What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-05-14 · 475 added, 318 removed, 561 unchanged (59% of the section changed)

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Index to the Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2026 and 2025 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three and Six Months Ended June 30, 2026 and 2025 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (unaudited)

Notes to the Unaudited Condensed Consolidated Financial Statements

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Capitalized software costs

LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’

Current Liabilities:

Accounts payable and accrued liabilities

Other current liabilities

Loan, current portion

Lease liability, current portion

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Non-Current Liabilities:

Lease liability, less current portion

Loan, less current portion

Other liability

Lease liability, less current

Total Liabilities

Redeemable Preferred Stock:

Series B convertible redeemable preferred stock, par value $ 0.001 per share, 15,000 shares authorized;

6,447 and 7,263 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Series B convertible

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

0 and 7,263 shares issued and outstanding as of

June 30, 2026 and December 31, 2025, respectively

Contingencies

Stockholders’ Equity:

Common stock, par value $ 0.001 per share, 1,000,000,000 shares authorized;

1,025,135 and 915,097 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Treasury stock ( 33,975 and 17,085 shares held at March 31, 2026 and December 31, 2025, respectively)

Common stock,

par value $ 0.001 per share, 1,000,000,000 shares authorized;

702,745 and 228,774 shares issued and outstanding as of June 30, 2026

and December 31, 2025, respectively

Treasury stock

( 54,494 and 4,271 shares held at June 30, 2026 and December 31, 2025, respectively)

Additional paid-in capital

Shares to be issued, common shares ( 4,254 and 5,794 shares at March 31, 2026 and December 31, 2025, respectively)

Accumulated deficit

be issued, common shares ( 1,534 and 1,449 shares at June 30, 2026 and December 31, 2025, respectively)

( 34,015,113 )

( 31,023,411 )

Accumulated other comprehensive loss

other comprehensive loss

Total Stockholders’ Equity

Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity

Total Liabilities, Redeemable Preferred Stock and

Stockholders’ Equity

The accompanying notes are an integral part

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AND COMPREHENSIVE (LOSS)

For the Three Months Ended March 31,

Cost of revenue

Operating Expenses

Three Months Ended June 30,

Six Months Ended June 30,

Rental revenue

Other revenue

Total Revenue

Cost and Operating Expenses

Property operating expenses

Cost of other revenue

Depreciation and amortization

Selling expense

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General and administrative

Total Operating Expenses

Total Cost and Operating Expenses

Loss from Operations

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( 1,542,760 )

( 2,821,286 )

( 2,814,287 )

Other Income (Expense):

Interest income (expense), net

Unrealized loss on marketable equity securities

Other income (expense), net

Unrealized gain on marketable equity securities

Realized gain on marketable equity securities

Other income, net

Total other income

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$ ( 1,505,648 )

$ ( 2,765,036 )

$ ( 2,757,026 )

Accretion of redeemable preferred stock

Net loss available to common stockholders

Net loss to common stockholders’

$ ( 1,518,958 )

$ ( 1,505,648 )

$ ( 2,991,702 )

$ ( 2,757,026 )

Other comprehensive items

Foreign currency translation income (loss)

Foreign currency translation loss

Total comprehensive loss

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$ ( 1,509,713 )

Net loss per common share:

Basic and Fully diluted

$ ( 2,980,543 )

$ ( 2,767,459 )

Basic net income loss per share:

Basic net loss per share

Weighted Average Number of Common Shares Outstanding:

Basic and Diluted

Basic and Fully Diluted

The accompanying notes are an integral part

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FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED

STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND

Redeemable Preferred Stock

Treasury stock

Additional Paid-In

Shares to be issued

Accumulated Other Comprehensive

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE

PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2026 AND 2025

Preferred Stock

Other Comprehensive

Total Stockholders’

Balance – December 31, 2025

$ ( 494,390 )

$ ( 31,023,411 )

Balance – March 31, 2026

Stock based compensation - options

based compensation – shares issued for award agreement

based compensation – shares issued for employment contract

Purchase of treasury stock

Stock split rounding up

Conversion of Series B preferred stock to common stock

and cancellation of series B preferred stock

Gain on cancellation of preferred stock

Shares issued for pre-funded units

Other comprehensive income

Balance – June 30, 2026

Preferred Stock

Other Comprehensive

Total Stockholders’

Balance – March 31, 2025

Stock based compensation - options

Stock based compensation – shares

Purchase of treasury stock

Retirement of treasury stock

Stock issued for cash

Other comprehensive income

Balance – June 30, 2025

Preferred Stock

Other Comprehensive

Total Stockholders’

Balance – December 31, 2025

Stock based compensation - options

based compensation – shares issued for award agreement

based compensation – shares issued for employment contract

Purchase of treasury stock

Stock split rounding up

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Preferred stock accretion

Repurchase and cancellation of series B preferred stock

Gain on cancellation of preferred stock

Shares issued for pre-funded units

Other comprehensive income

( 1,246,078 )

