References in this document to "us," "we,"
or "Company" refer to FOCUS UNIVERSAL INC.
ITEM 1. FINANCIAL STATEMENTS
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
Index to the Financial Statements
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
3,721,226
|
|
|
$
|
394,398
|
|
Accounts receivable
|
|
|
–
|
|
|
|
26,311
|
|
Accounts receivable - related party
|
|
|
19,200
|
|
|
|
564
|
|
Inventories, net
|
|
|
66,309
|
|
|
|
47,432
|
|
Prepaid expenses
|
|
|
1,667
|
|
|
|
8,280
|
|
Total Current Assets
|
|
|
3,808,402
|
|
|
|
476,985
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
5,246
|
|
|
|
6,336
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
7,210
|
|
|
|
7,210
|
|
|
|
|
|
|
|
|
|
|
Total assets:
|
|
$
|
3,820,858
|
|
|
$
|
490,531
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
(DEFICIT)
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
270,711
|
|
|
$
|
449,256
|
|
Customer deposit
|
|
|
60,019
|
|
|
|
31,734
|
|
Loan from Stockholders
|
|
|
50,000
|
|
|
|
–
|
|
Income taxes payable
|
|
|
–
|
|
|
|
800
|
|
Total Current Liabilities
|
|
|
380,730
|
|
|
|
481,790
|
|
Non-current Liabilities
|
|
|
|
|
|
|
|
|
Convertible promissory note, net
|
|
|
–
|
|
|
|
81,342
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
380,730
|
|
|
|
563,132
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit):
|
|
|
|
|
|
|
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 40,644,319 shares issued and outstanding as of June 30, 2018 and 34,574,706 shares issued and outstanding as of December 31, 2017, respectively
|
|
|
40,644
|
|
|
|
34,575
|
|
Additional paid-in capital
|
|
|
12,487,372
|
|
|
|
1,871,618
|
|
Subscriptions receivable
|
|
|
(6,267,360
|
)
|
|
|
–
|
|
Shares to be issued, common share
|
|
|
457,377
|
|
|
|
–
|
|
Accumulated deficit
|
|
|
(3,277,905
|
)
|
|
|
(1,978,794
|
)
|
Total stockholders' equity (deficit)
|
|
|
3,440,128
|
|
|
|
(72,601
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity (Deficit)
|
|
$
|
3,820,858
|
|
|
$
|
490,531
|
|
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
|
|
Three Months
|
|
|
Three Months
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
36,580
|
|
|
$
|
625,068
|
|
|
$
|
97,757
|
|
|
$
|
891,513
|
|
Revenue - related party
|
|
|
3,200
|
|
|
|
3,563
|
|
|
|
10,575
|
|
|
|
6,571
|
|
Total revenue
|
|
|
39,780
|
|
|
|
628,631
|
|
|
|
108,332
|
|
|
|
898,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
9,761
|
|
|
|
544,898
|
|
|
|
27,685
|
|
|
|
752,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
30,019
|
|
|
|
83,733
|
|
|
|
80,647
|
|
|
|
145,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation - officers
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
60,000
|
|
|
|
60,000
|
|
Research and development
|
|
|
56,771
|
|
|
|
55,453
|
|
|
|
107,789
|
|
|
|
109,929
|
|
Professional fees
|
|
|
513,736
|
|
|
|
41,797
|
|
|
|
563,897
|
|
|
|
69,778
|
|
General and administrative
|
|
|
135,874
|
|
|
|
60,673
|
|
|
|
205,037
|
|
|
|
123,582
|
|
Total Operating Expenses
|
|
|
736,381
|
|
|
|
187,923
|
|
|
|
936,723
|
|
|
|
363,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(706,362
|
)
|
|
|
(104,190
|
)
|
|
|
(856,076
|
)
|
|
|
(217,701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(388,901
|
)
|
|
|
20
|
|
|
|
(443,020
|
)
|
|
|
53
|
|
Other income
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
4,763
|
|
Total other expense
|
|
|
(388,901
|
)
|
|
|
20
|
|
|
|
(443,020
|
)
|
|
|
4,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(1,095,263
|
)
|
|
|
(104,170
|
)
|
|
|
(1,299,096
|
)
|
|
|
(212,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense
|
|
|
15
|
|
|
|
800
|
|
|
|
15
|
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,095,278
|
)
|
|
$
|
(104,970
|
)
|
|
$
|
(1,299,111
|
)
|
|
$
|
(213,685
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight Average Number of Common Shares Outstanding - Basic and Diluted
|
|
|
34,641,405
|
|
|
|
34,574,706
|
|
|
|
34,417,219
|
|
|
|
34,574,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.03
|
)
|
|
$
|
–
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.01
|
)
|
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS
OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2018
AND 2017
(unaudited)
|
|
2018
|
|
|
2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(1,299,111
|
)
|
|
$
|
(213,685
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Inventory reserve
|
|
|
39,089
|
|
|
|
–
|
|
Depreciation expense
|
|
|
1,090
|
|
|
|
914
|
|
Amortization of debt discount
|
|
|
336,713
|
|
|
|
–
|
|
Stock base compensation
|
|
|
457,377
|
|
|
|
–
|
|
Changes in Operating Assets and Liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
26,311
|
|
|
|
14,043
|
|
Accounts receivable - related party
|
|
|
(18,636
|
)
|
|
|
–
|
|
Inventories
|
|
|
(57,966
|
)
|
|
|
20,179
|
|
Prepaid expenses
|
|
|
6,613
|
|
|
|
636
|
|
Deposits
|
|
|
–
|
|
|
|
13,116
|
|
Accounts payable and accrued liabilities
|
|
|
(47,649
|
)
|
|
|
9,743
|
|
Customer deposit
|
|
|
28,285
|
|
|
|
47,145
|
|
Income taxes payable
|
|
|
(800
|
)
|
|
|
(800
|
)
|
Deferred rent
|
|
|
–
|
|
|
|
(468
|
)
|
Net cash flows used in operating activities
|
|
|
(528,684
|
)
|
|
|
(109,177
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from convertible note payable
|
|
|
–
|
|
|
|
420,000
|
|
Repayment of convertible notes
|
|
|
(548,949
|
)
|
|
|
–
|
|
Shares issued for convertible notes
|
|
|
548,949
|
|
|
|
|
|
Proceeds from shareholders loan
|
|
|
50,000
|
|
|
|
–
|
|
Proceeds from sale of common stock
|
|
|
3,805,488
|
|
|
|
–
|
|
Net cash flows provided by financing activities
|
|
|
3,855,512
|
|
|
|
420,000
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
|
3,326,828
|
|
|
|
310,823
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - Beginning of Period
|
|
|
394,398
|
|
|
|
340,073
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - End of Period
|
|
$
|
3,721,226
|
|
|
$
|
650,896
|
|
|
|
|
|
|
|
|
|
|
Supplemental non-cash financing activities
|
|
|
|
|
|
|
|
|
Shares issued to reduce notes payable
|
|
|
313,700
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures for Statement of Cash Flows:
|
|
|
|
|
|
|
Interest paid
|
|
$
|
–
|
|
|
$
|
–
|
|
Income tax paid
|
|
$
|
15
|
|
|
$
|
800
|
|
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements
FOCUS UNIVERSAL INC. AND SUBSIDIARY
NOTES TO THE CONDENSED UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
(unaudited)
Note 1 – Organization and Operations
Focus Universal Inc. (the “Company”)
was incorporated under the laws of the State of Nevada on December 4, 2012 (“Inception”). We are a
universal
smart instrument developer and manufacturer, headquartered in the Los Angeles, California metropolitan area, specializing in the
development and commercialization of the novel and proprietary universal smart technologies and instruments. Universal smart technology
is an innovative, commercial, off-the-shelf technology with an innovative soft hardware integrated platform. Our platform provides
a unique and universal wireless solution for embedded design, industrial control, test and measurement. Our smart technology software
utilizes a smartphone, computer, or a mobile device as a platform and display that communicates and works in tandem with a group
of external sensors and probes manufactured by different vendors in a manner that requires the user to have little or no knowledge
of their unique characteristics. Our universal smart instrument (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),
a universal smart application software (our “Application”) which is installed on the user’s smartphone allowing
the sensor readouts to be monitored on the smartphone screen. The Ubiquitor also connects to a variety of individual scientific
sensors that collect unique data points, from moisture, light, and airflow to other things like electricity voltage meters and
a wide variety of applications. These data points are then sent wirelessly to the smartphone and the data is organized on the smartphone
screen. The smartphone, 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 and Perfecular were entities
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.
