What changed in this filing

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Item 1. Financial Statements

2021-08-13 compared with 2021-05-10 · 361 added, 289 removed, 563 unchanged (54% of the section changed)

3 unchanged sentences

Index to the Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)

Condensed Consolidated Statement of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2021 and 2020 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)

Notes to the Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020

Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2021 and 2020

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2021 and 2020

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2021 and 2020

Notes to the Unaudited Condensed Consolidated Financial Statements

FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS

Current Assets:

Accounts receivable, net

Accounts receivable - related party

Inventories, net

Other receivables

Prepaid expenses

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40,959,741 shares issued and

outstanding as of March 31, 2021 and December 31, 2020, respectively

outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

2 unchanged sentences

( 10,878,775 )

( 9,716,114 )

Total Stockholders' Equity

Total Liabilities and Stockholders' Equity

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements

FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED STATEMENTS

OF OPERATIONS

Three Months Ended March 31,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Revenue - related party

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Loss from Operations

( 1,382,728 )

( 1,630,184 )

Other Income (Expense):

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Interest (expense) - related party

Total other income (expense)

Total other income

Loss before income taxes

( 1,162,661 )

( 1,549,973 )

Income tax expense

$ ( 480,145 )

$ ( 627,667 )

$ ( 1,162,661 )

$ ( 1,549,973 )

Weight Average Number of Common Shares Outstanding:

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Basic and Diluted

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements

The accompanying notes are an integral

part of these unaudited condensed consolidated financial statements

FOCUS UNIVERSAL INC.

CONSOLIDATED STATEMENTS

OF STOCKHOLDERS' EQUITY

Additional Paid-In

Shares to be issued Common

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2021 AND 2020

Shares to be issued

Total Stockholders'

Balance - December 31, 2020

Balance - March 31, 2021

$ ( 10,398,630 )

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Common stock to be issued for services

Balance - June 30, 2021

$ ( 10,878,775 )

Balance - March 31, 2020

$ ( 8,101,307 )

Additional Paid-In

Stock based compensation - options

Common stock to be issued for services

Balance - June 30, 2020

$ ( 8,728,974 )

Shares to be issued

Total Stockholders'

Common Shares

Balance - December

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Common stock to be issued for services

Balance - March 31, 2020

( 1,162,661 )

Balance - June 30, 2021

( 10,878,775 )

Balance, December 31, 2019

$ ( 7,179,001 )

Stock based compensation - options

Common stock to be issued for services

( 1,549,973 )

Balance, June 30, 2020

$ ( 8,728,974 )

The accompanying notes are an integral part

1 unchanged sentence

FOCUS UNIVERSAL INC.

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

Three Months Ended March 31,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Six Months Ended June 30,

Cash flows from operating activities:

$ ( 1,162,661 )

$ ( 1,549,973 )

Adjustments to reconcile net loss to net cash from operating activities:

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Depreciation expense

SBA loan forgiveness

Amortization of right-of-use assets

Stock-based compensation

Stock option compensation - options

Stock based compensation - options

Changes in operating assets and liabilities:

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Accounts receivable - related party

Other receivable

Prepaid expenses

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Net cash flows used in operating activities

( 1,183,486 )

Cash flows from financing activities:

Proceeds from SBA loan

Payment on SBA loan

Payment on promissory note

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Prepayment on bank loan

Net cash flows provided by (used in) financing activities

Net cash flows provided by financing activities

Net change in cash

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FOCUS UNIVERSAL INC.

NOTES TO THE CONDENSED CONSOLIDATED

AND SUBSIDIARIES

NOTES TO THE CONDENSED UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

Note 1 –

Organization and Operations

Note 1 – Organization and Operations

Focus Universal Inc.

(“Focus”) was

incorporated under the laws of the state of Nevada on December 4, 2012 (“Inception”).

It is a universal smart instrument developer

and manufacturer, headquartered in the Los Angeles, California metropolitan area, specializing in the research and development and commercialization

of novel and proprietary universal smart technologies and instruments related to the internet of things (“IoT”) and telecommunications

Focus is researching and developing novel and proprietary ultra-narrowband powerline communication (“PLC”) technology

that allows users to send data over existing electricity power cables without the noise problems that have plagued PLC for decades.

smart technology is an off-the-shelf technology utilizing an innovative hardware integrated platform.

The Focus platform provides a unique

and universal combined wired and wireless solution for embedded design, industrial control, functionality testing, and parameter measurement

instruments and functions.

Our smart technology software utilizes a smartphone, computer, or a mobile device as an interface platform

and display that communicates and works in tandem with a group of external sensors or probes, or both.

The external sensors and probes

may be manufactured by different vendors, but the universal smart technology functions in a manner that does not require the user to have

extensive knowledge of the unique characteristics of the function of each of the sensors and probes.