Balance – March 31, 2026

$ ( 649,007 )

$ ( 32,496,155 )

Redeemable Preferred Stock

Balance – June 30, 2026

Preferred Stock

Treasury stock

Additional Paid-In

Shares to be issued

Accumulated Other Comprehensive

Other Comprehensive

Total 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

Stock issued for cash

Other comprehensive loss

( 1,251,378 )

Balance – March 31, 2025

$ ( 1,200,167 )

$ ( 27,033,686 )

Balance – June 30, 2025

The accompanying notes are an integral part

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

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

Inventory reserve

Depreciation expense

Unrealized loss on marketable equity securities

Amortization expense

Unrealized gain on marketable equity securities

Realized gain on marketable equity securities

Stock-based compensation – shares

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Purchase of property and equipment

Deposit on building

( 6,656,031 )

Capitalized software costs

Proceeds from sale of marketable

Net cash flows used in investing activities

( 6,632,052 )

Cash flows from financing activities:

Redemption of preferred stock

Repayment on bank loan

Shares issued for pre-funded units

Stock issued for private placement

Purchases of treasury stock

Net cash flows used in financing activities

Net cash flows provided by financing activities

Effect of exchange rate

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Supplemental disclosure of non-cash investing and financing activities:

Accretion of redeemable series B preferred stock discount

Conversion of series B preferred stock to common stock

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

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

Accretion of redeemable series

B preferred stock discount

Conversion of series B preferred

stock to common stock

Gain on cancellation of preferred

Right-of-use assets obtained

in exchange for operating lease liabilities

Issuance to bank loan on building

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, 2026 AND

FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025

Note 1 – Organization and Operations

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The Company is a universal smart instrument

developer and manufacturer, headquartered in West Covina, California, specializing in the development and commercialization of novel and

developer and manufacturer, headquartered in Monterey Park, California, specializing in the development and commercialization of novel and

proprietary universal smart technologies and instruments.

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Lusher Holding LLC was established to provide commercial real estate property management services.

On April 1, 2026, the Company formed a wholly owned subsidiary named, Lusher LLC.

On April 16, 2026, the Company formed a wholly owned

subsidiary named, Lusher Service LLC.

On April 1, 2026, and April 16, 2026, the Company

founded two wholly owned subsidiaries, Lusher LLC and Lusher Service LLC respectively, both registered under the laws of the State of

Both of these subsidiaries were established to support the Company’s future planned financial services operations.

On May 18, 2026, the Company entered into a Cross-Border E-Commerce Acquiring Service Cooperation Agreement.

Focus Universal Inc.

ownership interest in Lusher LLC, while Avantgarde Service Inc.

held the remaining 49 %

ownership interest.

There were no transactions involving Lusher LLC through June 30, 2026.

Note 2 – Summary of Significant Accounting Policies

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The unaudited condensed consolidated

financial statements of the Company for the three months ended March 31, 2026 and 2025 have been prepared in accordance with

financial statements of the Company for the three and six months ended June 30, 2026 and 2025 have been prepared in accordance with

accounting principles generally accepted in the U.S.

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sheet information as of December 31, 2025 was derived from the audited financial statements included in the Company’s

financial statements as of and for the years ended December 31, 2025 and 2024 contained in the Company’s Annual Report on Form

financial statements as of and for the years ended December 31, 2025 contained in the Company’s Annual Report on Form

10-K filed with the Securities and Exchange Commission, or the SEC, on March 31, 2026.

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

Holding LLC, and, until August of 2024, AT Tech Systems (collectively, the “Company,” “we,” “our,”

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.

Holding LLC, Lusher Service LLC, as well as its 51% ownership interest in Lusher LLC and, until August of 2024, 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.

Use of Estimates

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

As of March 31, 2026 and December 31, 2025, allowance

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

As of June 30, 2026 and December 31, 2025, 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 to concentrations of credit risk consist primarily of cash.

The Company limits its exposure to credit

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Major customers

For the three months ended of March 31, 2026 and

2025, 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,

(*) Revenue for the period

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

As of March 31, 2026 and December 31, 2025, the

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

March 31, 2026

December 31, 2025

Two major tenants accounted for approximately

37 % and 12 % of the Company’s total rental revenue during the three and six months ended June 30, 2026, respectively.

No individual

tenant accounted for more than 10% of the Company’s total rental revenue during either the three or six months ended June 30, 2025.

Two major customers accounted for approximately

80 % and 12 % of the Company’s total other revenue during the three months ended June 30, 2026, compared to approximately 55 % and

29 %, respectively, during the three months ended June 30, 2025.

Three major customers accounted for approximately 43 %, 26 %, and 13 % of

the Company’s total other revenue during the six months ended June 30, 2026, compared to approximately 36 %, 24 %, and 12 %, respectively,

during the six months ended June 30, 2025.

