FOCUS UNIVERSAL INC.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
FCUV$2.85-2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001683168-26-003903
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001683168-26-006446
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 88 previous paragraphs and 115 current paragraphs.
61 unchanged; 19 reworded; 28 added; 8 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 7 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
Focus Universal Inc. (the “Company,” “we,” “us,” or “our”) is a Nevada corporation. Prior to our acquisition of the Property (as defined below), we had two sources of revenue: generated from our Universal Smart Technology and our software to streamline SEC financial reporting.: Upon our acquisition of the Property in April 2026, our primary source of revenue shifted to revenue generated from rental of our Property. Accordingly, periods prior to the acquisition reflect the historical financial statements of the Company, and the results of operations of the Property are included beginning on the acquisition date. As a result, the results of operations, liquidity and capital resources information for the six months ended June 30, 2026 is not directly comparable to the prior-year period.
Current report
During the six months ended June 30, 2026, we generated $651,950 from rental income from the Property. We currently have executed leases for rental of 91,366 space through December 31, 2026 from 12 tenants and anticipate generating $1,464,523 of revenue through December 31, 2026 from the rental income derived from the Property assuming no current leases are terminated.
Current report
Recent Developments
Current report
On April 17, 2026, our wholly owned subsidiary, Lusher Holding LLC (the “Lusher Holding”), closed the acquisition of a Class A office and commercial building along with a four-level parking structure, located at 901 Corporate Center Drive, Monterey Park, California 91754 (the “Property”). The Seller of the Property was 901 Corporate Center, LP (the “Seller”).
Current report
The aggregate purchase price of the Property was $17,700,000, exclusive of closing costs (the “Purchase Price”). We made an initial down payment of $525,000 on January 26, 2026. On April 17, 2026, we funded the Purchase Price with a loan of $11,050,000 facilitated by a term loan agreement with East West Bank and $5,797,152 in cash as a downpayment to close escrow. The Purchase Price was discounted approximately $419,153 due to rent prorations, security deposits, and other such pre-paid amounts which resulted in the Company receiving a balance of $2,434 after closing costs. The surveyed aggregate land area of the Property amounts to approximately 464,955 useable square feet or 10.73 acres, which is comprised of four parcels (i.e., Parcel Numbers, 5237-022-014, 046, 047, and 5237-002-021) (the “Parcels”). The Parcels, including its land and improvements, have an aggregate value of approximately $28,424,982 in 2026 according to the Los Angeles County Assessor.
Current report
The Property provides approximately 100,743 sq. ft. in rentable Class A office space and has a parking ratio of 4.1/1,000, offering a blend of surface parking and adjacent four-level parking structure with a canopy of solar panels that are currently leased. Currently, the Property is 99.2% occupied by approximately 16 tenants. The Company does not intend to alter the terms of lease agreements in place with the current tenants, most of which have a term of 5 to 8 years. The Company plans to occupy approximately 2,000 square feet of space.
Current report
Loan with East West Bank
Current report
We are listed as the primary guarantor of the East West Loan and our Chief Executive Officer, Dr. Desheng Wang, is listed as a secondary guarantor.
Current report
Reverse Stock Split
Current report
On June 23, 2026, we effected a four-to-one reverse stock split of our common stock. Except as otherwise stated, all numbers in this Quarterly Report on Form 10-Q reflect the reverse stock split.
Current report
Our results of operations for the three and six months ended June 30, 2026 include the revenue generated from the Property and related expenses from April 17, 2026 through June 30, 2026 which is not included in our results of operations for the three and six months ended June 30, 2025. Accordingly, the results of operations for the three and six months ended June 30, 2026 is not directly comparable to the prior-year periods.
Current report
Revenue
Current report
Our consolidated gross revenue for the three months ended June 30, 2026 and 2025 was $675,170 and $35,330, respectively. The increase in revenue was primarily attributable to an increase in rental revenue from Lusher Holding LLC.
Current report
Property operating expense for the three months ended June 30, 2026 were $259,663, compared to $0 for the three months ended June 30, 2025. The increase in property operating expenses was primarily due to the acquisition of the commercial property during the quarter.
Current report
Cost of other revenue for the three months ended June 30, 2026 were $17,227, compared to $47,742 for the three months ended June 30, 2025. The decrease in the cost of other revenue was primarily due to a decrease in the number and quantity of other revenue-generating transactions.
Current report
Depreciation and amortization for the three months ended June 30, 2026 were $201,024, compared to $5,506 for the three months ended June 30, 2025. The increase in depreciation and amortization expense was primarily due to depreciation expense recognized on the commercial property acquired during the quarter.
Current report
Research and development costs were $362,165 and $467,297 for the three months ended June 30, 2026 and 2025, respectively. The decrease was primarily due to a reduction in the number of research and development employees during the current year.
Current report
For the six months ended June 30, 2026 compared to the six months ended June 30, 2025
Current report
Revenue
Current report
Our consolidated gross revenue for the six months ended June 30, 2026 and 2025 was $723,143 and $225,585, respectively. The increase in revenue was primarily attributable to an increase in rental revenue from Lusher Holding LLC.
Current report
Property operating expense for the six months ended June 30, 2026 were $259,663, compared to $0 for the six months ended June 30, 2025. The increase in property operating expenses was primarily due to the acquisition of the commercial property during the quarter.
Current report
Cost of other revenue for the six months ended June 30, 2026 were $49,956, compared to $207,453 for the six months ended June 30, 2025. The decrease in the cost of other revenue was primarily due to a decrease in the number and quantity of other revenue-generating transactions.
Current report
Depreciation and amortization for the six months ended June 30, 2026 were $207,746, compared to $10,959 for the six months ended June 30, 2025. The increase in depreciation and amortization expense was primarily due to depreciation expense recognized on the commercial property acquired during the quarter.
Current report
Professional fees were $1,136,349 during the six months ended June 30, 2026, compared to $902,146 during the six months ended June 30, 2025. The increase in these professional fees compared to the prior period was primarily due to an increase in legal advisory fees related to preferred stock and other securities matters.
Current report
Other Income (expense)
Current report
Other income for the six months ended June 30, 2026 was $56,250, compared to $57,261 for the six months ended June 30, 2025.
Current report
Net Losses
Current report
For the six months ended June 30, 2026, we had cash inflows of $2,180,050, consisting of $3,547,348 in gross proceeds from the sale of pre-funded units in a private placement offering, offset by $961,861 of redemption of preferred stock, $51,294 of repayment on a bank loan, and $354,143 spent on the purchase of treasury stock. For the six months ended June 30, 2025, we had cash inflows of $207,387, consisting of $381,224 of gross proceeds from the sale of stock issued in a private placement offering and offset by $173,837 spent on the purchase of treasury stock.
Removed paragraphs (8)
Previous report
SEC financial reporting is traditionally a complex, costly, and time-consuming process. It includes:
Previous report
For large organizations, this process is resource intensive and time consuming. For small public companies, the entire process may take several weeks. Delays in filing can result in SEC reviews, enforcement actions, and significant penalties.
Previous report
On July 22, 2025, we began customer testing of our fully automated SEC financial reporting software in the final design format of the software product. The Company organized and conducted a technology roadshow to showcase the platform. Built-in validation, including self-consistency and compliance checks, ensures accuracy and eliminates human error. The solution provides a true one-click process from raw accounting data all the way to a complete SEC filing.
Previous report
Management estimates that with this product what once took weeks of manual work can now be completed in minutes. Unlike other companies offering partial automation, our solution provides a true one-click process from raw accounting data all the way to a complete SEC filing. With years of development, our full automated software processing includes the final edgarization and XBRL tagging.
Previous report
Purchase of Building
Previous report
Revenue, cost of revenue and gross profit
Previous report
Our consolidated gross revenue for the three months ended March 31, 2026 and 2025 was $47,973 and $190,255, respectively. Cost of revenue for the three months ended March 31, 2026 was $32,729, compared to $159,711 for the three months ended March 31, 2025. The decrease in cost of revenue was primarily due to the decrease in revenue and fewer LED installation projects during the period and also the increase in LED materials. In addition to the decrease in revenue and cost of revenue, gross profit decreased to $15,244 compared to $30,544 for the three months ended March 31, 2026 and 2025, respectively.
Previous report
For the three months ended March 31, 2026, we had cash outflows of $154,617 due to purchase of treasury stock of $154,617. For the three months ended March 31, 2025, we had cash outflows of $144,575 due to purchase of treasury stock of $144,575.
