loss on marketable equity securities

Unrealized (gain) and loss on marketable equity securities

Stock-based compensation – shares

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( 2,648,288 )

( 1,721,946 )

Cash flows from investing activities:

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Repayment on third party loan

Stock issued for private placement

Purchases of treasury stock

Net cash flows provided by (used in) financing activities

Net cash flows provided by financing activities

Effect of exchange rate

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Cash paid for interest

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements

FOCUS UNIVERSAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024

Note 1 – Organization and Operations

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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.

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.

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

The Company has multiple subsidiaries, including Perfecular

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

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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

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.

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the Smart AVX name.

On December 23, 2021, Focus Shenzhen was founded

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

Focus Shenzhen is

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

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

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.

was founded to develop, market, and commercialize automation software, titled One Touch

Financial, initially targeting the financial reporting software market sector.

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.

On December 23, 2021, Focus Shenzhen was founded as

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

Focus Shenzhen is designed

to function as a branch office to source products and build relationships with manufacturers in China and as a lower cost form of support,

research and development as engineers abound in China.

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.

was founded to develop, market, and commercialize automation software, titled One Touch Financial,

initially targeting the financial reporting software market sector.

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

Basis of Presentation

The unaudited condensed financial statements of

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.

The unaudited condensed financial statements of the

Company for the three and six months ended June 30, 2025 and 2024 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, 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

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The accompanying unaudited condensed consolidated

financial statements include the accounts of Focus and its wholly-owned subsidiaries, Perfecular, AVX, Focus Shenzhen, Lusher and AT Tech

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

All intercompany balances

and transactions have been eliminated upon consolidation.

The Company’s unaudited condensed consolidated financial statements have

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

financial statements include the accounts of Focus and its wholly-owned subsidiaries, Perfecular, AVX, Focus Shenzhen, Lusher and, until

August of 2024, AT Tech Systems (collectively, the “Company,” “we,” “our,” or “us”).

intercompany balances and transactions have been eliminated upon consolidation.

The Company’s unaudited condensed consolidated financial

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

Use of Estimates

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

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.

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 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

The Company estimates an allowance for doubtful

accounts based on historical collection trends and review of the current status of trade accounts receivable.

It is reasonably possible

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

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

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

The Company estimates an allowance for doubtful accounts

based on historical collection trends and review of the current status of trade accounts receivable.

It is reasonably possible that the

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

As of June 30, 2025 and December 31, 2024, allowance for

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

Concentrations of Credit and Business Risk

Financial instruments that potentially subject

the Company to concentrations of credit risk consist primarily of cash and cash equivalents.

The Company limits its exposure to credit

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

Financial instruments that potentially subject the

Company to concentrations of credit risk consist primarily of cash and cash equivalents.

The Company limits its exposure to credit loss

by investing its cash with high credit quality financial institutions.

Major customers

For the three months ended of March 31, 2025 and

For the three months ended of June 30, 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

Three months ended June 30,

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

For the six months ended of June 30, 2025 and 2024,

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

Six months ended June 30,

Major vendors

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.

One major vendor accounted for more than 66 % of our

total purchases during the six months ended June 30, 2025 and no major vendor accounted more than 10% of total purchase during the six

months ended June 30, 2024.

Share-based Compensation

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of stock options, grants, and restricted shares that are recognized in the statement of operations based on their fair values at the date

The measurement of stock-based compensation is

subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period during which

services are received.

The Company calculates the fair value of option

grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the

common stock.

The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that

are ultimately expected to vest.

The resulting stock-based compensation expense

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

The measurement of stock-based compensation is subject

to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period during which services

are received.

The Company calculates the fair value of option grants

utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the common

The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately

expected to vest.

The resulting stock-based compensation expense for

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

Fair Value of Financial Instruments

The Company follows paragraph ASC 825-10-50-10

for disclosures about fair value of its financial instruments and paragraph ASC 820-10-35-37 (“Paragraph 820-10-35-37”) to

measure the fair value of its financial instruments.

Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting

principles generally accepted in the United States of America (U.S.

The Company follows paragraph ASC 825-10-50-10 for

disclosures about fair value of its financial instruments and paragraph ASC 820-10-35-37 (“Paragraph 820-10-35-37”) to measure

the fair value of its financial instruments.

Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles

generally accepted in the United States of America (U.S.

GAAP), and expands disclosures about fair value measurements.

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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 March 31, 2025 and December 31, 2024:

The following table summarize financial assets and

liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024:

Schedule of fair value of assets

and liabilities measured on recurring basis

March 31, 2025 (unaudited)

June 30, 2025 (unaudited)

Marketable securities:

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The Company’s other comprehensive

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

loss for the six months ended June 30, 2025 and 2024 was comprised of foreign currency translation adjustments.

