What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-16 · 534 added, 407 removed, 547 unchanged (63% of the section changed)

3 unchanged sentences

Index to the Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three Months Ended March 31, 2023 and 2022 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)

Condensed Consolidated Statements of Changes in Stockholder’s Equity for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (unaudited)

Notes to the Unaudited Condensed Consolidated Financial Statements

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Property and equipment, net

Operating lease right-of-use asset

Operating lease right-of-use assets

LIABILITIES AND STOCKHOLDERS' EQUITY

3 unchanged sentences

Other current liabilities

Lease liability, current portion

Lease liabilities, current portion

Total Current Liabilities

Non-Current Liabilities:

Lease liability, less current portion

Lease liabilities, less current portion

Other liability

4 unchanged sentences

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

64,769,490 shares issued and outstanding as of March 31, 2023 and 43,530,915 shares issued and outstanding as of December 31, 2022

Treasury stock at cost ( 0 shares and 400,000 shares held at March 31, 2023 and December 31, 2022, respectively)

64,771,817 shares issued and outstanding as of June 30, 2023 and 65,296,383 shares issued and outstanding as of December 31, 2022

Treasury stock at cost ( 233,040 shares and 400,000 shares held at June 30, 2023 and December 31, 2022, respectively)

( 2,000,000 )

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( 17,864,028 )

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Total Stockholders' Equity

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Revenue - related party

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Selling expense

Compensation - officers

Compensation - officers and directors

Research and development

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( 1,205,348 )

( 2,312,460 )

( 3,129,209 )

Other Income (Expense):

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Unrealized gain (loss) on marketable equity securities

Realized loss on marketable equity securities

Realized gain (loss) on marketable equity securities

Rental income

Other income (expense), net

Total other income (expense)

Total other income, net

Loss before income taxes

1 unchanged sentence

( 1,061,297 )

( 2,132,409 )

( 2,930,227 )

Income tax expense

1 unchanged sentence

$ ( 1,061,297 )

$ ( 2,132,409 )

$ ( 2,930,227 )

Other comprehensive items

Foreign currency translation gain and (loss)

Foreign currency translation gain (loss)

Total comprehensive loss

1 unchanged sentence

$ ( 1,061,728 )

$ ( 2,132,617 )

$ ( 2,930,106 )

Weight Average Number of Common Shares Outstanding:

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

FOR THE THREE MONTHS ENDED March 31, 2023 AND

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2023 AND 2022

Treasury Stock

3 unchanged sentences

Total Stockholders’

Balance – December 31, 2022

$ ( 2,000,000 )

Balance – March 31, 2023

$ ( 18,978,271 )

Stock based compensation - options

Stock based compensation – cashless exercise options

Stock based compensation - shares

Retirement of treasury stock

( 1,999,600 )

Purchase of treasury stock

Issued stock dividend

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( 1,018,166 )

Balance – June 30, 2023

$ ( 420,686 )

$ ( 19,996,437 )

Balance – March 31, 2022*

$ ( 14,806,021 )

Stock based compensation - options

Stock based compensation - shares

Common stock to be issued for service

( 1,930,753 )

Other comprehensive income

( 1,061,297 )

Balance – June 30, 2022

$ ( 15,867,318 )

Treasury Stock

Additional Paid-In

Shares to be issued Common

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive

Total Stockholders’

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$ ( 2,000,000 )

$ ( 17,864,028 )

Stock based compensation - options

Employee compensation

Common stock to be issued for services

Other comprehensive loss

Stock based compensation – cashless exercise options

Stock based compensation - shares

Purchase of treasury stock

Retirement of treasury stock

( 1,999,400 )

Other comprehensive income

Issued stock dividend

( 2,132,409 )

Balance - March 31, 2022

( 2,132,409 )

Balance – June 30, 2023

$ ( 420,686 )

$ ( 19,996,437 )

Balance – December 31, 2022*

$ ( 12,937,091 )

Stock based compensation - options

Stock based compensation - shares

Common stock to be issued for service

( 1,930,753 )

Other comprehensive income

( 2,930,227 )

Balance – June 30, 2022*

$ ( 15,867,318 )

*Retroactively applied to the stock split

The accompanying notes are an integral part

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Ended June 30,

Cash flows from operating activities:

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Amortization of intangible assets

Unrealized gain on marketable equity securities

Realized loss on marketable equity securities

Unrealized (gain) loss on marketable equity

Realized (gain) loss on marketable equity

SBA loan forgiveness

Gain on bargain purchase

Stock-based compensation – shares

Stock-based compensation – services

Stock option compensation – options

4 unchanged sentences

Prepaid expenses

Operating lease right-of-use asset

Operating lease right-of-use assets

Accounts payable and accrued liabilities

Other current liabilities

Customer deposit

Lease liabilities

1 unchanged sentence

Net cash flows used in operating activities

( 1,606,739 )

( 1,749,492 )

Cash flows from investing activities:

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( 2,984,743 )

( 2,018,257 )

Cash beginning of period

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Supplemental disclosure for noncash financing activities:

Right-of-use assets obtained in exchange for operating lease liabilities

Right-of-use assets obtained in exchange for operating

lease liabilities

The accompanying notes are an integral part

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND

FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

2023 AND 2022

Note 1 – Organization and Operations

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(the “Company”)

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 Ontario, California, specializing in the development and commercialization of novel and proprietary

universal smart technologies and instruments.

was incorporated under the laws of the State of Nevada on December 4, 2012.