Major vendors

No major vendors accounted for more than 10% of

our total purchases during the three months ended March 31, 2026, and two major vendors accounted more than 98 % of total purchase during

the three months ended March 31, 2025.

No major vendors accounted for more than 10%

of our total purchases during the three and six months ended June 30, 2026, and one major vendor accounted for more than 66 %

of total purchases during the three and six months ended June 30, 2025.

Share-based Compensation

The Company accounts for stock-based

compensation to employees in conformity with the provisions of Accounting Standards Codification (“ASC”) Topic 718,

Stock-Based Compensation.

Stock-based compensation to employees consist of stock options, grants, and restricted shares that are

recognized in the statement of operations based on their fair values at the date of grant.

The Company accounts for stock-based compensation

to employees in conformity with the provisions of Accounting Standards Codification (“ASC”) Topic 718, Stock-Based Compensation.

Stock-based compensation to employees consist of stock options, grants, and restricted shares that are recognized in the statement of

operations based on their fair values at the date of grant.

The measurement of stock-based compensation is

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The following table summarizes financial assets

and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025:

Schedule of fair value of assets

and liabilities measured on recurring basis

March 31, 2026 (unaudited)

Marketable securities:

Total assets measured at fair value

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

Fair values on a recurring basis

December 31, 2025

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Other comprehensive income (loss) refers to revenues,

expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from

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

The Company’s other comprehensive

loss for the three months ended March 31, 2026 and 2025 was comprised of foreign currency translation adjustments.

expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded

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

The Company’s other

comprehensive loss for the six months ended June 30, 2026 and 2025 was comprised of foreign currency translation adjustments.

Revenue Recognition

Rental Income

Rental income from operating leases is recognized

on a straight-line basis over the non-cancelable lease term when collectability is probable and the tenant has been provided access to

and control of the leased premises.

Rental income includes fixed contractual lease payments and, when applicable, variable lease payments

that are recognized in the period in which the underlying conditions giving rise to such payments are satisfied.

The Company evaluates each lease to determine

whether it is an operating or finance lease in accordance with ASC 842, Leases.

The Company's leases of office and commercial space are

classified as operating leases.

Lease payments received in advance are recorded as deferred revenue and recognized as rental income over

the applicable lease term.

The Company recognizes reimbursements from tenants

for operating expenses, including common area maintenance, property taxes and other recoverable costs, as rental income when the Company

is the principal in providing the related services.

Variable lease payments, including amounts based on tenant sales or other specified

conditions, are recognized when the applicable conditions are met.

Other Revenue

Revenue from the Company is recognized under ASC

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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.

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

Perfecular and Lusher, (2) Corporate and IoT Products and (3) Lusher Holding LLC.

Cost of Revenue, excluding depreciation

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Stock into common stock, the related carrying amount is reclassified to stockholders’ equity.

We evaluate the appropriate balance sheet classification

of warrants we issue as either equity or as a derivative liability.

In accordance with ASC 815, we classify a warrant as equity if it

is “indexed to the Company’s equity” and meets several specific conditions for equity classification.

A warrant is not

considered “indexed to the Company’s equity,” in general, when it contains certain types of exercise contingencies or

potential adjustments to its exercise price.

If a warrant is not indexed to the Company’s equity or it has net cash settlement provisions

that result in the warrants being accounted for under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) or ASC 815,

it is classified as a derivative liability which is carried on the consolidated balance sheets at fair value with any changes in its fair

value recognized in the statements of operations and comprehensive loss.

At June 30, 2026 and 2025 all of the Company’s outstanding

warrants were classified as equity

Research and development

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stock options.

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

Because the Company incurred a net loss, potentially dilutive securities, including warrants, were excluded from the calculation

of diluted loss per share because their inclusion would have been antidilutive.

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

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Schedule of anti-dilutive shares

Three Months Ended March 31,

Six Months Ended June 30,

Stock options

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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, 2026

June 30, 2026

December 31, 2025

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United States Dollar ($)

As of March 31, 2026 and December 31, 2025, the

As of June 30, 2026 and December 31, 2025, the

Company had cash balances of $ 25,801 and $ 26,552 denominated in China Yuan (RMB), respectively.

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 $ 1,246,078 for the three months ended March 31, 2026.

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 $ 2,765,036 for the six months ended June 30, 2026.

In addition, the Company had an accumulated deficit of $ 34,015,113

as of March 31, 2026, and negative cash flow from operating activities of $ 1,148,500 for the three months ended March 31, 2026.

as of June 30, 2026, and negative cash flow from operating activities of $ 1,889,277 for the six months ended June 30, 2026.

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

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as a going concern.

At March 31, 2026, the Company had cash and cash

equivalents, and short-term investments, in the amount of $ 6,021,591 .

At June 30, 2026, the Company had cash, and short-term investments, in the amount of $ 1,600,258 .

The ability to continue as a going concern is dependent on the Company

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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

Reclassification

During the period we made certain reclassifications to the format of

our statement of operations to more properly reflect the commencement of our rental operations.