Perfecular Inc. was founded in September
2009 and is headquartered in Walnut, 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.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial
statements include the accounts of Focus Universal Inc. and its wholly-owned subsidiary, Perfecular Inc. 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. GAAP”). Certain
reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation.
Such reclassifications have no effect on net income as previously reported. Please see Note 12, Restatement.
Segment Reporting
The Company currently has one operating
segment. In accordance with ASC 280,
Segment Reporting
(“ASC 280’), the Company considers operating
segments to be components of the Company’s business for which separate financial information is available that evaluated
regularly by the Management in deciding how to allocate resources and in assessing performance. The Management reviews financial
information presented on a consolidated basis for purposes of allocation resources and evaluating financial performance. Accordingly,
the Company has determined that it has a single operating and reportable segment.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with a maturity of three months or less to be cash and cash equivalents. At times, such investments may be in excess
of Federal Deposit Insurance Corporation (FDIC) insurance limit. There were no cash equivalents held by the Company at June 30,
2018 and December 31, 2017.
Concentrations of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure
to credit loss by investing its cash with high credit quality financial institutions.
Fair Value of Financial Instruments
The Company follows paragraph ASC 825-10-50-10
for disclosures about fair value of its financial instruments and paragraph ASC 820- 10-35-37 (“Paragraph 820-10-35-37”)
to measure the fair value of its financial instruments. 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. 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:
|
·
|
Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
|
·
|
Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
|
|
|
|
·
|
Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data.
|
Financial assets are considered Level 3
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.
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. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the
categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amount of the Company’s
financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate
their fair value because of the short maturity of those instruments.
Transactions involving related parties
cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings
may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions
were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
It is not however practical to determine
the fair value of advances from stockholders, if any, due to their related party nature.
Inventory
Inventory is valued at the lower of the
inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of
inventory with its market value and an allowance is made to write down inventory to market value, if lower. Inventory allowances
are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the
impact of new product introductions and specific identification of items, such as discontinued products. These estimates could
vary significantly from actual requirements 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 futu
re
usage.
As of June 30, 2018 and December 31, 2017, inventory reserve amounted to $66,155 and $27,067, respectively.
Property and Equipment
Property and equipment are stated at cost.
Depreciation is computed using the straight-line method. Estimated useful lives range from three to seven years on all categories
of depreciable assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts
and any gain or loss is included in earnings. Maintenance and repairs are expensed currently. Major renewals and betterments are
capitalized.
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.
Revenue Recognition
The Company applies ASC 605-10-S99-1 for
revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue
realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists,
(ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable,
and (iv) collectability is reasonably assured.
The Company derives its revenues
from sales contracts with its customer with revenues being generated upon rendering of services. Persuasive evidence of an arrangement
is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price
to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.
Perfecular’s primary business
functions are designing and marketing products. Tianjin Guanglee serves as an original equipment manufacturer (“OEM”).
Perfecular determines the product specifications and the sales prices, and bears physical loss risks during shipping. Perfecular
collects full amount of accounts receivable from customers through direct wire transfers or letters of credit. Tianjin Guanglee
invoices Perfecular for the manufacturing costs and Perfecular pays these invoices.
Allowance for doubtful accounts
The Company provides an allowance for doubtful
accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and
a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance
for doubtful accounts will change. Management evaluated that there was no allowance for doubtful accounts at June 30, 2018 and
December 31, 2017 based on collection history.
Research and development
Research and development costs are expensed
as incurred. Research and development costs primarily consist of efforts to refine existing product models and develop new product
models.
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 entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that 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.
The consolidated financial statements shall
include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other
similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of
consolidated financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s)
involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for
each of the periods for which income statements are presented, and such other information deemed necessary to an understanding
of the effects of the transactions on the consolidated financial statements; (c) the dollar amounts of transactions for each of
the periods for which income statements are presented and the effects of any change in the method of establishing the terms from
that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented
and, if not otherwise apparent, the terms and manner of settlement.
Commitments and Contingencies
The Company follows ASC 450-20 to report
accounting for contingencies. Certain conditions may exist as of the date the 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 it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated
liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of
the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are
generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe,
based upon information available at this time that these matters will have a material adverse effect on the Company’s financial
position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely
affect the Company’s business, financial position, and results of operations or cash flows.
Stock Based Compensation
The Company accounts for employee and non-employee
stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of
the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the
fair value of the equity instrument, whichever is more reliably measurable.
There were no outstanding stock options
as of June 30, 2018 and December 31, 2017.
Income Tax Provision
Income taxes are accounted for using the
asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense
and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the
difference between the tax basis of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities
are measured by applying 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 June 30, 2018 and December
31, 2017.
As of June 30, 2018 and December 31, 2017,
the Company did not identify any material uncertain tax positions.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed
pursuant to ASC 260-10-45. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average
number of common shares outstanding during the period.
Diluted net income (loss) per common share
is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding
shares of common 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.
There were no potentially dilutive debt
or equity instruments issued and outstanding at any time during the six months ended June 30, 2018 and 2017.
Cash Flows Reporting
The Company adopted ASC 230-10-45-24 for
cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”)
as defined by ASC 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities
by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals
of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all
items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting
currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect
of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and
ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting
in cash receipts or payments in the period pursuant to ASC 830-230-45-1.
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. 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.
Note 3 – Property and Equipment
At June 30, 2018 and December 31, 2017,
property and equipment consisted of the following:
|
|
June 30,
2018
|
|
|
December 31,
2017
|
|
Computers
|
|
$
|
1,029
|
|
|
$
|
1,029
|
|
Furniture and fixture
|
|
|
8,850
|
|
|
|
8,850
|
|
Total cost
|
|
|
9,879
|
|
|
|
9,879
|
|
Less accumulated depreciation
|
|
|
(4,633
|
)
|
|
|
(3,543
|
)
|
Property and equipment, net
|
|
$
|
5,246
|
|
|
$
|
6,336
|
|
Depreciation expense for the six months
ended June 30, 2018 and 2017 amounted to $1,090 and $914, respectively.
