Focus Universal(FCUV) - 2022 Q1 - Quarterly Report

Technology Development - The company has developed four proprietary technologies aimed at solving key issues in the IoT industry, including ultra-narrowband technology and power line communication (PLC) technology[136] - The ultra-narrowband PLC technology allows data transmission over existing power lines, potentially offering a cost-effective solution for IoT connectivity[158] - PLC technology is expected to provide a reliable communication infrastructure for IoT devices, overcoming challenges faced by traditional wireless networks[160] - The company has developed ultra-narrow band PLC technology that achieves noise rejection and interference suppression five orders of magnitude better than traditional PLC technology, with a bandwidth of 4 megabits per second[163] - The company has filed multiple patent applications to protect its innovations, including a patent for its PLC technology, which is expected to be issued soon[173] Product Development - The company plans to introduce the Ubiquitor device in smart home installations and agricultural warehouses to optimize conditions for growth by regulating light, humidity, and moisture[147] - The Ubiquitor device is designed to connect potentially thousands of sensor nodes and can display data in real-time, achieving up to 100 Hz per second[153] - The Ubiquitor's sensor analytics system integrates monitoring, storage, and analytics software, providing a comprehensive view of sensor data[150] - The company has created prototype models of the Ubiquitor and plans to expand assembly in late 2022, moving towards full-scale production[146] - The company aims to reduce production costs and development efforts for new sensor products by utilizing smartphone technology in the Ubiquitor[154] - The company plans to enhance the Ubiquitor to serve as a central component in smart home and gardening systems, aiming for near real-time control of hundreds of devices[165] Financial Performance - Total revenue for the three months ended March 31, 2022, was $157,167, a decrease of $206,296 compared to $363,463 for the same period in 2021[183] - Research and development costs increased significantly to $561,744 for the three months ended March 31, 2022, compared to $63,150 for the same period in 2021, reflecting a focus on innovation[187] - The company incurred net losses of $1,868,930 for the three months ended March 31, 2022, compared to $682,516 for the same period in 2021[190] - Current assets as of March 31, 2022, were $8,274,005, down from $9,214,340 as of December 31, 2021[192] - For the three months ended March 31, 2022, the company reported net cash outflows from operating activities of $902,283, primarily due to a net loss of $1,868,930[194] - The company had a net loss of $1,868,930 for the three months ended March 31, 2022, with a projected annual cash burn rate of $3,152,618[199] - As of January 1, 2022, the company had a beginning cash amount of $8,678,665, sufficient to cover its projected cash burn rate without additional capital raise[199] Operational Changes - The company anticipates that the sales and marketing efforts for the Ubiquitor will require hiring new employees to gain market traction[147] - Selling expenses increased to $38,339 for the three months ended March 31, 2022, from $512 in the same period in 2021, primarily due to increased advertising fees[186] - The company experienced an increase in accounts receivable of $96,258 and an increase in inventories of $5,067 during the same period[194] - Non-cash expenses for the three months ended March 31, 2022 included $656,370 in stock-based compensation and $40,165 in depreciation expense[194] - Cash outflow from investing activities for the three months ended March 31, 2022 was $31,470 for the purchase of property and equipment[198] - 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[196] Strategic Planning - The company aims to unify universal smart instruments and IoT into a single system, charging monthly subscription fees for connectivity[168] - The company plans to establish five divisions to integrate its technology, including AVX, IT, Universal Smart Instrumentation, PLC, and IoT divisions[169] - There were no off-balance-sheet arrangements as of March 31, 2022[200] - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[201]