Internet of things (IoT) is a somewhat overused technology buzzword of late, but still has important meaning in the future of everyday life. One recent IPO that may be able to take advantage of this growth market is Focus Universal (NASDAQ:FCUV), which went public on Aug. 31 of this year. 2 million common shares of FCUV stock were issued at an offering price of $5, with gross proceeds to the company totaling $10 million.
IoT refers to objects that have sensors and processing chips that work with software that connect to the internet or wireless networks. Smart homes are the most well known IoT concept. Appliances and fixtures such as lighting, thermostats, home security and kitchen and cleaning appliances can connect to the internet and be controlled and monitored both by users and automated systems.
The addressable market for IoT products and solutions is large and was estimated to be $760 billion in 2020 and reach $1.4 trillion by 2026. Focus Universal claims it will be a $1.5 trillion market by 2030. Data collected from these devices is an important aspect of this industry, and the increasing need for data analysis and analytics integration will be a key growth driver going forward.
Five Key Technologies
Founded in 2012 and based in Ontario, California, Focus Universal develops and manufactures internet of things products and solutions. The company states they are working to solve major problems in hardware design, hardware production, software design and communication in both IoT and 5G applications.
Focus is developing technologies covering five different areas:
- USIP (Universal Smart Instrumentation Platform) — a universal common hardware foundation for design, production and applications for IoT.
- DoC (Device-on-a-Chip) — a single chip that performs all USIP device functions.
- NIPL (Natural Integrated Programmable Language) — a cross-platform language that interfaces between other programming languages and designated application software.
- UNB-PLC (Ultra Narrowband Power Line Communication) — a communication technology that allows IoT devices to transmit data on a power grid.
- 5G+ (Ultra Narrowband Wireless Communication) — an update to the next-generation wireless communication technology intended to improve speed, coverage and cost.
When taken as a whole, these technologies will solve the most fundamental problems facing the current IoT industry and are crucial for the next step forward in IoT technology.
What to Do With FCUV Stock
As of June 30, the company only had $1.4 million in cash; however, the company’s IPO occurred in the third quarter, ending Sept. 30. Cash on the balance sheet currently should be approximately $10 million, depending on the company’s burn rate and debt repayments.
Currently, the company is primarily a wholesaler of various air filters and digital, analog, and quantum light meter systems. For the last fiscal year in 2020, the company generated a majority of their revenues from sales of a broad selection of agricultural sensors and measurement equipment.
I could find no analyst coverage from an underwriter as it has not been 40 days since the IPO. The third quarter earnings release is coming up in mid-September and have seen no information about a potential earnings call.
FCUV may be a good long-term growth company if their cash levels hold out and their important products come to market and are successfully commercialized. But I would I wait until the third quarter results to see where the company stands on these important issues before investing in FCUV stock.
On the date of publication, Tom Kerr did not hold a position in any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tom Kerr has worked in the financial services industry for over 25 years. Mr. Kerr has also been a contributing writer to TheStreet.com, RagingBull.com and InvestorPlace.com. He’s a CFA charterholder and obtained a B.B.A in Finance from Texas Tech University. He also created the 406dad.com kids adventure blog.