Note 3 – Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards

Board (“FASB”) issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation

Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses.

The guidance in ASU 2024-03 requires public business entities

to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including

purchases of inventory;

Board (“FASB”) issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

(Subtopic 220-40) Disaggregation of Income Statement Expenses.

The guidance in ASU 2024-03 requires public business entities to disclose

in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases

of inventory;

employee compensation;

and depreciation and amortization expense for each caption on the income statement where

such expenses are included.

The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting

periods beginning after December 15, 2027.

Early adoption is permitted, and the amendments may be applied prospectively to reporting

periods after the effective date or retrospectively to all periods presented in the financial statements.

We are currently evaluating

the provisions of this guidance and assessing the potential impact on our financial statement disclosures.

and depreciation and amortization expense for each caption on the income statement where such expenses

are included.

The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning

after December 15, 2027.

Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective

date or retrospectively to all periods presented in the financial statements.

The Company is currently evaluating the provisions of this guidance

and assessing the potential impact on our financial statement disclosures.

Management does not believe that any other recently

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Note 4 – Inventory

At March 31, 2026 and December 31, 2025, inventory

At June 30, 2026 and December 31, 2025, inventory

consisted of the following:

Schedule of inventory

March 31, 2026

June 30, 2026

December 31, 2025

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Note 5 – Property and Equipment

At March 31, 2026 and December 31, 2025, property and equipment consisted

On January 21, 2026, the Company entered into

a purchase, sale, and escrow agreement with 901 Corporate Center, LP to acquire a 100,743 sq.

office and commercial building, along

with a four-level parking structure, located in Monterey Park, California.

The purchase price was $ 17,700,000 , of which $ 8,862,095 and $ 5,148,306 has been preliminarily allocated

to Building, Land, respectively.

As of April 17, 2026, the

Company and Lusher Holding LLC completed the purchase of the building.

The building will serve as Focus Universal’s principal

headquarters and is expected to carry the same rent roll in 2026 as it did in 2025.

At June 30, 2026 and December 31, 2025, property and equipment consisted

of the following:

Schedule of property and equipment

March 31, 2026

June 30, 2026

December 31, 2025

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Property and equipment, net

Depreciation expense for the three months ended

March 31, 2026 and 2025 amounted to $ 6,722 and $ 5,453 , respectively.

As of March 31, 2026, the Company had placed a $ 525,000 deposit on

a purchase of a building which is recorded in other assets on the accompanying balance sheet.

The building was subsequently purchased for

$17,700,000 (See Note 11).

Depreciation expense for the six months ended

June 30, 2026 and 2025 amounted to $ 198,588 and $ 10,959 , respectively.

Note 6 – Rental Operations

Rental income from operating leases, is recognized

on a straight-line basis over the lease term once we have determined that the collectability of substantially all of the lease payments

Accounts receivable, included $ 59,243 of rent receivables at June 30, 2026.

The following operating lease maturity analysis

presents the future contractual lease payments to be received by the Company as of June 30, 2026:

Schedule of future rents receivable

Year ending December 31, 2026

Year ending December 31, 2027

Year ending December 31, 2028

Year ending December 31, 2029

Year ending December 31, 2030

Note 7 – Series B Redeemable Preferred

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On or after January 19, 2026, and for a period of two years thereafter, each holder of Series B

Preferred Stock shall have the right, but not the obligation, to require the Company to redeem all or a portion of the outstanding

Series B shares held by them during specified periods within the redemption window.

The initial redemption period will last ninety

days, beginning on January 19, 2026.

Subsequent redemption periods will each last thirty days and commence on the following dates:

Preferred Stock had the right, but not the obligation, to require the Company to redeem all or a portion of the outstanding Series B

shares held by them during specified periods within the redemption window.

The initial redemption period was to last ninety days,

beginning on January 19, 2026.

Subsequent redemption periods were to each last thirty days and commence on the following dates:

(i) July 1, 2026;

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and (vi) December 1,

The holders of the Series B Preferred Stock may,

at any time and from time to time, require the Company to convert their Series B Preferred Stock shares into common stock.

conversion price shall be equal to 85% of the lowest daily volume-weighted average price (VWAP) of the Company’s common stock

during the ten trading days immediately preceding the applicable conversion date or other determination date, subject to the

adjustments set forth herein.

In no event, however, shall the conversion price be less than the floor price of $7.84.

classifies the Series B Preferred Stock outside of permanent equity (as temporary equity within the mezzanine section between

liabilities and equity on the consolidated balance sheets) since the redemption of such shares is not solely within the

Company’s control.

During the year ended December 31, 2025, 973

The holders of the Series B Preferred Stock had

the right, at any time and from time to time, to require the Company to convert their Series B Preferred Stock shares into common stock.

The conversion price was to be equal to 85% of the lowest daily volume-weighted average price (VWAP) of the Company’s common stock

during the ten trading days immediately preceding the applicable conversion date or other determination date, subject to the adjustments

set forth herein.

In no event, however, could the conversion price be less than the floor price of $7.84.

The Company initially classified

the Series B Preferred Stock outside of permanent equity (as temporary equity within the mezzanine section between liabilities and equity

on the consolidated balance sheets) since the redemption of such shares was not solely within the Company’s control.

year ended December 31, 2025, 973

shares of Series B Preferred Stock were converted into 93,926

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which has been reflected as an addition to the net loss allocated to common stockholders.

At December 31, 2025, 7,263 shares of the

Series B Preferred Stock remained outstanding and the Series B Preferred Stock has been recorded at its redemption value of $ 5,946,284 .

During the three months ended March 31, 2025, 816

At December 31, 2025, 7,263 shares of the Series

B Preferred Stock remained outstanding and the Series B Preferred Stock had been recorded at its redemption value of $ 5,946,284 .

During the six months ended June 30, 2026, 6,032

shares of Series B Preferred Stock were converted into 192,357

shares of common stock, and there was an accretion of the discount of $ 226,666

which has been reflected as an addition to the net loss allocated to common stockholders.

At March 31, 2026, 6,447 shares of the

Series B Preferred Stock remain outstanding and the Series B Preferred Stock has been recorded at its redemption value of $ 5,479,350 .

See note 11 for subsequent conversions and redemption demand.

As of March 31, 2026 and December 31, 2025

Series B Preferred Stock shares reflected on the balance sheet is reconciled on the following table:

shares of common stock.

The Company recorded an accretion of the discount of $ 226,666 ,

which was reflected as an addition to the net loss attributable to common stockholders.

The remaining outstanding shares of Series B

Convertible Preferred Stock were held by Great Point Capital LLC, and the Company entered into a redemption agreement dated April 13,

2026, with Great Point Capital LLC to redeem the 1,231 remaining shares with a stated value $ 1,045,750 at a price of $782

per share for an aggregate amount of $ 961,860 ,

resulting in a gain of $ 83,890 which has been reflected as additional paid in capital.

As of June 30, 2026, there are no

shares of Series B Convertible Preferred Stock outstanding.

As of June 30, 2026 and December 31, 2025 Series

B Preferred Stock shares reflected on the balance sheet are reconciled on the following table:

Schedule of balance sheet reconciled

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( 5,954,250 )

( 1,045,750 )

Accretion of carrying value to redemption value

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Note 8 – Leases

Operating Leases

Operating Lease

In January 2026, Focus Universal (Shenzhen) Technology

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Lease expense is recognized on a straight-line basis over the

The Company recorded a right of use assets and a lease obligation of

$ 175,271 upon inception of these leases.

The Company recorded a right of use assets and a lease obligation of $ 175,271 upon inception of these leases.

Operating lease right-of-use assets represent

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to make lease payments arising from the lease.

As of March 31, 2026 and December 31, 2025, operating lease right-of use assets and lease

As of June 30, 2026 and December 31, 2025, 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, 2026

June 30, 2026

December 31, 2025

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Schedule of lease term and discount rate

March 31, 2026

June 30, 2026

December 31, 2025

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Present value of future minimum lease payments

Short-term leases

On January 22, 2026, the Company entered into

a Standard Industrial/Commercial Single-Tenant Lease (the “Lease”) with the Cameron Court, L.P.

to lease the Company premises

located at 1515 W Cameron Ave., Ste.

210, West Covina, CA 91790 on a month-to-month basis.

The commercial property consists of a total

office space of 3,546 square feet.

Related Party Short-term Lease

On February 26, 2026, the Company entered into

a one-year storage lease agreement with the CEO’s wife, commencing on March 1, 2026, at a monthly fee of $5,000.

The Company recorded an operating lease expense

of $ 65,128 and $ 80,210 for the three months ended March 31, 2026 and 2025, respectively.

This is included in general and administrative

of $ 102,259 and $ 168,417

for the six months ended June 30, 2026 and 2025, respectively.

This is included in general and administrative expenses.

Note 9 – Bank Loan

Lusher Holding LLC, a subsidiary of the Company

entered into a term loan agreement with East West Bank (the “East West Loan”) to borrow $ 11,050,000 , at 6.25% interest for

the first 3-years, then floating at the Wall Street Journal Prime Rate plus (+) 0.25% for the remaining term, with a floor interest rate

The loan provides for 36 consecutive monthly principal and interest payments of approximately $68,698.64, beginning on May 1,

2026 and subsequently, 83 monthly principal and interest payments of an initially estimated amount of approximately $73,917.99 (subject

to change based on Wall Street Journal Prime Rate plus 0.25%) beginning May 1, 2029.

A final principal and interest payment of approximately

$9,533,143.67 (subject to change based on Wall Street Journal Prime Rate plus 0.25%) is due on April 1, 2036.

Focus Universal Inc.

listed as the primary guarantor of this East West Loan with Desheng Wang listed as a backup guarantor.