It is a universal smart instrument developer and manufacturer,

headquartered in 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 what it believes are five disruptive patented technology platforms with

26 patents and patents pending in various phases and 8 trademarks pending in various phases to solve what it believes are the major problems

facing hardware and software design and production within the industry today.

These technologies combined have the potential to reduce

costs, product development timelines and energy usage while increasing range, speed, efficiency, and security of the IoT and 5G networks.

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.

The company has multiple subsidiary units, including

Perfecular Inc.

(“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

is also a provider of patented hardware and software design technologies for Internet of Things

(IoT) and 5G.

The Company has developed what it believes are five disruptive patented technology platforms with 26 patents and patents

pending in various phases and 8 trademarks pending in various phases to solve what it believes are the major problems facing hardware

and software design and production within the industry today.

These technologies combined have the potential to reduce costs, product

development timelines and energy usage while increasing range, speed, efficiency, and security of the IoT and 5G networks.

The Company has multiple subsidiaries, including

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.

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 promote the Company’s horticultural sensors

and filters with 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.

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.

The Company 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.

In addition 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.

Tejeda, 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.

(“Perfecular”), Focus Universal (Shenzhen) Technology Company LTD (“Focus Shenzhen”), AVX Design

& Integration, Inc.

(“AVX,” also doing business as Smart AVX (“Smart AVX”)), Lusher Bioscientific, Inc.

and AT Tech Systems LLC (“AT Tech Systems”).

Perfecular, a wholly owned subsidiary of Focus that was founded in September

2009 and is headquartered in Ontario, California, is engaged in designing digital sensor products and selling a broad selection of horticultural

sensors and filters in North America and Europe.

AVX, incorporated on June 16, 2000 in the state of California, is an IoT installation

and management company specializing in high performance and easy to use audio/video systems, home theaters, lighting control, automation

and integration.

Services provided by AVX include full integration of houses, apartments, commercial complexes, office spaces with audio,

visual and control systems to fully integrate devices in the low voltage field, specializing in high end residential smart IoT install

projects in areas throughout the Southern California area.

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

AVX also markets and sells our IoT Products, such as high end LED, live wall panel products and cameras, under the Smart AVX name.

set up a branch in Shenzhen China, Focus Shenzhen, to be engaged in IoT research and development, equipment sales, application services,

and software development and sales, amongst other activities.

As of January 6, 2023, AT Tech Systems is a subsidiary

of Focus specializing in commercial and industrial smart IoT install projects in areas throughout the Southern California area.

Systems has several clients from medical/dental facilities and commercial and industrial projects, including several with notable manufacturers

and wholesalers, and provides clients with integrated network, security, and multimedia design solutions and technology systems.

has completed integration throughout its existing businesses, including key employees serving dual roles with its subsidiaries.

Anthony Tejeda serves 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.

Note 2 – Summary of Significant Accounting Policies

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The accompanying unaudited condensed consolidated

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

Focus Universal (Shenzhen) Technology Co., LTD, Lusher Bioscientific and AT Tech Systems LLC (collectively, the “Company”,

“we”, “our”, or “us”).

All intercompany balances and transactions have been eliminated upon consolidation.

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

financial statements include the accounts of Focus and its wholly-owned subsidiaries, Perfecular, AVX, Focus Shenzhen, Lusher and AT Tech

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

All intercompany balances

and transactions have been eliminated upon consolidation.

The Company’s unaudited condensed consolidated financial statements have

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

Segment Reporting

The Company currently has three operating segments.

(1) Focus and Focus Shenzhen (“Corporate and R&D”) involve 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

and research and development of technology products.

(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 and AT Tech

(“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.

First, Focus and Focus Shenzhen collectively operate our “Corporate and R&D” segment, which involves the non-specific

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

the Company’s subsidiaries that spread across all functional categories and research and development of technology products.

Perfecular, AVX (doing business as Smart AVX) and Lusher jointly operate the “IoT Products” segment, which involves the

wholesale, marketing, and production of our universal smart instruments and devices in the hydroponic and controlled agriculture segments

and of our smart products into the commercial and home automation sectors.

And third, AVX (exclusive of the smart IoT Products sales under

Smart AVX) and AT Tech Systems cooperatively run our “IoT Installation Services” segment, which handles our IoT installation

and management business specializing in high performance and easy to use audio/video systems, home theaters, lighting control, automation,

and integration.

Use of Estimates

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Significant estimates in the accompanying financial statements

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

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

deferred tax assets.

include the lease term impacting right-of-use asset with the estimate discount rate and lease liability, useful lives of property and

equipment, useful lives of intangible assets, allowance for doubtful accounts, inventory reserves, and the valuation allowance on deferred

The Company regularly evaluates its estimates and assumptions.

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At times, such investments may be in excess of Federal Deposit Insurance Corporation

(FDIC) insurance limit.

As of March 31, 2023 and December 31, 2022, approximately $ 2,651,309 and $ 3,120,763 of the Company’s

(FDIC) insurance limits.

As of June 30, 2023 and December 31, 2022, respectively, approximately $ 781,867 and $ 3,120,763 of the Company’s

cash was not insured by the FDIC.

There were no cash equivalents held by the Company as of March 31, 2023 and December 31, 2022.

There were no cash equivalents held by the Company as of either June 30, 2023 or December 31, 2022.

Accounts Receivable

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

As of March 31, 2023 and December 31, 2022, allowance

As of June 30, 2023 and December 31, 2022, allowance

for doubtful accounts amounted to $ 227,647 and $ 222,972 , respectively.