Note 4 – Convertible Promissory
Notes
On June 30, 2017 and July 28, 2017,
the Company received $420,000 and $80,000, respectively through a series of two unsecured convertible promissory notes from the
same unrelated third party (the “2017 Notes”). The 2017 Notes bear interest at 10% per annum, are due on June 30,
2020 and July 28, 2020 respectively and are unsecured. The 2017 Notes contain a provision that allows the note holder to convert
the outstanding balance into shares of the Company's common stock at $1.75 per share. The Company determined that the convertible
promissory notes contain beneficial conversion features that are valued at $420,000 and $80,000 respectively; however, the amount
recorded as the beneficial conversion feature is limited to the face amount of the convertible promissory note. This beneficial
conversion feature of $420,000 and $80,000 has been recorded in the financial statements to additional paid-in capital and as
a discount to the convertible promissory payable. The debt discounts are being amortized over the terms of the 2017 Notes. The
Company recognized interest expense of $336,713 during the six months ended June 30, 2018 related to the amortization of the debt
discounts. On June 27, 2018, the convertible holder elected the right to convert all of convertible notes to common stock at $1.75
per share. Total conversion amounted to $548,949, 313,686 shares.
Note 5 – Related Party Transactions
Revenue generated from Vitashower Corp.,
a company owned by the CEO, amounted to $10,575 and $6,571 for the sixed months ended June 30, 2018 and 2017, respectively, $7,375
and $3,008 for the three months ended June 30, 2018 and 2017, respectively. Account receivable balance due from Vitashower Corp.
amounted to $19,200 and $564 as of June 30, 2018 and December 31, 2017, respectively.
On May 30, 2018, the CEO and majority shareholder
of the Company lent the Company $50,000 for operation use. The loan had no interest and is due upon demand. The loan was repaid
on July 12, 2018.
Compensation for services provided by the
President and Chief Executive Officer for the six months ended June 30, 2018 and 2017 amounted to $30,000 and $30,000, respectively
and three months ended June 30, 2018 and 2017 amounted to $30,000 and $30,000, respectively.
Note 6 – Business Concentration
and Risks
Major customers
One customer accounted for 100% of the
total accounts receivable as of December 31, 2017. The customer did not have balance due and receivable as of June 30, 2018
Major vendors
One vendor accounted for 80% and 92% of
total accounts payable at June 30, 2018 and December 31, 2017, respectively.
Note 7 – Commitments and Contingencies
On April 24, 2017, we entered into a
two-year industrial/commercial lease within a larger multi-tenant industrial complex with Walnut Park Business Center, LLC.
We leased a 2,800-square foot warehouse with a 1,400-square foot office space inside which will allow us to assemble our
products as well as efficiently run our administrative operations in the same building. The lease commenced on May 1, 2017
and will end on April 30, 2019. We will pay $3,500 per month until May 1, 2018 when the rent will increase to $3,605 per
month. The warehouse is located at 820511 East Walnut Drive North, Walnut, California. Rent expense under this lease will be
recognized over the life of the lease term on a straight-line basis. Straight-line monthly rent expense over the life of the
lease will be $3,553.
Total rent expense was $24,815 and $22,000
for the six months ended June 30, 2018 and 2017, respectively.
Future minimum lease commitments are as follows:
December 31,
|
|
Rent Expense
|
|
2018
|
|
$
|
21,630
|
|
2019
|
|
|
14,420
|
|
Thereafter
|
|
|
–
|
|
Note 8 – Stockholders’ Equity
Shares authorized
Upon formation the total number of shares
of all classes of stock which the Company is authorized to issue is seventy-five million (75,000,000) shares of common stock, par
value $0.001 per share.
Common stock
During the six months ended June 30, 2018,
the Company had the following transactions in its common stock:
|
·
|
issued 5,755,927 shares through private
placement at $1.75 per share.
|
|
·
|
issued 313,686 shares for conversion debt
rendered valued at $548,949 or $1.75 per share.
|
As of June 30, 2018 the Company had 40,644,319
shares of common stock issued and outstanding.
Note 9 – Subscription Receivable
As of June 30, 2018,
the Company issued 3,581,328 shares through private placement with subscription receivable amounting to $6,267,360 or $1.75 per
share.
Note 10 – Shares to be Issued,
Common Shares
During the six months ended June 30,
2018, the Company incurred professional expenses amounting to $457,377 which were paid for by issuing common 261,358 shares at
$1.75 per share.
Note 11 – Going Concern
In August 2014, the FASB issued ACU 2014-15,
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management
to assess the company’s ability to continue as a going concern. Disclosures are required if there is substantial doubt as
to the company’s continuation as a going concern within one year after the issue date of financial statements. The standard
provides guidance for making the assessment, including consideration of management’s plans which may alleviate doubt regarding
the Company’s ability to continue as a going concern. ASU 2014-15 is effective for years ending after December 15, 2016.
The Company has adopted this standard for the year ending December 31, 2017 and six months ending June 30, 2018.
These
financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its
assets and discharge its liabilities in the normal course of business. 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.
Recently, the Company has devoted a substantial amount of resources to research and development to bring the Ubiquitor and
its mobile application to full production and distribution. For the six months ended June 30, 2018, the Company had net loss
of $1,299,111 and negative cash flow from operating activities of $528,684. As of June 30, 2018 the Company also had an
accumulated deficit of $3,277,905. These factors raise certain doubts regarding the Company’s ability to continue as a
going concern. There are no assurances, however, that the Company will be successful in obtaining an adequate level of
financing for the long-term development and commercialization of its Ubiquitor product.
Note 12 – Restatement
|
|
Previously reported
|
|
|
|
|
|
|
Restated
|
|
|
|
For the six months ended
|
|
|
|
|
|
|
For the six months ended
|
|
|
|
6/30/2017
|
|
|
Adjustment
|
|
|
|
6/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
211,086
|
|
|
|
680,427
|
|
{a}
|
|
$
|
891,513
|
|
Revenue - related party
|
|
|
–
|
|
|
|
6,571
|
|
{b}
|
|
|
6,571
|
|
Total revenue
|
|
|
211,086
|
|
|
|
|
|
|
|
|
898,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
65,498
|
|
|
|
686,998
|
|
{a}
|
|
|
752,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
145,588
|
|
|
|
|
|
|
|
|
145,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation - officers
|
|
|
60,000
|
|
|
|
|
|
|
|
|
60,000
|
|
Research and development
|
|
|
109,929
|
|
|
|
|
|
|
|
|
109,929
|
|
Professional fees
|
|
|
69,777
|
|
|
|
|
|
|
|
|
69,777
|
|
General and administrative
|
|
|
123,083
|
|
|
|
|
|
|
|
|
123,083
|
|
Total Operating Expenses
|
|
|
362,789
|
|
|
|
|
|
|
|
|
362,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(217,201
|
)
|
|
|
|
|
|
|
|
(217,201
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
53
|
|
|
|
|
|
|
|
|
53
|
|
Other income
|
|
|
4,763
|
|
|
|
|
|
|
|
|
4,763
|
|
Total other expense
|
|
|
4,815
|
|
|
|
|
|
|
|
|
4,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(212,885
|
)
|
|
|
|
|
|
|
|
(212,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
800
|
|
|
|
|
|
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(213,685
|
)
|
|
|
|
|
|
|
$
|
(213,685
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight Average Number of Common Shares Outstanding - Basic and Diluted
|
|
|
34,574,706
|
|
|
|
|
|
|
|
|
34,574,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
{a} The Company previously recorded shipment
of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales
at gross amount and separately record cost of goods sold amount.
