Focus Universal(FCUV) - 2024 Q3 - Quarterly Report

Technology and Product Development - Focus Universal Inc. holds 28 patents and patents pending in various phases of the patent process, focusing on proprietary technologies in the IoT industry[94] - The company plans to phase out traditional lower-margin products and launch a new line of products that have been in development for several years, targeting controlled agriculture and home automation industries[97] - The U.S.-based sales team has begun marketing Smart AVX-branded product lines, including large format multimedia touch screens and surveillance camera systems[99] - Production for home automation products, such as smart wall touch light switches and smart controllers, is underway, with sourcing and cost analysis completed[100] - The Shenzhen subsidiary has completed designs for several sensors, including a TDS meter and carbon dioxide sensor, which are expected to be cost-effective compared to existing market options[101] - The Ubiquitor device integrates multiple digital sensors into one platform, representing a technological advancement in the IoT marketplace[109] - The USIP technology enables the Ubiquitor to cut production costs and reduce the effort required to develop new sensor products[110] - Smart AVX-branded products are integrated across various sectors, including LED audio-visual panel products and VOIP phone services, enhancing customer experience and operational efficiency[114] Financial Performance - Revenue for the three months ended September 30, 2024, was $74,215, compared to $71,854 for the same period in 2023, representing an increase of $2,361[149] - Cost of revenue decreased to $42,530 in Q3 2024 from $44,386 in Q3 2023, resulting in a gross profit increase to $31,685 from $27,468[149] - Selling expenses rose to $30,936 in Q3 2024 from $25,193 in Q3 2023, an increase of $5,743 attributed to higher advertising fees[150] - Compensation for officers and directors increased significantly to $575,255 in Q3 2024 from $267,002 in Q3 2023[151] - Other income surged to $3,215,560 in Q3 2024 compared to $62,050 in Q3 2023, primarily due to a gain on the sale of property[155] - Research and development expenses were relatively stable, at $308,516 in Q3 2024 compared to $305,872 in Q3 2023[151] - General and administrative expenses increased to $585,491 in Q3 2024 from $387,764 in Q3 2023, mainly due to a rise in office employees[153] - For the nine months ended September 30, 2024, the company's revenue was $264,954, an increase of $26,151 (approximately 10.9%) compared to $238,803 for the same period in 2023[156] - Gross profit for the nine months ended September 30, 2024 was $137,268, up $72,555 (approximately 112.1%) from $64,713 in 2023, attributed to higher sales of LED products[156] - Total operating expenses increased to $4,329,474 for the nine months ended September 30, 2024, up $819,082 (approximately 23.3%) from $3,510,392 in 2023[157] - The company incurred a net loss of $1,238,776 for the nine months ended September 30, 2024, a significant improvement compared to a net loss of $3,100,442 in 2023[163] Market Insights - The IoT sensors market is projected to grow from $11.1 billion in 2022 to $26 billion by 2026, indicating significant market potential[147] - The overall enterprise IoT spending increased to $201 billion in 2022, reflecting a growth of 21.5%[147] Cash Flow and Assets - Current assets as of September 30, 2024 were $5,971,500, a substantial increase from $1,028,278 as of December 31, 2023[163] - Cash inflow from investing activities for the nine months ended September 30, 2024 was $3,950,852, a significant increase from $54,472 in 2023[169] - Cash used in operating activities was $477,195 for the nine months ended September 30, 2024, a decrease of $2,126,350 (approximately 81.7%) compared to $2,603,545 in 2023[165] - The company reported other income of $3,231,253 for the nine months ended September 30, 2024, compared to $240,360 in 2023, primarily due to a gain on the sale of property[162] - The accumulated deficit increased to $23,820,946 as of September 30, 2024, compared to $22,582,170 as of December 31, 2023[172] - The company had cash and cash equivalents of $5,368,273 as of September 30, 2024, indicating a need for future capital to meet obligations[173] Future Plans - The company has developed a Microsoft®-based add-on software to streamline SEC reporting processes, with plans to commercialize it in Q4 2024 or Q1 2025[102] - A complementary office automation software product is 80% complete, aimed at assisting in faster and more accurate financial report preparation[103] - The company plans a roadshow in Q3 2024 to update the community on new software developments[130]