This loan is secured by 901 Corporate Center building.

Schedule of loan

June 30, 2026

December 31, 2025

East West Bank Loan

current portion

Long term portion

Interest expense incurred from the loan amounted

to $ 86,103 for the six months ended June 30,2026.

Future maturities of payments on the bank loan

are as follows as of June 30, 2026:

Future maturities of bank loan payments

Year ending December 31, 2026

Year ending December 31, 2027

Year ending December 31, 2028

Year ending December 31, 2029

Year ending December 31, 2030

Amounts representing interest

( 7,005,375 )

Note 10 – Stockholders’ Equity

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stock split of its outstanding common stock on a 1-for-10 basis .

No adjustment was made to the Company’s authorized shares of capital

All share and per share amounts have been retroactively restated to reflect the split as if it occurred at the beginning of the

earliest period presented.

On June 23,2026, the Company effected another reverse stock split of

its outstanding common stock on a 1-for-4 basis .

No adjustment was made to the Company’s authorized shares of capital stock.

share and per share amounts have been retroactively restated to reflect the split as if it occurred at the beginning of the earliest period

Treasury stock

During the three months ended March 31, 2026,

the Company repurchased 16,890 shares of its common stock for $ 154,617 in the public market at average price of $9.15 and placed them

As of March 31, 2026 and December 31, 2025, 33,975 and 17,085 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, 2026, the

Company repurchased 50,223

shares of its common stock for $ 354,143

in the public market at average price of $12.81 and placed them in treasury.

As of June 30, 2026 and December 31, 2025, 54,494

shares remain as treasury shares, respectively.

These were all purchased as part of publicly announced plans or program and currently,

as also noted in the previous 10-K filing.

Employee compensation

In prior years, the Company entered into several

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

In prior years, the Company entered into several employment agreements

that require the issuance of common shares to employees, which vest on a quarterly basis.

During the period ended

March 31, 2026, 5,772 shares with a fair value of $ 63,441 that previously vested were issued.

During the period ended March 31, 2026,

an aggregate of 4,232 shares with a fair value of $ 15,275 vested during the period and were recognized as compensation costs.

31, 2026, 4,254 shares of common stock with a fair value of $ 19,443 remain vested but not issued.

June 30, 2026, 2,311 shares with a fair value of $ 91,215 that previously vested were issued.

During the period ended June 30, 2026, an

aggregate of 1,534 shares with a fair value of $ 12,019 vested during the period and were recognized as compensation costs.

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

the Company entered into a restricted stock award agreements (the “Award Agreement”) with eight employees for 2,800 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

the Company entered into a restricted stock award agreements (the “Award Agreement”) with eight employees for 700 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.

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December 31, 2025, the Company amortized $ 357,340 of this amount leaving an unamortized balance of $ 357,340 at December 31, 2025.

the period ended March 31, 2026, 510 shares of common stock vested and the Company amortized $ 89,335 of this amount leaving an unamortized

balance of $ 268,005 at March 31, 2026.

As of March 31, 2026, 2,800 of the shares had been vested.

the period ended June 30, 2026, 131 shares of common stock vested and the Company amortized $ 178,670 of this amount leaving an unamortized

balance of $ 178,670 at June 30, 2026.

As of June 30, 2026, 700 of the shares had been vested.

April 6, 2026, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) to issue and sell to

Armistice Capital Master Fund Ltd.

(“Armistice”) approximately $4,000,000 worth of Pre-Funded Units resulting in net proceeds to the Company of $3,547,348.

Pursuant to the

terms of the Purchase Agreement, Armistice purchased an aggregate of 279,330 Pre-Funded Units at a purchase price of $14.3199 per

Each Pre-Funded Unit consists of (i) one (1) Pre-Funded Warrant (the “Pre-Funded Warrant”), (ii) one (1) Series A

PIPE Common Warrant (“Series A Common Warrant”) to purchase one (1) share of common stock, and (iii) one (1) Series B

PIPE Common Warrant (“Series B Common Warrant”) to purchase one (1) share of common stock.

Each Pre-Funded Warrant is

exercisable for one (1) share of common stock at a nominal exercise price of $0.00001 per share, with the aggregate exercise price

having been pre-funded to the Company and is exercisable immediately upon issuance until all of the Pre-Funded Warrants are

exercised in full.

Alternatively, the Pre-Funded Warrants may be exercised on a cashless basis.

Armistice also received (i) a Series

A Common Warrant to purchase up to 279,330 shares of Common Stock with an exercise price of $13.32, which expires 24 months after

its initial issuance date;

and (ii) a Series B Common Warrant to purchase up to 279,330 shares of Common Stock at an exercise price

of $13.32, which expires sixty (60) months after its initial issuance date.

The Series A Common Warrants and Series B Common

Warrants are exercisable immediately upon issuance until their respective expiration dates.

The number of shares of Common Stock

issuable under the warrants are subject to adjustments for stock splits, dividends, and fundamental transactions as further

described in the agreement.