The universal smart instrument Focus

developed (called the “Ubiquitor”) consists of a reusable foundation component which includes a wireless gateway (which allows

the instrument to connect to the smartphone via Bluetooth and WiFi technology), universal smart application software (“Application”)

which is installed on the user’s smartphone or other mobile device and allows monitoring of the sensor readouts on the smartphone

The Ubiquitor also connects to a variety of individual scientific sensors that collect data, from moisture, light, airflow, voltage,

and a wide variety of applications.

The data then sent through a wired or wireless connection, or a combination thereof to the smartphone

or other mobile device and the data is organized and displayed on the smartphone screen.

The smartphone or other mobile device, foundation,

and sensor readouts together perform the functions of many traditional scientific and engineering instruments and are intended to replace

the traditional, wired stand-alone instruments at a fraction of their cost.

(“Focus”) was

incorporated under the laws of the state of Nevada on December 4, 2012 (“Inception”).

It is a universal smart instrument

developer and manufacturer, headquartered in the Los Angeles, California metropolitan area, specializing in the development and commercialization

of novel and proprietary universal smart technologies and instruments.

Universal smart technology is an off-the-shelf technology utilizing

an innovative hardware integrated platform.

The Focus platform provides a unique and universal combined wired and wireless solution for

embedded design, industrial control, functionality testing, and parameter measurement instruments and functions.

Our smart technology

software utilizes a smartphone, computer, or a mobile device as an interface platform and display that communicates and works in tandem

with a group of external sensors or probes, or both.

The external sensors and probes may be manufactured by different vendors, but the

universal smart technology functions in a manner that does not require the user to have extensive knowledge of the unique characteristics

of the function of each of the sensors and probes.

The universal smart instrument Focus developed (the “Ubiquitor”) consists

of a reusable foundation component which includes a wireless gateway (which allows the instrument to connect to the smartphone via Bluetooth

and WiFi technology), universal smart application software (“Application”) which is installed on the user’s smartphone

or other mobile device and allows monitoring of the sensor readouts on the smartphone screen.

The Ubiquitor also connects to a variety

of individual scientific sensors that collect data, from moisture, light, airflow, voltage, and a wide variety of applications.

then sent through a wired or wireless connection, or a combination thereof to the smartphone or other mobile device and the data is organized

and displayed on the smartphone screen.

The smartphone or other mobile device, foundation, and sensor readouts together perform the functions

of many traditional scientific and engineering instruments and are intended to replace the traditional, wired stand-alone instruments

at a fraction of their cost.

Perfecular Inc.

(“Perfecular”) was

founded in September 2009 and is headquartered in Ontario, California, and is engaged in designing certain digital sensor products and

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AVX Design & Integration, Inc.

(“AVX”)

was incorporated on June 16, 2000 in the state of California.

AVX is an internet of things (“IoT”) installation and management

company specializing in high performance and easy to use Audio/Video, Home Theater, Lighting Control, Automation and Integration.

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to fully integrate devices in the low voltage field.

AVX’s services also include partial equipment upgrade and installation.

Note 2 –

Summary of Significant Accounting

AVX’s services also include partial equipment upgrade and installation.

Note 2 – Summary of Significant Accounting

Basis of Presentation

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and AVX Design & Integration,

(collectively, the “Company”, “we”, “our”, or “us”).

All intercompany balances and

transactions have been eliminated upon consolidation.

The Company’s condensed consolidated financial statements have been prepared

in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”).

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 period

ended March 31, 2021, the Company had a net loss of $682,516 and negative cash flow from operating activities of $438,775.

the Company has obtained a $1,500,000 loan from a financial institution and has a $1,500,000 loan commitment from a private related party.

The loan from the financial institution requires monthly payments with the final payment due in 2026.

The related party loan will accrue

interest at 10% until March 15, 2022, or six months from the date the loan is funded, whichever is later (the “Initial Interest

Accrual Date”).

The Company’s condensed consolidated financial statements have been prepared

in accordance with accounting principles generally accepted in the United States of America (“U.S.

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

For the six months ended June 30, 2021, the Company had a net loss of $ 1,162,661

and negative cash flow from operating activities of $ 964,297 .

In Q1, 2021 the Company had obtained a $ 1,500,000

loan from a financial institution and a $ 1,500,000

loan commitment from a private related party.

The loan from the financial institution requires monthly payments starting February

2021 and with the final payment due in 2026.

The related party loan will accrue interest at 10 %

15, 2022 , or six months from the date the loan is funded, whichever is later (the “Initial Interest Accrual

Interest on any unpaid principal after Initial Interest Accrual Date shall accrue at a fixed rate of 12% per annum

The Company reserves the right to prepay this loan agreement (in whole or in part) after 6 months of the first day with no

prepayment penalty.

The Company may make, in its sole discretion, payments of interest only, or interest and principal, provided that

the principal is not paid in full prior to six months from the date the loan is funded.

The Company also plans to raise $10 million through

an underwritten public offering in 2021.

The Company reserves the right to prepay this loan agreement (in whole or in part) after 6 months of the first day with

no prepayment penalty.

The Company may make, in its sole discretion, payments of interest only, or interest and principal, provided

that the principal is not paid in full prior to six months from the date the loan is funded.

The Company also plans to raise $10

million through an underwritten public offering in 2021.

With the January 1, 2021 beginning cash amount

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With the additional $1,500,000 related party loan, the Company will have adequate reserves to continue operations in 2021 and 2022.

related party which will provide the loan to the Company is owned by a director of the Company, which we have evaluated to be a reliable

related party which provided the loan to the Company is owned by a director of the Company, which we have evaluated to be a reliable

source of cashflow.

The $10 million planned public offering will contribute to a projected December 31, 2021 cash balance of $11,000,000.

Historically, the Company has been successful in reaching planned its fund-raising targets.

Historically, the Company has been successful in reaching its planned fund-raising targets.

In 2020 the Company had negative operating cashflow

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to generate profit once the products and licenses are available for the market, which will begin to alleviate the negative cashflow.

the Company is testing 4 Mbps ultra-narrowband power line communication printed circuit boards, the testing is expected to complete in

The ultra-narrowband power line communication products will launch in Q4, 2021.

The portable universal smart device is also in

the final printed circuit board layout stage, the Company is planning to launch this product in Q4 2021.

Initially, new products would

require cash to manufacture and promote.

The Company expects to begin generating positive cashflow with the launch of above-mentioned

products from Q2 of 2022.

the Company is testing 4 Mbps ultra-narrowband power line communication printed circuit boards, the testing is completed in Q2 2021.

ultra-narrowband power line communication products will launch in Q4, 2021.

The portable universal smart device is also in the final printed

circuit board layout stage, the Company is planning to launch this product in Q4 2021.

Initially, new products would require cash to manufacture

The Company expects to begin generating positive cashflow with the launch of above-mentioned products from Q2 of 2022.

Overall, we expect that with the loan we obtained,

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as a going concern throughout 2021 and 2022.

The Company expects the loans and offering will generate cash for 2021’s operation

and be able to pay off the loans obtained through the offering with sufficient cashflow for 2021 and 2022.

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Focus and Perfecular,

collectively “the entities”

were under common control;

collectively “the entities” were under common control;

therefore, in accordance with Financial Accounting Standards Board

(“FASB”) Accounting Standards Codification (“ASC”) 805-50-45, the acquisition of Perfecular was accounted for

as a business combination between entities under common control and treated similar to a pooling of interest transaction.

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The Company currently has two operating segments.

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company considers operating segments to be components

of the Company’s business for which separate financial information is available and evaluated regularly by management in deciding

In accordance with ASC 280, Segment Reporting (“ASC 280”), the Company considers operating segments to be components

of the Company’s business for which separate financial information is available and evaluated regularly by management in deciding

how to allocate resources and to assess performance.

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The reporting segments follow the same accounting

policies used in the preparation of the Company’s unaudited condensed consolidated financial statements.

Use of Estimates

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readily apparent from other sources.

The actual results experienced by the Company

may differ materially and adversely from the Company’s estimates.

The actual results experienced by the Company may

differ materially and adversely from the Company’s estimates.

To the extent there are material differences between the estimates

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Significant estimates in the accompanying financial statements

include the lease term impacting right-of use asset and lease liability, useful lives of property and equipment, useful lives of intangible

assets, allowance for doubtful accounts, inventory reserves, debt discounts, valuation of derivatives, and the valuation allowance on

deferred tax assets.

include the lease term impacting right-of use asset and lease liability, useful lives of property and equipment, allowance for doubtful

accounts, inventory reserves, and the valuation allowance on deferred tax assets.

The Company regularly evaluates its estimates and assumptions.

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(FDIC) insurance limit.

There were no cash equivalents held by the Company at March 31, 2021 and December 31, 2020.

There were no cash equivalents held by the Company at June 30, 2021 and December 31, 2020.

Accounts Receivable

The Company grants credit to clients that sell

the Company’s products or engage in construction service under credit terms that it believes are customary in the industry and do

not require collateral to support customer receivables.

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Allowance for Doubtful Accounts

Company estimates an allowance for doubtful accounts based on historical collection trends and review of the current status of trade

accounts receivable.

It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change.

March 31, 2021 and December 31, 2020, allowance for doubtful accounts amounted to $52,876 and $44,519, respectively.

The Company estimates an allowance for doubtful

accounts based on historical collection trends and review of the current status of trade accounts receivable.

It is reasonably possible

that the Company's estimate of the allowance for doubtful accounts will change.

As of June 30, 2021 and December 31, 2020, allowance for

doubtful accounts amounted to $ 50,268 and $ 44,519 , respectively.

Concentrations of Credit Risk

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loss by investing its cash with high credit quality financial institutions.

consists primarily of parts and finished goods and is valued at the lower of the inventory’s cost or net realizable value under

the first-in-first-out method.

Management compares the cost of inventory with its market value and an allowance is made to write down

inventory to market value, if lower.

Inventory allowances are recorded for obsolete or slow-moving inventory based on assumptions about

future demand and marketability of products, the impact of new product introductions and specific identification of items, such as discontinued

These estimates could vary significantly from actual requirements, for example, if future economic conditions, customer inventory

levels, or competitive conditions differ from expectations.

The Company regularly reviews the value of inventory based on historical usage

and estimated future usage.

If estimated realized value of our inventory is less than cost, we make provisions in order to reduce its

carrying value to its estimated market value.

As of March 31, 2021 and December 31, 2020, inventory reserve amounted to $67,275

and $70,562, respectively.

Inventory consists primarily of parts and finished

goods and is valued at the lower of the inventory’s cost or net realizable value under the first-in-first-out method.

compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower.

allowances are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products,

the impact of new product introductions and specific identification of items, such as discontinued products.

These estimates could vary

significantly from actual requirements, for example, if future economic conditions, customer inventory levels, or competitive conditions

differ from expectations.

The Company regularly reviews the value of inventory based on historical usage and estimated future usage.

estimated realized value of our inventory is less than cost, we make provisions in order to reduce its carrying value to its estimated

market value.

As of June 30, 2021 and December 31, 2020, inventory reserve amounted to $ 69,233 and $ 70,562 , respectively.

Property and Equipment

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Estimated useful lives are as follows:

Schedule of estimated useful lives of property, plant and equipment

Construction in progress

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ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present

and the undiscounted cash flows estimated to be generated by those assets are less than the assets’

carrying amounts.

and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.

In that event,

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of the Company are reviewed when circumstances warrant as to whether their carrying value has become impaired.

The Company considers

assets to be impaired if the carrying value exceeds the future projected cash flows from related operations.

The Company also re-evaluates

the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

on its review at March 31, 2021 and December 31, 2020, the Company believes there was no impairment of its long-lived assets.

The Company considers assets

to be impaired if the carrying value exceeds the future projected cash flows from related operations.

The Company also re-evaluates the

periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives.

review at June 30, 2021 and December 31, 2020, the Company believes there was no impairment of its long-lived assets.

Share-based Compensation

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The Company follows paragraph ASC 825-10-50-10

for disclosures about fair value of its financial instruments and paragraph ASC 820-10-35-37 (“Paragraph 820-10-35-37”) to

measure the fair value of its financial instruments.

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model assumption or input is unobservable.

The carrying amount of the Company’s financial

assets and liabilities, such as cash, prepaid expenses, accounts payable, and accrued expenses, approximate their fair value because of

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reflects the consideration to which the entity expects to be entitled for exchange of those goods or services.

The Company’s updated

accounting policies and related disclosures are set forth below, including the disclosure for disaggregated revenue.

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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;

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These five elements, as applied to each of the

Company’s revenue categories, is summarized below:

Product sales –

revenue is recognized at the time of sale of equipment to the customer.

Service sales –

revenue is recognized based on the service been provided to the customer.

Company’s revenue categories, is summarized below:

Product sales – revenue is recognized at the time of sale of equipment to the customer.

Service sales – revenue is recognized based on the service been provided to the customer.

Revenue from construction projects is recognized

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b) entities for which investments in their equity securities would be required, absent the election of the fair value

option under the Fair Value Option Subsection of ASC 825–10–15, to be accounted for by the equity method by the investing

c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship

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it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would

be accrued in the Company’s consolidated financial statements.

If the assessment indicates that a potential material loss contingency

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Management does not believe, based upon

information available at this time that these matters will have a material adverse effect on the Company’s financial position, results

of operations or cash flows.

However, there is no assurance that such matters will not materially and adversely affect the Company’s

business, financial position, and results of operations or cash flows.

If the assessment of a contingency indicates that

it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would

be accrued in the Company’s consolidated financial statements.

If the assessment indicates that a potential material loss contingency

is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an

estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally

not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Management does not believe, based upon

information available at this time that these matters will have a material adverse effect on the Company’s financial position, results

of operations or cash flows.

However, there is no assurance that such matters will not materially and adversely affect the Company’s

business, financial position, and results of operations or cash flows.

Income Tax Provision

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Under ASC 740, a tax position is recognized as

a benefit only if it is “more likely than not”

that the tax position would be sustained in a tax examination, with a tax examination

a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination

being presumed to occur.

The amount recognized is the largest amount of tax benefit that is more than 50% likely to be realized on examination.

For tax positions not meeting the “more likely than not”

test, no tax benefit is recorded.

For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company has no material uncertain

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enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized.

There was no material deferred tax asset or liabilities as of September 30, 2020 and December 31, 2019.

As of March 31, 2021 and December 31, 2020, the

Company did not identify any material uncertain tax positions.

There was no material deferred tax asset or liabilities as of June 30, 2021 and December 31, 2020.

As of June 30, 2021 and December 31, 2020, the

Company did no t identify any material uncertain tax positions.

Basic and Diluted Net Income (Loss) Per Share

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to ASC 260-10-45.

Basic net income (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted average

number of shares outstanding during the period.

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would be anti-dilutive.

Three months ended March 31,

Schedule of antidilutive shares

Six months ended June 30,

Stock options

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to users, such as through filing them on EDGAR.

Based upon the review, other than described in Note 14 –

Subsequent Events, the

Based upon the review, other than described in Note 14 – Subsequent Events, the

Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed

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Certain reclassifications have been made to the

condensed consolidated financial statements for prior years to the current year’s presentation.

Such reclassifications have no effect

on net income as previously reported.

Note 3 –

Recent Accounting Pronouncement

Note 3 – Recent Accounting Pronouncement

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) (“Topic 842”),

which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements.

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The new standard establishes a right-of-use

model (“ROU”) that requires a lessee to recognize ROU asset and lease liability on the balance sheet for all leases with a

term longer than 12 months.

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and used the effective date as its date of initial application.

Consequently, prior period financial information has not been recast

and the disclosures required under the new standard have not been provided for dates and periods before January 1, 2019.

Consequently, prior period financial information has not been recast and

the disclosures required under the new standard have not been provided for dates and periods before January 1, 2019.

The new standard provides a number of optional

practical expedients in transition.

The Company elected the “package of practical expedients,”

which permits it not to reassess

The Company elected the “package of practical expedients,” which permits it not to reassess

under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.

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not elect the use-of-hindsight or the practical expedient pertaining to land easements, the latter not being applicable to the Company.

The new standard also provides practical expedients for an entity’s ongoing accounting.

The Company elected the short-term lease

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Early adoption is permitted.

of this ASU did not have a material impact on the Company’s consolidated financial statements.

of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

In December 2019, FASB issued ASU 2019-12, Income

Taxes, which provides for certain updates to reduce complexity in the accounting for income taxes, including the utilization of the incremental

approach for intra-period tax allocation, among others.

The amendments in ASU 2019-12 are effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2020.

The adoption of this ASU did not have a material effect on its condensed

consolidated financial statements.

In June 2020, the FASB issued ASU 2020-05 in response

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Recently Issued Accounting Standards Not Yet Adopted

In June 2016, FASB issued ASU 2016-13, Financial

Instruments - Credit Losses, which changes the accounting for recognizing impairments of financial assets.

Under the new guidance, credit

losses for certain types of financial instruments will be estimated based on expected losses.

The new guidance also modifies the impairment

models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination.

February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842) - Amendments to SEC

Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective Date Related to Accounting Standards

2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies.

ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December

The Company believes the adoption will modify the way the Company analyzes financial instruments, but it does not anticipate

a material impact on results of operations.

The Company is in the process of determining the effects the adoption will have on its consolidated

financial statements.

In December 2019, FASB issued ASU 2019-12, Income

Taxes, which provides for certain updates to reduce complexity in the accounting for income taxes, including the utilization of the incremental

approach for intra-period tax allocation, among others.

The amendments in ASU 2019-12 are effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2020.

The Company does not expect the implementation of ASU 2019-12 to have a

material effect on its consolidated financial statements.

In June 2016, FASB issued ASU 2016-13,

Financial Instruments - Credit Losses, which changes the accounting for recognizing impairments of financial assets.

Under the new

guidance, credit losses for certain types of financial instruments will be estimated based on expected losses.

The new guidance also

modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration

since their origination.

In February 2020, the FASB issued ASU 2020-02, Financial Instruments-Credit Losses (Topic 326) and Leases

(Topic 842) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

119 and Update to SEC Section on Effective

Date Related to Accounting Standards Update No.

2016-02, Leases (Topic 842), which amends the effective date of the original

pronouncement for smaller reporting companies.

ASU 2016-13 and its amendments will be effective for the Company for interim and

annual periods in fiscal years beginning after December 15, 2022.

The Company believes the adoption will modify the way the Company

analyzes financial instruments, but it does not anticipate a material impact on results of operations.

The Company is in the process

of determining the effects the adoption will have on its condensed consolidated financial statements.

Management does not believe that any recently

2 unchanged sentences

pronouncements are issued, we will adopt those that are applicable under the circumstances.

