Focus Universal(FCUV) - 2019 Q4 - Annual Report

Financial Performance - Consolidated gross revenue for the year ended December 31, 2019, was $1,460,370, an increase of $1,152,241 from $308,129 in 2018, primarily due to the acquisition of AVX Design & Integration, Inc. which generated $817,233 in revenue [332]. - Consolidated cost of revenues for 2019 was $1,342,139, resulting in a gross profit of $118,231, compared to a gross profit of $170,232 in 2018 [332]. - Total operating expenses for the year ended December 31, 2019, were $3,448,671, an increase of $1,694,718 from $1,753,953 in 2018 [334]. - Professional fees increased from $940,846 in 2018 to $1,376,995 in 2019, an increase of $436,149, mainly due to legal, accounting, and consulting expenses related to the acquisition and SEC filings [336]. - Net losses for the years ended December 31, 2019, and 2018 were $3,175,543 and $2,024,664, respectively [338]. - For the year ended December 31, 2019, the company reported a net loss of $3,175,543, compared to a net loss of $2,024,664 for the year ended December 31, 2018 [342]. Cash Flow and Financial Position - Net cash used in operating activities for the year ended December 31, 2019 was $1,697,771, an increase from $1,411,703 in 2018 [341]. - The company had negative cash flow from operating activities of $1,697,771 for the year ended December 31, 2019, and an accumulated deficit of $7,179,001 as of the same date [347]. - Cash outflows from investing activities were $565,110 for the year ended December 31, 2019, significantly lower than $4,599,792 in 2018 [344]. - The company did not have any cash inflows or outflows from financing activities for the year ended December 31, 2019, compared to net cash inflows of $10,072,848 in 2018 [346]. - The company’s working capital decreased to $2,007,113 as of December 31, 2019, down from $4,479,928 in 2018 [340]. - The company’s current assets were $2,440,112 and current liabilities were $432,999 as of December 31, 2019 [340]. Research and Development - The company is focusing on developing universal smart instrumentation technology, which aims to replace traditional wired measurement instruments at lower costs [302]. - Research and development efforts include three filed patents related to the Ubiquitor device and a quantum PAR photo sensor [304]. - The company is focusing on research and development for the Ubiquitor and its mobile application, which may impact future cash flows [347]. Product Development and Market Strategy - The Ubiquitor device is designed to connect up to 2,500 sensor instruments and can display data and analytics on a digital screen using a Wi-Fi connection [318]. - The company plans to integrate the Ubiquitor device into the IoT installation business, aiming to reduce costs and enhance integration capabilities in residential and commercial spaces [303]. - The company aims to play a role in academic laboratories, particularly with smaller labs sensitive to price, as wireless universal smart technology becomes critical for traditional instrument manufacturers [331]. Future Outlook - Future cash flows from operating activities may fluctuate due to various factors, including changes in net revenues and collection of accounts receivable [343]. - As of December 31, 2019, the company had no off-balance-sheet arrangements [348].