Reworded paragraphs (19)
Previous wording
Focus Universal Inc. (the “Company,” “we,” “us,” or “our”) is a Nevada corporation. We believe we have developed five proprietary technologies utilizing our patent portfolio which we believe solve the most fundamental problems plaguing the internet of things (“IoT”) industry through: (1) increasing overall chip integration by shifting integration from the component level to the device level; (2) creating a faster 5G cellular technology by using ultra-narrowband technology; (3) leveraging ultra-narrowband power line communication (“PLC”) technology; (4) proprietary User Interface Machine auto generation technology; and (5) incorporating all our core technologies into a single chip. Our Universal Smart Technology is designed to overcome instrumentation interoperability and interchangeability. The electronic design starts from a 90% completed common foundation we call our universal smart instrumentation platform (“USIP”), instead of the current method of building each stand-alone instrument from scratch. Our method eliminates redundant hardware and software and results in significant cost savings and production efficiency. We also provide sensor devices and are a wholesaler of various air filters and digital, analog, and quantum light meter systems. The Company holds 28 patents and patents pending in various phases of the patent process.
Current wording
We have developed five proprietary technologies utilizing our patent portfolio which we believe solve the most fundamental problems plaguing the internet of things (“IoT”) industry through: (1) increasing overall chip integration by shifting integration from the component level to the device level; (2) creating a faster 5G cellular technology by using ultra-narrowband technology; (3) leveraging ultra-narrowband power line communication (“PLC”) technology; (4) proprietary User Interface Machine auto generation technology; and (5) incorporating all our core technologies into a single chip. Our Universal Smart Technology is designed to overcome instrumentation interoperability and interchangeability. The electronic design starts from a 90% completed common foundation we call our universal smart instrumentation platform (“USIP”), instead of the current method of building each stand-alone instrument from scratch. Our method has the potential to eliminates redundant hardware and software and results in significant cost savings and production efficiency. We also provide sensor devices and are a wholesaler of various air filters and digital, analog, and quantum light meter systems. We holds 28 patents and patents pending in various phases of the patent process.
Previous wording
On January 21, 2026, the Company entered into a purchase, sale, and escrow agreement with 901 Corporate Center, LP to acquire a 100,743 sq. ft. office and commercial building, along with a four-level parking structure, located in Monterey Park, California. The purchase price was $17,700,000, with an escrow deposit of $525,000. The escrow was initially scheduled to close within sixty days of opening escrow. The $525,000 deposit was placed into the escrow account on January 26, 2026. Lusher Holding LLC, a subsidiary of the Company, entered into a term loan agreement with East West Bank (the “East West Loan”) to borrow $11,050,000, at 6.25% interest for the first 3-years, then floating at the Wall Street Journal Prime Rate plus (+) 0.25% for the remaining term, with a floor interest rate at 6.25%. The loan provides for 36 consecutive monthly principal and interest payments of approximately $68,698.64, beginning on May 1, 2026 and subsequently, 83 monthly principal and interest payments of an initially estimated amount of approximately $73,917.99 (subject to change based on Wall Street Journal Prime Rate plus 0.25%) beginning May 1, 2029. A final principal and interest payment of approximately $9,533,143.67 (subject to change based on Wall Street Journal Prime Rate plus 0.25%) is due on April 1, 2036. Focus Universal Inc. is listed as the primary guarantor for this East West Loan with Desheng Wang listed as a backup guarantor. Lusher Holding LLC on Friday, April 17, 2026, deposited $11 million, from the East West Loan to escrow and $5.8 million as downpayment to close escrow. As of April 17, 2026, the Company and Lusher Holding LLC have completed the purchase of the building. The building will serve as Focus Universal’s principal headquarters and is expected to carry the same rent roll in 2026.
Current wording
Acquisition of Office and Commercial Building
Previous wording
Our USIP technology that will make the Ubiquitor possible is an advanced software and hardware integrated instrumentation platform that uses a large-scale modular design approach. The large-scale modular design approach subdivides instruments into a foundation component (a USIP) and architecture-specific components (sensor nodes), which together replaces the functions of traditional instruments at a fraction of their cost. The USIP has an open architecture, incorporating a variety of individual instrument functions, sensors, and probes from different industries and vendors. The platform features the ability to connect potentially thousands of different sensors or probes, addressing major limitations present in traditional instrumentation systems.
Current wording
Our USIP technology that will make the Ubiquitor possible is an advanced software and hardware integrated instrumentation platform that uses a large-scale modular design approach. The large-scale modular design approach subdivides instruments into a foundation component (a USIP) and architecture-specific components (sensor nodes), which together are intended to replaces the functions of traditional instruments at a fraction of their cost. The USIP has an open architecture, incorporating a variety of individual instrument functions, sensors, and probes from different industries and vendors. The platform features the ability to connect potentially thousands of different sensors or probes, addressing major limitations present in traditional instrumentation systems.
Previous wording
**Additional Focus Universal Inc. IoT Products under Smart AVX.**Focus Universal Inc. is integrating its own Smart AVX- branded IoT equipment to connect devices across platform systems and to facilitate unified collaboration across audio-visual technologies, digital media technologies, security and surveillance technologies and communication technologies. This approach allows the Company to service its customers for ease of use, design and integration, and installation and maintenance by utilizing technology that integrates our five core technologies.
Current wording
**Additional Focus Universal Inc. IoT Products under Smart AVX.**We also sell integrated IoT equipment under the Smart AVX brand to connect devices across platform systems and to facilitate unified collaboration across audio-visual technologies, digital media technologies, security and surveillance technologies and communication technologies. This approach allows us to provide customers ease of use, design and integration, and installation and maintenance by utilizing technology that integrates our five core technologies.
Previous wording
Power Line Communication (“PLC”) technology 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. Rather, PLC utilizes existing power lines, thereby forming a distribution network that already penetrates all residential, commercial and industrial premises. Accordingly, connectivity via PLC technology is potentially the most cost-effective, scalable interconnectivity approach for the IoT. We believe PLC technology can be an integral part of our communication infrastructure for the IoT, which enables reliable, real-time measurements, monitoring, and control. A large variety of appliances may be interconnected by transmitting data through the same wires that provide electrical energy.
Current wording
Power Line Communication (“PLC”) technology 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. Rather, PLC utilizes existing power lines, thereby utilizing a distribution network that already penetrates all residential, commercial and industrial premises. Accordingly, connectivity via PLC technology is potentially the most cost-effective, scalable interconnectivity approach for the IoT. We believe PLC technology can be an integral part of our communication infrastructure for the IoT, which enables reliable, real-time measurements, monitoring, and control. A large variety of appliances may be interconnected by transmitting data through the same wires that provide electrical energy.
Previous wording
Currently, the Company has 18 pending U.S. nonprovisional patent applications and 9 issued U.S. patents. As a result of our primary IP attorney switching firms from Knobbe Martens to Dority Manning, Focus Universal Inc, hired Dority Manning on July 16, 2024 to serve as outside intellectual property counsel for the Company.
Current wording
Currently, the Company has 18 pending U.S. nonprovisional patent applications and 9 issued U.S. patents.
Previous wording
There are several companies that compete with AVX in smart home installations, including Vivint Smart Home, Savant, Crestron and Control4. However, we believe we can distinguish ourselves from our competitors by offering substantially more customization and interoperability with existing platforms. While our service offerings do not rely on always providing the entire installation for the end client, our Company is able to seamlessly provide accenting, replacement, or conversion home automation systems which are easier to use and interoperate for the end client, and with limited rewiring. Complete installation by Crestron ranges between $100,000 and $500,000 and an installation by Control4 ranges between $70,000 and $250,000. The cheapest competitor we can identify in this sector is Vivint Smart Home, which costs less than $50,000 to install; however, we understand that the Vivint Smart Home focuses on security systems only and that users have no other smart applications, which our smart home product line would include. Our sales staff have encountered a growing client base of unhappy customers with the pre-existing and completely siloed platform systems that reportedly are not easy to use or program, require costly specialty service for simple operations, are subject to lengthy software and hardware backlogs, and despite being based on the same platform, fail to operate compatibly, possessing frequent errors and bugs.