Revenue Recognition

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recognition of revenue only when the Company satisfies each performance obligation.

These five elements, as applied to each of the

Company’s revenue category, is summarized below:

These five elements, as applied to each of the 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.

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Research and development

Research and development costs are expensed as

Research and development costs are expensed as incurred.

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

Basic and Fully Diluted Net Income (Loss) Per Share

Net income (loss) per share is computed pursuant

to ASC 260-10-45.

Net income (loss) per share is computed pursuant to

ASC 260-10-45.

Basic net income (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted average

number of shares outstanding during the period.

Fully diluted EPS is computed by dividing net

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

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

Fully diluted EPS is computed by dividing net income

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

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

unless these shares are covered by anti-dilutive protections.

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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.

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

Three Months Ended March 31,

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

Six Months Ended June 30,

Stock options

Foreign Currency Translation and Transactions

The reporting and functional currency of Focus

The reporting and functional currency of Focus is

The functional currency of Focus Universal (Shenzhen) Technology Co.

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is the Renminbi (“RMB”).

For financial reporting purposes, the financial

statements of the Company’s Chinese subsidiary, which are prepared using the RMB, are translated into the Company’s reporting

currency, USD.

For financial reporting purposes, the financial statements

of the Company’s Chinese subsidiary, which are prepared using the RMB, are translated into the Company’s reporting currency,

Assets and liabilities are translated using the exchange rate on the balance sheet date.

Revenue and expenses are translated

using average exchange rates prevailing during each reporting period.

Stockholders’ equity is translated at historical exchange

Revenue and expenses are translated using

average exchange rates prevailing during each reporting period.

Stockholders’ equity is translated at historical exchange rates.

Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive loss in stockholders’

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Schedule of exchange rates foreign currency

Average Rate for the Three Months Ended

Average Rate for the Six Months Ended

China Yuan (RMB)

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Exchange Rate at

March 31, 2025

June 30, 2025

December 31, 2024

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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 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,

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 $ 2,757,026 for the six months ended June 30, 2025.

In addition, the Company had an accumulated deficit of $ 28,539,334

as of June 30, 2025, and negative cash flow from operating activities of $ 2,648,288 for the six months ended June 30, 2025.

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

indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year from the financial

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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

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 June 30, 2025, the Company had cash and cash equivalents,

and short-term investments, in the amount of $ 1,150,614 .

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, such financing may bring about 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

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

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Note 4 – Inventory

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

At June 30, 2025 and December 31, 2024, inventory

consisted of the following:

Schedule of inventory

March 31, 2025

June 30, 2025

December 31, 2024

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Note 5 – Property and Equipment

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

At June 30, 2025 and December 31, 2024, property and equipment consisted

of the following:

Schedule of property and equipment

March 31, 2025

June 30, 2025

December 31, 2024

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Property and equipment, net

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.

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.

Depreciation expense for the six months ended June

30, 2025 and 2024 amounted to $ 10,959 and $ 67,354 , respectively.

Note 6 – Leases

The Company recorded an operating lease expense

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

This is included in general and administrative

On January 16, 2023, Focus Universal (Shenzhen)

Technology Co.

Operating Leases

On January 16, 2023, Focus Universal (Shenzhen) Technology

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.

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

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

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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.

On February 22, 2023, Focus Universal (Shenzhen) Technology

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.

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

The monthly rent is RMB35,246 (approximately $4,906) with approximately

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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

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

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

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.

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

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

liabilities were as follows:

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 June 30, 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

March 31, 2025

June 30, 2025

December 31, 2024

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Schedule of lease term and discount rate

March 31, 2025

June 30, 2025

December 31, 2024

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Present value of future minimum lease payments

Short Term Leases

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.

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.

The Company recorded an operating lease expense of

$ 168,417 and $ 56,625 for the six months ended June 30, 2025 and 2024, respectively.

This is included in general and administrative expenses.

Note 7 – Stockholders’ Equity

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reverse stock split.

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.

Treasury stock

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.

During the six months ended June 30, 2025, the Company

repurchased 39,574 shares of its common stock for $ 173,837 in the public market at average price of $4.39 and placed them in treasury.

In the same period, the Company terminated 348,968 shares of its common stock previously repurchased $ 1,055,592 .

As of June 30, 2025 and

December 31, 2024, 39,574 and 348,968 shares remain as treasury shares, respectively.

These were all purchased as part of publicly announced

plans or program, as also noted in the December 31, 2024 10-K filing.

Employee compensation

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

During the period ended March 31, 2025,

During the period ended June 30, 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.

During the period ended June 30, 2025, an aggregate of 2,711

shares with a fair value of $ 11,191 vested and were recognized as compensation costs.