{b} Revenue generated from Vitashower Corp.,
a company owned by the CEO, amounted to $6,571 for the six months ended June 30, 2017 was reclassified to be separately disclosed.
|
|
Previously reported
|
|
|
|
|
|
|
Restated
|
|
|
|
For the three months ended
|
|
|
|
|
|
|
For the three months ended
|
|
|
|
6/30/2017
|
|
|
Adjustment
|
|
|
|
6/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
128,896
|
|
|
|
496,172
|
|
{a}
|
|
$
|
625,068
|
|
Revenue - related party
|
|
|
–
|
|
|
|
3,563
|
|
{b}
|
|
|
3,563
|
|
Total revenue
|
|
|
128,896
|
|
|
|
|
|
|
|
|
628,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
45,163
|
|
|
|
499,736
|
|
{a}
|
|
|
544,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
83,733
|
|
|
|
|
|
|
|
|
83,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation - officers
|
|
|
30,000
|
|
|
|
|
|
|
|
|
30,000
|
|
Research and development
|
|
|
55,453
|
|
|
|
|
|
|
|
|
55,453
|
|
Professional fees
|
|
|
41,797
|
|
|
|
|
|
|
|
|
41,797
|
|
General and administrative
|
|
|
60,673
|
|
|
|
|
|
|
|
|
60,673
|
|
Total Operating Expenses
|
|
|
187,923
|
|
|
|
|
|
|
|
|
187,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(104,190
|
)
|
|
|
|
|
|
|
|
(104,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
20
|
|
|
|
|
|
|
|
|
20
|
|
Other income
|
|
|
–
|
|
|
|
|
|
|
|
|
–
|
|
Total other expense
|
|
|
20
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(104,170
|
)
|
|
|
|
|
|
|
|
(104,170
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
800
|
|
|
|
|
|
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(104,970
|
)
|
|
|
|
|
|
|
$
|
(104,970
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weight Average Number of Common Shares Outstanding - Basic and Diluted
|
|
|
34,574,706
|
|
|
|
|
|
|
|
|
34,574,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
$
|
(0.00
|
)
|
{a} The Company previously recorded shipment
of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales
at gross amount and separately record cost of goods sold amount.
{b} Revenue generated from Vitashower Corp.,
a company owned by the CEO, amounted to $3,563 for the three months ended June 30, 2017 was reclassified to be separately disclosed.
Note 13 – Subsequent Events
The Company has evaluated all events that
occurred after the consolidated balance sheet date through the date when the consolidated financial statements were issued to determine
if they must be reported.
From July 1, 2018 to July 17, 2018, the
Company received additional $5,658,243 for subscription receivable.
On July 1, 2018, the Company entered
into an Advisory Agreement with Oakshore Consulting (“Oakshore”). Pursuant to the Advisory Agreement, Oakshore provided
consulting services to the Company starting from July 2018. The total advisory fee is $8,000 per month and payable on the sixth
day of each month. The advisory fee may be paid in either cash or in the Company’s common stock. A finder’s fee will
be 8% of the enterprise value of any acquisition closed during the term of this advisory agreement or any acquisition introduced
to the Company. Both the Company and Oakshore may terminate this advisory agreement by providing written notice thirty days in
advance of intended termination.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF
OPERATION
The following discussion of our financial
condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial
statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements
that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and
the documents incorporated herein by reference contain forward-looking. Such forward-looking statements are based on current expectations,
estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements.
These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that
are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking
statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth herein
and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the
Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.
Narrative Description of the Business
Focus Universal Inc. (“the Company”,
“we”, “us” or “our”) currently conducts business as a handheld sensor systems and filters wholesaler
to distribution platforms. We are a universal smart instrumentation platform developer and universal smart device manufacturer.
We are also a wholesaler of various air filtration systems.
We are currently in the
process of researching, developing, and manufacturing a universal smart instrument device and working on specializing in the development
and commercialization of such universal smart technologies and instruments. We define universal smart technology as commercial
technology with an integrated platform, which provides a unique and universal solution for test and measurement made up of off-the-shelf
parts.
We are working on developing a universal sensor node and gateway system that uses the data processing capabilities
of a smartphone to display readings of multiple probe modules.
Our universal smart instrumentation technology
features a Universal Smart Instrumentation Platform (“USIP”) which generalizes instruments into a reusable foundation
representing a majority part of the instruments, and architecture-specific components (sensor modules), which together replaces
the functions of traditional instruments at a fraction of their cost. The USIP has an open architecture incorporating a variety
of individual instrument functions, sensors and probes from different industries and vendors. The platform features the ability
to connect thousands of sensors or probes. This technology addresses major limitations present in traditional hardware and represents
a technological advancement in the Internet of Things marketplace. We call this device the “Ubiquitor” because it can
be used to wirelessly measure and test a variety of electrical and physical phenomena such as voltage, current, temperature, pressure,
sound, light, and humidity.
The Ubiquitor, which we have created and
have manufactured in limited quantities, utilizes a standard desktop computer with Mac OS, Windows OS, an Android-based or
iOS-based smartphone, or mobile tablet device as a platform that communicates with a group of sensors or probes manufactured by
different vendors in a manner that requires the user to have little or no knowledge of their unique characteristics. The data readout
is displayed on the computer, smartphone, or tablet display in a program or application we have created for Windows PC and are
creating for MacOS. We are designing the application software (the “App”) to have a graphical representation of control
and indicator elements common in real instruments such as knobs, buttons, dials, and graphs, etc. Our developers are designing
and implementing a soft control touch screen interface which supports real-time data monitoring and facilitates instrument control
and operation.
Until March 31, 2016, we offered a full
range of web services, including web marketing services, social and viral marketing campaigns, search engine optimization consulting,
custom web design, website usability consulting and web analytics implementation. We generate our revenue from providing these
services to small and medium sized businesses. We focused on providing one-off services, such as development of a fully functioning
website or creation of a marketing strategy plan, to small business clients.
Through a merger with Perfecular Inc, we
strategically expanded our services to the manufacture and marketing of high-tech electronic devices. We sell handheld sensor systems
and filters wholesale to distribution platforms and are working on developing a universal sensor node and gateway system that use
the data processing capabilities of a smartphone to display readings of multiple probe modules. We are also researching the development
of an anti-counterfeit authentication technology that we believe could address the problem of counterfeit production by attempting
to authenticate consumer goods.
Our current services include:
Scientific Instrument Research and
Development and Sales
Through our acquisition of Perfecular Inc.,
we entered into the scientific instrument industry, specifically the instrument sensor industry. Instrument sensors are devices
specifically designed and constructed for sensing and measuring physical variables that are useful in: (i) industrial operations;
(ii) environmental, commercial and medical applications; (iii) research and development in a variety of industries; and (iv) the
daily lives of electronics consumers.
We believe that instrument sensors are
important in modern science, having applications in both the industrial and educational fields. In recent years, significant progress
has been made in instruments and instrumentation systems. The performance of measuring and monitoring instruments has improved
considerably in the computer age. Analog instruments are used to indicate the magnitude of the quantity in the form of pointer
movements. Digital instruments, on the other hand, specify the quantity in a digital readout format, they can be read easily, and
are more accurate than the analog multi-meters because the pointer movements can be easily misread and are often not permanently
stored, reducing interpolation and reading errors. Digital instruments offer significant advantages over analog devices. The auto-polarity
function of digital devices prevents various problems. Parallax error which occurs when the pointer of an analog instrument is
viewed from a different angle, which may cause users to see and read a different value are eliminated as well. Digital instruments
are free from wear and potential shock failures because they have no moving parts. With the advancements in technology of integrated
circuits, digital instruments are becoming increasingly compact and accurate. Key market players of analog and digital instruments
include Thermo Fisher Scientific, Danaher Corporation, Mettler Toledo, Metrohm USA, Hanna Instruments, Agilent Technologies, and
Perkin Elmer.
Most modern instruments are digital. They
are designed for measuring various physical quantities in objects; and consist of the following functional components:
|
●
|
Data acquisition. This is the process of sampling signals that measure real world physical conditions
and converting the resulting samples into digital numeric values that can be manipulated by a microprocessor. The components of
data acquisition systems include:
|
|
a.
|
Sensors, to convert physical parameters to electrical signals;
|
|
b.
|
Signal conditioning circuitry, to convert sensor signals into a form that can be converted to digital
values;
|
|
c.
|
Analog-to-digital converters, to convert conditioned sensor signals to digital values. It normally
operates on conditioned signals, that is, signals that have already been filtered and amplified by analog circuits.
|
|
●
|
Storage and communication components. Application-specific input/output (I/O) components. In digital
instrumentation systems, the transmission of data between devices is realized relatively easily by using serial or parallel transmission
techniques.
|
|
●
|
Ancillaries such as displays and power supplies and application specific software.
|
Traditional hardware-centered instrumentation
systems are made up of multiple stand-alone instruments that are interconnected to carry out a determined measurement or control
an operation. They have fixed vendor-defined functionality, and the components that comprise the instruments are also fixed and
permanently associated with each other. All software and measurement circuitry, packaged onto the traditional instrument, are provided
with a finite list of fixed-functionality using the instrument’s front panel. They all tended to be box-shaped objects with
a control panel and a display. Stand-alone electronic instruments are very powerful and large, expensive, and cumbersome. They
also require a lot of power, and often have excessive amounts of features that are not user friendly. Users generally cannot extend
or customize them. The knobs and buttons on the instrument, the built-in circuitry, and the functions available to the user, are
specific to the nature of the instrument.
Virtual instruments represent a fundamental
shift from traditional hardware-centered instrumentation systems, to software-centered systems that exploit the computing power,
productivity, display, and connectivity capabilities of popular desktop computers and workstations. The functionality of these
stand-alone instruments can be implemented in a digital environment by using computers, plug-in data-acquisition boards, and support
software to implement the functions of the system. The plug-in data acquisition boards enable the interface of analog signals to
computer, and the software allows programming of the computer to look and function as an instrument. The major advantage of virtual
instrumentation is its flexibility. Changing function simply requires a modification of the supporting software. Whereas the same
change in a traditional system may require adding or substituting a stand-alone instrument, which is more difficult and also more
expensive. Virtual instruments also offer advantages in displaying and storing information. Computer display can show more colors
and allow users to quickly change the format of displaying the data that is received by the instrument.
Instrument inter-operability and connectivity
allow devices to communicate and work with other instruments manufactured by different vendors, in a manner that requires the user
to have little or no knowledge of the unique characteristics of those instruments. Traditional instruments, including traditional
hardware-centered instrumentations and software centered virtual instrumentations, are specifically designed, constructed and refined
to perform one or more specific tasks. When manufacturers develop these instruments they naturally seek ways to differentiate their
products from those of their competitors. Most of the instruments on the market come with a variety of connectivity technologies
and do not have the built-in firmware and software to support the connectivity and inter-operability of instruments. Even instruments
within in the same class, from different vendors, are not compatible. In 1998, National Instruments, along with other companies
including Agilent, Advantest, Anritsu, Ascor, BAE systems, Boeing, Ericsson, Genrad, Honeywell, IFR, Keithley, Lecroy, Nokia, Northrop
Grumman, Racal, Ratheon, Rohde & Schwarz, Smiths, Tektronix, Teradyne, and Wavetek formed the interchangeable virtual machine
foundation. Interchangeable Virtual Instruments (IVI) is a revolutionary standard for instrument driver software technology. It
attempts to standardize the commands to which specific kinds of instruments respond, and also makes it possible to interchange
instruments in a test system without drastically revising the application software and maximizing interchangeability across instrument
brands. Unfortunately, while the instrument driver did simplify software development and maintenance, it didn’t address hardware
obsolescence as each manufacturer had their own and none were compatible. Current applications are limited to large, expensive
test and measurement instruments.
A universal instrument is a versatile device
which combines many individual instrument functions, sensors and probes in a single unit. It has a primary purpose, but also incorporates
other instrument’s functionalities. One instrument could perform many different measurements and control and substitute many
other instruments. It utilizes a variety of probes to connect to the device for a wide variety of process measurement and control.
A universal instrument offers superior sensor or probe compatibility, versatility, inter-operability, connectivity and scalability.
Theoretically, it is feasible to design a universal instrument which is compatible with all sensors or probes on the market, and
capable of monitoring and controlling any combination of sensors or probes.
Despite the undoubted usefulness of the
universal instruments, one of the major obstacles that prevent the universal instruments from being adopted by end users is their
cost. The cost of a $10 traditional instrument, which incorporates the functions of a $1000 instrument, may have to increase its
cost to the order of $1000. The end user who just needs a $10 traditional instrument for his applications certainly does not have
the motivation to spend $1000 for functions he does not need. Functionality always needs to be balanced against cost. The knobs
and buttons on the instrument, the built-in circuitry, and the functions available to the user, are specific to the nature
of the instrument, making them very expensive and hard to adapt.
Smartphones and tablets have been considered
recreational devices for communicating, playing games and streaming videos, but they are also one of the most powerful tools engineers
use for designing, validating, and producing products. These ubiquitous smartphones perform better than most instrumentation in
many fields. Because of their network connectivity, smartphones and tablets are great tools for remotely viewing measurements.
In addition, the processing capabilities have exploded in recent years with processors and data capability rivaling that of very
recent laptop computers. Thus, their small size and processing power also makes them effective for portable measurements. The ubiquity
of wireless connectivity, unlimited data plans, and more powerful cellular networks combined with increasing functionality and
the speed of connected devices and mobile networks will further drive consumer demand for more cost effective wireless smartphone
based instruments. Building an application for a smartphone or tablet and turning a smartphone or tablet to an instrument is not
a trivial task. Many of the industrial instrument manufacturers have limited or no expertise programming for mobile platforms and
designing wireless hardware. To help industrial instrument manufacturers take advantage of these smart devices, Perfecular Inc.,
has dedicated many years of research and development efforts into designing, manufacturing, marketing and promoting wireless smart
technology and products for industrial measuring instruments.
Our universal smart development protocol
focuses not only on the design of the hardware and software modules, but also on the design of the overall universal smart instruments
system, guided by the structured, universal and modular principles. We make our development open to industrial instrument manufacturers,
software, and hardware developers.
Compatibility
: The compatibility
in universal smart instrument system refers not only to the compatibility between the same types of industrial sensor instruments
from different manufactures, but also to the compatibility between various industrial instrument types. The full inter-operability
and absolute instrument interchangeability is constantly addressed in our development protocol.