Current wording
There are several companies that compete with AVX in smart home installations, including Vivint Smart Home, Savant, Crestron and Control4. However, we believe we can distinguish ourselves from our competitors by offering substantially more customization and interoperability with existing platforms. While our service offerings do not rely on always providing the entire installation for the end client, our Company is able to seamlessly provide accenting, replacement, or conversion home automation systems which are easier to use and interoperate for the end client, and with limited rewiring. Complete installation by Crestron ranges between $100,000 and $500,000 and an installation by Control4 ranges between $70,000 and $250,000. The cheapest competitor we can identify in this sector is Vivint Smart Home, which costs less than $50,000 to install; however, we understand that the Vivint Smart Home focuses on security systems only and that users have no other smart applications, which our smart home product line would include. Our sales staff have encountered a growing client base of unhappy customers with the pre-existing and completely siloed platform systems that reportedly are not easy to use or program, require costly specialty service for simple operations, are subject to lengthy software and hardware backlogs, and despite being based on the same platform, fail to operate compatibly, possessing frequent errors and bugs. Our products are being designed to solve the foregoing problems.
Previous wording
Selling expenses for the three months ended March 31, 2026 were $32,848, compared to $48,980 for the three months ended March 31, 2025. Selling expenses were mainly from third party advertising fees and marketing related fees. The decrease in selling expenses was due to a decrease in advertising fees.
Current wording
Selling expenses for the three months ended June 30, 2026 were $691, compared to $7,420 for the three months ended June 30, 2025. Selling expenses were mainly from third party advertising fees and marketing related fees. The decrease in selling expenses was due to a decrease in advertising fees.
Previous wording
Compensation – officers and directors were $117,551 and $125,387 for the three months ended March 31, 2026 and 2025, respectively. The decrease in cost was a result of the decrease in the share price, which reduced the stock-based compensation expense for the associated directors.
Current wording
Compensation – officers and directors were $117,638 and $125,357 for the three months ended June 30, 2026 and 2025, respectively. The decrease in cost was a result of the decrease in the share price, which reduced the stock-based compensation expense for the associated directors.
Previous wording
Professional fees were $385,205 during the three months ended March 31, 2026, compared to $472,991 during the three months ended March 31, 2025. The decrease in these professional fees compared to the prior period was due to a decrease in legal fees for employment litigation defense.
Current wording
Professional fees were $751,144 during the three months ended June 30, 2026, compared to $429,155 during the three months ended June 30, 2025. The increase in these professional fees compared to the prior period was primarily due to an increase in legal advisory fees related to preferred stock and other securities matters.
Previous wording
General and administrative expenses for the three months ended March 31, 2026 was $486,554 compared to $282,455 during the three months ended March 31, 2025. The increase in general and administrative expenses was primarily due to the Company having received its employee retention credit from the Internal Revenue Service in 2025, which reduced the prior year’s comparable expenses.
Current wording
General and administrative expenses for the three months ended June 30, 2026 was $515,193 compared to $495,613 during the three months ended June 30, 2025. The increase in general and administrative expenses was primarily due to the Company having received its employee retention credit from the Internal Revenue Service in 2025, which reduced that year’s comparable expenses.
Previous wording
Other income for the three months ended March 31, 2026 was $25,633, compared to $20,149 for the three months ended March 31, 2025.
Current wording
Other income for the three months ended June 30, 2026 was $30,617, compared to $37,112 for the three months ended June 30, 2025.
Previous wording
During the three months ended March 31, 2026 and 2025, we incurred net loss of $1,246,078 and $1,251,378 respectively, due to the factors discussed above.
Current wording
During the three months ended June 30, 2026 and 2025, we incurred net loss of $1,518,958 and $1,505,648 respectively, due to the factors discussed above.
Previous wording
Research and development costs were $264,797 and $372,258 for the three months ended March 31, 2026 and 2025, respectively. The decrease was due to software costs being capitalized in the current year.
Current wording
Research and development costs were $626,962 and $839,555 for the six months ended June 30, 2026 and 2025, respectively. The decrease was due to software costs being capitalized in the current year.
Previous wording
Our net cash outflows from operating activities of $1,148,500 for the three months ended March 31, 2026 was primarily the result of our net loss of $1,246,078 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Current wording
Our net cash outflows from operating activities of $1,889,277 for the six months ended June 30, 2026 was primarily the result of our net loss of $2,765,036 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Previous wording
Our net cash outflows from operating activities of $1,220,049 for the three months ended March 31, 2025 was primarily the result of our net loss of $1,251,378 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Current wording
Our net cash outflows from operating activities of $2,648,288 for the six months ended June 30, 2025 was primarily the result of our net loss of $2,757,026 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Previous wording
For the three months ended March 31, 2026 we had cash outflow from investing activities of $622,216 from the purchase of property and equipment of $297, deposit on building of $525,000 and capitalized software cost of $96,919. For the three months ended March 31, 2025 we had cash outflow from investing activities of $23,380 from the purchase of property and equipment of $23,380.
