FOCUS UNIVERSAL INC. Revenue Disclosure
Revenue Recognition
Revenue from the Company is recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
| ☐ | executed contracts with the Company’s customers that it believes are legally enforceable; | |
| ☐ | identification of performance obligations in the respective contract; | |
| ☐ | determination of the transaction price for each performance obligation in the respective contract; | |
| ☐ | Allocation of the transaction price to each performance obligation; and | |
| ☐ | recognition of revenue only when the Company satisfies each performance obligation. |
These five elements, as applied to each of the Company’s revenue category, is summarized below:
| ☐ | Product sales – revenue is recognized at the time of sale upon the delivery of the equipment to the customer and completion of performance obligation. | |
| ☐ | Service sales – revenue is recognized based on the service been provided and the agreed upon performance obligation has been completed to the customer. |
Revenue from our project construction is recognized over time using the percentage-of-completion method under the cost approach. The percentage of completion is determined by estimating stage of work completed. Under this approach, recognized contract revenue equals the total estimated contract revenue multiplied by the percentage of completion. Our construction contracts are unit priced, and an account receivable is recorded for amounts invoiced based on actual units produced. Currently, the software segment is not generating any revenue.
A summary of our revenue by product type for the fiscal years ended December 31, 2024 and 2023 is as follows:
| December 31, 2024 | December 31, 2023 | |||||||
| IoT Products | $ | 398,137 | $ | 384,168 | ||||
| IoT Project Construction and Installation Services | – | 56,375 | ||||||
| Total | $ | 398,137 | $ | 440,543 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Feb 28, 2025 | Showing above |
| 2019 | Mar 30, 2020 | |
| 2018 | Mar 11, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.