FOCUS UNIVERSAL INC. The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated herein by
reference contain forward-looking statements. Such forward-looking statements
are based on current expectations, estimates, and projections about our
industry, management beliefs, and certain assumptions made by our management.
Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates," variations of such words, and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties, and
assumptions that are difficult to predict; therefore, actual results may differ
materially from those expressed or forecasted in any such forward-looking
statements. Unless required by law, we undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events, or otherwise. However, readers should carefully review the risk
factors set forth herein and in other reports and documents that we file from
time to time with the
Narrative Description of the Business
For the three and six months ended
Our Current Products Include:
We are a wholesaler of various digital, analog, and quantum light meters and
filtration products, including fan speed adjusters, carbon filters and HEPA
filtration systems. We source these products from various manufacturers in
Specifically, we sell the following products through Hydrofarm:
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Fan speed adjuster device. We provide a fan speed adjuster device to our client Hydrofarm. Designed specifically for centrifugal fans with brushless motors, our adjuster device helps ensure longer life by preventing damage to fan motors by adjusting the speed of centrifugal fans without causing the motor to hum. These devices are rated for 350 watts max, have 120VAC voltage capacity and feature an internal, electronic auto-resetting circuit breaker.
Carbon filter devices. We sell two types of carbon filter devices to our client Hydrofarm. These carbon filter devices are professional grade filters specifically designed and used to filter air in greenhouses that might be polluted by fermenting organics. One of these filters can be attached to a centrifugal fan to scrub the air in a constant circle or can be attached to an exhaust line as a single pass filter, which moves air out of the growing area and filters unwanted odors and removes pollens, dust, and other debris in the air. The other filter is designed to be used with fans from 0-6000 C.F.M.
HEPA filtration device. We provide a high-efficiency particulate arrestance ("HEPA") filtration device at wholesale prices to our client Hydrofarm. Manufactured, tested, certified, and labeled in accordance with current HEPA filter standards, this device is targeted towards greenhouses and grow rooms and designed to keep insects, bacteria, and mold out of grow rooms. We sell these devices in various sizes.
Digital light meter. We provide a handheld digital light meter that is used to measure luminance in fc units, or foot-candles.
Quantum par meter. We provide a handheld quantum par meter used to measure photosynthetically active radiation ("PAR"). This fully portable handheld PAR meter is designed to measure PAR flux in wavelengths ranging from 400 to 700 nm. It is designed to measure up to 10,000 µmol.
Ubiquitor Wireless Universal Sensor Device
We are developing a device we call the Ubiquitor, which replaces the functions of traditional digital measurement and sensing products by integrating many digital sensors and measurement tools into one single digital device. We believe the platform represents a technological advancement in the IoT marketplace by integrating large numbers of technologies, including cloud technology, wired and wireless communication technology, software programming, instrumentation technology, artificial intelligence, PLC, and sensor networking into a single platform. The result of such integration is a smaller, cheaper and faster circuit system design than those currently offered in the instrumentation market.
Our
The
We have created and assembled prototype models of the Ubiquitor in limited quantities and plan to expand our assembly in 2023. Our prototype Ubiquitor is compatible with standard desktop computers running either Windows OS or MacOS and Android- or iOS-based mobile devices and acts as a conduit that communicates with a group of sensors or probes manufactured by different vendors in a manner that requires the user to have little or no knowledge of their unique specifications. The data readout is displayed on the computer or mobile device display in application software we have created for use with a Windows PC and are creating for use with a Mac. We are designing the application software (the "App") to have a graphical representation of control and indicator elements common in traditional tangible instruments, such as knobs, buttons, dials, and graphs, etc. Utilizing the Ubiquitor and the App, users and instrument manufacturers will be free to add, remove or change a sensor module for their special industrial or educational application without needing to create their own application software and design their own hardware. Our developers are designing and implementing a soft control touch screen interface that supports real-time data monitoring and facilitates instrument control and operation.
