What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-16 · 332 added, 251 removed, 656 unchanged (47% of the section changed)

3 unchanged sentences

Index to the Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (unaudited)

Condensed Consolidated Statement of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2022 and 2021 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (unaudited)

Notes to the Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

Condensed Consolidated Statement of Changes in Stockholder’s Equity for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)

Notes to the Unaudited Condensed Consolidated Financial Statements

FOCUS UNIVERSAL INC.

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Prepaid expenses

Marketable equity securities

Deposit - current portion

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Common stock, par value $ 0.001 per share, 75,000,000 shares authorized;

43,259,741 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

43,413,517 shares issued and outstanding as of June 30, 2022 and 43,259,741 shares issued and outstanding as of December 31, 2021

Additional paid-in capital

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Revenue - related party

Total Revenue

Operating Expenses:

Cost and Operating Expenses:

Cost of revenue, excluding depreciation & amortization

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General and administrative

Total Cost and Operating Expenses

Total Operating Expenses

Loss from Operations

( 1,205,348 )

( 3,129,209 )

( 1,382,728 )

Other Income (Expense):

Interest income (expense), net

Unrealized loss on marketable equity securities

Realized gain on marketable equity securities

Other income (expense), net

Total other income (expense)

1 unchanged sentence

( 1,061,297 )

( 2,930,227 )

( 1,162,661 )

Income tax expense

1 unchanged sentence

$ ( 480,145 )

$ ( 2,930,227 )

$ ( 1,162,661 )

Other comprehensive items

Foreign currency translation gain (loss)

Foreign currency translation gain and (loss)

Total comprehensive loss

1 unchanged sentence

$ ( 480,145 )

Weighted Average Number of Common Shares Outstanding:

Net Loss per common share:

$ ( 2,930,106 )

$ ( 1,162,661 )

Weight Average Number of Common Shares Outstanding:

Basic and Diluted

Net Loss per common share:

Basic and Diluted

The accompanying notes are an integral part

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FOCUS UNIVERSAL INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Balance - December 31, 2021

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

FOR THE THREE AND SIX MONTHS ENDED JUNE

30, 2022 AND 2021

Shares to be Issued

Accumulated Other

Common Shares

Comprehensive Income (Loss)

Stockholders’

Balance - March 31, 2022

$ ( 14,806,021 )

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Common stock to be issued for services

( 1,930,753 )

Other comprehensive loss

1 unchanged sentence

( 1,061,297 )

Balance – June 30, 2022

$ ( 15,867,318 )

Balance - March 31, 2021

$ ( 10,398,630 )

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive

Total Stockholders’

Stock based compensation -options

Common stock to be issued for services

Balance – June 30, 2021

$ ( 10,878,775 )

Shares to be Issued

Accumulated Other

Common Shares

Comprehensive Income (Loss)

Stockholders’

Balance - December 31, 2021

1 unchanged sentence

Stock based compensation -options

Stock based compensation - shares

Common stock to be issued for services

Balance - March 31, 2021

( 1,930,753 )

Other comprehensive loss

( 2,930,227 )

Balance – June 30, 2022

$ ( 15,867,318 )

Balance - December 31, 2020

$ ( 9,716,114 )

Stock based compensation - options

Common stock to be issued for services

( 1,162,661 )

Balance – June 30, 2021

$ ( 10,878,775 )

The accompanying notes are an integral part

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

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Depreciation expense

Unrealized loss on marketable equity securities

Realized gain on marketable equity securities

Gain on forgiveness of debt

Stock-based compensation – shares

Stock-based compensation

Stock-based compensation – services

Stock option compensation – options

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Net cash flows used in operating activities

( 1,749,492 )

Cash flows from investing activities:

Purchase of property and equipment

Purchase of marketable securities

Proceeds from sale of marketable securities

Net cash flows used in investing activities

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Proceeds from SBA loan

Repayment on SBA loan

Proceeds from bank loan

Prepayment on bank loan

Net cash flows used in financing activities

Net cash flows provided by financing activities

Effect of exchange rate

Net change in cash

( 2,018,257 )

Cash beginning of period

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND

Note 1 – Organization and Operations

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is a universal

smart instrument developer and manufacturer focused on the IoT industry, headquartered in Ontario, California, 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 test, and parameter measurement instruments and functions.

Company’s 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.

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.

smart instrument developer and manufacturer focused on the internet of things (“IoT”) industry, headquartered in Ontario,

California, specializing in the development and commercialization of novel and proprietary universal smart technologies and instruments

that solve problems plaguing the internet of things (“IoT”) industry by:

(1) increasing overall chip integration by shifting

it 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;

and (4) User Interface Machine auto generation technology.

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 test, and parameter measurement instruments

and functions.

The Company’s 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

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 is 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 Universal is also developing ultra-narrow band technology

that is hopefully capable of overcoming the noise problems communicating through power lines that have hindered the industry for over

Focus Universal’s wireless communication technology may allow for longer-range coverage, might be more energy effective

and management believes has much faster data sending speeds than the current 5G technology speeds being used.

Perfecular Inc.

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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.

provided by AVX include full integration of houses, apartment, commercial complex, office spaces with audio, visual and control systems

to fully integrate devices in the low voltage field.

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.

Services provided by AVX include full integration

of houses, apartment, commercial complex, office spaces with audio, visual and control systems to fully integrate devices in the low voltage

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

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obligations, to obtain necessary equity financing to continue operations, and the attainment of profitable operations.

For the three

months ended March 31, 2022, the Company had a net loss of $ 1,868,930

and negative cash flow from operating activities of $ 902,283 .

For the six months

ended June 30, 2022, the Company had a net loss of $ 2,930,227 and negative cash flow from operating activities of $ 1,749,492 .

With the January 1, 2022 beginning cash amount of $8,678,665, the Company will have enough cash to cover its projected annual cash burn

rate of $3,152,618 which is an increase

from the previous year.

This is a result of coming off of a year where the company completed an uplisting transaction causing a greater

than normal amount of expenditure, especially within professional service fees.

Overall, the Company has adequate cash for the Company

to continue operation as a going concern throughout 2022 without any additional capital raise.

As a result, the previous factors raising

substantial doubt to continue as a going concern have been alleviated for the following year.

rate of $ 3,152,618 which is an increase from the previous year.

This is a result of coming off of a year where the company

completed an uplisting transaction causing a greater than normal amount of expenditure, especially in professional fees.

Company has adequate cash for the Company to continue operation as a going concern throughout 2022 without any additional capital raise.

As a result, the previous factors raising substantial doubt to continue as a going concern have been alleviated for the following year.

Segment Reporting

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(FDIC) insurance limit.

As of March 31, 2022 and December 31, 2021, approximately $ 5,950,016 and $ 7,464,846 of the Company’s

As of June 30, 2022 and December 31, 2021, approximately $ 5,719,087 and $ 7,464,846 of the Company’s

cash was not insured by the FDIC.

There were no cash equivalents held by the Company as of March 31, 2022 and December 31, 2021.

There were no cash equivalents held by the Company as of June 30, 2022 and December 31, 2021.

Accounts Receivable

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

As of March 31, 2022 and December 31, 2021, allowance

As of June 30, 2022 and December 31, 2021, allowance

for doubtful accounts amounted to $ 143,782 and $ 86,635 , respectively.

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

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.

Management compares the cost of inventory with its market value and a fair value adjustment 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 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.

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, 2022 and December 31, 2021,

inventory fair value adjustments amounted to $ 43,934

and $ 68,940 ,

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 a fair value adjustment 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 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

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 June 30, 2022 and December 31, 2021, inventory fair value adjustments amounted to $ 43,323 and $ 68,940 , respectively.

Marketable Securities

The Company invests part of its excess treasury

cash in equity securities and money market funds according to company treasury and investment policies.

Marketable securities represent

trading securities bought and held primarily for sale in the near-term to generate income on short-term price differences and are stated

at fair value.

Realized and unrealized gains and losses are recorded in other income (expense), net.

Property and Equipment

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Loss on long-lived

assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal.

Long-term assets

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.

review at March 31, 2022 and December 31, 2021, the Company believes there was no impairment of its long-lived assets.

assets to be disposed of is determined in a similar manner, except that those fair values are reduced for the cost of disposal.

assets 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 June 30, 2022 and December 31, 2021, the Company believes there was no impairment of its long-lived assets.

Share-based Compensation

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to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.

Changes in the estimated fair

value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

The fair value of the warrants was estimated

using a Black-Scholes pricing model (see Note 11).

Changes in the estimated

fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

The fair value of the warrants

was estimated using a Black-Scholes pricing model (see Note 11).

The Company does not have any outstanding warrants as of June 30, 2022

and December 31, 2021, respectively.

Fair Value of Financial Instruments

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Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets are considered Level 2 when their

fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant

model assumption or input is unobservable, such as Boustead warrant (Note 11).

The following table summarize financial assets

and liabilities measured at fair value on a recurring basis as of June 30, 2022:

Schedule of Fair Value Assets And Liabilities

Measured On Recurring Basis

June 30, 2022 (unaudited)

Marketable securities:

Total assets measured at fair value

The carrying amount

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Transactions involving related parties cannot

be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist.

be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not

Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated

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net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity.

The Company other comprehensive

loss for the three months ended March 31, 2022 and for the years ended December 31, 2021 was comprised of foreign currency translation

The Company’s other comprehensive

loss for the six months ended June 30, 2022 and for the years ended December 31, 2021 was comprised of foreign currency translation adjustments.

Revenue Recognition

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The impact of adopting

ASC 606 was not material to the

Consolidated Financial Statements.

ASC 606 was not material to the Consolidated Financial Statements.

Revenue from the Company is recognized under Topic

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includes the following elements:

executed contracts with the Company’s customers that it believes are legally enforceable;

· 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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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 March 31, 2022 and December 31, 2021.

As of March 31, 2022 and December 31, 2021, the

There was no material deferred tax asset or liabilities as of June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, the

Company did no t identify any material uncertain tax positions.

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potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

Due to the net loss incurred by the Company,

potentially dilutive instruments would be anti-dilutive.

Accordingly, diluted loss per share is the same as basic loss for all periods

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their

inclusion would be anti-dilutive.

Due to the net loss incurred by the Company, potentially

dilutive instruments would be anti-dilutive.

Accordingly, diluted loss per share is the same as basic loss for all periods presented.

The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion

would be anti-dilutive.

Schedule of anti dilutive shares

Three Months Ended March 31,

Six Months Ended June 30,

Stock options

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consolidated statements of operations.

The exchange rates used for unaudited condensed consolidated financial statements are as follows:

Of Intercompany Foreign Currency Balances

Average Rate for the Six Months Ended

China Yuan (RMB)

United States Dollar ($)

Exchange Rate at

June 30, 2022

December 31, 2021

China Yuan (RMB)

United States Dollar ($)

Note 3 – Recent Accounting Pronouncement

Recently Adopted Accounting Standards

In January 2020, the FASB issued ASU 2020-01,

Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic

815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.

The guidance provides clarification of the interaction of

rules for equity securities, the equity method of accounting and forward contracts and purchase options on certain types of securities.

ASU 2020-01 is effective for the Company in the first quarter of 2021.

The adoption did not have any significant impact on the Company’s

unaudited condensed consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06,

Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity

(Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to improve financial reporting

associated with accounting for convertible instruments and contracts in an entity’s own equity.

ASU 2020-06 will be effective for

the Company in the first quarter of 2022.

The adoption did not have any significant impact on the Company’s unaudited condensed

consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In June 2016, the FASB issued ASU No.

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Note 4 – Inventory

At March 31, 2022 and December 31, 2021, inventory

At June 30, 2022 and December 31, 2021, inventory

consisted of the following:

Schedule of Inventory

March 31, 2022

June 30, 2022

December 31, 2021

Finished goods

Less inventory fair value adjustments

Inventory, net

Note 5 – Deposits

Deposit balance as of March 31, 2022 amounted

to $ 75,177 for lease agreement and utility deposit and third-party payroll service deposit.

Deposit balance as of June 30, 2022 amounted to

$ 42,203 for lease agreement and utility deposit and third-party payroll service deposit.

Deposit balance as of December 31, 2021 amounted

1 unchanged sentence

Note 6 – Property and Equipment

At March 31, 2022 and December 31, 2021, property and equipment consisted

At June 30, 2022 and December 31, 2021, property and equipment consisted

of the following:

Schedule of property and equipment

March 31, 2022

June 30, 2022

December 31, 2021

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Property and equipment, net

Depreciation expense for the three months ended

March 31, 2022 and 2021 amounted to $ 40,165 and $ 40,537 , respectively.

Depreciation expense for the six months ended

June 30, 2022 and 2021 amounted to $ 82,063 and $ 80,872 , respectively.

The Company purchased a warehouse in Ontario,

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The tenant paid $ 12,335 as security deposit, shown as non-current

liabilities as of March 31, 2022 and other liability in other current liability as of December 31, 2021.

liabilities as of June 30, 2022 and other liability in other current liability as of December 31, 2021.

Note 7 – Related Party Transactions

Revenue generated from Vitashower Corp., a company

owned by the CEO’s wife, amounted to $ 31,542 and $ 10,191 for the three months ended March 31, 2022 and 2021, respectively.

receivable balance due from Vitashower Corp.

amounted to $ 85,992 and $ 15,176 as of March 31, 2022 and December 31, 2021, respectively.

owned by the Chief Executive Officer’s wife, amounted to $ 31,542 and $ 15,141 for the six months ended June 30, 2022 and 2021, respectively.

Account receivable balance due from Vitashower Corp.

amounted to $ 85,992 and $ 15,176 as of June 30, 2022 and December 31, 2021, respectively.

Purchases generated from Vitashower Corp.

amounted to $ 0 and $ 0 for the three months ended March 31, 2022 and 2021, respectively.

were accounts payable balances of $ 0 and $ 0 due to Vitashower Corp.

as of March 31, 2022 and December 31, 2021, respectively.

amounted to $ 0 and $ 0 for the six months ended June 30, 2022 and 2021, respectively.

accounts payable balances of $ 0 and $ 0 due to Vitashower Corp.

as of June 30, 2022 and December 31, 2021, respectively.

Service revenue generated from one of the Company’s

directors, amounted to $ 2,278 and $ 0 for the six months ended June 30, 2022 and 2021, respectively.

Account receivable balance due from

this director amounted to $ 2,278 and $ 0 as of June 30, 2022 and December 31, 2021, respectively.

Compensation for services provided by the President

and Chief Executive Officer for the three months ended March 31, 2022 and 2021 amounted to $ 30,000 and $ 30,000 , respectively.

Vendor Tianjin

Guanglee was once owned by the Chief Executive Officer Desheng Wang, as fully disclosed in the annual report in 2017 and in previous filings.

In 2018, the entity was sold to an unrelated party who has since passed away causing, and further ownership changes as noted in Note 8

and Chief Executive Officer for the six months ended June 30, 2022 and 2021 amounted to $ 60,000 and $ 60,000 , respectively.

Of subsequent

note, Tianjin Guanglee was once owned by the Chief Executive Officer Desheng Wang, as fully disclosed in the annual report in 2017.

then, during 2018, the entity was transferred to another individual and was not considered a related party transaction per guidelines,

and further subsequent changes to the vendor are noted in Note 8 found below.

Note 8 – Business Concentration and Risks

Major customers

Four customers accounted for 56 % of the total

accounts receivable as of March 31, 2022 and one customer accounted for 48 % of the total accounts receivable as of December 31, 2021,

respectively.

These four customers accounted for 67 % of the total revenue for the three months ended March 31, 2022 and one customer accounted

for 80 % of total revenue for the three months ended March 31, 2021, respectively.

Three customers accounted for 34 % of the total

accounts receivable as of June 30, 2022 and one customer accounted for 48 % of the total accounts receivable as of December 31, 2021, respectively.

These three customers accounted for 54 % of the total revenue for the six months ended June 30, 2022 and one customer accounted for 78 %

of total revenue for the six months ended June 30, 2021, respectively.

Major vendors

One vendor, Tianjin Guanglee, accounted for 0 %

and 0 % of total accounts payable at March 31, 2022 and December 31, 2021, respectively.

This same vendor, Tianjin Guanglee, accounted

for 30 % and 84 % of the total purchases for the three months ended March 31, 2022 and 2021, respectively.

and 0 % of total accounts payable at June 30, 2022 and December 31, 2021, respectively.

This same vendor, Tianjin Guanglee, accounted for

24 % and 77 % of the total purchases for the six months ended June 30, 2022 and 2021, respectively.

Of subsequent note, Tianjin Guanglee

was once owned by the Chief Executive Officer Desheng Wang, as fully disclosed in the annual report in 2017 and prior annual reports.

Wang transferred the ownership of the entity to an unrelated third party in a transaction not considered a related

party transaction per the guidelines.

was once owned by the Chief Executive Officer Desheng Wang, as fully disclosed in the annual report in 2017.

Wang transferred

the ownership of the entity to an unrelated third party in a transaction not considered a related party transaction per the guidelines.

Note 9 – Lease

The Company recorded its operating lease expense

of $ 75,597 and $ 16,295 for the three months ended March 31, 2022 and 2021, respectively.

of $ 237,045 and $ 32,590 for the six months ended June 30, 2022 and 2021, respectively.

On April 8, 2015, AVX Design & Integration

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on July 1, 2015, and will end on August 31, 2022.

The monthly rent is $4,536 with approximately a 3% increase rate in each additional year.

The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an

amount equal to the lease payments for the asset under similar term, which is 15%.

The monthly rent is $4,536 with approximately a 3% increase rate in each additional

The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow

an amount equal to the lease payments for the asset under similar term, which is 15%.

Lease expense for the lease is recognized on a straight-line

basis over the lease term.

As of August, the company has not entered into any new commercial lease for AVX Design & Integration Inc.

On December 7, 2021, Focus Universal (Shenzhen)

Technology Co.

LTD entered a thirty-eight month commercial lease with a third party for an approximately 5,895 square foot office space.

LTD entered into a thirty-eight month commercial lease with a third party for an approximately 5,895 square foot office

The lease commenced on December 25, 2021 and will end on February 28, 2025.

The monthly rent is RMB70,097 (approximately $11,053) with

approximately an 11.1% to 12.5% increase rate in each additional year.

The incremental borrowing rate for a lease is the rate of interest

the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term,

which is 10%.

The monthly rent is RMB70,097 (approximately $11,053)

with approximately an 11.1% to 12.5% increase rate in each additional year.

The incremental borrowing rate for a lease is the rate of

interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar

term, which is 10%.

Lease expense for the lease is recognized on a straight-line basis over the lease term.

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to make lease payments arising from the lease.

As of March 31, 2022 and December 31, 2021, operating lease right-of use assets and lease

As of June 30, 2022 and December 31, 2021, operating lease right-of use assets and lease

liabilities were as follows:

Schedule of operating Right-of-use asset and liability

March 31, 2022

June 30, 2022

December 31, 2021

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Schedule Lease term and discount rate

March 31, 2022

June 30, 2022

December 31, 2021

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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.

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.

The balance of principal and interest were $ 158,547

and $ 1,570 ,

respectively, due as of March 31, 2022.

There were no principal and interest due as of March 31, 2022.

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

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.

On April 4, 2022, the SBA authorized full forgiveness of this loan principal amount of $ 158,547

and $ 1,570 interest.

Schedule of debt

March 31, 2022

June 30, 2022

December 31, 2021

2 unchanged sentences

Interest expense incurred from the loans amounted

to $288 and $132 for the three months ended March 31, 2022 and 2021, respectively.

to $ 288 and $ 22,827 for the six months ended June 30, 2022 and 2021, respectively.

Note 11 – Stockholders’ Equity

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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

During the three months ended March 31, 2022,

the Company did not issued any shares of common stock.

During the year ended December 31, 2021, the Company issued 2,300,000 shares of

common stock.

On September 2, 2021, the Company closed its Nasdaq

uplisting public offering (“IPO”) under a registration statement effective August 30, 2021, in which it issued and sold 2,000,000

shares of its Common Stock at a purchase price of $ 5.00 per share.

During the six months ended June 30, 2022, the

Company issued 153,776 shares of common stock.

On April 4, 2022, the Company issued 121,149 shares

of its Common Stock to Boustead Securities LLC.

(“Boustead”), which is the warrants exercised by Boustead on September 7,

2021 with the exercise price $ 6.25 and the shares were valued at $ 1,776,044 upon cashless exercise option of warrants related to completion

of the Company’s public offering.

On May 2, 2022, the Company issued 32,627 shares

to consultants in exchange for professional services rendered.

The shares were valued at $ 154,709 based on the closing price of the Company’s

common stock on the dates that the shares were deemed earned, according to the agreements.

During the year ended December 31, 2021, the Company

issued 2,300,000 shares of common stock.

On September 2, 2021, the Company closed its initial

public offering (“IPO”) under a registration statement effective August 30, 2021, in which it issued and sold 2,000,000 shares

of its Common Stock at a purchase price of $ 5.00 per share.

On September 2, 2021, the Company closed on the

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and offering expenses.

As of March 31, 2022 and December 31, 2021 and

2020, the Company had 43,259,741 shares of common stock issued and outstanding, respectively.

As of June 30, 2022 and December 31, 2021 and

2020, the Company had 43,413,517 shares and 43,259,741 shares of common stock issued and outstanding, respectively.

Shares to be issued for compensation

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

to $ 8,000 for the three months ended March 31, 2022, which the Company intends to issue stock as compensation for services rendered.

Expenses incurred but not yet paid in shares as of March 31, 2022 and 2021 amounted to $ 154,709 and $ 110,709 , respectively.

to $ 8,000 for the three months ended June 30, 2022, which the Company intends to issue stock as compensation for services

Expenses incurred and paid in shares as of June 30, 2022 amounted to $ 154,709 .

On August 30, 2021, the Company entered into a

Representative Common Stock Purchase Warrant agreement (“Warrant Agreement”) with its placement agent, Boustead Securities

(“Boustead”) for 161,000 shares and the exercise price is $6.25.

Representative Common Stock Purchase Warrant agreement (“Warrant Agreement”) with its placement agent, Boustead for 161,000

shares and the exercise price is $6.25.

Boustead exercised the warrants on September 7, 2021.

The fair value of the warrants was $ 1,041,670 and $ 2,326,450 as of August 30 and September 7, 2021, respectively.

For the year ended December

31, 2021, the Company recorded a loss from change in the fair value of warrant liability which amounted to a difference of $ 1,284,780 .

The fair value of the warrants was $ 1,041,670

and $ 2,326,450 as of August 30 and September 7, 2021, respectively.

For the year ended December 31, 2021, the Company recorded a loss

from change in the fair value of warrant liability which amounted to a difference of $ 1,284,780 .

These warrants were valued using a Black-Scholes

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For the year ended December 31, 2021, the Company has a gain on settlement of derivative liability which amounted to $550,406.

Shares to be issued as of December 31, 2021 and December 31, 2020 amounted to $1,776,044 and $0, respectively.

121,149 shares were issued to Boustead which amounted to $17,776,044 as of June 30, 2022.

Employee compensation

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of the restricted shares was granted and vested on February 11, 2022.

The rest 20% of the restricted shares will vest on each anniversary

of the Vesting Date until fourth anniversary of the Vesting Date.

20% of the restricted shares will vest on each anniversary of the

Vesting Date until fourth anniversary of the Vesting Date.

There were 58,000 shares granted as of March 31, 2022.

The fair value

of above employee compensation was $ 609,580 as of March 31, 2022.

In November 2021, the Company entered into a

one-year employment agreement with VP of Finance and Head of Investor Relations of the Company, pursuant to which the Company

granted a 10,000-share bonus consisting of shares of $0.001 par value voting common stock, which will be granted in 2,500 blocks

every quarter based on certain performance metrics.

During the three months ended March 31, 2022,

the Company recognized VP of Finance and Head of Investor Relations of the Company employee compensation amount of $ 46,790 .

three months ended March 31, 2022 and 2021, the Company total employee compensation amount were $ 656,370 and $ 0 , respectively.

The fair value of above

employee compensation was $ 609,580 as of June 30, 2022.

In November 2021, the Company entered into a one-year

employment agreement with VP of Finance and Head of Investor Relations of the Company, pursuant to which the Company rewards 10,000-share

bonus consisting of shares of $0.001 par value voting common stock, which will be granted in 2,500 blocks every quarter based on certain

performance metrics.

During the six months ended June 30, 2022, the

Company recognized VP of Finance and Head of Investor Relations of the Company employee compensation amount of $ 75,340 .

During the six

months ended June 30, 2022 and 2021, the Company total employee compensation amount were $ 684,920 and $ 0 , respectively.

Stock options

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granted, 315,288 options vested, 104,713 options unvested, and 420,000 outstanding stock options.

For the three months ended March 31, 2022 and

For the six months ended June 31, 2022 and 2021,

the Company’s stock option compensation expenses amounted to $ 456,750 and $ 213,675 , respectively.

2 unchanged sentences

Schedule of option activity

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

Risk-free interest rate

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Expected dividend yield

The following is a summary of options activity

from December 31, 2021 to March 31, 2022:

The following is a summary of the option activity

from December 31, 2021 to June 30, 2022:

Schedule of options by exercise price

4 unchanged sentences

Forfeited or expired

Outstanding at March 31, 2022

Vested as of March 31, 2022

Exercisable at March 31, 2022

As of March 31, 2021, there were 210,000

options with an exercise price of $ 5.70 ,

options with an exercise price of $ 3.00 ,

options with an exercise price of $ 8.86

As of December 31, 2021, there were 210,000

options with an exercise price of $ 5.70 ,

options with an exercise price of $ 3.00 ,

options with an exercise price of $ 8.86

Outstanding at June 30, 2022

Vested as of June 30, 2022

Exercisable at June 30, 2022

Note 12 – Segment reporting

The Company consists of three types of operations.

The Company consists of two types of operations.

Focus Universal, Inc.

(“Corporate”) involves operations related to research and development of technology products, non-specific

financing, executive expense, operations and investor relations of the public entity, and general shared management and costs across

subsidiary units which spread across all functional categories.

financing, executive expense, operations and investor relations of the public entity, and general shared management and costs across subsidiary

units which spread across all functional categories.

Perfecular Inc.

(“Perfecular”) involve wholesale, marketing,

and production of universal smart instrument and devices in the hydroponic and controlled agricultural segments.

AVX Design & Integration,

(“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.

(“Perfecular”) involve wholesale, marketing, and production

of universal smart instrument and devices in the hydroponic and controlled agricultural segments.

AVX Design & Integration, Inc.

is an IoT installation and management company specializing in high performance and easy to use audio/video, home theater, lighting control,

automation, and integration.

The table below discloses income statement information by segment.

Three Months Ended March 31, 2022

Segment Reporting

Six Months Ended June 30, 2022

Revenue - related party

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( 1,171,117 )

( 3,129,209 )

Other Income (Expense):

Interest income (expense), net

Unrealized loss on marketable equity securities

Realized gain on marketable equity securities

Other income (expense), net

6 unchanged sentences

$ ( 1,011,288 )

$ ( 153,377 )

$ ( 2,930,227 )

Note 13 – Commitments and Contingencies

8 unchanged sentences

There were no recorded litigation loss contingencies

as of March 31, 2022 and December 31, 2021.

as of June 30, 2022 and December 31, 2021.

Note 14 – Subsequent Events

On April 4, 2022, the SBA authorized full forgiveness

of Perfecular Inc.’s PPP loan principal amount of $158,547 and $1,570 interest.

On April 28, 2022, Oakshore Consulting agreed

to cancel the outstanding AVX finder's fee amount of $22,000.

As a result, the Company recognized $22,000 as other income.

The Company issued 32,627 shares to full fill

prior period share compensation to third party consultants for financing and management consulting service at the end of April.

Regarding election of directors, on August 10,

2022, the Board of Directors appointed Sean Warren to serve on the Board of Directors as an independent director.

The appointment of Mr.

Warren fills a board seat previously vacated by Mr.

Greg Butterfield.

As a director, Mr.

Warren’s term begins August 10, 2022, and

expires at the annual meeting of the stockholders to be held in 2023.

It has been determined and accepted that Mr.

Warren will serve as

a member on the audit and compensation committees of the Board of Directors.

Warren will have the same compensation arrangement for

his service as the other independent directors.

That compensation currently consists of cash compensation and an option grant.

Sean Warren is a seasoned executive with over

25 years of experience in technology and enterprise technology systems and has previously served on Focus Universal’s board of directors

beginning on June 8, 2018.

His areas of expertise include software development, cloud management, enterprise infrastructure development

and full spectrum of IT compliance.

Warren currently serves as the Vice President of OPSA Change Delivery for Wells Fargo and has

From 2016 to 2018, he served as Director of IT Operations at Domo, Inc.

Warren has also previous served as the CIO of

Mountain Medical, Veyo Medical and Vice President of IT at Larry Miller.

He has also worked for technology companies including Omniture,

Warren graduated from Florida State University with a degree in accounting.

He is qualified to serve as a director because

of his accounting experience, his experience serving on public company boards and experience with the financial industry and information

The Company has evaluated other subsequent events

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

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

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

events or transactions other than this election of director event that require recognition or disclosures in the unaudited 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