Focus Universal(FCUV) - 2020 Q1 - Quarterly Report

Financial Performance - Consolidated gross revenue for the three months ended March 31, 2020, was $310,609, an increase of $156,726 from $153,883 in the same period of 2019, primarily due to the acquisition of AVX Design & Integration, Inc.[168] - The consolidated cost of revenues for the three months ended March 31, 2020, was $338,072, resulting in a gross loss of $27,463, compared to a gross profit of $22,152 in the same period of 2019[168] - For the three months ended March 31, 2020, the company incurred a net loss of $922,306, compared to a net loss of $535,179 for the same period in 2019, representing an increase in losses of approximately 72%[175] - Total operating expenses for the three months ended March 31, 2020, were $942,818, a significant increase of 69% from $558,056 in the same period of 2019[176] - Research and development expenses rose to $70,396 for the three months ended March 31, 2020, up from $62,004 in 2019, indicating an increase of approximately 13%[176] Expenses - Professional fees increased from $350,399 in Q1 2019 to $433,539 in Q1 2020, an increase of $83,140, mainly due to legal, accounting, and consulting expenses related to the acquisition and SEC filings[171] - General and administrative expenses for Q1 2020 were $389,813, up from $110,653 in Q1 2019, driven by increased salaries, insurance, and depreciation expenses[172] - Net cash used in operating activities was $649,587 for the three months ended March 31, 2020, compared to $369,117 for the same period in 2019, representing an increase of approximately 76%[177] - Cash outflow from financing activities was $50,000 for the three months ended March 31, 2020, compared to $2,021 in the same period of 2019[182] Working Capital and Cash Flow - The company's working capital decreased to $1,394,232 as of March 31, 2020, down from $2,007,113 as of December 31, 2019, reflecting a decline of about 31%[176] - The company had no cash inflow or outflow from investing activities for the three months ended March 31, 2020, while it had a cash outflow of $529,638 in the same period of 2019 due to the acquisition of AVX[181] - The company expects fluctuations in cash flows from operating activities in future periods due to various factors, including net revenues and collection of accounts receivable[179] Product Development and Innovation - The Ubiquitor device can connect up to 2,500 sensor instruments and is designed to collect data in real-time at a rate of up to 100Hz per second[152] - The company has filed three patents related to the Ubiquitor device and quantum PAR photo sensor technology, enhancing its intellectual property portfolio[138][159][160] - The acquisition of AVX in March 2019 allowed the company to enter the residential and commercial automation installation service industry, generating $170,230 in revenue for the period[137][168] - The company aims to reduce IoT installation costs and enhance integration capabilities through the Ubiquitor device in both residential and commercial spaces[137] - The Ubiquitor device is expected to cut production costs by leveraging smartphone technology, improving functionality and performance[154] - The company is optimistic about the patent for its powerline communication technology, which is expected to provide strong protections worldwide[162] - The company has devoted substantial resources to research and development for the Ubiquitor and its mobile application, aiming for full production and distribution[183] Concerns and Future Outlook - As of March 31, 2020, the company had an accumulated deficit of $8,101,307, raising concerns about its ability to continue as a going concern[183]