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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 fair value adjustments 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.

Equity Securities

goods and is valued at the lower of the inventory’s cost or net realizable value under the first in, first out method (“FIFO

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

value to its net realizable value.

Marketable Equity Securities

The Company invests part of its excess treasury

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at fair value.

Realized gains and losses are recognized the fair value differences when the trading securities been sold.

Unrealized gains

and losses are recognized the fair value differences of unsold trading securities for the period end.

Both realized and unrealized gains

and losses are recorded in other income (expense).

Realized gains and losses are recognized the fair value differences when the trading securities been sold based on the

Unrealized gains and losses are recognized the fair value differences of unsold trading securities for the period end based

on the FIFO Method.

Both realized and unrealized gains and losses are recorded in other income (expense).

Property and Equipment

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Long-Lived Assets

The Company applies the provisions of FASB ASC

Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived

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

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

In that event,

a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived assets.

Loss on long-lived

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 March 31, 2023 and December 31, 2022, the Company believes there was no impairment of its long-lived assets.

The Company applies the provisions of Financial Accounting

Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment,

which addresses financial accounting and reporting for the impairment or disposal of long-lived assets.

ASC 360 requires impairment losses

to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated

to be generated by those assets are less than the assets’ carrying amounts.

In that event, a loss is recognized based on the amount

by which the carrying value exceeds the fair value of the long-lived assets.

Loss on long-lived assets to be disposed of is determined

in a similar manner, except that those 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.

Based on its review at June 30, 2023

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

Intangible Assets

The Company’s intangible assets were acquired

from AT Tech due to customer relationship using multi-period excess earnings method.

These intangible assets were valued based on the

AT Tech business acquisition.

The value based on the assessed income expected to be generated from the existing customer list, namely

the carry-over of the existing contracts after a careful evaluation of the customer list.

Amortization on the intangible assets was computed

by the percentage completed for these existing assets and fully amortized this quarter.

from AT Tech Systems due to customer relationships using the multi-period excess earnings method.

These intangible assets were valued

based on the AT Tech Systems business acquisition.

The value is based on the assessed income expected to be generated from the existing

customer list, namely the carry-over of the existing contracts after a careful evaluation of the customer list.

Amortization on the intangible

assets was computed by the percentage completed for these existing assets and fully amortized as of June 30, 2023.

Treasury stock

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The Company accounts for stock-based compensation

to employees in conformity with the provisions of ASC Topic 718, Stock-Based Compensation.

Stock-based compensation to employees consist

of stock options, grants, and restricted shares that are recognized in the statement of operations based on their fair values at the date

to employees in conformity with the provisions of FASB ASC Topic 718, Stock-Based Compensation.

Stock-based compensation to employees

consist of stock options, grants, and restricted shares that are recognized in the statement of operations based on their fair values

at the date of grant.

The measurement of stock-based compensation is

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The Company calculates the fair value of option

grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the

common stock.

The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that

are ultimately expected to vest.

grants utilizing the Black-Scholes pricing model (see Note 11) and estimates the fair value of the stock based upon the estimated fair

value of the common stock.

The amount of stock-based compensation recognized during a period is based on the value of the portion of the

awards that are ultimately expected to vest.

The resulting stock-based compensation expense

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or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance

in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability

pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether

the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net

cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly

period end date while the warrants are outstanding.

in FASB ASC Topic 480, Distinguishing Liabilities from Equity and FASB ASC Topic 815, Derivatives and Hedging.

The assessment considers

whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,

and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed

to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement”

in a circumstance outside of the Company’s control, among other conditions for equity classification.

This assessment, which requires

the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while

the warrants are outstanding.

For issued or modified warrants that meet all

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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 no t have any outstanding warrants as of March 31, 2023 and December

The Company calculates the fair value

of warrants utilizing the Black-Scholes pricing model.

The Company does no t have any outstanding warrants as of June 30, 2023 and December

31, 2022, respectively.

Stock Dividends

The Company issued a fifty percent (50%) stock

dividend of the Company’s common stock to its shareholders for a stock dividend of one share of common stock for every two shares

of common stock held.

The Company follows paragraph ASC 505-20-25 in treating its stock dividend as a stock split due to the stock dividend

being greater than 25% of the shares then outstanding.

On March 23, 2023 and April 3, 2023, the Company issued 21,592,164 stock dividends

to its shareholders for a stock dividend of one share of common stock for every two shares of common stock issued and outstanding.

Company also adheres to paragraph ASC 260-10-55-12, wherein it retroactively adjusted its statement of stockholders’ equity for

all presented periods to incorporate the alteration in capital structure.

The retroactive treatment is based on a fifty percent (50%)

stock dividend of the Company’s common stock to its shareholders on March 23, 2023.

The Company does not capitalize its retained

earnings, and there is no impact to the Company’s overall equity or its total assets.

Fair Value of Financial Instruments

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measure the fair value of its financial instruments.

Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting

principles generally accepted in the United States of America (U.S.

Paragraph 820-10-35-37 establishes a framework for measuring fair value in conformity

GAAP, and expands disclosures about fair value measurements.

To increase consistency and comparability in fair

value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to

valuation techniques used to measure fair value into three (3) broad levels.

The fair value hierarchy gives the highest priority to quoted

prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The three (3)

levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy that prioritizes the inputs to valuation

techniques used to measure fair value into three broad levels.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted)

in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The three levels of fair value hierarchy

defined by Paragraph 820-10-35-37 are described below:

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

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The following table summarize financial assets

and liabilities measured at fair value on a recurring basis as of March 31, 2023:

and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022:

Schedule of Fair Value Assets And Liabilities Measured On Recurring Basis

March 31, 2023 (unaudited)

June 30, 2023 (unaudited)

Marketable securities:

Total assets measured at fair value

December 31, 2022

Marketable securities:

Total assets measured at fair value

The carrying amount of the Company’s financial

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The Company’s other comprehensive

loss for the three months ended March 31, 2023 and for the year ended December 31, 2022 was comprised of foreign

currency translation adjustments.

loss for the six months ended June 30, 2023 and for the year ended December 31, 2022 was comprised of foreign currency translation adjustments.

Revenue Recognition

On September 1, 2018, the Company adopted ASC

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

On September 1, 2018, the Company adopted FASB

ASC Topic 606, Revenue from Contracts with Customers using the modified retrospective transition approach.

The core principle of ASC 606

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The impact of adopting

ASC 606 was not material to the Consolidated Financial Statements.

Revenue from the Company is recognized under Topic

ASC 606 was not material to the unaudited condensed consolidated financial statements.

Revenue from the Company is recognized under ASC

606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and

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These five elements, as applied to each of the

Company’s revenue category, is summarized below:

Product sales – revenue is recognized at the time of sale upon the delivery of equipment

to the customer.

Service sales – revenue is recognized based on the service

having been provided and the agreed upon performance obligation has been completed to the customer.

Company’s revenue categories, is summarized below:

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

Service sales – revenue is recognized based on the service having been provided and the agreed upon performance obligation has been completed to the customer.

Revenue from our project construction is recognized

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percentage of completion.

Our construction contracts are unit priced, and an account receivable is recorded for amounts invoiced based

Our construction contracts are unit priced, and an accounts receivable is recorded for amounts invoiced based

on actual units produced.

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Related Parties

The Company follows ASC 850-10 for the identification

of related parties and disclosure of related party transactions.

Pursuant to ASC 850-10-20 the related parties include:

a) affiliates

of the Company;

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

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

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

of management;

The Company follows Section 10 of FASB ASC Topic

850, Related Party Disclosures for the identification of related parties and disclosure of related party transactions.

Pursuant to ASC

850-10-20 the related parties include:

(a) affiliates of the Company;

(b) entities for which investments in their equity securities would

be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC 825–10–15, to be accounted

for by the equity method by the investing entity;

are managed by or under the trusteeship of management;

(d) principal owners of the Company;

(e) management of the Company;

f) other parties with which the Company may deal if one

party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting

parties might be prevented from fully pursuing its own separate interests;

and g) other parties that can significantly influence the management

or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly

influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

(f) other parties

with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other

to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests;

and (g) other parties

that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in

one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might

be prevented from fully pursuing its own separate interests.

The unaudited condensed consolidated financial

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Commitments and Contingencies

The Company follows ASC 450-20 to report accounting

for contingencies.

Certain conditions may exist as of the date the unaudited condensed consolidated financial statements are issued, which

may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.

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.

The Company follows Section 20 of FASB ASC Topic

450, Contingencies to report accounting for loss contingencies.

Certain conditions may exist as of the date the unaudited condensed consolidated

financial statements are issued, which may result in a 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 therein.

If the assessment of a contingency indicates that

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The Company accounts for income taxes in accordance

with ASC Topic 740, Income Taxes.

ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby

deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.

tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating taxable income

in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all of, the deferred

tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on

the date of enactment.

with FASB ASC Topic 740, Income Taxes.

ASC 740 requires a company to use the asset and liability method of accounting for income taxes,

whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable

temporary differences.

Temporary differences are the differences between the reported amounts of assets and liabilities and their tax

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, the Company does not foresee generating

taxable income in the near future and utilizing its deferred tax asset, therefore, it is more likely than not that some portion, or all

of, the deferred tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws

and rates on the date of enactment.

Under ASC 740, a tax position is recognized as

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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, 2023 and December 31, 2022.

As of March 31, 2023 and December 31, 2022, the

There were no material deferred tax assets or liabilities as of June 30, 2023 and December 31, 2022.

As of June 30, 2023 and December 31, 2022, the

Company did no t identify any material uncertain tax positions.

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Net income (loss) per share is computed pursuant

to ASC 260-10-45.

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

number of shares outstanding during the period.

to Section 10-45 of FASB ASC Topic 260, Earnings Per Share.

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

net income (loss) by the weighted average number of shares outstanding during the period.

Diluted EPS is computed by dividing net income

(loss) by the weighted average number of shares of stock and potentially outstanding shares of stock during the period to reflect the

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

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

Due to the net loss incurred by the Company, potentially

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Schedule of anti dilutive shares

Three Months Ended March 31,

Six Months Ended June 30,

Stock options

While the EPS treatment was applied in Q2 ended

June 30, 2032, the adjustment is also retroactive accordingly.

Reclassification

Certain reclassifications have been made to the

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

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

Such reclassifications

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The reporting and functional currency of Focus

The functional currency of Focus Universal (Shenzhen) Technology Co.

LTD, a wholly owned subsidiary of Focus located in China,

is the Renminbi (“RMB”).

dollar (USD).

The functional currency of Focus Shenzhen is the renminbi (RMB).

For financial reporting purposes, the financial

statements of the Company’s Chinese subsidiary, which are prepared using the RMB, are translated into the Company’s reporting

currency, USD.

Assets and liabilities are translated using the exchange rate on the balance sheet date.

Revenue and expenses are translated

using average exchange rates prevailing during each reporting period.

Stockholders’ equity is translated at historical exchange

Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive loss in stockholders’

statements of Focus Shenzhen, which are prepared using the RMB, are translated into the USD.

Assets and liabilities are translated using

the exchange rate on the balance sheet date.

Revenue and expenses are translated using average exchange rates prevailing during each reporting

Stockholders’ equity is translated at historical exchange rates.

Adjustments resulting from the translation are recorded

as a separate component of accumulated other comprehensive loss in stockholders’ equity.

Transactions denominated in currencies other than

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Schedule Of Intercompany Foreign Currency Balances

Average Rate for the Three Months Ended

Average Rate for the Six Months Ended

China Yuan (RMB)

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Exchange Rate at

March 31, 2023

June 30, 2023

December 31, 2022

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United States Dollar ($)

Going Concern

In August 2014, the FASB issued ASC 2014-15, Disclosure

of Uncertainties about an Entity’s Ability to Continue as a Going Concern.

The Company has assessed its ability to continue as a

going concern for a period of one year from the date of the issuance of these unconsolidated financial statements.

Substantial doubt about

the Company’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate

that it is probable that the Company will be unable to meet its obligations as they become due within one year from the financial statement

issuance date.

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S.

which contemplate continuation of the Company as a going concern.

The Company currently suffered recurring loss from operations, generated

negative cash flow from operating activities, has an accumulated deficit and has not completed its efforts to establish a stabilized source

of revenues sufficient to cover operating costs over an extended period of time.

These conditions raise substantial doubt as to its ability

to continue as a going concern.

These unaudited condensed consolidated financial statements do not include adjustments relating to the

recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should

the Company be unable to continue as a going concern.

The Company has a net loss of $ 2,132,409

and $ 2,930,227 for the six months ended

June 30, 2023 and 2022, respectively.

In addition, the Company had an accumulated deficit of $ 19,996,437

and $ 17,864,028 as of June 30,

2023 and December 31, 2022, respectively, and negative cash flow from operating activities of $1,606,739 and $1,749,492 for the six

months ended June 30, 2023 and 2022, respectively.

These factors raise substantial doubt about the Company’s ability to

continue as a going concern.

The Company’s ability to continue as a going concern is dependent on its ability to raise

additional capital.

The Company’s consolidated financial statements do not include any adjustments relating to the

recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary

should the Company be unable to continue as a going concern.

The Company is operating on a going concern basis as of June 30,

Note 3 – Recent Accounting Pronouncement

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2016-13, (Topic 326), Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments which amends the current

accounting guidance and requires the use of the new forward-looking “expected loss” model, rather than the “incurred

loss” model, which requires all expected losses to be determined based on historical experience, current conditions and reasonable

and supportable forecasts.

This guidance amends the accounting for credit losses for most financial assets and certain other instruments

including trade and other receivables, held-to-maturity debt securities, loans and other instruments.

In November 2019, the FASB issued

Measurement of Credit Losses on Financial

Instruments which amends the current accounting guidance and requires the use of the new forward-looking “expected loss” model,

rather than the “incurred loss” model, which requires all expected losses to be determined based on historical experience,

current conditions and reasonable and supportable forecasts.

This guidance amends the accounting for credit losses for most financial

assets and certain other instruments including trade and other receivables, held-to-maturity debt securities, loans and other instruments.

In November 2019, the FASB issued ASU No.

2019-10 to postpone the effective date of ASU No.

2016-13 for public business entities eligible to be smaller reporting companies

defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

believes the adoption of ASU No.

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

2016-13 for public business entities eligible

to be smaller reporting companies defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022,

including interim periods within those fiscal years.

The Company believes the adoption of ASU No.

2016-13 will not have a material impact

on its financial position and results of operations.

Management does not believe that any recently

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Note 4 – Inventory

At March 31, 2023 and December 31, 2022, inventory

At June 30, 2023 and December 31, 2022, inventory

consisted of the following:

Schedule of inventory

March 31, 2023

June 30, 2023

December 31, 2022

1 unchanged sentence

Note 5 – Deposits

Deposit balance as of March 31, 2023 amounted

to $ 24,823 for lease agreement and utility deposit and third-party payroll service deposit.

Deposit balance as of December 31, 2022 amounted

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

deposits balance as of June 30, 2023 amounted to $ 23,545

for lease agreement and utility deposits and third-party payroll service deposits.

The deposits balance as of December 31, 2022

amounted to $ 33,264

for lease agreement and utility deposits.

Note 6 – Property and Equipment

At March 31, 2023 and December 31, 2022, property and equipment consisted

As of June 30, 2023 and December 31, 2022, property and equipment consisted

of the following:

Schedule of property and equipment

March 31, 2023

June 30, 2023

December 31, 2022

3 unchanged sentences

Property and equipment, net

Depreciation expense for the three months

ended March 31, 2023 and 2022 amounted to $ 42,041 and $ 40,165 , respectively.

Depreciation expense for the three months ended June 30, 2023 and 2022

amounted to $42,209 and $41,898, respectively.

Depreciation expense for the six months ended

June 30, 2023 and 2022 amounted to $ 84,616 and $ 82,063 , respectively.

Note 7 – Intangible Assets, net

The following table presents intangible assets balance at March 31,

2023 and December 31, 2022:

The following table presents the intangible assets balances as of

June 30, 2023 and December 31, 2022:

Schedule of intangible assets

March 31, 2023

June 30, 2023

December 31, 2022

1 unchanged sentence

Less accumulated amortization

Intangible assets, net of amortization

Impairment loss

Intangible assets, net

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Revenue generated from Vitashower Corp., a company

owned by the Chief Executive Officer’s wife, amounted to $ 0 and $ 31,542 for the three months ended March 31, 2023 and 2022, respectively.

Account receivable balance due from Vitashower Corp.

amounted to $ 0 and $ 34,507 as of March 31, 2023 and December 31, 2022, respectively.

owned by the Chief Executive Officer’s wife, amounted to $ 0 and $ 33,820 for the six months ended June 30, 2023 and 2022, respectively.

The accounts receivable balance due from Vitashower Corp.

amounted to $ 0 and $ 34,507 as of June 30, 2023 and December 31, 2022, respectively.

Note 9 – Business Concentration and Risks

Major customers

Four customers accounted for 15 % of the total

accounts receivable as of March 31, 2023 and four customers accounted for 11 % of the total accounts receivable as of December

These four customers accounted for 59 % of the total revenue for the three months ended March 31, 2023 and four customers accounted

for 67 % of total revenue for the three months ended March 31, 2022.

Two customers accounted for 32 % of the total accounts

receivable as of June 30, 2023 and four customers accounted for 11 % of the total accounts receivable as of December 31, 2022.

Two customers

accounted for 37 % of the total revenue for the six months ended June 30, 2023 and three customers accounted for 54 % of total revenue for

the six months ended June 30, 2022.

Major vendors

No major vendor accounted more than 10 % of total

purchase during three months ended March 31, 2023.

One vendor, Tianjin Guanglee, accounted for 0 % of total accounts payable at March

31, 2022 and this vendor accounted 30 % of total purchases during the three months ended March 31, 2022.

Of subsequent note,

Tianjin Guanglee 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.

purchases during the six months ended June 30, 2023.

One vendor, Tianjin Guanglee, accounted for 0 % of total accounts payable at June

and this vendor accounted for 24 % of total purchases during the six months ended June 30, 2022.

Of subsequent note, Tianjin

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

In 2018, the Chief Executive

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

the relevant guidelines.

Note 10 – Lease

The Company recorded its operating lease

expense of $ 46,080 and $ 75,597 for

the three months ended March 31, 2023 and 2022, respectively.

This is included in general and administrative expenses.

On December 7, 2021, Focus Universal (Shenzhen)

Technology Co.

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%.

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

This lease was terminated

on February 22, 2023.

On January 16, 2023, Focus Universal (Shenzhen)

Technology Co.

LTD entered into a thirty-six month commercial lease with a third party for an approximately 2,017 square foot office space.

The lease commenced on February 1, 2023 and will end on January 31, 2026.

The monthly rent is RMB29,974 (approximately $4,365) 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

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

On February 22, 2023, Focus Universal (Shenzhen)

Technology Co.

LTD entered into a thirty-six month commercial lease with a third party for an approximately 3,449 square foot office space.

The lease commenced on March 31, 2023 and will end on February 28, 2026.

The monthly rent is RMB35,246 (approximately $5,133) 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

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

The Company recorded its operating lease expense

of $ 81,069 and $ 237,045 for the six months ended June 30, 2023 and 2022, respectively.

This is included in general and administrative

On December 7, 2021, Focus Shenzhen entered into

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

The lease commenced on December

25, 2021 and was scheduled to end on February 28, 2025.

The monthly rent was RMB70,097 (approximately $9,663) 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 terms, which is 10%.

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

This lease was terminated on February 22, 2023.

On January 16, 2023, Focus Shenzhen entered into

a thirty-six month commercial lease with a third party for an approximately 2,017 square foot office space.

The lease commenced on February

1, 2023 and will end on January 31, 2026.

The monthly rent is RMB29,974 (approximately $4,132) 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 terms, which is 10%.

Lease expense for this lease is

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

On February 22, 2023, Focus Shenzhen entered into

a thirty-six month commercial lease with a third party for an approximately 3,449 square foot office space.

The lease commenced on March

31, 2023 and will end on February 28, 2026.

The monthly rent is RMB35,246 (approximately $4,859) 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 terms, which is 10%.

Lease expense

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

Operating lease right-of-use assets represent

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to make lease payments arising from the lease.

As of March 31, 2023 and December 31, 2022, operating lease right-of use assets and lease

As of June 30, 2023 and December 31, 2022, operating lease right-of-use assets and lease

liabilities were as follows:

Schedule of operating right-of-use asset and liability

March 31, 2023

June 30, 2023

December 31, 2022

Operating lease right-of-use assets

Operating lease right-of-use assets, net

Lease liabilities, current portion

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Lease term and discount rate:

Schedule Lease term and discount rate

March 31, 2023

Schedule of lease term and discount

June 30, 2023

December 31, 2022

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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, 2023,

the Company issued 21,589,837

shares of common stock in a one-for-two dividend to its shareholders.

On March 23, 2023, the Company issued a

fifty percent (50%) stock dividend of the Company’s common stock to its shareholders for a stock dividend of one share of

common stock for every two shares of common stock held.

During the six months ended June 30, 2023, the

Company issued 75,434 shares of common stock.