As of June 30, 2025, 3,439 shares of common stock

with a fair value of $ 22,864 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.

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.

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.

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.

the period ended June 30, 2025, 5,100 shares of common stock vested and the Company amortized $ 178,670 of this amount leaving an unamortized

balance of $ 536,010 at June 30, 2025.

As of June 30, 2025, 20,400 of the shares had been vested.

Stock options

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

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

During the six months ended

June 30, 2025, the Company recognized $ 20,568 of compensation cost relating to the vesting of these options and $ 20,556 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.

For the six months ended June 30, 2025 and 2024, the

Company’s stock option compensation expenses amounted to $ 20,568 and $ 73,990 , respectively.

The fair value of the stock options issued during

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Schedule of assumptions

March 31, 2025

June 30, 2025

Risk-free interest rate

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The following is a summary of the option activity

from December 31, 2024 to March 31, 2025:

from December 31, 2024 to June 30, 2025:

Schedule of option activity

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Cancelled or forfeited

Outstanding at March 31, 2025

Exercisable as of March 31, 2025

Outstanding at June 30, 2025

Exercisable as of June 30, 2025

Based on the closing fair market value of $4.09 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.

share on June 30, 2025, intrinsic value of $ 1,802 was attributed to exercisable but not exercised common stock options at June 30, 2025.

Note 8 – 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.

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

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

The income (loss) from discontinued operations

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

The income (loss) from discontinued operations presented

in the statement of operations for the three months ended June 30, 2025 and 2024 as follows:

Schedule of discontinued operations

Three Months Ended March 31,

Three Months Ended June 30,

Cost of Revenue

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Total operating cash flows from discontinued operations

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

were $ 0 and $ 146,276 , respectively, for the three months ended June 30, 2025 and 2024.

The income (loss) from discontinued operations presented

in the statement of operations for the six months ended June 30, 2025 and 2024 as follows:

Six Months Ended June 30,

Cost of Revenue

Operating Expenses:

General and administrative

Total Operating Expenses

Loss from Operations

Other Income (Expense):

Other income, net

Total other income, net

$ ( 251,039 )

Total operating cash flows from discontinued operations

were $ 0 and $ 187,709 , respectively, for the six months ended June 30, 2025 and 2024.

Note 9 – Segment Reporting

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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.

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:

of each operating segment of the Company for the six months ended June 30, 2025:

Schedule of segment reporting

For the Three Months ended March 31, 2025

For the Six Months ended June 30, 2025

Perfecular & Lusher

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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

of each operating segment of the Company for the six months ended June 30, 2024:

For the Six Months ended June 30, 2024

Perfecular & Lusher

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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

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

As of the date of this quarterly report, the Company

has resolved certain material legal proceedings described in Note 11.

Note 11 – Subsequent Events

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 or about April 13, 2020, the Chief Operating

Officer (the “Former COO”) of our subsidiary AVX resigned from his position.

On May 5, 2020, the Former COO filed an action

in the Superior Court for the County of Los Angeles, State of California, against the company, et al.

The complaint sought unspecified

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

On August 29, 2025, the Company and Former COO entered into a confidential

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

This settlement has been accounted for in

these financial statements and is scheduled to be executed and concluded in early August.

Similarly, on or about

April 14, 2020, we terminated our Sales and Marketing Director (the “Former Sales and Marketing Director”).

On May 13, 2020,

the Former Sales and Marketing Director filed an action in the Superior Court for the County of Los Angeles, State of California.

The complaint

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

On August 29, 2025, the Company and Former Sales

and Marketing Director entered into a confidential settlement agreement which concluded this matter and releases all claims against the

This settlement has been accounted for in these financial statements and this is scheduled to be executed and concluded in early

August as well.

The conclusion on these two related matters would mark the conclusion of all legal matters with respect to Focus

Universal Inc.

On August 26, 2024, a former software engineer

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State of California alleging wrongful termination and other violations of the California Labor Code.

The complaint sought unspecified

The complaint seeks 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.

This case was settled for $ 130,000 plus legal fees, and its impact

recorded in the accompanying financial statements.

The Company has EPLI insurance with a deductible amount of $100,000.

During the quarter,

Focus Universal settled and this matter was finally executed and concluded on April 25, 2025.

Note 11 – Subsequent Events

On July 15, 2025 and July 18, 2025 Alumni Capital

purchased 25,000 and 142,867 of our common shares for $86,995 and $354,282, respectively, 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 July 15, 2025, accessible via the Bloomberg terminal.

In July, the Company repurchased 17,464

shares of its common stock for $70,092 with our broker Paulson Securities in the public market at an average price of $4.01 and placed

them in treasury.

All these shares were purchased as part of publicly announced plans or program, as also noted in the December 31, 2024

The Company has evaluated all other subsequent

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements