What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-31 compared with 2022-03-08 · 471 added, 367 removed, 750 unchanged (53% of the section changed)

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Index to the Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered

Public Accounting Firm (PCAOB No.

Report of Independent Registered Public Accounting Firm (PCAOB

Consolidated Balance Sheets as of December 31, 2022 and 2021

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We have audited the accompanying consolidated

balance sheets of Focus Universal, Inc.

(the “Company”) as of December 31, 2021 and 2020, the related statement of operations,

stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting

principles generally accepted in the United States.

balance sheet of Focus Universal, Inc.

(the “Company”) as of December 31, 2022 the related consolidated statement

of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2022 and the results of its operations and its cash flows for the year then

ended, in conformity with accounting principles generally accepted in the United States.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter

communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to

be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter

in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,

providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition — identification

of contractual terms in certain customer arrangements

As described in Note

2 to the consolidated financial statements, management applies FASB Topic 606, Revenue from Contacts with Customers (“ASC

606”) to recognize revenue.

Management recognizes revenue upon transfer of control of promised goods or services to customers in

an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

The Company’s

revenue is divided into two sources, with one source being from project construction which is recognized over time using the percentage-of-completion

method under the cost approach.

Management is required to estimate the percentage of completion when determining the amount and timing

of revenue recognition.

The principal considerations

for our determination that performing procedures over the percentage-of-completion method of recognition of revenue contracts and subsequent

payment collections is a critical audit matter as there are more significant risks associated with the percentage-of completion recognition

of this revenue.

This in turn led to significant effort in performing our audit procedures which were designed to evaluate whether the

contractual terms, the timing of revenue recognition were appropriately identified and determined by management and to evaluate the reasonableness

of management’s estimates.

Our audit procedures included, among others, understanding

of controls relating to management’s revenue recognition process, examining transaction related documents, confirming revenues and

outstanding receivables at the balance sheet date with a sample of the project construction customers, and testing collections subsequent

to the balance sheet date.

/s/ Reliant CPA PC

Reliant CPA PC

We have served as the Company’s auditor

Report of Independent Registered Public Accounting

To the shareholders and the board of directors

of Focus Universal, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Focus Universal, Inc.

(the “Company”) as of December 31, 2021, the related statement of operations, stockholders’

equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally

accepted in the United States.

Substantial Doubt about the Company’s

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We have served as the Company’s auditor

since 2017 to 2022.

March 8, 2022

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Accounts receivable – related party

Inventories, net

Other receivables

Prepaid expenses

Marketable securities

Deposit - current portion

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Accounts payable and accrued liabilities

Accounts payable - related party

Treasury stock payable

Other current liabilities

Customer deposit

Loan, current portion

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43,530,915 and 43,259,741 shares issued and outstanding as of December 31, 2022 and 2021, respectively

Treasury stock ( 400,000

held at December 31, 2022 and 2021, respectively)

( 2,000,000 )

Additional paid-in capital

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FOCUS UNIVERSAL INC.

CONSOLIDATED STATEMENTS

OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31,

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Total Revenue

Costs and Operating Expenses

Cost of revenue, excluding depreciation & amortization

Cost of revenue

Operating Expenses

Selling expense

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Interest income (expense), net

Interest (expense) - related party

Gain on extinguishment of debt

Forgiveness of debt

Change in fair value of warrant liability

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Gain on settlement of derivative liability

Unrealized loss on marketable equity securities

Realized loss on marketable equity securities

Rental income

Total other income (expense)

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FOCUS UNIVERSAL INC.

CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

Common Shares

Comprehensive Loss

Treasury stock

Shares to be issued

Accumulated Other

Comprehensive

Stockholders'

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$ ( 9,716,114 )

Issuance of common stock

Stock based compensation - options

Common stock to be issued for services

Common stock issued for services

Other comprehensive loss

( 3,220,977 )

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$ ( 12,937,091 )

Issuance of common stock

Stock based compensation - options

Common stock to be issued for services

Stock based compensation - cashless exercise option

Stock based compensation - shares

Purchase of treasury stock

( 2,000,000 )

Common stock issued for current services

Common stock issued for prior services

Shares issued for cashless exercise of warrants

( 1,776,044 )

Other comprehensive loss

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$ ( 2,000,000 )

$ ( 17,864,028 )

The accompanying notes are an integral part

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FOCUS UNIVERSAL INC.

CONSOLIDATED STATEMENTS

OF CASH FLOWS

For the Years Ended

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

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Bad debt expense

Inventories reserve

Inventories fair value net realizable

Depreciation expense

Gain on extinguishment of debt

Unrealized loss on marketable equity securities

Realized loss on marketable equity securities

Change in fair value of warrant liability

Gain on settlement of derivative liability

Amortization of right-of-use assets

Stock-based compensation

Stock-based compensation - shares

Stock-based compensation - services

Stock based compensation - options

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Other current liabilities

Interest payable - related party

Customer deposit

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Purchase of property and equipment

Purchase of marketable securities

Proceeds from sales of marketable

Net cash flows used in investing activities

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Repayment on SBA loan

Repayment on promissory note

Purchase of treasury stock

( 1,000,000 )

Proceeds from bank loan

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( 1,500,000 )

Forgiveness of debt

Proceeds from IPO, net

Net cash flows provided by financing activities

Net cash flows provided by (used in) financing

( 1,158,547 )

Effect of exchange rate

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Cashless warrant

The accompanying notes are an integral part

of these consolidated financial statements.

UNIVERSAL INC.

The accompanying

notes are an integral part of these consolidated financial statements.

FOCUS UNIVERSAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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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 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.

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 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.

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 Ontario, California, specializing in the development and

commercialization of novel and proprietary universal smart technologies and instruments.

Focus Universal Inc.

is also a provider of

patented hardware and software design technologies for Internet of Things (IoT) and 5G.

The company has developed five disruptive

patented technology platforms with 26 patents and patents pending in various phases and 8 trademarks pending in various phases to

solve the major problems facing hardware and software design and production within the industry today.

These technologies combined

to have the potential to reduce costs, product development timelines and energy usage while increasing range, speed, efficiency, and

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

The company has multiple subsidiary units, including

Perfecular Inc.

(“Perfecular”), a

wholly-owned subsidiary of Focus, was founded in September 2009 and is headquartered in Ontario, California, and is engaged in designing

certain digital sensor products and sells a broad selection of horticultural sensors and filters in North America and Europe.

(“Perfecular”), AVX Design and Integration Inc.

(“AVX”), Focus Universal (Shenzhen) Technology

Company LTD (“Focus Shenzhen”), Lusher Bioscientific, Inc.

(“Lusher”), and AT Tech Systems LLC (“AT Tech

Perfecular Inc.

a wholly owned subsidiary of Focus, was founded in September 2009 and is headquartered in Ontario, California,

and is engaged in designing certain digital sensor products and sells a broad selection of horticultural sensors and filters in North

America and Europe.

AVX Design & Integration, Inc.

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’s services also include partial equipment upgrade and installation.

On December 23, 2021, Focus set up a branch in

Shenzhen China, Focus Universal (Shenzhen) Technology Company LTD.

The subsidiary was registered to be engaged in IoT research and development,

equipment sales, and application services, software development and sales, software outsourcing, intelligent agricultural management,

intelligent instrumentation sales, and information consulting services.

This excludes any projects subject to approval or that require

a separate business license in accordance with the local laws.

China allows foreign entities to setup wholly owned limited liability companies

in China, also known as Wholly Foreign Owned Enterprises (WFOEs), in non “restricted” or “prohibited” industries

and business activities.

The subsidiary’s business operation has been approved by the local government in Shenzhen to be qualified

as a WFOE entity in China.

The entity is 100% owned by Focus Universal, Inc.

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.

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 field.

AVX’s services also include

partial equipment upgrade and installation.

Focus set up a branch in Shenzhen China, Focus Universal (Shenzhen) Technology Company LTD

to be engaged in IoT research and development, equipment sales, and application services, software development and sales, amongst other

On January 5, 2022, the Company founded a wholly owned

subsidiary named Lusher Bioscientific, Inc.

Lusher Bioscientific was founded to market to the hydroponic and controlled agriculture market

and to assist in the product development of IoT technology products within this sector.

As of the date of this filing, Lusher’s

activities are in the introductory phase.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements

include the accounts of Focus and its wholly-owned subsidiaries, Perfecular Inc.

and AVX Design & Integration, Inc.

(collectively,

the “Company”, “we”, “our”, or “us”).

All intercompany balances and transactions have

been eliminated upon consolidation.

The Company’s 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 operations.

For the year ended

December 31, 2021, the Company had a net loss of $ 3,220,977

and negative cash flow from operating activities of $ 2,228,405 .

The Company raised $ 10.3 million through an underwritten public offering in September 2021.

With the January 1, 2021 beginning cash amount

of $583,325 and underwritten public offering of $10.3 million, the Company will have enough cash to cover its projected annual cash burn

rate of $ 1,967,074 , which is a decrease 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.

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.

Principles of Consolidation

The accompanying consolidated financial statements

include the accounts of the Company and its wholly-owned subsidiaries, Perfecular Inc., AVX Design & Integration, and Focus Universal

include the accounts of the Company and its wholly-owned subsidiaries, Perfecular Inc., AVX Design & Integration, Focus Universal

(Shenzhen) Technology Co.

Focus and Perfecular, 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.

LTD, and Lusher Bioscientific.

Focus and Perfecular, collectively “the entities,” were under common

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

like a pooling of interest transaction.

On March 15, 2019, Focus entered into a stock purchase agreement with AVX whereby Focus purchased

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On December 23, 2021, Focus established Focus Universal (Shenzhen) Technology Co.

LTD as a wholly owned

All significant intercompany transactions and balances have been eliminated.

LTD as a wholly

owned subsidiary.

On January 5, 2022, the Company founded a wholly owned subsidiary named Lusher Bioscientific, Inc.

All significant intercompany transactions and balances

have been eliminated.

Segment Reporting

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of allocating resources and evaluating financial performance.

Accordingly, the Company has determined that it has two operating and reportable

Accordingly, the Company has determined that it has three operating

and reportable segments.

The Company consists of three types of operations.

(1) Focus and Focus Shenzhen (“Corporate”) involve

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.

(2) Perfecular and Lusher (“Product”) involve wholesale, marketing, and production of universal smart instruments and devices

in the hydroponic and controlled agricultural segments.

(3) AVX (“Installation service”) is an IoT installation and management

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

Asset information by operating segment is not

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(FDIC) insurance limit.

As of December 31, 2021 and 2020, approximately $ 7,464,846 and $ 0 of the Company’s cash was not insured

As of December 31, 2022 and 2021, approximately $ 3,120,763 and $ 7,464,846 of the Company’s cash was not

insured by the FDIC.

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

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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.

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 December 31, 2021 and 2020, inventory reserve amounted to $ 68,940 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.

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

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 the carrying value to its estimated market value.

As of December 31, 2022 and 2021, inventory fair value net

realizable amounted to $ 41,741 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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review at December 31, 2022 and 2021, the Company believes there was no impairment of its long-lived assets.

Treasury stock

Purchases and sales of treasury stock are accounted

for using the cost method.

Under this method, shares acquired are record at the acquisition price directly to the treasury stock account.

Upon sale, the treasury stock account is reduced by the original acquisition price of the shares and any difference is recorded in additional

paid in capital, on a first-in first-out basis.

The Company does not recognize a gain or loss to income from the purchase and sale of

treasury stock.

Share-based Compensation

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

The Company does no t have any outstanding warrants as of December 31, 2022 and 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 December 31, 2022:

Schedule of Fair Value Assets And Liabilities Measured On Recurring Basis

December 31, 2022

Marketable securities:

Total assets measured at fair value

The carrying amount of the Company’s financial

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Other comprehensive income (loss) refers to revenues,

expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded

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

expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from

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

The Company other comprehensive

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Revenue Recognition

On September 1, 2018, the Company adopted ASC

606 – Revenue from Contracts with Customers using the modified retrospective transition approach.

The core principle of ASC 606

is that revenue should be recognized in a manner that depicts the transfer of promised goods or services to customers in an amount that

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.

The impact of adopting

ASC 606 was not material to the Consolidated Financial Statements.

Revenue from the Company is recognized under Topic

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Company’s revenue category, 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.

Product sales –

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

Service sales –

revenue is recognized based on the service been provided and the agreed upon performance obligation has been completed to the

Revenue from our project construction is recognized

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loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.

The Company assesses such contingent

liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings

that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits

of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought

The Company assesses such

contingent liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal

proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived

merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be

sought therein.

If the assessment of a contingency indicates that

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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.

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

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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

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Subsequent Events

The Company follows the guidance in ASC 855-10-50 for the disclosure

of subsequent events.

The Company will evaluate subsequent events through the date when the financial statements were issued.

to ASU 2010-09, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such

as through filing them on EDGAR.

As of January 5, 2022, the Company founded a wholly owned subsidiary named Lusher Bioscientific, Inc.

Lusher Bioscientific was founded to market to the hydroponic and controlled agriculture market and to assist in the product development

of product within this sector.

As of the date of this filing, the Company has only founded the subsidiary and activities are in the introductory

The Company follows the guidance in ASC 855-10-50

for the disclosure of subsequent events.

The Company will evaluate subsequent events through the date when the financial statements were

Pursuant to ASU 2010-09, the Company as an SEC filer considers its financial statements issued when they are widely distributed

to users, such as through filing them on EDGAR.

Reclassification

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accompanying consolidated statements of operations.

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

Schedule Of Intercompany Foreign Currency Balances

Average Rate for the Year Ended

China Yuan (RMB)

United States Dollar ($)

Exchange Rate at

December 31, 2022

December 31, 2021

China Yuan (RMB)

United States Dollar ($)

Note 3 – Recent Accounting Pronouncement

Recently Adopted Accounting Standards

In December 2019, Financial Accounting Standards

Board (“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.

of this ASU did not have a material effect on its condensed consolidated financial statements.

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

condensed consolidated financial statements.

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

to the ongoing impacts to U.S.

businesses in response to the COVID-19 pandemic.

ASU 2020-05, Revenue from Contracts with Customers (Topic

606) and Leases (Topic 842) Effective Dates for Certain Entities provide a limited deferral of the effective dates for implementing previously

issued ASU 606 and ASU 842 to give some relief to businesses considering the difficulties they are facing during the pandemic.

These entities

may defer application to fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December

As the Company has already adopted ASU 606 and ASU 842, the Company does not anticipate any effect on its financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In June 2016, the FASB issued ASU No.

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2016-13 will not have a material impact on its financial position and results of operations.

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

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 Company is currently evaluating the amended guidance and the impact on its consolidated financial statements

and related disclosures.

Management does not believe that any recently

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

Note 4 – Inventory, net

Note 4 – Inventories

At December 31, 2022 and 2021, inventory consisted

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Finished goods

Less inventory reserve

Inventory, net

Note 5 – Deposits

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to $ 33,264 for lease agreement and utility deposit.

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

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

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.

Deposit balance as of December 31, 2021, amounted to $ 39,901 for lease agreement and

utility deposit.

Note 6 – Property and Equipment

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31, 2022 and 2021 amounted to $ 166,266 and $ 162,160 , respectively.

The Company purchased a warehouse in Ontario,

California in September 2018 and leased an unused portion to a third party.

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

liability in other current liability as of December 31, 2021 and non-current liabilities as of December 31, 2020.

Note 7 – Related Party Transactions

Revenue generated from Vitashower Corp., a company

owned by the CEO’s wife, amounted to $ 29,084 and $ 26,449 for the year ended December 31, 2021 and 2020, respectively.

Account receivable

balance due from Vitashower Corp.

amounted to $ 15,176 and $ 0 as of December 31, 2021 and 2020, respectively.

Purchases generated from

Vitashower Corp.

amounted to $ 3,379 and $ 0 for the years ended December 31, 2021 and 2020, respectively.

There were accounts payable balances

of $ 0 and $ 17,471 due to Vitashower Corp.

owned by the Chief Executive Officer’s wife, amounted to $ 41,536

for the year ended December 31, 2022 and 2021, respectively.

Account receivable balance due from Vitashower Corp.

as of December 31, 2022 and 2021, respectively.

Service revenue generated from the installation

of home security equipment by AVX for one of the Company’s directors, amounted to $ 8,246

for the year ended December 31, 2022 and 2021, respectively.

Compensation for services provided by the President

and Chief Executive Officer for the years ended December 31, 2021 and 2020 amounted to $ 124,615 and $ 120,000 , respectively.

and Chief Executive Officer for the year ended December 31, 2022 and 2021 amounted to $ 141,020 and $ 124,615 , 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.

Note 8 – Business Concentration and Risks

Major customers

One customer accounted for 9 % and 0 % of the total

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

This customer accounted for 77 % and 53 % of total revenue for the years

ended December 31, 2021 and 2020, respectively.

Four customers accounted for 11 % of the total

accounts receivable as of December 31, 2022 and those customers accounted for 49 % of total revenue for the years ended December 31, 2022.

One customer accounted 9 % of the total accounts

receivable as of December 31, 2021 and this customer accounted for 77 % of total revenue for the year ended December 31, 2021.

Major vendors

One vendor, Tianjin Guanglee, accounted for 65 %

of total accounts payable at December 31, 2021 and 2020, respectively.

This same vendor, Tianjin Guanglee, accounted for 81 %

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

This same vendor, Tianjin Guanglee, accounted for 22 % and

81 % of the total purchases for the years ended December 31, 2022 and 2021, respectively.

Note 9 – Lease

The Company recorded its operating lease cost

of $ 67,664 and $ 65,180 for the years ended December 31, 2021 and 2020, respectively.

April 8, 2015, AVX Design & Integration Inc.

Note 9 – Leases

The Company recorded its operating lease

cost of $ 209,738

for the years ended December 31, 2022 and 2021, respectively.

This included in general and administrative expenses.

8, 2015, AVX Design & Integration Inc.

entered an eighty-six-month commercial lease with a third party for an approximately 2,592

square foot office space.

The lease commenced 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%.

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

The lease commenced on July 1, 2015, and ended upon August 31, 2022, as AVX operations moved into our corporate

headquarters in Ontario.

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%.

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

On December 7, 2021, Focus Universal (Shenzhen)

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Year ending December 31, 2025

Total minimum lease payment

3 unchanged sentences

Paycheck Protection Program

On April 24, 2020, AVX Design & Integration,

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 $ 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 years from the date the loan was issued.

There were no principal and interest due as

of December 31, 2020.

On July 8, 2021, SBA authorized full forgiveness of this loan and the Company recognized principal amount of $ 107,460

and $ 1,267 interest to other income.

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.

There were no principal and interest due as of December 31, 2020.

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.

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.

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 $ 1,282 , respectively, due as of

December 31, 2021.

There were no principal and interest due as of December 31, 2021.

On March 10, 2021, AVX Design & Integration,

entered into an agreement to receive an SBA Loan from Chase Bank related to the COVID-19 pandemic in the amount of $ 108,750 .

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.

22, 2021, SBA authorized full forgiveness of this loan and the Company recognized principal amount of $ 108,750 and $ 651 interest to other

There were no principal and interest due as of December 31, 2021.

Economic Injury Disaster Loan

On June 4, 2020, Perfecular Inc.

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.

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.

On September 13, 2021, the Company paid this loan off with loan principal

amount of $ 81,100 and $ 3,624 interest.

On June 5, 2020, AVX Design & Integration,

On March 2, 2021, our subsidiary Perfecular 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.

On September 22, 2021, the Company paid this

loan off with loan principal amount of $ 56,800 and $ 2,743 interest.

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.

On September 22, 2021, the Company paid this loan off with loan principal amount of $ 1,500,000

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.

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

Schedule of debt

3 unchanged sentences

Long term portion

Interest expense incurred from the loans amounted

to $ 38,355 and $ 4,746 for the years ended December 31, 2021 and 2020, respectively.

Note 11 – Stockholders’ Equity

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issued 271,174 shares of common stock.

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

of its Common Stock to Boustead Securities LLC.

(“Boustead”), issued pursuant to the cashless warrant exercise, exercised

by Boustead on September 7, 2021 with an exercise price of $6.25 with the shares were valued at $ 1,776,044 upon the cashless exercise

option of the warrants related to the completion of the Company’s August 30, 2021, public offering in connection with its listing

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.

On August 17, 2022, the Company issued 54,898

shares to two of the board members who exercised their options.

On August 22, 2022, the Company issued 62,500

shares to employee based on the Restricted Stock Award Agreements (see Employee compensation ).

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

6 unchanged sentences

had 43,530,915 and 43,259,741 shares of common stock issued and outstanding, respectively.

Treasury stock

On August 10, 2022, the Company entered a stock

purchase agreement with a private shareholder to repurchase 400,000

shares of its common stock for $ 2,000,000

and placed it in treasury.

The private shareholder transferred the shares on October 4, 2022, forming a binding agreement, and

on October 6, 2022, the Company wired the first $1,000,000 of the purchase price.

The remaining $1,000,000 was due on or before February

This $1,000,000 is still not paid off as of the filing date.

Shares to be issued for compensation

1 unchanged sentence

party consultants for financing and management consulting.

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

to $ 48,000 for the year ended December 31, 2021, which the Company intends to issue stock as compensation for services rendered.

incurred but not yet paid in shares as of December 31, 2021 and 2020 amounted to $ 146,709 and $ 98,709 , respectively.

The Company has incurred consulting service fees paid in cash amounting to

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

incurred and paid in shares as of December 31, 2022 and 2021 amounted to $ 8,000 and $ 48,000 , respectively.

On August 30, 2021, the Company entered into a

4 unchanged sentences

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 .

31, 2022 and 2021, the Company recorded a loss from change in the fair value of warrant liability which amounted to a difference of $ 0

and $ 1,284,780 , respectively.

These warrants were valued using a Black-Scholes

pricing model with the following assumptions:

Schedule of assumptions

Schedule of warrant assumptions

August 30, 2021 (Initial

11 unchanged sentences

been exercised.

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

For the year ended December 31, 2022 and 2021, the Company has a gain on settlement of derivative liability which amounted

to $0 and $550,406, respectively.

Shares to be issued as of December 31, 2022 and December 31, 2021 amounted to $0 and $1,776,044, respectively.

Employee compensation

On February 11, 2022 (“Vesting

Date”), the Company entered into a Restricted Stock Award Agreement (“Award Agreement”) with eight employees for 280,000

shares of the $0.001 par value voting common stock subject to the terms and to the fulfillment of the conditions set in the

Company’s equity incentive plan.

The first 20% of the restricted shares was granted and vested on February 11, 2022 (the

“Vesting Date”).

Twenty percent of the restricted shares will vest on each anniversary of the Vesting Date until fourth

anniversary of the Vesting Date.

There were 56,000

shares granted on February 11, 2022.

The fair value of above employee compensation was $ 588,560

as of December 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 rewards 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.

In November 2022, the Company entered into an amendment agreement to amend performance metrics.

In October 2022, the Company entered into a employee

agreement with VP of the Company, pursuant to which the Company rewards a 10,000 -share bonus consisting of shares of $0.001 par value

voting common stock, which will be granted in 2,500 shares every quarter.

During the years ended December 31, 2022 and

2021, the total employee compensation amount for all employees in the company, was $ 711,975

respectively.

The Company issued 62,500

shares with total value of $ 663,900 for employee compensation as of the year ended December 31, 2022.

During the year ended

December 31, 2022, the Company recognized employee compensation in amount of $ 107,390

for the fixed salary of the VP of Finance and $ 16,025

The Company has incurred expenses amount of $ 48,075 employee compensation

for the year ended December 31, 2022 and not yet paid in shares as of December 31, 2022.

Stock options

5 unchanged sentences

was granted 15,000 options to purchase shares at $ 8.86 per share.

On December 30, 2022, each member of the Board

was granted 15,000 options to purchase shares at $ 6.41 per share.

As of December 31, 2022, there were 410,041 options

4 unchanged sentences

was determined using the Black-Scholes option pricing model with the following assumptions:

Schedule of option activity

Schedule of option assumptions

December 31, 2022

8 unchanged sentences

from December 31, 2021 to December 31, 2022:

Schedule of options by exercise price

Schedule of options activity

Weighted average exercise price

2 unchanged sentences

Outstanding at December 31, 2021

Forfeited or expired

Cancelled or forfeited

Outstanding at December 31, 2022

Vested as of December 31, 2021

Exercisable at December 31, 2022

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

As of December 31, 2021, there were 210,000 options with an exercise price of $5.70, 105,000 options with an exercise

price of $3.00, and 288 options with an exercise price of $8.86 exercisable.

Note 12 – Segment reporting

The Company consists of two types of operations.

Focus Universal, Inc.

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.

The table below discloses

income statement information by segment.

Segment information table

The Company consists of three types of operations.

(1) Focus and Focus Shenzhen (“Corporate”) involve 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.

(2) Perfecular and Lusher (“IoT Products”) involve

wholesale, marketing, and production of universal smart instruments and devices in the hydroponic and controlled agricultural segments.

(3) AVX (“IoT Installation Services”) 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

Segment Reporting

Year Ended December 31, 2022

IoT Installation Services

Revenue - related party

Total revenue

Cost and Operating Expenses

Cost of Revenue, excluding depreciation & amortization

Cost of revenue

Operating Expenses

Selling expense

10 unchanged sentences

Gain on extinguishment of debt

Change in fair value of warrant liability

( 1,284,780 )

Gain on settlement of derivative liability

Unrealized loss on marketable equity securities

Realized loss on marketable equity securities

Rental income

Other income (expense), net

5 unchanged sentences

$ ( 282,259 )

$ ( 307,991 )

$ ( 4,926,937 )

Note 13 – Commitments and Contingencies

Pending Litigation

In the normal course of business or otherwise,

the Company may become involved in legal proceedings.

The Company will accrue a liability for such matters when it is probable that a

liability has been incurred and the amount can be reasonable estimated.

When only a range of possible loss can be established, the most

probable amount in the range is accrued.

The accrual for a litigation loss contingency might include, for example, estimates of potential

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

Employment Agreements

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 bonus

management shares will be granted in 2,500 blocks every quarter if any of the below three performances metrics are met during the employment

90 Day Volume Weighted Average Stock Price:

Increase 20% over previous quarter

Avg 90 trading volume:

Increase 15% over previous quarter

Number of Stocktwits watchers:

Increase 100% per quarter

During the year ended December 31, 2021 and 2020,

The Company recognized employee compensation amount of $ 5,791 and $ 0 , respectively.

On or about April 13, 2020, Ian Patterson, the

Chief Operations Officer of AVX resigned from his position.

On May 5, 2020, Mr.

Patterson filed an action in the Superior Court for the

County of Los Angeles, State of California, against the Company, et al.

The complaint alleges claims including discrimination, wrongful

termination, retaliation and various other provisions of the California Labor Code, and various other claims under California state law.

Trial for this matter is not set, nor has discovery been conducted.

AVX intends to contest this matter.

Further, AVX disputes that the

other defendants are proper parties to the litigation.

However, litigation and investigations are inherently uncertain, but the outcome

could have a material impact on the Company.

Similarly, on or about April 14, 2020, Devesa

Sarria, the Sales and Marketing Director, was terminated.

On May 13, 2020, she filed an action in the Superior Court for the County of

Los Angeles, State of California.

The Complaint alleges claims including discrimination, wrongful termination, retaliation and various

other provisions of the California Labor Code, and various other claims under California state law.

The complaint seeks unspecified economic

and non-economic losses, as well as attorneys’ fees.

Trial is set for October 11, 2023.

AVX intends to vigorously contest this matter.

Further, AVX disputes that the other defendants are proper parties to the litigation.

However, litigation and investigations are inherently

uncertain, but the outcome could have a material impact on the Company.

On January 19, 2023, the company filed an action in

the Superior Court of California, County of San Bernardino against Jaqueline Li.

AVX Design and Integration pre-paid for equipment toward

a joint project with her father Jeffrey Li.

Payment was made to Jaqueline’s father’s company Sing Young Music, while no goods

or services were ever received.

Upon death, Jacqueline Li distributed assets from the business Sing Young Music without consideration

toward the business entity or any formation of an estate for Jeffrey Li.

We attended the trial on March 17, 2023 to represent our side

of the case and are awaiting judgement from the court.

Note 14 – Income taxes

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Effective rate

The tax effect of temporary differences that

give rise to a significant portion of the deferred tax assets and liabilities at December 31, 2021 and 2020 is presented below:

The tax effect of temporary differences that give

rise to a significant portion of the deferred tax assets and liabilities at December 31, 2022 and 2021 is presented below:

Schedule of deferred tax assets and liabilities

13 unchanged sentences

As of December 31, 2022, we had cumulative net

operating loss carryforwards for federal and state income tax purposes of $ 12,272,231 ,

and available tax credit carryforwards of approximately $ 2,576,449

operating loss carryforwards for federal and state income tax purposes of $ 17,718,495 , and available tax credit carryforwards of approximately

$ 3,611,045 for federal income tax purposes, which can be carried forward to offset future taxable income.

The federal net operating loss

carryforwards consists of $ 9,062,776 of losses incurred

prior to January 1, 2021 and which can be used to offset 100% of future taxable income and, $ 3,206,028

of losses incurred after January 1, 2021, which can be used to offset up to 80% of taxable income in subsequent years.

Note 15 – Subsequent Events

As of January 5, 2022, the Company founded a wholly

owned subsidiary named Lusher Bioscientific, Inc.

Lusher Bioscientific was founded to market to the hydroponic and controlled agriculture

market and to assist in the product development of product within this sector.

As of the date of this filing, the Company has only founded

the subsidiary and activities are in the introductory phase.

carryforwards consists of $ 12,268,804 of losses incurred prior to January 1, 2022 and which can be used to offset 100% of future taxable

income and, $ 4,926,649 of losses incurred after January 1, 2022, which can be used to offset up to 80% of taxable income in subsequent

15 – Subsequent Events

As of January 6, 2023, the Company completed the

business combination of AT Tech Systems.

The transaction included AT Tech Systems’ business, including its cash and cash equivalents,

accounts receivable, professional licenses, customer lists and corresponding client relationships, trademarks, trade names, brand names,

goodwill and related intangible assets, inventory, and all other assigned contracts.

While the agreement was signed on December 19, 2022,

in order to complete control, a new entity AT Tech Systems LLC needed to be formed, which was completed on January 6, 2023.

also hired certain employees of AT Tech Systems’ business, assuming employment obligations as of December 30, 2023, despite the

control of the entity being completed thereafter.

AT Tech Systems LLC is now a subsidiary of Focus Universal, as defined in ASC 805, Business

Combinations .

The Company has integrated the acquired assets and employees throughout its existing business, including key employees

serving dual roles with AVX Design and Integration.

For example, Mr.

Anthony Tejeda will serve as the Company’s director

of installation services, as the vice president of operations of AVX, and as chief operating officer of AT Tech Systems LLC.

to the provision of services in the positions mentioned above, Mr.

Tejeda shall assist with AVX’s management and train certain of

its personnel in performing installations.

The employment agreement of Mr.

Tejeda is for a term of 5 years.

The onboarding of Mr.

who has extensive experience and expertise in commercial smart installations, will complement the smart installation services and allow

Focus and AVX to enter the commercial smart installation market.

AT Tech Systems has several clients from medical/dental facilities, commercial,

and industrial projects, including notable manufacturers and wholesalers, and provides clients with integrated network, security, and

multimedia design solutions and technology systems.

As of February 7, the Company approved a fifty

percent (50%) stock dividend of the Company’s common stock.

The Company will issue one share of common stock for every two shares

of common stock held.

The record date for the stock dividend will be February 23, 2023, and the payment date will be March 23, 2023.

Company’s common stock shares will be traded in accordance with the “due bill” procedures of NASDAQ from February 7,

2023 through March 2, 2023.

This means any trades that are executed on the NASDAQ Stock Exchange during this period will be identified

to ensure purchasers of the Company’s common stock receive the entitlement to the stock dividend.

The Company’s common stock

shares are expected to begin trading on a post-stock dividend basis on the NASDAQ Stock Exchange on March 23, 2023.

As of February 13, 2023, the Company granted and

vested the second 20% of the restricted shares based on 2022 Award Agreement, which is 34,000 shares with the total fair value of $205,360.

As of February 16, 2023, one of the Company predecessor

Director accept the cashless exercise of his entirety grant options to be exercised for 7,238 shares.

As of March 1, 2023, the Company reduced its previously

announced at-the-market (ATM) offering from December 12, 20222 from US $25 million to US $1 million.

As of March 8, 2023, the Board of Directors also

agreed to include on the Annual Shareholder Meeting ballot the increase of share count from 75,000,000 to 750,000,000.

This increase is

to facilitate additional stock dividends in the future as needed.

The Company has evaluated other subsequent events

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

that require recognition or disclosures in the consolidated financial statements.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data