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Recently, the Company has devoted a substantial number of resources to research
and development in both the US and
Our universal smart development protocol focuses not only on the design of the hardware and software modules but also on the design of the overall universal smart instruments system, guided by the principles of structure, universality and modularity. As mentioned, we believe we address the core and fundamental issues facing the IoT marketplace.
Our Ubiquitor device is a fully modular system with a universal sensor node and gateway system that uses a computer or mobile device as the output display module responsible for displaying the readings of various sensor nodes. We have completed an initial production run of prototype Ubiquitor devices and intend to proceed into full-scale production. The Ubiquitor's sensor analytics system integrates event-monitoring, storage and analytics software in a cohesive package that provides a holistic view of the sensor data it is reading.
The physical hardware of the Ubiquitor will consist of:
1. The sensor nodes, which come in hundreds of different varieties of sensor
instruments in the form of a USB stick, with both male and female ports;
and
2. The Ubiquitor instrument as the main hardware gateway, which is a small
cell phone-sized device with integrated circuits.
We believe the Ubiquitor device can connect up to thousands of potential sensor nodes, and integrate data using embedded software to display the data and all analytics onto a digital screen (desktop, smartphone or mobile device displays) using a Wi-Fi connection. As disclosed in our patent application, we have already tested up to 256 sensor instrument readouts. Most types of nodes and probes can connect to the hardware. If the sensor size is bigger than the standard probe size, it is possible to simply use a USB cable to connect the probe and the hub. All data and analytics are displayed on a single screen, with tools that record and keep track of all measurements, and sort and display analytic information in easy-to-read charts.
The Ubiquitor will be a general platform that collects data in real time, up to 100 Hz per second; and thus, is intended to be adapted to many industrial uses.
By using the universal hardware or
1. Cut production costs. Smartphone technology is widely used on the small
sensor device market. By utilizing smartphone technology, the Ubiquitor
will add superior functionality and performance, improve the product's
quality, and cut production costs.
2. Reduce the effort required to develop a new sensor product. With the
Ubiquitor, we believe that there will be no need for device manufacturers
to research and develop new monitoring and operating components because
they will just need to develop new sensor nodes or probes that may be
integrated into our software technology.
3. Reduce clutter. It is anticipated that the Ubiquitor could dispense with
some of the hassle of connecting cables, since the Ubiquitor allows
wireless transmission of sensor data and may allow wireless access to
networks, such as a PLC network.
We have not yet started research and development of a second generation Ubiquitor device, but once we demonstrate the market for this product, we intend to begin such research and development. Currently our research and development is focused on concepts we can implement in the current first generation Ubiquitor device.
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Research and Development Efforts of Power Line Communication
Power Line Communication ("PLC") is a communication technology that enables
sending data over existing power cables. One advantage of this technology is
that PLC does not require substantial new investment for its communications
infrastructure.
Our patented PLC is an innovative communication technology that enables sending data over existing power cables in the electric grid. Because PLC uses the existing power lines, it does not require substantial new investment for a dedicated wiring infrastructure. Existing power lines already form a distribution network that penetrates most residential, commercial, and industrial properties. Given that the power grid is, for the most part, an established ubiquitous network, we believe that PLC is potentially the most cost-effective, scalable interconnectivity approach for the backbone communication infrastructure required for the IoT. PLC allows IoT devices to be plugged into power outlets to establish a connection using the existing electrical wiring, permitting data sharing without the inconvenience of running dedicated network cables.
Historically, the primary design goal of the power line network was electric power distribution. The power line network was not originally designed to function as a communication channel. Consequently, while PLC has been around for many years, the harsh electrical noise present on power lines and variations in equipment and standards make communications over the power grid difficult and present several challenges for data transfer. Signals propagating along the power line are subjected to substantial amounts of noise, attenuation, and distortion. PLC is susceptible to noise from devices linked to the power supply infrastructure. Because of these factors, previous attempts at implementing PLC technology resulted in power companies and internet service providers deciding that the technology is not a viable means of delivering data or broadband internet access.
We have successfully developed ultra-narrowband PLC technology that we believe can transfer readable data through the power grid. According to our internal testing, our ultra-narrowband PLC technology can send and receive data without the customary interference that occurs in standard office and residential environments, achieving speeds of 4 Mbps at a bandwidth of less than 1000 Hz. To test noise interference and disturbance we utilized six industrial fans simultaneously, and no significant interference was found. By comparison, a single hair dryer will render legacy PLC technology completely useless. We have completed the development of our 4Mbps PLC modules and the printed circuit board layout. These modules will be used for IoT systems involving over 1,000 sensors.
Penetrating physical barriers like walls within a single floor or reaching out to different floors in a single building is a challenge for the wireless technology that current IoT systems are using. Moreover, wireless networks often face performance issues due to radio-frequency interference caused by microwave ovens, cordless telephones, or even Bluetooth devices at home. However, our PLC technology can reach every node connected via the power lines. Our technology converts virtually every standard wall socket into an access point, making it a more consistent and reliable system for crucial and sensitive operations. Our ultra-narrowband PLC technology's ability to reach long distances via power lines becomes especially useful in commercial networks that require the ability to avoid physical barriers like walls, underground structures, and hills. We believe that our PLC technology can be an integral part of any smart city, community, or campus.
The 5G cellular network, for example, promises exciting advances for telecommunication service providers, but the implementation of the 5G network will be challenging. The implementation will require building out dense, low-latency edge networks in ways that are affordable, secure and easily maintainable. 5G antennas will be able to handle more users and to transmit more data, but they will have a shorter transmission range. 5G networks will also require frequencies of up to 300 GHz. This requirement means wireless carriers will need to bid for the costly higher spectrum bands to roll out their respective 5G networks. Generally speaking, wireless networks are typically slower and more expensive than existing wired networks and extremely susceptible to interference from radio signals, radiation, walls and other forms of interference. Additionally, wireless networks may be accessed by any device within range of the network's signal, making the information transmitted on a wireless network susceptible to access by unauthorized recipients. We are currently developing a wired alternative to wireless networks that utilizes installed power lines to transmit information. Our PLC technology uses an ultra-narrow band spectrum channel of less than 1 KHz to establish a long-distance link between transmitter and receiver. Thus, we believe that our proprietary ultra-narrow band PLC technology will offer a promising alternative to wireless networks and provide the backbone communication infrastructure for IoT devices.
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We believe that because residential and commercial structures already include multiple power outlets, the power line infrastructure represents an excellent network to share data among intelligent devices, particularly in the smart home installations that we are currently performing through AVX. Using PLC technology would mean that the requirement for costly ethernet cable networks to carry network information could be eliminated, as the same signals may be carried on the existing power lines.
We plan to leverage the communications technology of PLC to enhance the Ubiquitor and make the Ubiquitor a central component of the smart home and gardening systems we are currently developing. The goal would be that our Ubiquitor would be used to send or receive control signals from a smart device, and control hundreds of devices in near real time. We intend to apply the same concept to commercial and industrial applications.
Also, we plan to design a full line of products for the gardening industry by integrating the Ubiquitor device into a gardening system. The system would include a light control node, temperature sensor, humidity sensor, digital light sensor, quantum PAR sensor, pH sensor, total dissolved solids ("TDS") sensor and carbon dioxide sensor design. We believe the combination of these sensors would offer the same features as a combination of dozens or even hundreds of different instruments in the gardening industry. The Ubiquitor would be used to replace these devices and could offer another case study of the effectiveness of the application of universal smart technology to such systems.
The development of universal smart instruments and the IoT have a considerable amount of overlap, with the only difference being the number of sensor nodes involved. We plan to take advantage of this overlap and unify universal smart instruments and the IoT into a single system, building the IoT infrastructure for both residential and commercial uses and charging monthly subscription fees. End users will be able to plug any peripheral devices into the power outlet and enjoy the IoT connectivity throughout their home.
Eventually, we hope to establish five divisions to bring our technology together: 1) AVX with new shared distributed smart home products powered by the Ubiquitor; 2) an IT division in software machine design; 3) Universal Smart Instrumentation; 4) PLC; and 5) an IoT division.