Note 4 –

Inventory, net

At March 31, 2021 and December 31, 2020, inventory

Note 4 – Inventory, net

At June 30, 2021 and December 31, 2020, inventory

consisted of the following:

Schedule of Inventory

Finished goods

1 unchanged sentence

Inventory, net

Note 5 –

Deposit balance as of March 31, 2021 amounted

to $6,630 for lease agreement deposit.

Deposit balance as of December 31, 2020 amounted to $106,630, including $6,630 for lease agreement

deposit and $100,000 for payment made into an escrow account for purchasing a target company.

On March 26, 2021, the management of CWS

decided to terminate the LOI.

The LOI was terminated effective as of March 29, 2021 and $100,000 was returned on March 29, 2021.

Note 6 –

Property and Equipment

At March 31, 2020 and December 31, 2019, property and equipment consisted

Note 5 – Deposit

Deposit balance as of June 30, 2021 amounted

for lease agreement deposit.

Deposit balance as of December 31, 2020 amounted to $106,630, including $ 6,630

for lease agreement deposit and $ 100,000

for payment made into an escrow account for purchasing a target company.

On March 26, 2021, the management of target company decided to

terminate the LOI.

The LOI was terminated effective as of March 29, 2021 and $ 100,000

was returned on March 29, 2021.

Note 6 – Property and Equipment

At June 30, 2021 and December 31, 2020, property and equipment consisted

of the following:

Schedule of property and equipment

Building Improvement

2 unchanged sentences

Property and equipment, net

Depreciation expense for the three months ended

March 31, 2021 and 2020 amounted to $40,537 and $40,598, respectively.

Depreciation expense for the six months ended

June 30, 2021 and 2020 amounted to $ 80,872 and $ 81,125 , respectively.

The Company purchased a warehouse in Ontario,

1 unchanged sentence

The tenant paid $ 12,335 as a security deposit, shown as other

liability in non-current liability.

Note 7 –

Related Party Transactions

Revenue generated from Vitashower Corp., a company

owned by the CEO’s wife, amounted to $10,191 and $14,672 for the three months ended March, 2021 and 2020, respectively.

receivable balance due from Vitashower Corp.

amounted to $0 and $0 as of March 31, 2021 and December 31, 2020, respectively.

liability in non-current liabilities.

Note 7 – Related Party Transactions

Revenue generated from Vitashower Corp., a

company owned by the CEO’s wife, amounted to $ 15,141

for the six months ended June 30, 2021 and 2020, respectively.

Account receivable balance due from Vitashower Corp.

as of June 30, 2021 and December 31, 2020, respectively.

Purchases generated from Vitashower Corp.

amounted to $ 3,379

for the six months ended June 30, 2021 and 2021, respectively.

There were accounts payable balances of $ 0

and $ 17,471 due to Vitashower Corp.

as of June 30, 2021 and December 31, 2020, respectively.

Compensation for services provided by the President

and Chief Executive Officer for the three months ended March 31, 2021 and 2020 amounted to $30,000 and $30,000, respectively.

Note 8 –

Business Concentration and Risks

and Chief Executive Officer for the six months ended June 30, 2021 and 2020 amounted to $ 60,000 and $ 60,000 , respectively.

Note 8 – Business Concentration and Risks

Major customers

One customer accounted for 48% and 17% of the

total accounts receivable as of March 31, 2021 and December 31, 2020, respectively.

This customer accounted for 80% and 58% of the total

revenue for the period ended March 31, 2021 and 2020, respectively.

One customer accounted for 0 % and 17 % of the total

accounts receivable as of June 30, 2021 and December 31, 2020, respectively.

This customer accounted for 78 % and 42 % of the total revenue

for the period ended June 30, 2021 and 2020, respectively.

Major vendors

One vendor accounted for 0 % and 0 % of total accounts

payable at March 31, 2021 and December 31, 2020, respectively.

payable at June 30, 2021 and December 31, 2020, respectively.

This vendor accounted for 77 % and 47 % of the total purchases for the period

ended March 31, 2021 and 2020, respectively.

Note 9 –

Operating Lease Right-of-use

ended June 30, 2021 and 2020, respectively.

Note 9 – Operating Lease Right-of-use

Asset and Operating Lease Liability

2 unchanged sentences

in our lease is not readily determinable.

During the three months ended March 31, 2021 and 2020, the Company recorded $16,295 and $16,295,

During the six months ended June 30, 2021 and 2020, the Company recorded $ 32,590 and $ 32,590 ,

respectively as operating lease expense.

The Company currently has a lease agreement for

AVX’s operation for a monthly payment of $5,258 and shall increase by 3% every year.