Universality
: It is our goal to
incorporate as many functionalities of the traditional industrial sensor instruments into a single unit, allowing different data
acquisition sensor modules to execute on the same mobile platform. Thus, the interoperability between various sensors or probes
can be achieved.
Upgradeability
: Most traditional
industrial instrument sensor interfaces are unidirectional applications, meaning the instrument performs its task and transmits
results to the interface device in one direction only. They only perform monitoring tasks and share a majority of functions of
the bi-directional controlling instruments, however, they cannot be upgraded to controllers. End users have to purchase a new controlling
instrument for their applications. Taking advantage of the secure bi-directional wireless communications and interface supported
by smartphones or mobile devices, universal smart instruments, which deliver data back-and-forth between the smartphones and industrial
sensors, can be readily modified or upgraded by adding the corresponding actuators for controlling applications. Sensors or probes
measure the output performance of the device being controlled and give feedback to the input actuators that can make corrections
towards the desired performance.
Expandability and Scalability
: Similar
to sensor network technology, universal smart instruments are more flexible than sensor networks. They can currently monitor and
control a few hundreds of sensors or probes, they automatically identify and configure the corresponding graphical user interfaces.
End users are free to add or removes sensors or probes. All communication protocols supported by smartphones are integrated in
the software design including WI-FI, blue tooth, cellular network technology and wired form through the audio port on the smartphone.
Security
: Universal smart instruments
have the sensor security built-in data acquisition module and help companies meet sensor security requirements, preventing unauthorized
users from accessing the sensor measurements and control. Unauthorized access of the universal smart instruments sensors is forbidden.
Modularity
: Increasing instrument
complexity is driving instruments to become more modular. The knobs and buttons on the instrument, the built-in circuitry, and
the functions available to the user used in traditional stand-alone instruments duplicate these components for each instrument,
adding cost and size. Universal smart instruments divide all instruments into three parts: smartphones including their application
software, wireless communication module (we called the universal smart device), which is not needed in the wired form, and task-specific
data acquisition module. The smartphone is used and purchased, no research and development is needed. Universal smart devices were
developed and manufactured by Perfecular Inc. Both hardware and software, including wired or wireless communication protocols,
were developed and well tested. The only work needed to be done are the design and manufacture of the task-specific data acquisition,
which is just a fraction of the traditional stand-alone instrument design. The high degree of modularity saves a lot of time in
development, maintenance, and support. Modular hardware and software limits the time needed to test products so developers can
spend more of their energy on innovation.
Universal smart instruments share many
similarities, in terms of functionalities and advantages, with virtual instruments. They are both soft-centered technologies. However,
developing the software for virtual instrumentation is not trivial, a programming language or special software can be used. Professional
software engineers with virtual instrument expertise are needed. A virtual instrument consists of an industry-standard computer
or workstation equipped with powerful application software, cost-effective hardware such as plug-in boards, and driver software,
which together perform the functions of traditional instruments. Its primary focus is on large, expensive, testing and measurement
instruments, not portable devices. Because of the unique nature of the smartphone operating systems such as IOS or Android, which
are significantly different from those used in industry-standard computers or workstations, the migration of virtual instrument
technology from industry-standard computers or workstations to mobile devices such as smartphones is not straight forward. Virtual
Instrument Software Architecture, commonly known as VISA is a comprehensive package for configuring, programming, and troubleshooting
instrumentation systems comprised of GPIB, Serial, VXI, PXI, Ethernet, and USB interfaces which are wired forms of communications
and widely used in traditional instruments. Universal smart instruments adopt ubiquitous wireless connectivity for communications
between a sensor and the smartphone. The wired form communications used in virtual instruments cannot be applied to wireless communications
supported by smartphone. Industry-standard computers or workstations have more powerful computational capability, memories and
storage to deal with demanding applications in modern industrial measurement systems than those found on smartphones. The software
architecture designed in universal smart instruments is significantly different from that of virtual instruments. There are many
applications running on smartphones. Universal smart instrument software should not interfere with other software. Mobile application
programming and wireless communication technologies are the major holdup for instrument engineers who do not have the mobile application
programming and wireless communication expertise. Focus Universal Inc. provided a comprehensive package including both universal
instrument application software for smartphones or mobile devices, and hardware for wireless communications between smartphones
and sensors, called universal smart device. These technologies, including instrument protocol, completely eliminate those holdups.
No smartphone programming and/or wireless communication knowledge are required, instrument engineers just use their traditional
embedded programming and spend a small fraction of their time to code the instrument specification into the data acquisition modules
including sensors or probes according to the universal smart protocol, and then enjoy the huge hardware reduction and more functionalities
provided or supported by the smartphone. The instrument design was simplified to the data acquisition design; all other functions
were achieved by the universal smart instrument software. Universal smart technology offers the potential to standardization of
the instrument design.
Universal smart technologies are designed
so that a single software package and hardware support all instrumentation applications, no new software and hardware is needed.
Traditional instrument manufacturers still migrate from their traditional instruments to the state-of-the-art universal wireless
smart instruments seamlessly. Instrumentation is a huge industry which covers a variety of industry fields including commercial,
industrial, military, medical, healthcare, scientific and daily life. It is very difficult to estimate its market value; McKinsey
Global Institute estimated that the impact of the Internet of Things on the global economy might be as high as $6.2 trillion
by 2025
1
. Cisco predicts the global Internet of Things market will be $14.4 trillion by 2022.
2
The Internet
of Things is just a fraction of the instrumentation market.
Our Approach to Measurement and Sensing
We offer a different approach that links
handheld devices and sensors with common smartphone computing power through an application on the smartphone in both IOS and Android
devices. Tapping into the computing power of a smartphone enables a measurement device to increase its capabilities.
We also offer an array of traditional handheld
meters through our wholesale distribution platform.
Ubiquitor Wireless Universal Sensor
Device
Our “Ubiquitor,” device will
be a handheld fully modular system with a universal sensor node and gateway system that will use a smartphone as the output display
module that displays the readings of various probe modules. We have initial functioning prototype devices created and intend to
develop this into full-scale production. The Ubiquitor will be a wireless sensor device that combines measuring tools with smartphone
technology to quickly deliver sensor node data on desktop and mobile phone screens. The Ubiquitor’s sensor analytics system
will integrate event-monitoring, storage and analytics software in a cohesive package that provides a holistic view of sensor data
it is reading.
The physical hardware consists of:
|
1.
|
The sensor probes, which come in hundreds of different varieties of sensor instruments in the form of a USB stick, with both male and female ports; and
|
|
2.
|
The main hardware gateway, a small cell phone size device with integrated circuits.
|
This device can connect up to 2.5 kilometers
of sensor instruments, and integrate data using embedded software to display the data and all analytics onto a digital screen (desktop
or mobile displays) using a Wi-Fi connection. Most types of probes can connect to the hardware. If the sensor size is bigger than
the standard probe size, it is possible to simply use a USB cable to connect the probe and the hub. All data and analytics are
displayed on a single screen, with tools that record and keep track of all measurements, and sort and display analytic information
in easy to read charts.
The Ubiquitor is a general platform that
collects data in real time, up to 100hz per second, and thus is intended to be adapted to many industrial uses.
The Ubiquitor is a multipurpose wireless
intelligent sensor device. Its greatest advantage is universal compatibility. Currently, the Ubiquitor device could simultaneously
accommodate more than 256 different types of sensor heads. Users could use their smartphones to simultaneously operate and monitor
over 256 kinds of sensor readings. With our technology, users only need to obtain the sensor heads, facilitating ease and convenience
of use. Using a smartphone, users can collect and analyze data in real time.
________________________
1
http://www.mckinsey.com/industries/high-tech/our-insights/the-internet-of-things-sizing-up-the-opportunity
.
2
http://www.forbes.com/sites/louiscolumbus/2015/12/27/roundup-of-internet-of-things-forecasts-and-market-estimates-2015/#2305058e48a0.
By using the smartphone as a substitute
platform, we believe we will achieve the following efficiencies:
|
1.
|
Cut production costs.
Smartphone
technology will advance and become more widely used than the vast majority products on the small sensor device market. By utilizing
smartphone technology, the Ubiquitor will add superior functionality and performance, improve the product’s quality and cutting
production costs.
|
|
2.
|
Reduce the effort required to develop a new sensor product.
With the Ubiquitor, we believe that there will be no need for device manufacturers to research and develop the new monitoring and operating components because they will just need to develop new sensor heads based on our software technology.
|
|
3.
|
Reduce clutter.
It is anticipated that the Ubiquitor dispenses with the hassle of hooking up cables, since it is based on wireless transmission of data.
|
Other Traditional Handheld Meters
Filter and Handheld Meter Wholesaler
We are a wholesaler of various filtration
products and digital meters. We source our products from manufacturers in China and then sell to a major U.S. distributor who resells
our products directly to consumers through retail distribution channels. Specifically, we sell the following products.
Fan Speed Adjuster device
. We provide
a fan speed adjuster device to retailers and distributors. Designed specifically for centrifugal fans with brushless motors, our
adjuster device helps ensure longer life by preventing damage to fan motors by adjusting the speed of centrifugal fans without
causing the motor to hum. These devices are rated for 350 watts max, have 120VAC voltage capacity and feature an internal, electronic
auto-resetting circuit breaker.
Carbon filter devices.
We also sell
two types of carbon filter devices to distributors. These Carbon filter devices are professional grade filters specifically designed
and used to filter air in greenhouses that might be polluted by fermenting organics. One of these filters can be attached to a
centrifugal fan to scrub the air in a constant circle or can be attached to an exhaust line as a single pass filter, which moves
air out of the growing area and filters unwanted odors and removes pollens, dust, and other debris in the air. The other filter
is designed to be used with fans from 0-6000 C.F.M.
HEPA filtration device.
We provide
an organic air high efficiency particulate arrestance (“HEPA”) filtration device at wholesale prices to distributors
and retailers. Manufactured, tested, certified, and labeled in accordance with current HEPA filter standards, this device is targeted
towards greenhouses and grow rooms and designed to keep insects, bacteria, and mold out of grow rooms. We sell these devices in
various sizes.
Digital light meter.
We provide
a handheld digital light meter that is used to measure luminance in fc units, or foot-candles. The meter we sell is designed to
be full cosine corrected for the angular incidence of light (meaning if you are not holding the sensor perpendicular to the light
source, the sensor will still read the light correctly). The meter has a built-in low battery indicator and is designed to accurately
measure to 40,000 FC.
Quantum par meter
. We provide a
handheld quantum par meter used to measure photosynthetically active radiation (“PAR”). This fully portable handheld
PAR meter is designed to measure PAR flux in wavelengths ranging from 400 to 700 nm. It is designed to measure up to 10,000 umol.
Strategy
Strategy and Marketing Plan
We have designed, manufactured, marketed
and distributed our electronic measurement devices, such as temperature humidity meters, digital meters, quantum PAR meters, pH
meters, TDS meters and CO2 monitors, for many years and have many loyal customers. The universal smart technology has been applied
to our existing traditional devices and demonstrated functionality and hardware cost savings. We believe we have achieved hardware
cost savings in the range of 70% to 90%. Prototypes were sent to our customers for demonstrations and evaluation. Currently, we
are in the stage of producing a pilot manufacturing run. The first round of pilot production was completed in May 2016. The second
round of pilot production was completed in July 2016.
Smartphones are an integral part of our
wireless universal smart technology system. Both wireless and wired communication connectivity are used and targeted on different
applications. In wired connectivity, the data acquisition module is connected through the audio port in the smartphone. The smartphone
is used to replace a traditional instrument. Compared with the wireless solution, the wireless communication module or even the
power supply used for data acquisition module are eliminated in the design, as a consequence of this some hardware costs are saved.
End users are not able to access the sensors or probes remotely. We believe that the instruments based on wired universal smart
technology are not as convenient as their wireless counterparts. Currently, in the industry, however, wired instruments are cheaper.
We believe that being the first ones in
the market provides a significant and sustained market-share advantage over later competitors. We first focus on our existing instruments
and convert them to universal smart devices and market them to our existing customers.
We are putting together an internal sales
team with the proceeds of the offering in order to get established for the marketing efforts.
We believe that wireless universal smart
technology will play a critical role for traditional industrial instrument manufacturers, as it is too expensive and difficult
to develop industrial instrument sensors for medium or smaller companies. The cost factor is the first consideration when deciding
whether a company wants to develop smart wireless technologies and implement them in their products. There are hundreds of thousands
of instrument manufacturers and trillion-dollar revenues for this manufacturing industry in China. We plan to open a sales department
in China dedicate to promoting our technologies to local instrument manufacturers.
Smartphones have been seamlessly integrated
into our daily life. A large number of functions and services have become accessible to the masses through the use of smart phones.
The proliferation of the smartphone and its user-friendly interface, which allows access to digital information, will cause these
devices to become a crucial part of our wireless universal smart instruments.
Intellectual Property Protection
After the merger, on January 20, 2016 we
filed provisional patent application number 62/281,104 with attorney docket number PER1.PAU.01.0 and Confirmation No. 2212. Prior
to its expiration, on November 4, 2016, we filed a full utility patent application with the U.S. Patent and Trademark Office (number
15/344,041). On November 4, 2016 we filed a U.S. patent application number 15/344,041 with the U.S. Patent and Trademark Office.
On March 5, 2018, Focus Universal Inc. (the "Company") issued a press release announcing that the U.S. Patent and Trademark
Office has issued an Issue Notification for U.S. Patent Application No. 9924295 entitled “Universal Smart Device,”
which covers a patent application regarding the Company’s Universal Smart Device. The USPTO had previously issued a Notice
of Allowance for the same patent. Barring any unforeseen circumstances, this patent, when issued, will be valid until 2036. We
filed the trademark “Ubiquitor” on July 10, 2016, under
Serial No.: 87068020.
Competitors
There are several competitors we have identified
in the wireless sensor node industry, including traditional instruments or devices manufacturers such as Hanna Instruments or Extech
Instruments.
Hach developed and launched SC1000 Multi-parameter
Universal Controller, a probe module for connecting up to 8 SC sensors and their products are not compatible with smart phones
yet and we believe their price-point is still prohibitive to consumers.
Monnit Corporation offers a range of wireless
or remote sensors. Many of Monnit’s products are web-based wireless sensors usually are not portable because of the power
consumption. Also, the sensors real-time updates are slow and we believe security of the web-based sensor data acquisition also
may be a concern. In addition to purchasing the device, consumers usually have to pay monthly fee for using web-based services.