On January 17, 2023, the Company retired 600,000

shares from prior stock repurchase agreement as announced in a current report on October 7, 2022.

shares obtained pursuant to a prior stock repurchase agreement as announced in a current report on October 7, 2022.

On February 13, 2023, the Company issued 62,250

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

shares to employees based on their Restricted Stock Award Agreements (see Employee compensation ).

On February 21, 2023, the Company issued 10,857

shares to one of the prior board members who exercised his options with cashless exercise.

On March 23, 2023, the Company issued 21,589,837

stock dividends to its shareholders for a stock dividend of one share of common stock for every two shares of common stock issued

and outstanding.

During the three months’ ended March 31, 2022,

the Company did no t

issue any shares of common stock.

As of March 31, 2023 and December 31, 2022, the

On April 3, 2023, the Company issued 2,327 shares

to round up the stock dividend effective on March 23, 2023.

During the six months ended June 30, 2022, the

Company issued 230,664 shares of common stock.

On April 4, 2022, the Company issued 181,724 shares

of its common stock to Boustead Securities LLC (“Boustead”), which were for the warrants exercised by Boustead on September

The warrants were issued to Boustead in connection with the Company’s initial public offering with an exercise price of

The shares issued to Boustead were valued at $ 1,776,044 upon the cashless exercise option of the warrants.

On May 2, 2022, the Company issued 48,940 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 terms of the related agreements.

As of June 30, 2023 and December 31, 2022, the

Company had 64,771,817 shares and 65,296,383 shares of common stock issued and outstanding, respectively.

1 unchanged sentence

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 paid on March 31, 2023.

The Company terminated those 400,000

shares on January 17, 2023.

As of March 31, 2023 and December 31, 2022, the Company has 0 and 400,000 shares of Treasury

stock outstanding, 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

purchase agreement (the “Stock Purchase Agreement”) with a private shareholder to repurchase 400,000 shares of its common

stock for $2,000,000.

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

placed in treasury;

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

Subsequently, on July 14, 2023,

the Company entered into an amendment to the Stock Purchase Agreement that increased the number of shares of its common stock the Company

would purchase to 1,300,000 shares and revised the total purchase price of the shares to $1,965,000 (See Note 14).

The remaining $965,000

was paid on July 14, 2023.

Upon receipt of the additional 900,000 shares, the Company also placed them in treasury.

As of January 17,

2023, the Company retired the initial 400,000 shares and restored them to the status of authorized and unissued shares.

As part of the Company’s repurchase

program, during the six months ended June 30, 2023 the Company repurchased 233,040

shares of its common stock for $ 420,686

and placed them in treasury.

As of June 30, 2023 and December 31, 2022,

the Company had 233,040 and 400,000 treasury

shares, respectively.

The intention of the Company is to retire the additional 900,000 shares obtained pursuant to the amendment to

the Stock Purchase Agreement along with the 233,040 shares repurchased during the six months ended June 30, 2023.

Employee stock-based

the six months ended June 30, 2023, the Company entered into employment contracts with three employees of

its engineering staff.

These employment contracts contained provisions for a total bonus of restricted stock grants valued at $ 50,000

based on the share price upon the date of completion of the performance metrics described in the employment

The fair value of the above employee compensation was

as of June 30, 2023.

On February 11, 2022 (the “Vesting Date”),

the Company entered into a restricted stock award agreement (the “Award Agreement”) with eight employees for 280,000 shares

of the Company’s common stock subject to the terms and to the fulfillment of the conditions set forth in the Company’s equity

incentive plan.

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

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

were 41,500 shares granted as of February 13, 2023.

The fair value of above employee compensation was $ 136,904 as of March 31, 2023.

An additional 20% of the restricted

shares will vest on each anniversary of the Vesting Date until the fourth anniversary of the Vesting Date.

There were 41,500 shares granted

as of February 13, 2023.

The fair value of the above employee compensation was $ 136,904 as of June 30, 2023.

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 awarded 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 the performance metrics.

As of March 31,

2023, 2,500 shares have vested.

In October 2022, the Company entered into an

employee agreement with VP of the Company, pursuant to which the Company awarded 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.

As of March 31, 2023, 2,500 shares have vested.

During the three months ended March 31, 2023 and

2022, the total employee compensation amount for all employees in the company, was $ 149,404 and $ 656,370 , respectively.

employment agreement with the then VP of Finance and Head of Investor Relations of the Company, pursuant to which the Company awarded

a 10,000-share bonus consisting of shares of the Company’s common stock, which will be granted in blocks of 2,500 shares for every

quarter certain performance metrics are achieved.

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

metrics and extend the term.

As of June 30, 2023, 5,000 shares have vested.

In October 2022, the Company entered into an employee

agreement with the CFO of the Company, pursuant to which the Company awarded a 10,000-share bonus consisting of shares of the Company’s

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

As of June 30, 2023, 5,000 shares have vested.

During the six months ended June 30, 2023

and 2022, the total employee stock-based compensation amount for all employees in the company, was $ 168,304

and $ 692,920 ,

respectively.

Stock options

7 unchanged sentences

was granted 22,500 options to purchase shares at $ 4.27 per share.

As of March 31, 2023, there were 615,061 options

granted, 423,457 options vested, 116,620 options unvested, and 536,250 outstanding stock options.

For the three months ended March 31, 2023 and

As of June 30, 2023, there were 615,061

options granted, 457,934

options vested and exercisable, 78,316

options unvested, and 536,249

outstanding stock options.

For the six months ended June 30, 2023 and 2022,

the Company’s stock option compensation expenses amounted to $ 266,806 and $ 456,750 , respectively.

1 unchanged sentence

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

Schedule of fair value of stock option

March 31, 2023

Schedule of fair value of stock option activity

December 31, 2022

4 unchanged sentences

The following is a summary of the option activity

from December 31, 2022 to March 31, 2023:

from December 31, 2022 to June 30, 2023:

Schedule of options activity

4 unchanged sentences

Forfeited or expired

Outstanding at March 31, 2023

Vested as of March 31, 2023

Exercisable at March 31, 2023

Outstanding at June 30, 2023

Vested as of June 30, 2023

Exercisable at June 30, 2023

Note 12 – Segment reporting

The Company currently has three operating segments.

First, Focus and Focus Shenzhen collectively operate our “Corporate and R&D” segment, which involves the non-specific

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

the Company’s subsidiaries that spread across all functional categories and research and development of technology products.

Perfecular, AVX (doing business as Smart AVX) and Lusher jointly operate the “IoT Products” segment, which involves the

wholesale, marketing, and production of our universal smart instruments and devices in the hydroponic and controlled agriculture segments

and of our smart instruments into the commercial and home automation sectors.

And third, AVX (exclusive of the smart IoT Products sales

under Smart AVX) and AT Tech Systems cooperatively run our “IoT Installation Services” segment, which handles our IoT installation

and management business specializing in high performance and easy to use audio/video systems, home theaters, lighting control, automation,

and integration.

Segment Reporting

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

IoT Installation

25 unchanged sentences

$ ( 2,132,409 )

Segment Reporting

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

IoT Installation

27 unchanged sentences

Note 13 – Business Combination

On January 6, 2023, the Company completed

the acquisition of 100 %

of AT Tech for a purchase price of $1 in cash.

The Company’s intangible assets were acquired from AT Tech due to customer

relationship.

Amortization on the intangible assets was fully amortized during the three months ended March 31, 2023.

purchase gain is recognized when the net assets acquired in a business combination have a higher fair value than the consideration

The result of AT Tech’s operations has been included in the condensed consolidated financial statement since that

On January 6, 2023, the Company completed the

business combination of AT Tech Systems for a purchase price of $1 in cash.

The Company’s intangible assets were acquired from AT

Tech Systems due to customer relationships using the multi-period excess earnings method.

Amortization on the intangible assets was fully

amortized during the six months ended June 30, 2023.

A bargain purchase gain is recognized when the net assets acquired in a business

combination have a higher fair value than the consideration paid.

The result of AT Tech Systems’ operations has been included in

the condensed consolidated financial statement since that date.

The following table summarizes the purchase consideration

2 unchanged sentences

Accounts receivable

Intangible assets

Total assets acquired

4 unchanged sentences

As a result of above information that existed

as of the acquisition date, the Company recorded a bargain purchase gain of $ 61,747 during the three months ended March 31, 2023.

as of the combination date, the Company recorded a bargain purchase gain of $61,747 during the six months ended June 30, 2023.

The excess of the aggregate net fair value of

1 unchanged sentence

bargain purchase gain.

Upon completion of the valuation of the acquired assets, the Company concluded that recording a bargain

purchase gain with respect to AT Tech was appropriate and required under U.S.

The Company believes the seller was motivated to

complete the transaction as part of an overall repositioning of its business.

Upon completion of the valuation of the acquired assets, the Company concluded that recording a bargain purchase

gain with respect to AT Tech Systems was appropriate and required under U.S.

The Company believes the seller was motivated to complete

the transaction as part of an overall repositioning of its business.

Note 14 – Subsequent Events

On April 5, 2023, the board of directors of the

Company approved the Company’s establishment of a share repurchase program (the “Repurchase Program”) authorizing the

Company to purchase up to $7 million of the Company’s common stock.

Pursuant to the Repurchase Program, the Company may, from time

to time, repurchase its common stock in the open market, in privately negotiated transactions or by other means, including through the

use of trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, in accordance with applicable

securities laws and other restrictions.

The timing and total amount of any repurchases made under the Repurchase Program will depend upon

business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations.

authorization expires on April 1, 2025, and may be suspended or discontinued at any time, and does not obligate the company to acquire

any amount of common stock.

As described in Note 11 above, on July 14, 2023, the

Company entered into an amendment to that certain previous stock purchase agreement wherein the Company agreed to purchase 400,000 shares

of its common stock from a single private, non-affiliate for a total purchase price of $2,000,000.

The private shareholder transferred

the 400,000 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.

While a check for the second $1,000,000 of the purchase price was issued and paid on March 31, 2023, the matter was

kept open and direct discussion between the shareholder and the Company continued.

As the stock market and the Company share prices continued

to fluctuate due to both general market conditions and Company-specific conditions at that point in time, the transaction was not fully

completed during the six-month period ended June 30, 2023.

Both parties mutually agreed that in fairness to the Company’s shareholders

and to benefit the long-term goals of the Company in a number of market-related areas, that an amendment should be negotiated to facilitate

growth for the Company in good faith.

As a result of these negotiations, the amendment increased the number of shares of its common stock

the Company would purchase from two private, non-affiliate shareholders to an aggregate 1,300,000 shares, inclusive of the initial 400,000

shares, and revised the total purchase price of the shares down to an aggregate $1,965,000.

The Company has evaluated all subsequent events

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.

events or transactions 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