Focus Universal(FCUV) - 2025 Q3 - Quarterly Report

Intellectual Property and Technology - Focus Universal Inc. holds 28 patents and patents pending in various phases of the patent process, aimed at solving fundamental problems in the IoT industry[91] - The Ubiquitor device integrates multiple digital sensors and measurement tools into a single platform, representing a technological advancement in the IoT marketplace[95] - The ultra-narrowband PLC technology developed by the company utilizes existing power lines for data transmission, potentially offering a cost-effective solution for IoT connectivity[112] - Focus Universal aims to provide a competitive edge and cost savings through its universal hardware and software shared across all sensors, enabling true interoperability[118] - The company is integrating its Smart AVX-branded IoT equipment to facilitate unified collaboration across various technologies, enhancing customer service and installation[98] Financial Performance - Revenue for the three months ended September 30, 2025 was $28,689, a decrease of $45,526 from $74,215 in the same period of 2024, representing a decline of approximately 61.4%[126] - Gross profit for the three months ended September 30, 2025 was $(1,612), down from $31,685 in 2024, indicating a decrease of $33,297[126] - Total operating expenses for the nine months ended September 30, 2025 were $4,011,183, a decrease of $318,291 from $4,329,474 in 2024[135] - Net loss for the nine months ended September 30, 2025 was $3,923,401, compared to a net loss of $1,238,776 in 2024, reflecting an increase in losses of approximately 216.5%[142] - Current assets as of September 30, 2025 were $771,077, down from $3,846,363 on December 31, 2024, indicating a decrease of approximately 80%[143] - Cash flows from operating activities for the nine months ended September 30, 2025 were $(3,709,104), compared to $(3,658,901) in 2024, showing an increase in cash outflows of approximately 1.4%[144] - Research and development costs for the nine months ended September 30, 2025 were $1,127,633, an increase of $179,592 from $948,041 in 2024[137] - Selling expenses for the nine months ended September 30, 2025 were $58,774, a decrease of $37,253 from $96,027 in 2024[136] - Other income for the nine months ended September 30, 2025 was $71,262, a significant decrease from $3,231,253 in 2024[140] - Loss from discontinued operations, net of tax, was $0 for the nine months ended September 30, 2025, down from $277,823 in 2024, reflecting the impact of discontinued operations of AT Tech Systems LLC[141] - For the nine months ended September 30, 2025, the company reported a net loss of $3,923,401 and an accumulated deficit of $29,705,709[151] Cash Flow and Financing - The company had negative cash flow from operating activities amounting to $3,709,104 for the nine months ended September 30, 2025[151] - As of September 30, 2025, the company had cash and cash equivalents, and short-term investments totaling $454,432[152] - Cash inflows for the nine months ended September 30, 2025, were $572,826 from stock issued for private placement of $822,501, offset by treasury stock purchases of $249,675[149] - The company entered into a Securities Purchase Agreement allowing Alumni Capital LP to purchase up to $20,000,000 in common stock, with $822,501 received for 262,692 shares as of September 30, 2025[150] - The company has relied on equity and debt financings since inception and expects to continue this strategy for future capital needs[152] Going Concern and Future Outlook - There are substantial doubts regarding the company's ability to continue as a going concern due to recurring losses and negative cash flows[151] - The company did not have any off-balance-sheet arrangements as of September 30, 2025[154] - The company has not completed efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period[151] - Future financing may impose restrictions on operations or cause dilution for stockholders, with no assurance of satisfactory terms[152] Product Development and Market Strategy - The company has developed a fully automated SEC financial reporting software that can complete tasks that previously took weeks in just minutes, significantly reducing manual work[111] - The company expects to showcase its SEC financial reporting software to the public in 2025, aiming to streamline the reporting process for financial professionals[92] - Focus Universal signed a contract with Shenzhen Donghui Precision Mold Manufacturing Co. for mold tooling design of the Universal Smart IoT, marking a significant milestone in commercialization[97] - The company plans to launch Smart IoT apps in the Apple and Google Play Stores for limited client release prior to a broader rollout[97] - The company has identified competitors in the SEC financial reporting software space but believes its product will be superior due to lower pricing and ease of integration[121]