Focus Universal(FCUV) - 2023 Q2 - Quarterly Report

Revenue and Profitability - For the six months ended June 30, 2023, the company generated significant revenue from agricultural sensors and measurement equipment, which is its primary business [125]. - Total revenue for the three months ended June 30, 2023, was $215,391, a significant increase of $150,749 compared to $64,642 for the same period in 2022 [172]. - Gross profit for the three months ended June 30, 2023, rose to $66,132, compared to $6,866 for the same period in 2022, reflecting a substantial increase of $59,266 [172]. - Total revenue for the six months ended June 30, 2023 was $451,486, an increase of $229,677 compared to $221,809 for the same period in 2022 [183]. - Gross profit for the six months ended June 30, 2023 was $121,483, up from $20,638 in 2022, reflecting a significant increase of $100,845 [184]. Expenses and Losses - Total operating expenses for the six months ended June 30, 2023 were $2,433,943, a decrease of $715,904 from $3,149,847 in 2022 [185]. - Research and development costs for the six months ended June 30, 2023 were $619,473, down from $729,105 in 2022, a decrease of $109,632 [186]. - Selling expenses for the six months ended June 30, 2023 were $74,934, an increase of $19,047 from $55,887 in 2022 [185]. - Net losses for the six months ended June 30, 2023 were $2,132,409, compared to $2,930,227 for the same period in 2022 [190]. - The Company reported a net loss of $2,132,409 for the six months ended June 30, 2023, compared to a net loss of $2,930,227 for the same period in 2022, indicating a reduction in losses of approximately 27% [200]. Cash Flow and Assets - Current assets as of June 30, 2023 were $1,796,226, down from $4,807,830 as of December 31, 2022 [191]. - Net cash used in operating activities for the six months ended June 30, 2023 was $1,606,739, compared to $1,749,492 in 2022 [192]. - Cash inflow from investing activities for the six months ended June 30, 2023 was $40,889, contrasting with an outflow of $267,537 in 2022 [197]. - Cash outflows from financing activities for the six months ended June 30, 2023 were $1,420,686 due to the purchase of treasury stock [198]. - Negative cash flow from operating activities was $1,606,739 for the six months ended June 30, 2023, compared to $1,749,492 for the same period in 2022, showing a decrease in negative cash flow of approximately 8.1% [200]. Business Development and Strategy - The company plans to phase out traditional lower-margin products and launch a new line of technology products, with increasing technology layers [127]. - The Ubiquitor device, which integrates multiple digital sensors and measurement tools, is under development and aims to reduce costs and increase functionality in smart home and agricultural applications [141][145]. - The company expects to complete its entire smart home and hydroponic IoT product lines by the end of 2023 [135]. - The company expects to establish five divisions to integrate its technology, including a PLC technology division and an IoT division [160]. - The acquisition of AT Tech Systems is expected to bolster the company's IoT Installation Services segment [171]. Innovation and Technology - The Ubiquitor device is designed to connect up to thousands of sensor nodes and display data in real-time, with a testing capacity of up to 256 sensor readouts [148][149]. - The company has developed a Microsoft-based software to automate SEC reporting processes, which is expected to be commercialized in Q3 or Q4 of 2023 [132]. - The company has completed 80% of the development of a complementary office automation software product aimed at streamlining financial report preparation [136]. - The first version of the Universal Smart Instrumentation Platform (USIP) for IoT is expected to be demonstrated in Q1 2024 [131]. - The company aims to launch a proprietary PLC microchip in 2023, following promising internal testing that increased bandwidth to 4 megabits per second [154]. Market and Contracts - The IoT sensors market is projected to reach $26 billion by 2026, up from $11.1 billion in 2022, indicating a strong growth trajectory [170]. - The overall enterprise IoT spending increased to $201 billion in 2022, reflecting a growth of 21.5% [170]. - The company signed 17 new contracts with an average value of $32,225, totaling $547,825 in signed contracts to date, with $281,717 already collected [171]. - The company has 28 total patents and patent applications in various phases with the USPTO, with three more provisional patents filed this quarter [165]. - The company has received a patent for its honeycomb activated carbon filter product, which is ready for nationwide marketing [128]. Financial Health and Concerns - The accumulated deficit as of June 30, 2023, was $19,996,437, up from $17,864,028 as of December 31, 2022, reflecting an increase of about 11.9% [200]. - The Company has substantial doubt about its ability to continue as a going concern, dependent on its ability to raise additional capital [200]. - As of June 30, 2023, the Company did not have any off-balance-sheet arrangements [201]. - The Company is classified as a smaller reporting company and is not required to provide certain market risk disclosures [202].