Intellectual Property Protection
On
Subsequent to our internal research and development efforts, we filed with the
USPTO on
In addition, we have been notified that the USPTO published a notice of
allowance for a patent application we filed on
On
In the fourth quarter of 2021, we hired the law firm of
8 Competitors
There are several competitors we have identified, specifically in the wireless
sensor node industry, including traditional instruments or devices manufacturers
such as
Hach developed and launched the SC1000 Multi-parameter Universal Controller, a probe module for connecting up to 32 digital sensors or analyzers. However, their products are not compatible with smart phones yet; and we believe their price point is still prohibitive to consumers.
We are not trying to compete with traditional instruments or device manufacturers because we utilize our Ubiquitor device in conjunction with our smartphone application, which we believe will be a completely different product category.
Market Potential
We believe that wireless universal smart technology will play a critical role for traditional instrument manufacturers, as it is too expensive and difficult to develop for medium or smaller companies. The cost factor is the first consideration when deciding whether a company wants to develop smart wireless technologies and implement them in their products or use them in their field testing. We also hope to play a role in academic laboratories, particularly with smaller academic laboratories who are sensitive to price.
Results of Operations
For the three months ended
Revenue
Our consolidated gross revenue for the three months ended
Cost and Operating Expenses
The major components of our cost and operating expenses for the three months
ended
For the three For the three Increase
months ended months ended (Decrease)
June 30, 2022 June 30, 2021 $
Cost of revenue, excluding depreciation &
amortization 57,472 $ 208,583 $ (151,111 )
Selling expense 17,548 446 17,102
Compensation - officers and directors 34,000 34,000 -
Research and development 167,361 47,222 120,139
Professional fees 174,341 186,765 (12,424 )
General and administrative 819,268 448,199 371,069
Total costs and operating expenses
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Cost of revenue, excluding depreciation and amortization for the three months
ended
Selling expense for the three months ended
Compensation - officers and directors were
Research and development costs were
Professional fees were
General and administrative expenses of
Other Income
Other income of
Net Losses
During the three months ended
For the six months ended
Revenue
Our consolidated gross revenue for the six months ended
Cost and Operating Expenses
The major components of our cost and operating expenses for the six months ended
For the six For the six Increase
months ended months ended (Decrease)
June 30, 2022 June 30, 2021 $
Cost of revenue, excluding depreciation &
amortization 200,563 $ 500,846 $ (300,283 )
Selling expense 55,887 958 54,929
Compensation - officers and directors 110,040 73,100 36,940
Research and development 729,105 110,372 618,733
Professional fees 535,207 457,475 77,732
General and administrative 1,720,216 865,120 855,096
Total costs and operating expenses
10
Cost of revenue, excluding depreciation & amortization for the six months ended
Selling expense for the six months ended
Compensation - officers and directors were
Research and development costs were
Professional fees were
General and administrative expenses of
Other Income
During the six months ended
Net Losses
During the six months ended
Liquidity and Capital Resources
Working Capital
June 30 , December 31,
2022 2021
Current Assets
11
Cash Flows
The table below, for the periods indicated, provides selected cash flow
information:
For the six For the six
months ended months ended
June 30, 2022 June 30, 2021
Net cash used in operating activities $ (1,749,492 ) $ (964,297 )
Net cash used in investing activities (267,537 ) -
Net cash provided by financing activities - 1,762,407
Effect of exchange rate (1,228 ) -
Net change in cash $ (2,018,257 ) $ 798,110 Cash Flows from Operating Activities
Our net cash outflows from operating activities of
Our net cash outflows from operating activities of
We expect that cash flows from operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our net revenues and operating results, utilization of new revenue streams, in line with our shifting revenue streams, collection of accounts receivable, and timing of billings and payments.
Cash Flows from Investing Activities
For the six months ended
Cash Flows from Financing Activities
There were no financing activities for the six months ended
12 Going Concern
In the long term, the continuation of the Company as a going concern is
dependent upon the continued financial support from its shareholders, the
ability of the Company to repay its debt obligations, to obtain necessary equity
financing to continue operations, and the attainment of profitable operations.
For the six months ended
Off-Balance Sheet Arrangements
As of
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