The lease commenced July 1, 2015 and expires

2 unchanged sentences

In adopting ASC Topic 842, Leases (Topic 842),

the Company has elected the ‘package of practical expedients,’

which permit it not to reassess under the new standard its

the Company has elected the ‘package of practical expedients,’ which permit it not to reassess under the new standard its

prior conclusions about lease identification, lease classification and initial direct costs.

7 unchanged sentences

Right-of-use asset is summarized below:

March 31, 2021

March 31, 2020

Schedule of operating Right-of-use asset and liability

June 30, 2021

December 31, 2020

accumulated amortization

1 unchanged sentence

Operating Lease liability is summarized below:

March 31, 2021

March 31, 2020

June 30, 2021

December 31, 2020

current portion

1 unchanged sentence

Maturity of lease liability is as follows:

Schedule of maturity of lease liabilities

Year ending December 31, 2021

3 unchanged sentences

Lease Obligation, net

Note 10 –

Note 10 – Loans

Paycheck Protection Program

On April 24, 2020, AVX Design & Integration,

On April 24, 2020, AVX Design &

Integration, Inc.

entered into an agreement to receive a U.S.

Small Business Administration Loan (“SBA Loan”) from JPMorgan Chase Bank,

related to the COVID-19 pandemic in the amount of $116,460, which we received on May 1, 2020.

The SBA Loan has a fixed interest rate

of 0.98 percent per annum and a maturity date two years from the date the loan was issued.

Small Business Administration Loan (“SBA Loan”) from

JPMorgan Chase Bank, N.A.

related to the COVID-19 pandemic in the amount of $ 107,460 ,

which we received on May 1, 2020.

The SBA Loan has a fixed interest rate of 0.98

percent per annum and a maturity date two 2 years from the date the loan was issued.

On May 4, 2020, Perfecular Inc.

entered into an

agreement to receive a U.S.

Small Business Administration Loan (“SBA Loan”) from Bank of America related to the COVID-19 pandemic

in the amount of $151,500, which we received on May 4, 2020.

The SBA Loan has a fixed interest rate of 1 percent per annum and

a maturity date two years from the date loan was issued.

an agreement to receive a U.S.

Small Business Administration Loan (“SBA Loan”) from Bank of America related to the

COVID-19 pandemic in the amount of $ 151,500 ,

which we received on May 4, 2020.

The SBA Loan has a fixed interest rate of 1 percent

per annum and a maturity date two 2

years from the date loan was issued.

On April 28, 2021, SBA authorized full forgiveness of this loan and the Company recognized

principal amount of $ 151,500

and $1,490 interest to other income.

On March 2, 2021, Perfecular Inc.

into an agreement to receive a U.S.

Small Business Administration Loan (“SBA Loan”) from Wells Fargo related to the COVID-19

pandemic in the amount of $ 158,547 , which we received on March 3, 2021.

1 unchanged sentence

and a maturity date two 2 years from the date loan was issued.

On March 10, 2021, AVX Design & Integration,

On March 10, 2021, AVX Design &

Integration, Inc.

entered into an agreement to receive an SBA Loan from Chase Bank related to the COVID-19 pandemic in the amount of

SBA Loan has a fixed interest rate of 0.98 percent per annum and a maturity date five years from the date loan was issued.

The SBA Loan has a fixed interest rate of 0.98

percent per annum and a maturity date five 5 years from the date loan was issued.

Economic Injury Disaster Loan

1 unchanged sentence

an agreement to receive a U.S.

Small Business Administration Loan (“SBA Loan”) from Bank of America related to the COVID-19

pandemic in the amount of $ 81,100 , which we received on June 4, 2020.

1 unchanged sentence

and a maturity date thirty 30 years from the date loan was issued.

On June 5, 2020, AVX Design & Integration,

On June 5, 2020, AVX Design &

Integration, Inc.

entered into an agreement to receive a U.S.

Small Business Administration Loan (“SBA Loan”) from JPMorgan Chase Bank,

related to the COVID-19 pandemic in the amount of $56,800, which we received on June 5, 2020.

The SBA Loan has a fixed interest rate

of 3.75 percent per annum and a maturity date thirty years from the date loan was issued.

January 8, 2021, Focus Universal Inc.

entered into a secured promissory note agreement with East West Bank in the amount of $1,500,000.

The note has a variable interest rate of 0.25% above Wall Street Journal Prime Rate.

The note requires monthly payments with the final

payment of $1,357,178 due on January 22, 2026.

Small Business Administration Loan (“SBA Loan”) from

JPMorgan Chase Bank, N.A.

related to the COVID-19 pandemic in the amount of $ 56,800 ,

which we received on June 5, 2020.

The SBA Loan has a fixed interest rate of 3.75

percent per annum and a maturity date thirty 30 years from the date loan was issued.

On January 8, 2021, Focus Universal Inc.

into a secured promissory note agreement with East West Bank in the amount of $ 1,500,000 .

The note has a variable interest rate of 0.25 %

above Wall Street Journal Prime Rate.