Current wording
For the six months ended June 30, 2026 we had cash outflow from investing activities of $6,632,052 from the proceed from sale of marketable securities of $121,823 offset by the purchase of property and equipment of $6,656,031 and capitalized software cost of $97,844. For the six months ended June 30, 2025 we had cash outflow from investing activities of $25,091 from the purchase of property and equipment of $25,091.
Previous wording
The Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these condensed consolidated financial statements. The Company has a net loss of $1,246,078 for the three months ended March 31, 2026. In addition, the Company had an accumulated deficit of $32,496,155 as of March 31, 2026, and negative cash flow from operating activities of $1,148,500 for the three months ended March 31, 2026. Substantial doubt about the Company’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. The Company currently suffered recurring losses from operations, generated negative cash flow from operating activities, has an accumulated deficit and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These conditions raise substantial doubt as to its ability to continue as a going concern. These condensed consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Current wording
The Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these condensed consolidated financial statements. The Company has a net loss of $2,765,036 for the six months ended June 30, 2026. In addition, the Company had an accumulated deficit of $34,015,113 as of June 30, 2026, and negative cash flow from operating activities of $1,889,277 for the six months ended June 30, 2026. Substantial doubt about the Company’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern. The Company currently suffered recurring losses from operations, generated negative cash flow from operating activities, has an accumulated deficit and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These conditions raise substantial doubt as to its ability to continue as a going concern. These condensed consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2025, has also expressed substantial doubt about the Company’s ability to continue as a going concern.
Previous wording
At March 31, 2026, the Company had cash and cash equivalents, and short-term investments, in the amount of $6,021,591. The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they come due. Since inception, the Company has funded its operations primarily through equity and debt financings, and it expects to continue to rely on these sources of capital in the future. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing, or grant unfavorable terms in future licensing agreements. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.
Current wording
At June 30, 2026, the Company had cash, and short-term investments, in the amount of $1,600,258. The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they come due. Since inception, the Company has funded its operations primarily through equity and debt financings, and it expects to continue to rely on these sources of capital in the future. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing, or grant unfavorable terms in future licensing agreements. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Lusher Holding entered into a loan with East West Bank to borrow $11,050,000 to pay the Purchase Price, at 6.25% interest for the first 3 years, then floating at the Wall Street Journal Prime Rate plus (+) 0.25% for the remaining term, with a floor interest rate at 6.25% to facilitate the purchase of the Property (“East West Loan”).
Current report — wording carried from elsewhere
The East West Loan provides for 83 consecutive monthly principal and interest payments of approximately $68,698.64, beginning on May 1, 2026, and subsequently, 83 consequent instalments of principal and interest payments of an estimated amount of approximately $73,917.99 (subject to change based on Wall Street Journal Prime Rate plus 0.25%) each beginning May 1, 2029. A final principal and interest payment of approximately $9,533,143.67 is due on April 1, 2036 (subject to change based on Wall Street Journal Prime Rate plus 0.25%).
Current report — wording carried from elsewhere
The major components of our cost and operating expenses for the six months ended June 30, 2026 and 2025 are outlined in the table below:
Current report — wording carried from elsewhere
Selling expenses for the six months ended June 30, 2026 were $33,539, compared to $56,400 for the six months ended June 30, 2025. Selling expenses were mainly from third party advertising fees and marketing related fees. The decrease in selling expenses was due to a decrease in advertising fees.
Current report — wording carried from elsewhere
Compensation – officers and directors were $235,189 and $250,744 for the six months ended June 30, 2026 and 2025, respectively. The decrease in cost was a result of the decrease in the share price, which reduced the stock-based compensation expense for the associated directors.
Current report — wording carried from elsewhere
General and administrative expenses for the six months ended June 30, 2026 was $995,025 compared to $772,615 during the six months ended June 30, 2025. The increase in general and administrative expenses was primarily due to the Company having received its employee retention credit from the Internal Revenue Service in 2025, which reduced that year’s comparable expenses.
Current report — wording carried from elsewhere
During the six months ended June 30, 2026 and 2025, we incurred net loss of $2,765,036 and $2,757,026 respectively, due to the factors discussed above.