The Series A Common Warrants and Series B Common Warrants may be exercised on a cashless basis if there

is no effective registration statement registering the issuance or resale of the warrant shares at the time of exercise.

During the six months ended June 30, 2026, Armistice has exercised 279,330

shares of its Pre-Funded Warrant and as a result, the Company has issued 279,330

shares of Common Stock.

Stock options

On January 2, 2026, each member of the Board

was granted 225

options to purchase shares at $ 8.5

per share with a fair value of $ 1,721 .

On March 27, 2026, one new member of the Board was granted 225

options to purchase shares at $ 3.83

per share with a fair value of $ 775 .

The options vest monthly over one (1) year, and may be exercised during a 10 -year

In the aggregate, 1,350

options were granted with a fair value of $ 9,380 .

During the three months ended March 31, 2026, the Company recognized $ 2,159

of compensation cost relating to the vesting of these options and $ 7,221

remained unvested which will be amortized over the remainder of 2026.

For the three months ended March 31, 2026 and

On January 2, 2026, each member of the Board was

granted 56 options to purchase shares at $ 34 per share with a fair value of $ 1,721 .

On March 27, 2026, one new member of the Board was

granted 56 options to purchase shares at $ 15.32 per share with a fair value of $ 775 .

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

be exercised during a 10 -year term.

In the aggregate, 338 options were granted with a fair value of $ 9,380 .

During the six months ended

June 30, 2026, the Company recognized $ 4,504 of compensation cost relating to the vesting of these options and $ 4,876 remained unvested

which will be amortized over the remainder of 2026.

For the six months ended June 30, 2026 and 2025,

the Company’s stock option compensation expenses amounted to $ 4,504 and $ 20,568 , respectively.

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Schedule of assumptions

March 31, 2026

June 30, 2026

Risk-free interest rate

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The following is a summary of the option activity

from December 31, 2025 to March 31, 2026:

from December 31, 2025 to June 30, 2026:

Schedule of option activity

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Cancelled or forfeited

Outstanding at March 31, 2026

Exercisable as of March 31, 2026

Outstanding at June 30, 2026

Exercisable as of June 30, 2026

Note 11 – Segment Reporting

The Company currently has two

The Company currently has two operating and reportable

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

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

in deciding how to allocate resources and to assess performance.

Management reviews financial information presented on a consolidated

basis for purposes of allocating resources and evaluating financial performance.

Accordingly, the Company has determined that it has three

operating and reportable segments.

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 segments.

The Company consists of two types of

(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

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 sectors.

The Company consists of three 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 sectors.

(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.

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.

(3) Lusher Holding LLC provide commercial real estate

property management services.

Asset information by operating segment is not

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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, 2026:

Schedule of segment reporting

For the Three Months ended March 31, 2026

of each operating segment of the Company for the three months ended June 30, 2026:

of segment reporting

For the Three Months ended June 30, 2026

Perfecular & Lusher

Corporate & IoT

Cost of revenue

Operating expenses

Lusher Holding LLC

Cost and operating expenses

Property operating expenses

Cost of other revenue

Depreciation and amortization

Selling expense

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General and administrative

Total operating expense

Loss from operations

Total cost and operating expense

Income (loss) from operations

( 1,527,132 )

( 1,549,575 )

Total other income (expense)

$ ( 219,272 )

$ ( 1,410,434 )

$ ( 1,518,958 )

The following tables summarize the financial information

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

For the Three Months ended June 30, 2025

Perfecular & Lusher

Lusher Holding LLC

Cost and operating expenses

Property operating expenses

Cost of other revenue

Depreciation and amortization

Selling expense

Compensation – officers and directors

Research and development

Professional fees

General and administrative

Total cost and operating expense

Income (loss) from operations

( 1,388,078 )

( 1,542,760 )

Total other income

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$ ( 1,350,946 )

$ ( 1,505,648 )

The following tables summarize the financial information

of each operating segment of the Company for the three months ended March 31, 2025:

For the Three Months ended March 31, 2025

of each operating segment of the Company for the six months ended June 30, 2026:

For the Six Months ended June 30, 2026

Perfecular & Lusher

Corporate & IoT

Cost of revenue

Operating expenses

Lusher Holding LLC

Cost and operating expenses

Property operating expenses

Cost of other revenue

Depreciation and amortization

Selling expense

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General and administrative

Total operating expense

Loss from operations

Total cost and operating expense

Income (loss) from operations

( 2,726,918 )

( 2,821,286 )

Total other income (expense)

$ ( 291,197 )

$ ( 2,584,587 )

$ ( 2,765,036 )

The following tables summarize the financial information

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

For the Six Months ended June 30, 2025

Perfecular & Lusher

Lusher Holding LLC

Cost and operating expenses

Property operating expenses

Cost of other revenue

Depreciation and amortization

Selling expense

Compensation – officers and directors

Research and development

Professional fees

General and administrative

Total cost and operating expense

Income (loss) from operations

( 2,543,332 )

( 2,814,287 )

Total other income

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Note 13 – Subsequent Events

On April 1, 2026, and April 16, 2026, the Company

founded two wholly owned subsidiaries, Lusher LLC and Lusher Service LLC respectively, both registered under the laws of the State

of California.

Both of these subsidiaries were established to support the Company’s future planned financial services operations.

Subsequent to March 31, 2026, on April 6, 2026,

the holders of a majority of the outstanding shares of Series B Convertible Preferred Stock converted 5,216 shares of Series B Convertible

Preferred Stock into 665,328 shares of Common Stock.

The remaining outstanding shares of Series B Convertible Preferred Stock were held

by Great Point Capital LLC, and the Company entered into a redemption agreement dated April 13, 2026, with Great Point Capital LLC to

redeem such remaining shares at a price of $782 per share for an aggregate amount of $961,860.

As of the date of this filing, there are

no shares of Series B Convertible Preferred Stock outstanding.

On April 6, 2026, the Company entered into a

Securities Purchase Agreement (the “Purchase Agreement”) to issue and sell to Armistice Capital Master Fund Ltd.

(“Armistice”)

approximately $4,000,000 worth of Pre-Funded Units.

Pursuant to the terms of the Purchase Agreement, Armistice purchased an aggregate

of 1,117,318 Pre-Funded Units at a purchase price of $3.57999 per unit.

Each Pre-Funded Unit consists of (i) one (1) Pre-Funded Warrant

(the “Pre-Funded Warrant”), (ii) one (1) Series A PIPE Common Warrant (“Series A Common Warrant”) to purchase

one (1) share of common stock , and (iii) one (1) Series B PIPE Common Warrant (“Series

B Common Warrant”) to purchase one (1) share of common stock.

Each Pre-Funded Warrant is exercisable for one (1) share of common

stock at a nominal exercise price of $0.00001 per share, with the aggregate exercise price having been pre-funded to the Company and

is exercisable immediately upon issuance until all of the Pre-Funded Warrants are exercised in full.

Alternatively, the Pre-Funded Warrants

may be exercised on a cashless basis.

Armistice also received (i) a Series A Common Warrant to purchase up to 1,117,318 shares of Common

Stock with an exercise price of $3.33, which expires 24 months after its initial issuance date;

and (ii) a Series B Common Warrant to

purchase up to 1,117,318 shares of Common Stock at an exercise price of $3.33, which expires sixty (60) months after its initial issuance

The Series A Common Warrants and Series B Common Warrants are exercisable immediately upon issuance until their respective expiration

The number of shares of Common Stock issuable under the warrants are subject to adjustments for stock splits, dividends, and fundamental

transactions as further described in the agreement.

The Series A Common Warrants and Series B Common Warrants may be exercised on a cashless

basis if there is no effective registration statement registering the issuance or resale of the warrant shares at the time of exercise.

Subsequently, Armistice has exercised 379,318 shares of its Pre-Funded Warrant and as a result, the Company has issued 379,318 shares

of Common Stock.

On January 21, 2026, the Company entered into

a purchase, sale, and escrow agreement with 901 Corporate Center, LP to acquire a 100,743 sq.

office and commercial building, along

with a four-level parking structure, located in Monterey Park, California.

The purchase price was $17,700,000, with an escrow deposit

The escrow was initially scheduled to close within sixty days of opening escrow.

The $525,000 deposit was placed into the

escrow account on January 26, 2026.

Lusher Holding LLC, a subsidiary of the Company entered into a term loan agreement with East West

Bank (the “East West Loan”) to borrow $11,050,000, at 6.25% interest for the first 3-years, then floating at the Wall Street

Journal Prime Rate plus (+) 0.25% for the remaining term, with a floor interest rate at 6.25%.

The loan provides for 36 consecutive monthly

principal and interest payments of approximately $68,698.64, beginning on May 1, 2026 and subsequently, 83 monthly principal and interest

payments of an initially estimated amount of approximately $73,917.99 (subject to change based on Wall Street Journal Prime Rate plus

0.25%) beginning May 1, 2029.

A final principal and interest payment of approximately $9,533,143.67 (subject to change based on Wall Street

Journal Prime Rate plus 0.25%) is due on April 1, 2036.

Focus Universal Inc.

is listed as the primary guarantor of this East West Loan

with Desheng Wang listed as a backup guarantor.

Lusher Holding LLC on Friday, April 17, 2026, deposited $11 million, from the East West

Loan to escrow and $5.8 million as downpayment to close escrow.

As of April 17, 2026, the Company and Lusher Holding LLC have completed

the purchase of the building.

The building will serve as Focus Universal’s principal headquarters and is expected to carry the same

rent roll in 2026.

In April and May 2026, the Company repurchased

57,835 shares of its Common Stock for $99,243 in the public market at average price of $1.76 and placed them in treasury.

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