We are not trying to compete with traditional
instruments or device manufacturers because we utilize our Ubiquitor universal smart device in conjunction with our generic instruments
smartphone application, which we believe will be a completely different product category.
Market Potential
We believe that wireless universal smart
technology will play a critical role for traditional instrument manufacturers, as it is too expensive and difficult to develop
for medium or smaller companies. The cost factor is the first consideration when deciding whether a company wants to develop smart
wireless technologies and implement them in their products or use them in their field testing. We also hope to play a role in academic
laboratories, particularly with smaller academic laboratories who are sensitive to price.
Results of operations for the three
months ended June 30, 2018 compared to the three months ended June 30, 2017.
Revenue, cost of sales and gross profit
Our
consolidated gross revenue for the three months ended June 30, 2018 and 2017, was $39,780 and $628,631,
respectively,
which included revenue from related party of $3,200 and $3,563, respectively. Our cost of consolidated cost of revenues for the
three months ended June 30, 2018 and 2017, was $9,761 and $544,898, respectively, resulting in a gross profit of $30,019 and $83,733
for the three months ended June 30, 2018 and 2017, respectively. The Company has been phasing out the sale of its older products
while currently developing new products for sale.
Operating Costs and Expenses
The major components of our operating
expenses for the three months ended June 30, 2018 and 2017 are outlined in the table below:
|
|
For the
Three Months
Ended
June 30,
2018
|
|
|
For the
Three Months
Ended
June 30,
2017
|
|
|
Increase
(Decrease)
$
|
|
Officer compensation
|
|
$
|
30,000
|
|
|
$
|
30,000
|
|
|
$
|
–
|
|
Research and development
|
|
|
56,771
|
|
|
|
55,453
|
|
|
|
1,318
|
|
Professional fees
|
|
|
513,736
|
|
|
|
41,797
|
|
|
|
471,939
|
|
General and administrative
|
|
|
135,874
|
|
|
|
60,673
|
|
|
|
75,201
|
|
Total operating expenses
|
|
$
|
736,381
|
|
|
$
|
187,923
|
|
|
$
|
548,458
|
|
General
and administrative expenses of $135,874
incurred
during the three months ended June 30, 2018 primarily consisted of marketing fee of $56,000, office rent of $14,315 and salaries
of $28,404. General and administrative expenses of $60,673 incurred during the three months ended June 30, 2017 primarily consisted
of office rent of $14,879 and salaries of $27,482. The increase was mainly due to increased marketing fee in 2018.
Professional
fees increased from $41,797 during the three months ended June 30, 2017 to $513,736 during the three months ended June 30, 2018,
an increase of $471,939.
The increase of
professional fees is mainly due to services incurred for private placement and professional engaged for potential investment.
Officer compensation was $30,000 for three
months ended June 30, 2017 and 2018. Research and development was $56,771 and $55,453 for the three months ended June 30, 2018
and 2017.
Net Losses
During
the three months ended June 30, 2018 and 2017, we incurred net losses of $
1,095,278
and $104,970 respectively, due to the factors discussed above.
Results of operations for the six months
ended June 30, 2018 compared to the six months ended June, 2017.
Revenue, cost of sales and gross profit
Our consolidated gross revenue for the
six months ended June 30, 2018 and 2017, was $108,332 and $898,084, respectively, which included revenue from related party of
$10,575 and $6,571, respectively. Our cost of consolidated cost of revenues for the six months ended June 30, 2018 and 2017, was
$27,685 and $752,496, respectively, resulting in a gross profit of $80,647 and $145,588 for the six months ended June 30, 2018
and 2017, respectively. The Company has been phasing out the sale of its old products while currently developing new products
for sale.
Operating Costs and Expenses
The major components of our operating expenses
for the three months ended June 30, 2018 and 2017 are outlined in the table below:
|
|
For the
Six Months
Ended
June 30,
2018
|
|
|
For the
Six Months
Ended
June 30,
2017
|
|
|
Increase
(Decrease)
$
|
|
Officer compensation
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
–
|
|
Research and development
|
|
|
107,789
|
|
|
|
109,929
|
|
|
|
(2,140
|
)
|
Professional fees
|
|
|
563,897
|
|
|
|
69,778
|
|
|
|
494,119
|
|
General and administrative
|
|
|
205,037
|
|
|
|
123,582
|
|
|
|
81,455
|
|
Total operating expenses
|
|
$
|
936,723
|
|
|
$
|
363,289
|
|
|
$
|
573,434
|
|
General and administrative expenses
of $205,037 incurred during the six months ended June 30, 2018 primarily consisted of market fee of $68,000, office rent of
$24,815 and salaries of $54,427. General and administrative expenses of $363,289 incurred during the six months ended June
30, 2017 primarily consisted of office rent of $22,000 and salaries of $55,171. The increase was mainly due to increased
marketing fee incurred in 2018.
Professional
fees increased from $69,778 during the six months ended June 30, 2018 to $563,897 during the six months ended June 30, 2017, an
increase of $494,119. The increase of professional fees is mainly due to services incurred for private placement and professional
engaged for potential investment.
Officer compensation was $60,000 for six
months ended June 30, 2017 and 2018. Research and development was $107,789 and $109,929 for the six months ended June 30, 2018
and 2017.
Net Losses
During the six months ended June
30, 2018 and 2017, we incurred net losses of $1,299,111 and $213,685 respectively, due to the factors discussed above.
Liquidity and Capital Resources
Working Capital
|
|
June 30,
2018
|
|
|
December 31,
2017
|
|
Current Assets
|
|
$
|
3,808,402
|
|
|
$
|
476,985
|
|
Current Liabilities
|
|
|
(380,730
|
)
|
|
|
(481,790
|
)
|
Working Capital
|
|
$
|
3,427,672
|
|
|
$
|
(4,805
|
)
|
Cash Flows
The table below, for the periods indicated, provides selected
cash flow information:
|
|
For the
Six Months
Ended
June 30,
2018
|
|
|
For the
Six Months
Ended
June 30,
2017
|
|
Net cash used in operating activities
|
|
$
|
(528,684
|
)
|
|
$
|
(109,177
|
)
|
Net cash used in investing activities
|
|
|
–
|
|
|
|
–
|
|
Net cash provided by financing activities
|
|
|
3,855,512
|
|
|
|
420,000
|
|
Net change in cash and cash equivalents
|
|
$
|
3,326,828
|
|
|
$
|
310,823
|
|
Cash Flows from Operating Activities
Our net cash outflows from operating
activities of $528,684 for the six months ended June 30, 2018 was primarily the result of our net loss of $1,299,111, and changes
in our operating assets and liabilities. Our net cash outflows from operating activities of $109,177 for the six months ended
June 30, 2017, was primarily the result of our net loss of $213,685 and changes in our operating assets and liabilities.
We expect that cash flows from operating
activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our net revenues and operating
results, utilization of new revenue streams, collection of accounts receivable, and timing of billings and payments.
Cash Flows from Investing Activities
The Company did not incur any cash flow
from investing activities for the six months ended June 30, 2018 and 2017.
Cash Flows from Financing Activities
Our
net cash inflows from financing activities of $3,855,512 for the six months ended June 30, 2018 was primarily due to the sale of
common stock through private placement. Our net cash inflows from financing activities of $420,000 for the six months ended June
30, 2017 was due to the issuance of a convertible promissory note.
Off Balance Sheet Arrangements
As of June 30, 2018, we did not have any
off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation SK.