The note requires monthly payments with the final payment of $ 1,357,178 due on January 22, 2026 .

Borrower will use all of the proceeds from this

Loan solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing

Economic Injury Disaster Loan

current portion

1 unchanged sentence

Interest expense incurred from the loans amounted

to $7,565 and $0 for the three months ended March 31, 2021 and 2020, respectively.

Note 11 –

Stockholders’

to $ 22,827 and $ 868 for the six months ended June 30, 2021 and 2020, respectively.

Note 11 – Stockholders’ Equity

Shares authorized

1 unchanged sentence

all classes of stock that the Company is authorized to issue is seventy-five million ( 75,000,000 ) shares of common stock, par value $ 0.001

As of March 31, 2021 the Company had 40,959,741

As of June 30, 2021 the Company had 40,959,741

shares of common stock issued and outstanding.

During the three months ended March 31, 2021,

the Company did not issue common stock.

During the six months ended June 30, 2021, the

Company did not issue common stock.

Shares to be issued for compensation

The Company entered into agreements with third

party consultants for financing and management consultation.

The Company has incurred consulting service fees not paid in cash amounting

to $12,000 for the period ended March 31, 2021, which the Company intends to issue stock as compensation for services rendered.

incurred but not yet paid in shares as of March 31, 2021 and 2020 amounted to $110,709 and $62,709, respectively.

The Company entered into agreements with

third party consultants for financing and management consultation.

The Company has incurred consulting service fees not paid in cash

amounting to $ 24,000

for the six months ended June 30, 2021, which the Company intends to issue stock as compensation for services rendered.

incurred but not yet paid in shares as of June 30, 2021 and December 31, 2020 amounted to $ 122,709

and $ 98,709 ,

respectively.

Stock options

3 unchanged sentences

granted 30,000 options to purchase shares at $ 5.70 per share.

As of March 31, 2021, there were 315,000 options

As of June 30, 2021, there were 315,000 options

granted, 262,500 options vested, 52,500 options unvested, and 315,000 outstanding stock options.

the three months ended March 31, 2021 and 2020, the Company’s stock option compensation expenses amounted to $259,350 and $106,838 ,

respectively.

For the six months ended June 30, 2021 and 2020,

the Company’s stock option compensation expenses amounted to $ 213,675 and $ 518,700 , respectively.

The fair value of the warrants listed above was determined using the

Black-Scholes option pricing model with the following assumptions:

Schedule of assumptions

Risk-free interest rate

3 unchanged sentences

The following is a summary of options activity

from December 31, 2020 to March 31, 2021:

from December 31, 2020 to June 30, 2021:

Schedule of option activity

Weighted average exercise price

3 unchanged sentences

Forfeited or expired

Outstanding at March 31, 2021

Vested as of March 31, 2021

Exercisable at March 31, 2021

Outstanding at June 30, 2021

Vested as of June 30, 2021

Exercisable at June 30, 2021

The exercise price for options outstanding and

exercisable at March 31, 2021:

Note 12 –

Segment reporting

exercisable at June 30, 2021:

Schedule of options by exercise price

Note 12 – Segment reporting

The Company consists of two types of operations.

1 unchanged sentence

and Perfecular Inc.

(“Focus”) involve wholesale, research and development of universal smart instrument

and farming devices.

AVX Design & Integration, Inc.

(“AVX”) is an IoT installation and management company specializing

in high performance and easy to use audio/video, home theater, lighting control, automation, and integration.

1 unchanged sentence

income statement information by segment.

Three months ended March 31, 2021

Segment information table

Six months ended June 30, 2021

Revenue - related party

8 unchanged sentences

Loss from Operations

( 1,254,418 )

( 1,382,728 )

Other Income (Expense):

Interest income (expense), net

Interest (expense) –

related party

Other income (expense), net

1 unchanged sentence

Loss before income taxes

Note 13 –

Commitments and Contingencies

( 1,029,892 )

( 1,162,661 )

$ ( 1,029,892 )

$ ( 132,769 )

$ ( 1,162,661 )

Note 13 – Commitments and Contingencies

In the normal course of business or otherwise,

6 unchanged sentences

damages, outside legal fees, and other directly related costs expected to be incurred.

Note 14 –

Subsequent Events

There were no recorded litigation loss contingencies

as of June 30, 2021 and December 31, 2020.

Note 14 – Subsequent Events

On July 8, 2021, SBA authorized full forgiveness of AVX Design &

Integration, Inc.

PPP loan principal amount of $107,460 and $1,267 interest.

The Company has evaluated all other subsequent

events through the date these condensed consolidated financial statements were issued and determine that there were no subsequent events

events through the date these condensed consolidated financial statements were issued and determined that there were no subsequent events

or transactions that require recognition or disclosures in the condensed consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements