Table of Contents
As filed with the Securities and
Exchange Commission on October 3, 2018
Registration No. 333-227311
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT No. 2
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
FOCUS UNIVERSAL INC.
(Exact name of registrant as specified in
its charter)
Nevada
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46-3355876
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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Incorporation or organization)
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20511 East Walnut Drive North, Walnut, CA
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91789
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(Address of principal executive offices)
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(Zip Code)
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(Address, including zip code, and telephone
number,
Including area code, of registrant’s
principal executive offices)
Registrant’s telephone number, including
area code (626) 272-3883
Copy to:
Gilbert J. Bradshaw, Esq.
Wilson Bradshaw & Cao, LLP
9110 Irvine Center Drive
Irvine, CA 92618
Tel: (917) 830-6517/Fax: (917) 791-8877
gbradshaw@wbc-law.com
Nevada Business Center, LLC
701 S. Carson St. Suite 200
Carson City, NV 89701
(775) 887-8853
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Approximate date of commencement of proposed
sale to the public:
From time to time after this registration
statement is declared effective.
If any of the securities being registered
on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box:
þ
If this form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.
¨
If this form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
If this form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging
growth company" in Rule 12b-2 of the Exchange Act. (check one)
Large accelerated filer:
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Accelerated filer:
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Non-accelerated filer:
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Smaller reporting company:
þ
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Emerging Growth Company:
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If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
o
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
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Shares to be
Registered
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Proposed
Offering Price
Per Share (1)
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Proposed
Maximum
Aggregate Offering
Price (2)
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Amount
of
Registration
Fee (3)(4)
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Common stock, par value $0.001 per share
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6,069,613
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$6.74
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$40,909,191.62
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$5,093.19
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___________________
(1)
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The offering price was estimated solely for the purpose of
computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national
exchange, but is traded as of the date of this prospectus on the OTCQB marketplace. The offering price is based on the average
of the bid and the ask price of our common stock on that market on September 11, 2018 and as set forth by our executives.
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(2)
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Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(c) under the Securities Act.
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(3)
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Estimated solely for the purpose of computing the amount
of the registration fee pursuant to Rule 457(o) under the Securities Act.
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(4)
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Previously paid via
Fedwire.
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The registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or
until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may
determine.
The information in this
prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION ON
_______, 2018
FOCUS UNIVERSAL INC.
6,069,613 SHARES OF COMMON STOCK
We are an emerging growth company. This prospectus relates to
the sale of up to 6,069,613 shares of the common stock of Focus Universal Inc., a Nevada corporation (“Focus Universal,”
“the Company,” “we,” “us,” and “our,”) by persons who purchased shares of our common
stock in a private placement that we effected in July 2018. The purchasers of common stock in such private placement whose shares
are being registered for resale are referred to in this prospectus as the selling stockholders. Each selling stockholder may be
considered an “underwriter” within the meaning of the Securities Act of 1933, as amended.
The selling stockholders may sell common
stock from time to time in the principal market on which the stock will be traded at the prevailing market price or in negotiated
transactions. See “Plan of Distribution” for more information about how the selling stockholders may sell the shares
of common stock being registered pursuant to this prospectus. The selling stockholders have informed us that they do not have any
agreement or understanding, directly or indirectly, with any person to distribute the common stock.
We have paid and will pay the expenses
incurred in registering the shares, including legal and accounting fees. See “Plan of Distribution.”
Our common stock is currently quoted on
the OTCQB market under the symbol “FCUV.” On September 28, 2018, the last quoted price of our common stock as reported
on the OTCQB was $6.50 per share.
An investment in our common stock is
speculative and involves a high degree of risk. Investors should carefully consider the risk factors and other uncertainties described
in this prospectus before purchasing our common stock. See “Risk Factors” beginning on page 3.
NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL, ACCURATE, OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is
October 3, 2018
EXPLANATORY
NOTE
Focus Universal, Inc. (the “Company”) filed a Registration
Statement on Form S-1 with the Securities and Exchange Commission on September 12, 2018. The Company is filing this Amendment
to accurately reflect that Duncan Lee is both the Chief Financial Officer and the Principal Accounting Officer of the Company.
TABLE OF CONTENTS
AVAILABLE INFORMATION
This prospectus constitutes a part of a
registration statement on Form S-1 (together with all amendments and exhibits thereto, the “Registration Statement”)
filed by us with the SEC under the Securities Act of 1933, as amended (the “Securities Act”). As permitted by the rules
and regulations of the SEC, this prospectus omits certain information contained in the Registration Statement, and reference is
made to the Registration Statement and related exhibits for further information with respect to Focus Universal Inc. and the securities
offered hereby. With regard to any statements contained herein concerning the provisions of any document filed as an exhibit to
the Registration Statement or otherwise filed with the SEC, in each instance reference is made to the copy of such document so
filed. Each such statement is qualified in its entirety by such reference.
Unless otherwise specified, the
information in this prospectus is set forth as of September 28, 2018,
and we anticipate that changes in our affairs
will occur after such date. We have not authorized any person to give any information or to make any representations, other than
as contained in this prospectus, in connection with the offer contained in this prospectus. If any person gives you any information
or makes representations in connection with this offer, do not rely on it as information we have authorized. This prospectus is
not an offer to sell our common stock in any state or other jurisdiction to any person to whom it is unlawful to make such offer.
PROSPECTUS SUMMARY
This summary highlights information
contained elsewhere in this prospectus. Because this is only a summary, it does not contain all of the information that may be
important to you. You should read this entire prospectus and should consider, among other things, the matters set forth under “Risk
Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our
consolidated financial statements and related notes thereto appearing elsewhere in this prospectus before making your investment
decision. This prospectus contains forward-looking statements and information relating to Focus Universal. See “Cautionary
Note Regarding Forward-Looking Statements” on page 13.
Focus Universal Inc.
(the “Company”,
“we”, “us” or “our”) is a Nevada corporation that is a provider of handheld sensor devices
and wholesaler of various air filters.
We are based in Walnut, California, and
were incorporated in Nevada in 2012. In December 2013, we filed an S-1 registration statement that went effective on March 14,
2014.
Our website is www.focusuniversal.com.
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Registration
Statement on Form S-1.
We market 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 principal executive offices
are located at 20511 East Walnut Drive North, Walnut, CA. Our telephone number is (626) 272-3883 and our website is www.focusuniversal.com.
JOBS Act
Recently the United States Congress passed
the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which provides for certain exemptions from various
reporting requirements applicable to public companies that are reporting companies and are “emerging growth companies.”
We are an “emerging growth company” as defined in Section 3(a) of the Exchange Act (as amended by the JOBS Act, enacted
on April 5, 2012), and we will continue to qualify as an “emerging growth company” until the earliest to occur of:
(a) the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as such amount is indexed
for inflation every five years by the SEC) or more; (b) the last day of our fiscal year following the fifth anniversary of the
date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act;
(c) the date on which we have, during the previous three-year period, issued more than $1,000,000,000 in non-convertible debt;
or (d) the date on which we are deemed to be a “large accelerated filer,” as defined in Exchange Act Rule 12b–2.
Therefore, we expect to continue to be an emerging growth company for the foreseeable future.
Generally, a registrant that registers
any class of its securities under Section 12 of the Exchange Act is required to include in the second and all subsequent annual
reports filed by it under the Exchange Act a management report on internal control over financial reporting and, subject to an
exemption available to registrants that meet the definition of a “smaller reporting company” in Exchange Act Rule 12b-2,
an auditor attestation report on management’s assessment of internal control over financial reporting. However, for so long
as we continue to qualify as an emerging growth company, we will be exempt from the requirement to include an auditor attestation
report in our annual reports filed under the Exchange Act, even if we do not qualify as a “smaller reporting company”.
In addition, as an emerging growth company, we are able to avail ourselves to the reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements and to not present to our stockholders a nonbinding advisory vote on
executive compensation, obtain approval of any golden parachute payments not previously approved or present the relationship between
executive compensation actually paid and our financial performance. We have irrevocably elected to comply with new or revised accounting
standards even though we are an emerging growth company.
The Offering
This prospectus covers shares being
offered for resale by the selling shareholders whose shares were issued by us in a private placement that we effected in July
2018 (the “Resale Shares”). The holders of shares of our common stock described in this paragraph are the selling
stockholders under this prospectus.
ABOUT THIS OFFERING
Securities Being Offered
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Up to 6,069,613 shares of our common stock to be sold by selling stockholders.
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Common Stock Outstanding Prior to the Offering
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34,574,706
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Common Stock Outstanding After the Offering
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40,644,319
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Offering Price Per Share
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The shareholders identified in the “Selling Shareholders” section may offer to sell the Resale Shares at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices, and will pay all brokerage commissions and discounts attributable to the sale of such shares. They will receive all of the net proceeds from the offering of their shares.
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Terms of the Offering
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The selling stockholders will determine the terms relative to the sale of the shares of our common stock offered hereby.
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Termination of the Offering
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The offering will conclude when all of the 6,069,613 shares of common stock have been sold or at a time when our company, in its sole discretion, decides to terminate the registration of the shares.
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Risk Factors
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An investment in our common stock is highly speculative and involves a high degree of risk. See “Risk Factors” beginning on page 3.
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RISK FACTORS
An investment in our common stock is
highly speculative, involves a high degree of risk and should be made only by investors who can afford a complete loss. You should
carefully consider the following risk factors, together with the other information in this prospectus, including our financial
statements and the related notes, before you decide to buy our common stock. If any of the following risks actually occurs, then
our business, financial condition or results of operations could be materially adversely affected, the trading of our common stock
could decline, and you may lose all or part of your investment therein.
We lack an operating history. There
is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate
profitably, our business will fail.
We were incorporated on December 4, 2012,
and as of December 31, 2017, we had an accumulated deficit of $1,978,794. We have a limited operating history upon which an evaluation
of our future success or failure can be made. Based upon current plans, we expect to continue generating revenues. However, our
revenues may not be sufficient to cover our operating costs. We cannot guarantee that we will be successful in generating significant
revenues in the future. Failure to achieve a sustainable sales level will cause us to go out of business.
We require significant funding to manufacture and market
our Ubiquitor wireless sensor.
We may ultimately require up to $20 million
to fund the manufacturing and marketing strategy for our product. Once we achieve this fund-raising goal, we intend to position
ourselves in the small device market, establishing the price at below a few hundred dollars. Due to superior functionality and
low price, we expect to capture this section of the market fairly easily, while our product and service matures, and the Company
becomes better known, we will seize the high-end market. None of this will be possible if we fail to obtain the funding we require.
We depend on key personnel.
Our future success will depend in part
on the continued service of key personnel, particularly, Desheng Wang our Chief Executive Officer, Duncan Lee our Chief Financial
Officer and our President Edward Lee.
If any of our directors and officers will
choose to leave the company, we will face significant difficulties in attracting potential candidates for replacement of our key
personnel due to our limited financial resources and operating history. In addition, the loss of any key employees or the inability
to attract or retain qualified personnel could delay our plan of operations and harm our ability to provide services to our current
customers and harm the market’s perception of us.
We outsourced our product manufacturing
and procurement, decreasing quality and reliability and protectability.
We have fully
outsourced all manufacturing and have no direct control over the manufacturing processes of our products. This lack of control
may increase quality or reliability risks and could limit our ability to quickly increase or decrease production rates. It also
creates liability in that we could lose control of our intellectual property that is not properly protected.
Demand for
our products is uncertain and depends on our currently unproven ability to create and maintain superior performance.
Our future operating
results will depend upon our ability to provide our products or services and to operate profitably in an industry characterized
by intense competition, rapid technological advances and low margins. This, in turn, will depend on a number of factors, including:
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Our ability to generate significant sales and profit margin from the Ubiquitor device;
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Worldwide market conditions and demand for web services, sensor devices and other products we may continue to add as we move forward;
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Our success in meeting targeted availability dates for our products and services;
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Our ability to develop and commercialize new intellectual property and to protect existing intellectual property;
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Our ability to maintain profitable relationships with our distributors, retailers and other resellers;
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Our ability to maintain an appropriate cost structure;
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Our ability to attract and retain competent, motivated employees;
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Our ability to comply with applicable legal requirements throughout the world; and
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Our ability to successfully manage litigation, including enforcing our rights, protecting our interests and defending claims made against us.
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These factors
are difficult to manage, satisfy and influence and we cannot provide any assurance that we will be able to sustain profits in the
future.
Our Ubiquitor
Product could fail to gain traction in the marketplace for a number of reasons that would adversely impact our financial results
and cause our investors to lose money
Future successful sales of our Ubiquitor
entail numerous risks such as:
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Any lack of market acceptance of the Ubiquitor;
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Failure to maintain acceptable arrangements with product suppliers, particularly in light of lower than anticipated volumes;
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Manufacturing, technical, supplier, or quality-related delays, issues or concerns, including the loss of any key supplier or failure of any key supplier to deliver high quality products on time;
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Competition;
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Potential declines in demand for sensor devices; and
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Risks that third parties may assert intellectual property claims against our products.
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In order to compete successfully, we must
accurately forecast demand, closely monitor inventory levels, secure quality products, continuously drive down costs, meet aggressive
product price and performance targets, create market demand for our brand and hold sufficient, but not excess, inventory.
There is a risk that the market will not adapt to using
the smartphone as a substitute platform for sensor devices, causing our products to fail in the marketplace.
There is a risk that the market will not
receive the smartphone technology, which we will be using as our platform. The vast majority of products on the small sensor device
market do not currently use smartphones to collect and analyze sensor data. There is no guarantee that using smartphone technology
will cut production costs and be well received. If our platform using smartphone technology is not well received, there is a risk
that device manufacturers will develop new monitoring and operating components that are incompatible with our current platform
instead of developing the traditional sensors that are compatible with our technology. Updating our platform to stay compatible
with new components could increase our costs unexpectedly.
Using wireless transmission technologies such as WI-FI
and Bluetooth may create security risks
There is also a risk of failure based on
the wireless transmission of data used by our smartphone platform. If there is instability in a wireless network, Bluetooth sensor,
or other network problems that are out of our control, our new platform may not be well received. Our smartphone platform relies
on the wireless transmission of data through WIFI networks and Bluetooth sensors. These networks are often deemed less secure than
a hard-wired network. The security of a wireless network is often out of our control. However, any breach of security could result
in the market and sensor device manufacturers to fail to embrace our platform.
Our business involves the use, transmission
and storage of confidential information, and the failure to properly safeguard such information could result in significant reputational
harm.
We may at times collect, store and transmit
information of, or on behalf of, our clients that may include certain types of confidential information that may be considered
personal or sensitive, and that are subject to laws that apply to data breaches. We believe that we take reasonable steps to protect
the security, integrity and confidentiality of the information we collect and store, but there is no guarantee that inadvertent
or unauthorized disclosure will not occur or that third parties will not gain unauthorized access to this information despite our
efforts to protect this information, including through a cyber-attack that circumvents existing security measures and compromises
the data that we store. If such unauthorized disclosure or access does occur, we may be required to notify persons whose information
was disclosed or accessed. Most states have enacted data breach notification laws and, in addition to federal laws that apply to
certain types of information, such as financial information, federal legislation has been proposed that would establish broader
federal obligations with respect to data breaches. We may also be subject to claims of breach of contract for such unauthorized
disclosure or access, investigation and penalties by regulatory authorities and potential claims by persons whose information was
disclosed. The unauthorized disclosure of information, or a cyber-security incident involving data that we store, may result in
the termination of one or more of our commercial relationships or a reduction in client confidence and usage of our services. We
may also be subject to litigation alleging the improper use, transmission or storage of confidential information, which could damage
our reputation among our current and potential clients and cause us to lose business and revenue.
Our business depends on our ability
to keep manufacturing costs low and we may lack the expertise necessary to negotiate and maintain favorable pricing, supply, business
and credit terms with our potential vendors.
It may be difficult
to negotiate or maintain favorable pricing, supply, business or credit terms with our potential vendors, suppliers and service
providers. In addition, product manufacturing costs may increase if we fail to achieve anticipated volumes. There can be no assurance
that we will be able to successfully manage these risks. In summary, we can offer no assurance that we will be able to obtain a
sufficient (but not excess) supply of products on a timely and cost effective basis. Our failure to do so would lead to a material
adverse impact on our business.
The lack of public company experience
of our management team could adversely impact our ability to comply with the reporting requirements of U.S. securities laws.
Dr. Wang lacks public company experience,
which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of
2002. Our CEO has never been responsible for managing a publicly traded company. Such responsibilities include complying with federal
securities laws and making required disclosures on a timely basis. Any such deficiencies, weaknesses or lack of compliance could
have a materially adverse effect on our ability to comply with the reporting requirements of the Securities Exchange Act of 1934,
as amended, which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability
to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company.
Our officers, directors, consultants
and advisors are involved in other businesses and not obligated to commit their time and attention exclusively to our business
and therefore they may encounter conflicts of interest with respect to the allocation of time and business opportunities between
our operations and those of other businesses.
Our Chief Executive Officer Mr. Desheng
Wang is currently involved in other businesses and not obligated to commit his time and attention exclusively to our business and,
accordingly, he may encounter conflicts of interest in allocating his own time, or any business opportunities that he may encounter,
between our operations and those of other businesses. Furthermore, if the execution of our business plan demands more time than
is currently committed by him, he will be under no obligation to commit such additional time, and his failure to do so may adversely
affect our ability to carry on our business and successfully execute our business plan.
Another example of a conflict of interest
is so called “self-dealing" transactions. If a conflict-of-interest transaction is negotiated and approved, in a manner
that approximates arms-length negotiations, the transaction is accepted unless a shareholder proves in court that the transaction
is not entirely fair to the company or its shareholders. The burden is on the shareholder to show lack of entire fairness. Otherwise,
the transaction is considered invalid if challenged, unless the director proves in court that the transaction is entirely fair
to the company. The burden is on the director to show entire fairness.
If, as a result of before mentioned conflicts,
we are deprived of business opportunities or information, the execution of our business plan and our ability to effectively compete
in the marketplace may be adversely affected. If we become aware of such conflict of interests we will take an immediate action
to resolve it. Each conflict of interest will be handled by the company based on the nature of the conflict and the individual
involved in it.
We do not have any actual or potential conflict of interests
with our consultants or advisors.
We have
concluded that we have not maintained effective internal control over financial reporting through the year ended December 31, 2017
and December 31, 2016. Significant deficiencies and material weaknesses in our internal control could have material adverse effects
on us.
It is important
for us to maintain effective internal control over financial reporting, which is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
For a discussion
of our internal control over financial reporting and a description of the identified material weakness, see “Management’s
Report on Internal Control Over Financial Reporting” included in Item 9A of this Report. A material weakness is a deficiency,
or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely
basis.
A material weakness
in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financial information.
We plan to implement a number of remediation steps to address the material weakness as described in Item 9A of this Report. If
we are unsuccessful in implementing or following our remediation plan, we may not be able to timely or accurately report our financial
condition, results of operations or cash flows or maintain effective disclosure controls and procedures. If we are unable to report
financial information timely and accurately or to maintain effective disclosure controls and procedures, we could be subject to,
among other things, regulatory or enforcement actions by the SEC, any one of which could adversely affect our business prospects.
We currently have identified significant
deficiencies in our internal control over financial reporting that, if not corrected, could result in material misstatements of
our financial statements.
In connection
with the audit of our financial statements as of and for the year ended December 31, 2017 and 2016, we identified significant deficiencies
in our internal control over financial reporting and a general understanding of U.S. GAAP. As such, there is a reasonable possibility
that a misstatement of our financial statements will not be prevented or detected on a timely basis.
As we have thus
far not needed to comply with Section 404 of the Sarbanes-Oxley Act, neither we nor our independent registered public accounting
firm has performed an evaluation of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley
Act. In light of the deficiency, we believe that it is possible that certain control deficiencies may have been identified if such
an evaluation had been performed.
We are working
to remediate the deficiencies or material weaknesses. We have taken steps to enhance our internal control environment and plan
to take additional steps to remediate the material weaknesses. Specifically:
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We have hired additional outside consultants and will hire qualified personnel in our accounting department, especially to add an experienced accountant in a controller capacity. We will continue to evaluate the structure of the finance organization and add resources as needed;
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we are implementing additional internal reporting procedures, including those designed to add depth to our review processes and improve our segregation of duties;
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we are updating our systems so that we may collect the necessary information to enable us to more effectively monitor and comply with applicable filing requirements on a timely basis;
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we are in the process of documenting, assessing and testing our internal control over financial reporting as part of our efforts to comply with Section 404 of the Sarbanes-Oxley Act.
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Although we plan
to complete this remediation process as quickly as possible, we are unable, at this time to estimate how long it will take, and
our efforts may not be successful in remediating the deficiencies or material weaknesses.
Because one of our Directors, who
is also our sole promoter, owns over 35.18% of our outstanding common stock he could make and control corporate decisions that
may be disadvantageous to other minority shareholders.
One of our Directors owns over 35.18% of the
outstanding shares of our common stock as of the date of this reporting. Accordingly, Directors have a significant influence in
determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or
substantially all of our assets. They also have the power to prevent or cause a change in control. The interests of our directors
may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other
shareholders.
Our executive officers and directors
collectively have the power to control our management and operations, and have a significant majority in voting power on all matters
submitted to the stockholders of the company.
Management currently beneficially owns
a majority of our outstanding common stock. Consequently, management has the ability to influence control of the operations of
the Company and, acting together, will have the ability to influence or control substantially all matters submitted to stockholders
for approval, including:
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Election of our board of directors;
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Removal of directors;
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Amendment to the Company’s Articles of Incorporation or Bylaws; and
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Adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination.
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These stockholders have complete control
over our affairs. Accordingly, this concentration of ownership by itself may have the effect of impeding a merger, consolidation,
takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for the Common Stock.
You could be diluted from our future
issuance of capital stock and derivative securities.
As of December 31, 2017, we had 34,574,706
shares of common stock outstanding and no shares of preferred stock outstanding. We are authorized to issue up to 75,000,000 shares
of common stock and no shares of preferred stock. To the extent of such authorization, our Board of Directors will have the ability,
without seeking stockholder approval, to issue additional shares of common stock or preferred stock in the future for such consideration
as the Board of Directors may consider sufficient. The issuance of additional common stock or preferred stock in the future may
reduce your proportionate ownership and voting power.
If we fail to maintain an effective
system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result,
current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading
price of our stock.
Members of our Board of Directors are inexperienced
with U.S. GAAP and the related internal control procedures required of U.S. public companies. Management has determined that our
internal audit function is also significantly deficient due to insufficient qualified resources to perform internal audit functions.
We are a smaller reporting company with
limited resources. Therefore, we cannot assure investors that we will be able to maintain effective internal controls over financial
reporting based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim
financial statements will not be prevented or detected on a timely basis. For these reasons, we are considering the costs and benefits
associated with improving and documenting our disclosure controls and procedures and internal controls and procedures, which includes
(i) hiring additional personnel with sufficient U.S. GAAP experience and (ii) implementing ongoing training in U.S. GAAP requirements
for our CFO and accounting and other finance personnel. If the result of these efforts are not successful, or if material weaknesses
are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness
of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further
implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness
of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation.
The requirements of being a public
company may strain our resources and distract our management.
We are required to comply with various
regulatory and reporting requirements, including those required by the Securities and Exchange Commission. Complying with these
reporting and other regulatory requirements is time-consuming and may result in increased costs to us and could have a negative
effect on our business, results of operations and financial condition.
As a public company, we are subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and requirements of the Sarbanes-Oxley
Act of 2002, as amended, or SOX. These requirements may place a strain on our systems and resources. The Exchange Act requires
that we file annual, quarterly and current reports with respect to our business and financial condition. The SOX requires that
we maintain effective disclosure controls and procedures and internal controls over financial reporting. Compliance with these
rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming
or costly and increase demand on our systems and resources.
These activities may divert management’s
attention from other business concerns, which could have a material adverse effect on our business and results of operations.
In addition, changing laws, regulations
and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing
legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are
subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice
may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend
to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general
and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance
activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory
or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and
our business may be harmed.
We also expect that being a public company
and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and
we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also
make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit
committee and compensation committee, and qualified executive officers.
We are required to evaluate our internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act because we have reported second fiscal year in our
second annual report on form 10-K. We have concluded that we have not maintained effective internal control over financial reporting
through the six months ended June 30, 2018. Significant deficiencies and material weaknesses in our internal control could have
material adverse effects on us.
The Sarbanes-Oxley Act of 2002 and the
new rules subsequently implemented by the Securities and Exchange Commissions, the Financial Industry Regulatory Authority (“FINRA”)
and the Public Company Accounting Oversight Board have imposed various new requirements on public companies, including requiring
changes in corporate governance practices.
We expect these rules and regulations to
increase our legal and financial compliance costs and to make some activities more time-consuming and costly. These costs could
affect profitability and our results of operations.
We are in the process of determining whether
our existing internal controls over financial reporting systems are compliant with Section 404. We are required to conduct the
evaluation of effectiveness of our internal controls because we have reported end of the fiscal year in our second annual report
on Form 10-K. In addition, because we are a smaller reporting company, we are not required to obtain the auditor attestation of
management’s evaluation of internal controls over financial reporting. If we obtain and disclose such reports we could continue
doing so at our discretion so long as we remain a smaller reporting company.
This process of internal control evaluation
and attestation may divert internal resources and will take a significant amount of time, effort and expense to complete. If it
is determined that we are not in compliance with Section 404, we may be required to implement new internal control procedures and
re-evaluate our financial reporting. If we are unable to implement these changes effectively or efficiently, it could harm our
operations, financial reporting or financial results, which could adversely affect our ability to comply with our periodic reporting
obligations under the Exchange Act.
There is a very limited public (trading)
market for our common stock and; therefore, our investors may not be able to sell their shares.
Our common stock is listed on the over-the-counter
exchange, and is thinly traded. As a result, stockholders may be unable to liquidate their investments, or may encounter considerable
delay in selling shares of our common stock. If an active trading market does develop, the market price of our common stock is
likely to be highly volatile due to, among other things, the nature of our business and because we are a new public company with
a limited operating history. Further, a few individual stockholders dominate our shares. The limited trading volume subjects the
price of our common stock to manipulation by one or more stockholders and will significantly limit the number of shares that one
can purchase or sell in a short period of time. The market price of our common stock may also fluctuate significantly in response
to the following factors, most of which are beyond our control:
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variations in our quarterly and annual operating results;
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changes in general economic conditions;
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changes in technologies favored by consumers;
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price competition or pricing changes by us or our competitors; and
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the addition or loss of key managerial and collaborative personnel.
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The equity markets have, on occasion, experienced
significant price and volume fluctuations that have affected the market prices for many companies' securities and that have often
been unrelated to the operating performance of these companies. Any such fluctuations may adversely affect the market price of
our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares,
or may be forced to sell them at a loss.
Our common stock has not been widely
traded, and the price of our common stock may fluctuate substantially.
To date, there has been a limited public
market for shares of our common stock, with limited trading. An active public trading market may not develop or, if developed,
may not be sustained. The current market price of our common stock and any possible subsequent listing on another larger securities
exchange, if and when we are successful in doing so, will be affected by a number of factors, including those discussed above.
Risks Related to this Offering and
Ownership of Our Common Stock - Because a majority of the outstanding shares of our common stock will be sold in this offering
and will be freely tradable without restriction or further registration under the Securities Act, any substantial number of shares
of common stock that may be sold in the market following this offering could cause the market price of our common stock to decline
significantly, even if our business is performing well.
Our common stock is traded on the OTCQB
and the market for our common stock is “thinly-traded,” meaning that the number of persons interested in purchasing
our common stock at or near bid prices at any given time may be relatively small or non-existent. Sales of a substantial number
of shares of our common stock in the public market following this offering could cause the market price of our common stock to
decline.
Almost all of the 6,069,613 shares of common
stock sold by Selling Shareholders in this offering upon issuance will be freely tradable without restriction or further registration
under the Securities Act. As a result, the lack of a robust resale market may require a stockholder who desires to sell a large
number of shares of common stock to sell the shares in increments over time to mitigate any adverse impact of the sales on the
market price of our stock.
Substantial future sales of our common stock, or the perception
in the public markets that these sales may occur, may depress our stock price.
Sales of substantial shares of our common
stock in the public market, or the perception that these sales could occur, could adversely affect the price of our common stock
and could impair our ability to raise capital through the sale of additional shares. All outstanding shares of our common stock
are freely tradable without restriction under the Securities Act of 1933 (the "Securities Act"), except for any shares
of our common stock that may be held or acquired by our directors, executive officers and other affiliates, as that term is defined
in the Securities Act, which are subject to restrictions under the Securities Act. Certain existing holders of a majority of our
common stock have rights, subject to certain conditions, to require us to file registration statements covering their shares or
to include their shares in registration statements that we may file for ourselves or other shareholders. If the sale of these shares
are registered, they will be freely tradable without restriction under the Securities Act. In the event such registration rights
are exercised and a large number of shares of common stock are sold in the public market, such sales could reduce the trading price
of our common stock.
In the future, we may also issue our securities
if we need to raise capital in connection with a capital raise or acquisitions. The number of shares of our common stock issued
in connection with a capital raise or acquisition could constitute a material portion of our then-outstanding shares of our common
stock.
Future sales of our common stock
by existing stockholders could cause our stock price to decline.
If our existing stockholders sell substantial
shares of our common stock in the public market, then the market price of our common stock could decrease significantly. The perception
in the public market that our stockholders might sell shares of common stock also could depress the market price of our common
stock. There are approximately 40,901,010 shares of our common stock outstanding, of which approximately 3,670,000 shares are currently
freely tradable. We may in the future issue and register additional shares of our common stock that might be freely transferable
at the time of such transaction.
A decline in the price of shares of our
common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity
securities.
We do not intend to pay dividends and there will be less
ways in which you can make a gain on any investment in Focus Universal Inc.
We have never paid any cash dividends and
currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently
not provided for in our financing plan, our funding sources may likely prohibit the payment of a dividend. Because we do not intend
to declare dividends, any gain on an investment in Focus Universal Inc. will need to come through appreciation of the stock’s
price.
You may face significant restrictions on the resale of
your shares due to state “blue sky” laws.
Each state has its own securities laws,
often called “blue sky” laws, which (1) limit sales of securities to a state’s residents unless the securities
are registered in that state or qualify for an exemption from registration, and (2) govern the reporting requirements for broker-dealers
doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place
to cover the transaction, or it must be exempt from registration. The applicable broker-dealer must also be registered in that
state.
We do not know whether our securities will
be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those
broker-dealers, if any, who agree to serve as market makers for our common stock. There may be significant state blue sky law restrictions
on the ability of investors to sell, and on purchasers to buy, our securities. You should therefore consider the resale market
for our common stock to be limited, as you may be unable to resell your shares without the significant expense of state registration
or qualification.
Focus Universal is an “emerging
growth company” under the Jumpstart Our Business Startups Act. We cannot be certain if the reduced reporting requirements
applicable to emerging growth companies will make our shares of common stock less attractive to investors.
Focus Universal is and will remain an "emerging
growth company" until the earliest to occur of (a) the last day of the fiscal year during which its total annual revenues
equal or exceed $1 billion (subject to adjustment for inflation), (b) the last day of the fiscal year following the fifth anniversary
of its initial public offering, (c) the date on which Focus Universal has, during the previous three-year period, issued more than
$1 billion in non-convertible debt securities, or (d) the date on which Focus Universal is deemed a "large accelerated filer"
(with at least $700 million in public float) under the Securities and Exchange Act of 1934 (the "Exchange Act").
For so long as Focus Universal remains
an "emerging growth company" as defined in the JOBS Act, it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not "emerging growth companies" as described in further
detail in the risk factors below. Focus Universal cannot predict if investors will find its shares of common stock less attractive
because Focus Universal will rely on some or all of these exemptions. If some investors find Focus Universal's shares of common
stock less attractive as a result, there may be a less active trading market for its shares of common stock and its stock price
may be more volatile.
If Focus Universal avails itself of certain
exemptions from various reporting requirements, its reduced disclosure may make it more difficult for investors and securities
analysts to evaluate Focus Universal and may result in less investor confidence.
The recently enacted JOBS Act is intended
to reduce the regulatory burden on "emerging growth companies". Focus Universal meets the definition of an "emerging
growth company" and so long as it qualifies as an "emerging growth company," it will not be required to:
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have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
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comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
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submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and
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disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.
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In addition, Section 107 of the JOBS Act
also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth
company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
However, Focus Universal is choosing to "opt out" of such extended transition period, and as a result, Focus Universal
will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for
non-emerging growth companies. Section 107 of the JOBS Act provides that its decision to opt out of the extended transition period
for complying with new or revised accounting standards is irrevocable.
Notwithstanding the above, we are also
currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or
a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75
million and annual revenues of less than $50 million during the most recently completed fiscal year.
In the event that we are still considered
a “smaller reporting company”, at such time are we cease being an “emerging growth company”, we will be
required to provide additional disclosure in our SEC filings. However, similar to “emerging growth companies”, “smaller
reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from
the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide
an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay
and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations
in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in
annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller
reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.
FOCUS UNIVERSAL INC.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Registration Statement contains forward-looking
statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s
plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such
as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”,
“estimates”, “predicts”, “potential” or “continue” or the negative of these terms
or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other
factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause
our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These
risks include, by way of example and not in limitation:
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the uncertainty of profitability based upon our history of losses;
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risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern;
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risks related to our international operations and currency exchange fluctuations; and
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other risks and uncertainties related to our business plan and business strategy.
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This list is not an exhaustive list of
the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers
should not place undue reliance on our forward-looking statements. Forward-looking statements are made based on management’s
beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements
if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual results.
Our financial statements are stated in
United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references
to “common stock” refer to the common shares in our capital stock.
As used in this Registration Statement,
the terms “we”, “us”, “our”, the “Company” and “Focus Universal” mean
Focus Universal Inc. unless otherwise indicated.
USE OF PROCEEDS
With respect to shares of our common stock that may be offered
and sold from time to time by the selling stockholders, we will receive no proceeds from the sale of shares of our common stock
pursuant to this offering.
MARKET PRICE FOR OUR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market Information
Our shares of common stock are not traded
on a national exchange; rather, they are traded on the OTCQB marketplace under the symbol “FCUV”. On September
28, 2018, the closing bid price for one share of common stock was $6.50. The following table sets forth, for the periods indicated,
the high and low trade prices for our common stock as reported on the OTCQB marketplace. During 2016 and 2017 our common stock
did not trade above $4.00.
On September 23, 2014, our common stock
was verified for trading on OTCQB under the trading symbol FCUV. Prior to that time, there was no public market for our stock.
The following table sets forth for the indicated periods the high and low intra-day sales price per share for our common stock
on the OTCQB for the last two quarters of 2016, for the four quarters of 2017, and for the first two quarters of 2018.
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High
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Low
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2016: Third Quarter
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$
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1.50
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$
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1.50
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2016: Fourth Quarter
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$
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1.50
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$
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1.50
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2017: First Quarter
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$
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3.57
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$
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3.57
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2017: Second Quarter
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$
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3.57
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$
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3.57
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2017: Third Quarter
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$
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3.57
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$
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0.25
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2017: Fourth Quarter
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$
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2.49
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$
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0.25
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2018: First Quarter
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$
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2.49
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$
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2.49
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2018: Second Quarter
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$
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9.00
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$
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2.49
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Holders.
As of September 12, 2018, there were 408
record holders of 40,907,010 shares of the Company's common stock.
DIVIDEND POLICY
We cannot provide any assurance that we
will declare or pay cash dividends on our common stock. Any future determination to declare cash dividends will be made at the
discretion of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations,
capital requirements, general business conditions and other factors that our board of directors may deem relevant.
CAPITALIZATION
The following table sets forth our capitalization
as of June 30, 2018.
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Actual
June 30,
2018
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Long-term debt:
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–
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Stockholders’equity:
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Common stock
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40,644
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Additional paid-in capital
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12,487,372
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Subscription receivable
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(6,267,372
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Shares to be issued, common share
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457,377
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Accumulated deficit
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(3,277,905
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)
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Total stockholders’ equity (deficit)
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3,440,128
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Total capitalization
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3,440,128
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DILUTION
The net tangible book value of our company as of June 30, 2018
was $3,440,128 or approximately $0.08 per share of common stock. Net tangible book value per share is determined by dividing
the tangible book value of our company (total tangible assets less total liabilities) by the number of outstanding shares of our
common stock.
None of the proceeds from the sale of 6,069,613 shares of common
stock offered by the selling stockholders will be paid to our company. Therefore, our net tangible book value will be unaffected
by such sales.
Holders of Our Common Stock
As of September 12, 2018, 40,907,010 shares of our common stock
were outstanding and held of record by 408 shareholders of record.
Securities Authorized for Issuance Under Equity Compensation
Plans
We have not adopted an Equity Compensation Plan.
DESCRIPTION OF THE BUSINESS
Company Background.
Focus Universal Inc.
(the “Company”,
“we”, “us” or “our”) is a Nevada corporation that is a provider of handheld sensor devices
and wholesaler of various air filters.
We are based in the City of Walnut, California,
and were incorporated in Nevada in 2012. In December of 2013, we filed an S-1 registration statement that went effective on March
14, 2014. Since then our securities have been trading in the OTCQB Market.
Our website is www.focusuniversal.com.
Our website and the information contained therein or connected thereto are not intended to be incorporated into this Memorandum.
Focus
Universal Inc.
is 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 a Mac OS, Windows OS, an Android-based or iOS-based smartphone, or a 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.
On April 2, 2018, Duncan Lee was appointed
as the Chief Financial Officer of the Company.
Effective as of October 21, 2015, Dr. Jennifer
Gu and Dr. Edward Lee were appointed as directors of the Company, and Dr. Gu and Dr. Lee accepted such appointments. Thereupon,
each of Xu Tang and Yan Chen resigned as directors of the Company. Accordingly, effective as of the 10th day after the accompanying
Information Statement is filed with the Securities and Exchange Commission and transmitted to the shareholders of the Company,
each of Dr. Jennifer Gu and Dr. Edward Lee would become members of the Board of Directors, and the entire Board of Directors would
consist of Dr. Desheng Wang, Dr. Jennifer Gu, and Dr. Edward Lee.
On April 24, 2017 we leased 2,800 square
feet at 201511 East Walnut Drive North, Walnut, California. This lease will extend through April 30, 2019 and we pay $3,500 per
month. We do not expect to remain in this property for the full term of our lease if we raise the maximum amount of this offering
because we anticipate that our board of directors will approve the purchase of a new office and/or warehouse, addressed at 2311
E Locust St, Ontario, CA, 91761. The property consists of an industrial type, two-story building, with a total building area of
30,740 square feet. 10,000 square feet will be utilized for office space; and 20,000 square feet for warehouse space that will
require particularized custom fixtures that we will need to install. The property includes 58 parking spaces. The purchase price
for the property is approximately $4.62 million dollars.
Our board of directors approved the filing
and we submitted an application in compliance with the NASDAQ rules and regulations to list and trade its securities on the
NASDAQ Capital Market on July 26, 2018.
Our current products and services include:
Scientific Instrument Research, Development and Sales
Industry Background and Overview
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:
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Sensors, to convert physical parameters to electrical signals;
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Signal conditioning circuitry, to convert sensor signals into a form that can be converted to digital
values;
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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.
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Ancillaries such as displays and power supplies and application specific software.
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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 $1,000 instrument, may have to increase its cost to the order
of $1,000. The end user who just needs a $10 traditional instrument for his applications certainly does not have the motivation
to spend $1,000 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.
________________
[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.
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:
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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
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The main hardware gateway, a small cell phone size device with integrated circuits.
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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.
By using the smartphone as a substitute
platform, we believe we will achieve the following efficiencies:
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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.
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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.
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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.
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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. We are continuing our future strategic and marketing plans, however, the
products from our first and second pilot production will still be offered in the future.
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.
Our goals over the next three years include:
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Raise capital to move to full manufacturing and production for our Ubiquitor device;
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Partner with manufacturers and promote the adoption of our Ubiquitor platform;
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Acquire a stable market share of the handheld wireless sensor device market;
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Continue to develop market share in our wholesale distribution of sensors and filters; and
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Utilize our internet marketing strategies to market our handheld sensors and filters.
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In order to achieve these goals, we intend to focus on the following
initiatives:
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Position the Ubiquitor product as the industry standard in universal wireless sensor reading technology;
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Establish strategic supply chain channels to facilitate efficient production operations; and
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Communicate the product and service differentiation through direct networking and effective marketing.
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Distribution Method
We intend to continue engaging in relationships
with Chinese manufacturers and then distribute our products to distributors and retailers directly from the Chinese manufacturers
and then we intend to distribute the Ubiquitor by selling directly to traditional instrument manufacturers. We believe that traditional
instrument manufacturers will adopt this technology since the Ubiquitor device is intended to consolidate various other sensors.
We intend to manufacture and market the
Ubiquitor and sell it directly to consumers or distributors using internet marketing and also using channels such as Amazon.com
and to launch the product through crowdfunding sites like indiegogo and kickstarter.com. We also intend to establish a marketing
department overseas in China.
Raw Materials
The electronic components used in the Ubiquitor
are common and can be easily purchased. Production and assembly lines are also available worldwide.
Manufacturing and Production
We have a limited production facility in
California where small and medium sized circuit board production can take place until we have enough sales to convert manufacturing
to a large-scale manufacturing facility in China, where we have key strategic relationships with manufacturing facilities.
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 instrument’s smartphone application, which we believe will be a completely different product category.
Patent, Trademark, License and Franchise
Restrictions and Contractual Obligations and Concessions
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, we issued a press release announcing
that the U.S. Patent and Trademark Office had 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 patent was granted
on March 20, 2018.
Research and Development Activities
Other than time spent researching our proposed
business we have not spent any funds on research and development activities to date. We do not currently plan to spend any funds
on research and development activities in the future.
Compliance with Environmental Laws
We are not aware of any environmental laws
that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our
business.
Employees
As of the date of this Registration Statement
we have eight full-time and two part-time employees, the Company’s officers, our President Dr. Edward Lee, our Chief Executive
Officer, and Secretary, Desheng Wang, and our Chief Financial Officer, Duncan Lee. Our officers and directors are responsible for
planning, developing and operational duties, and will continue to do so throughout the early stages of our growth. Our eight full-time
employees are working in the warehouse orchestrating the development and distribution of our handheld sensor devices as well as
our filters.
Reports to Securities Holders
We provide an annual report that includes
audited financial information to our shareholders. We incorporate our audited financials on file with Sec.gov herein by reference.
We make our financial information equally available to any interested parties or investors through compliance with the disclosure
rules for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements including
filing Form 10K annually and Form 10Q quarterly. In addition, we will file Form 8K and other proxy and information statements from
time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such
reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange
Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549.
The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov)
that contains reports, proxy and information statements, and other information regarding issuers that file electronically with
the SEC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be
read in conjunction with our audited financial statements and notes thereto included herein. In connection with, and because we
desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995,
we caution readers regarding certain Forward-looking statements in the following discussion and elsewhere in this report and in
any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate to future operations, strategies, financial results
or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject
to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed in any Forward-looking statements made by, or
our behalf. We disclaim any obligation to update forward-looking statements.
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 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.
Through a merger with Perfecular Inc.,
we strategically expanded our business to the manufacture and marketing of high-tech electronic devices. We realized that Internet
marketing would not be sufficient to generate sales of our products, particularly the Ubiquitor product. We are going to focus
on all types of marketing, particularly marketing directly to established consumer distributions retailers. For this reason,
during the first quarter of 2016 we decided to emphasize our sales of handheld sensors and air filters and discontinue our marketing
and advertising business segment. Through the development and creation of our Ubiquitor device, we anticipate that sales and marketing
involved with bringing this product to market will require us to hire a number of new employees in order to gain traction in the
market as well as continue to expand such sales of our existing sensor and air filter products.
For years ended December 31, 2017 and 2016,
we generated significant amount of revenue from sales of a broad selection of agricultural sensors and measurement equipment which
was the primary business for Perfecular and is now our primary business.
Our current products include:
Scientific Instrument Research and
Development and Sales
Engineers and scientists use instrumentation
to observe, understand, and manage real-world data and phenomena, events, and processes related to their industries or areas of
expertise. Instrumentation systems that we are researching and developing measure and control electrical signals, such as voltage,
current and power, as well as temperature, pressure, speed, flow, volume, torque, light sensing, and vibration for example. Common
general-purpose instruments in our market segment include, for example, voltmeters, signal generators, oscilloscopes, data loggers,
spectrum analyzers, cameras, and temperature and pressure monitors and controllers. Systems that perform measurement and control
can be generally categorized as test, measurement, and embedded systems.
A New Approach to Measurement and Sensing
We offer a different approach than what
is currently on the market because we are attempting to establish a demand for devices that link 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
measurement and control meters through our wholesale distribution platform.
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.
Ubiquitor Wireless Universal Sensor Device
We have fully researched and developed
a device we call the “Ubiquitor,” which is a handheld fully modular system with a universal sensor node and gateway
system that uses a smartphone as the output display module that displays the readings of various probe modules. We have completed
an initial production run of 1,000 devices and intend to develop this into full-scale production as soon as possible. The Ubiquitor
is 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 we hope will provide a holistic view of sensor data it is reading.
After sending our circuit boards to China
for soldering at an unaffiliated manufacturing facility, we assembled the initial production run at our facilities here in the
City of Industry. This initial production run will allow us to show large distributors and consumers the capabilities of the Ubiquitor
which we hope will generate demand.
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 is intended to 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 multiple types of wireless connections (i.e., Wi-Fi, Bluetooth, 3G and 4G). 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 industries’ uses.
The Ubiquitor is a multipurpose wireless
intelligent sensor device that will be intended to achieve 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 Perfecular’s 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. We have not yet started research
and development of a second generation Ubiquitor device, but once we demonstrate the market for this product intend to begin such
research and development.
Intellectual Property Protection
On November 4, 2016 we filed a U.S. patent
application number 15/344,041 with the U.S. Patent and Trademark Office. We hope this full patent application protects the Ubiquitor
universal sensor device. 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.
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 instrument’s
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
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 capital fundraising expenses 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 capital fundraising expenses 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.
For the year ended December 31, 2017 compared to the year
ended December 31, 2016
Revenue, cost of sales and gross profit
Our consolidated gross revenue for the
year ended December 31, 2017 and 2016 was $898,084 and $1,121,978, respectively. Our cost of revenues for the year ended December
31, 2017 and 2016 was $726,252 and $866,559, respectively, resulting in a gross profit of $171,832 and $255,419 for the year ended
December 31, 2017 and 2016, respectively. Revenue decreased due to decrease in demand from the Company’s customers. The sales
concentrate on one customer which consists of 99% of the revenue. The Company’s sales fluctuate based on the customer’s
demand.
For years ended December 31, 2017 and 2016,
we generated a significant amount of revenue from sales of our broad selection of measurement equipment and sensors equipment which
was the primary business for Perfecular and is now our primary business.
We hired an independent third-party contractor
who performed web development beginning in the first quarter of 2015. This service was terminated on April 30, 2016 as we discontinued
offering digital marketing services to third parties.
Operating Expenses
The major components of our operating expenses for the year
ended December 31, 2017 and 2016 are outlined in the table below:
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
Compensation - officers
|
|
$
|
120,000
|
|
|
$
|
121,385
|
|
Research and development
|
|
|
208,238
|
|
|
|
201,899
|
|
Professional fees
|
|
|
107,899
|
|
|
|
142,955
|
|
General and administrative
|
|
|
255,531
|
|
|
|
256,210
|
|
|
|
$
|
691,668
|
|
|
$
|
722,449
|
|
The decrease in our operating costs for
year ended December 31, 2017, compared to year ended December 31, 2016, was mainly due to decrease in professional fees. For the
year ended December 2017, operating expenses consists of general and administrative expenses of $255,531, including office rent
$51,167, employees’ salary expenses of $108,191, and payroll tax expenses of $38,991; officer’s compensation expenses
of $120,000; professional fees including audit and accounting fees of $75,551 and legal fees of $32,348; research and development
expenses of $208,238. Operating expenses decreased $30,781, 4% from $722,449 in 2016 to $691,668. The decrease was mainly from
professional fees. The Company incurred more professional fees in 2016 due to accounting and legal professional services rendered
for the merger.
Net Losses
During the year ended December 31, 2017
and 2016, we incurred net losses of $626,361 and $467,434, respectively, due to the factors discussed above.
Liquidity and Capital Resources
Working Capital
|
|
As of
December 31,
2017
|
|
|
As of
December 31,
2016
|
|
Current Assets
|
|
$
|
476,985
|
|
|
$
|
452,424
|
|
Current Liabilities
|
|
$
|
(481,790
|
)
|
|
$
|
(431,439
|
)
|
Working Capital (Deficit)
|
|
$
|
(4,805
|
)
|
|
$
|
20,985
|
|
Cash Flows
The table below, for the periods indicated, provides selected
cash flow information:
|
|
For the year ended
December 31, 2017
|
|
|
For the year ended
December 31, 2016
|
|
|
|
|
|
|
|
|
Cash used in operating activities
|
|
$
|
(445,673
|
)
|
|
$
|
(400,803
|
)
|
Cash used in investing activities
|
|
|
–
|
|
|
|
(8,239
|
)
|
Cash provided by (used in) financing activities
|
|
|
500,000
|
|
|
|
(82,902
|
)
|
Net increase (decrease) in cash
|
|
|
54,327
|
|
|
|
(491,944
|
)
|
Due to the merger with Perfecular Inc. we anticipate that for
the next year we will be generating cash from more diversified revenue stream as mentioned under Item 1, Company Background. We
believe that our cash generated from operations and cash on hand will provide sufficient capital to fund our operations and meet
our cash needs on a short term and long-term basis for the next twelve months. We intend to finance our internal growth with cash
on hand, cash provided from operations, borrowings, debt or equity offerings, or some combination thereof to expand our business
so that we can meet our cash needs.
Cash Flows from Operating Activities
Our cash flows from operating activities
represent the most significant source of funding for our operations. The primary use of our operating cash include funding general
operating expenses (marketing, travel, legal and professional expenses, and office rent) and cost of revenues. Our cash provided
by operating activities generally follows the trend in our net revenues and operating results.
Our net cash used in operating activities
of $445,673 for the year ended December 31, 2017 was primarily the result of our net loss of $626,361 largely offset for cash flow
purposes by changes in our operating assets and liabilities. These changes include increase in accounts receivable of $747, decrease
in accounts receivable – related party of $9,768, decrease in inventories of $30,333, increase in prepaid expense of $318,
decrease in deposit of $17,516, increase in accounts payable and accrued liabilities of $72,807, increase in accounts payable –
related party of $7,936, decrease in customer deposit of $30,392, and decrease in deferred rent of $468. Adjustment to reconcile
net loss to net cash used in operating activities includes decrease in inventory reserve of $9,270, depreciation expense of $2,181,
and amortization of debt discount of $81,342. The variances of the operating activities are mainly due to collection of accounts
receivable balances from 2016 and sales of inventories.
Our net cash used in operating activities
of $400,803 for the year ended December 31, 2016 was primarily the result of our net loss of $467,434 largely offset for cash flow
purposes by changes in our operating assets and liabilities. These changes include decrease in accounts receivable of $81,325,
increase in accounts receivable – related party of $10,332, increase in inventories of $53,258, decrease in prepaid expense
of $6,999, increase in accounts payable and accrued liabilities of $85,021, increase in accounts payable – related party
of $7,564, decrease in customer deposit of $77,903, and decrease in deferred rent of $443. Adjustment to reconcile net loss to
net cash used in operating activities includes increase in inventory reserve of $26,528, and depreciation expense of $1,130. The
variances of the operating activities are mainly due to collection of accounts receivable balances from 2015 and sales of inventories.
We expect that cash changes in 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 net cash used in investing activities
of $0 and $8,239 for the years ended December 31, 2017 and 2016, respectively, represents funds used to purchase property and equipment
for the Company.
Cash Flows from Financing Activities
During the year ended December 31, 2017,
the Company issued convertible note to third party of $500,000. The funds were used in the Company’s operations.
The Company paid off a loan of $63,369
during the year ended December 31, 2016 to a related party entity, Vitashower, Corp., which is under common ownership and management
and repaid $19,534 of loans from shareholders.
Management expects to keep operating costs
to a minimum until cash is available through financing or operating activities. Management plans to continue to seek, in addition
to equity financing, other sources of financing (e.g. bank loan, line of credit, shareholder loan) on favorable terms; however,
there are no assurances that any such financing can be obtained on favorable terms, if at all. If we are unable to generate profits
sufficient to cover our operating costs or unable to obtain additional funds for our working capital needs, we may need to cease
or curtail operations. Furthermore, there is no assurance the net proceeds from any successful financing arrangement will be sufficient
to cover cash requirements during the initial stages of the Company’s operations.
Operating lease
Total rent expense was $51,167 and $66,585
for the twelve months ended December 31, 2017 and 2016, respectively.
Future minimum lease commitments are as follows:
December 31,
|
|
|
Rent Expense
|
|
2018
|
|
|
$
|
42,840
|
|
2019
|
|
|
|
14,420
|
|
Thereafter
|
|
|
|
–
|
|
Convertible promissory note
On June 30, 2017 and again on 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 $81,342 during the year ended December 31, 2017 related to the amortization of the debt discounts.
Going concern
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. As of December 31, 2017, the
Company had a net loss and had negative cash flow from operating activities of $626,361 and $445,673, respectively. The Company
also had an accumulated deficit of $1,978,794. 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.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
MANAGEMENT
The following table presents information with respect to our
officers, directors and significant employees as of the date of this Prospectus:
Name
|
Age
|
Position
|
Dr. Edward Lee*
|
54
|
President and Director
|
Dr. Desheng Wang**
|
53
|
Chief Executive Officer, Secretary, and Director
|
Duncan Lee***
|
34
|
Chief Financial Officer
|
Dr. Jennifer Gu*
|
50
|
Director
|
Michael Pope****
|
38
|
Director (1)
|
Sheri Lofgren****
|
61
|
Director (1)
|
Sean Warren****
|
47
|
Director (1)
|
Carine Clark****
|
54
|
Director (1)
|
* Appointed director on October 21, 2015
** Appointed director on December 29, 2014
*** Appointed director on April 2, 2018
**** Appointed director on June 8, 2018
(1) Independent director
Each director serves until our next annual
meeting of the stockholders or unless they resign earlier. The Board of Directors elect officers and their terms of office are
at the discretion of the Board of Directors.
Each of our directors serves until his
or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year
and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. At the present
time, members of the board of directors are not compensated for their services to the board.
Biographical Information Regarding Officers and Directors
Desheng Wang
Dr. Desheng Wang was appointed as Chief
Executive Officer, Secretary, and is a director nominee effective as of December 29, 2014. Dr. Wang has over 20 years of professional
experience in mobile technology. Dr. Wang earned his bachelor’s degree from Hebei Normal University, Physics Department in
1985. In 1988, Dr. Wang earned his master’s degree from Dalian Institute of Chemical Physics at the Chinese Academy of Science
in 1988. Dr. Wang earned his Ph.D. in Chemistry at Emory University in 1994. Dr. Wang served as a senior research fellow at California
Institute of Technology from 1994-2011. Over the last five years, Dr. Wang has served as president of Vitashower Corporation and
formerly as President of Perfecular Inc.
Edward Lee
President and Director. Dr. Edward Lee
was born in 1963 in Henan, China. Received his bachelor’s degree in Mathematics at Lanzhou University in 1983, received his
master’s degree at University of Science and Technology of China in 1985 and earned his Ph.D. in Mathematics at University
of Florida in 1991. Dr. Lee worked as an assistant professor at Tsinghua University in 1986 and National University of Singapore
in 1992. Dr. Lee currently serves as CEO of AIDP. AIDP is a leading supplier of dietary supplement ingredients, focusing on research
& development and marketing and sales of proprietary ingredients like Magtein, KoACT, Predtic X, Long Jax etc. Dr. Lee is also
serving as the Vice President of the American Chinese Medicine Association.
Duncan Lee
Duncan Lee, age 34, is presently a licensed
Certified Public Accountant. Mr. Lee graduated in 2006 with a bachelor’s degree in Accounting from the University of Southern
California and has more than 11 years of experience with public company accounting and financial reporting with the SEC. Mr. Lee
worked on the audit staff of the PCAOB accounting firm of Moore Stephens Wurth Frazer and Torbet LLP and then worked as a senior
associate at the PCAOB accounting firm of Simon & Edward, LLP in Diamond Bar, CA. Since 2011, Mr. Lee worked in-house as a
staff accountant at a public company called Merion, Inc. preparing their S-1 filing (which was approved), and their routine securities
filings, including their 10-K and 10-Q filings.
Jennifer Gu
Director. Dr. Jennifer Gu was born in 1967
in Anhui, China. Dr. Gu earned her bachelor’s degree in Biology from University of Florida in 1990 and earned her Ph.D. in
Experimental Pathology at University of California, Los Angeles in 1997. She also completed post-doctoral research at the California
Institute of Technology in 2004. Dr. Gu is currently serving as the Vice President of Research & Development at AIDP.
Michael Pope
Mr. Pope has served as President of Boxlight
Corporation (Nasdaq: BOXL), a global education technology provider since July 2015. He previously served as Managing Director of
Vert Capital Corp., a Los Angeles based private equity, and Chief Financial Officer and Chief Operating Officer for the Taylor
Family. As a seasoned, global executive, Mr. Pope has lead over 50 buy-side transactions and raised over $200 million in debt and
equity financings. He brings specific experience with fundraising, investor relations, mergers and acquisitions, and corporate
strategy. Mr. Pope holds an active CPA license and serves on the boards of various private and public organizations. Mr. Pope earned
his undergraduate and graduate degrees in accounting from Brigham Young University.
Sheri Lofgren
Sheri
Lofgren has served as a financial consultant since March 2018. She served as Chief Financial Officer for Boxlight Corporation (Nasdaq:
BOXL), a global education technology provider, from September 2014 to March 2018. She was Chief Financial Officer at Logical Choice
Technologies, Inc., a distributor of interactive technologies to the education market, from 2005 to 2013. Ms. Lofgren is a certified
public accountant with extensive experience in financial accounting and management, operational improvement, budgeting and cost
control, cash management and treasury, along with broad audit experience, internal control knowledge and internal and external
reporting. She started her career with KPMG and then joined Tarica and Whittemore, an Atlanta based CPA firm, as an audit manager.
Ms. Lofgren is a graduate of Georgia State University where she earned a B.A. in Business Administration – Accounting.
Sean Warren
Sean
Warren is a talented and seasoned executive with over 25 years of experience in technology and enterprise technology systems. He
brings a wealth of expertise with particular strengths in areas such as software development, cloud management, enterprise infrastructure
development and full spectrum of IT compliance. Sean has been the CIO of Mountain Medical, Veyo Medical and VP of IT at Larry Miller.
He has worked for technology companies as Omniture, Adobe and director of cloud operations at Domo. Sean is fluent in Spanish and
graduated from Florida State University in accounting.
Carine Clark
Carine
Clark is a talented executive serving as president and CEO of four high-growth tech companies, specializing in helping companies
scale from $10 million to $100 million or more. Her reputation as a data-driven marketing executive at Novell, Altiris and Symantec
opened doors to lead Allegiance, MartizCX and Banyan as president and CEO. In addition, Clark serves on the executive boards of
GOED (The Utah Governor's Office of Economic Development) and Silicon Slopes, a non-profit helping Utah’s tech community
thrive. She has received numerous awards including the EY Entrepreneur of The Year® Award in the Utah Region and Utah Business
Magazine’s CEO of the Year. Clark earned a bachelor’s degree in organizational communications and an MBA from Brigham
Young University.
Corporate Governance
Our Chairperson of the Board is Edward
Lee. Edward Lee, Desheng Wang and Jennifer Gu are the three members of our Board who are not independent directors. Michael Pope,
Sheri Lofgren, Sean Warren, and Carine Clark are four members of our Board who are independent directors.
Director Attendance at Meetings
Our Board conducts its business through
meetings of our Board, both in person and telephonic, and actions taken by written consent in lieu of meetings. During the year
ended December 31, 2017, our Board held four meetings. All directors attended at least 75% of the meetings of our Board and
of the committees of our Board on which they served during 2017.
Our Board encourages all directors to attend
our annual meetings of stockholders unless it is not reasonably practicable for a director to do so.
Committees of our Board of Directors
Our Board has established and delegated
certain responsibilities to its standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
Audit Committee
We have a separately designated standing
Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The Audit Committee’s primary duties and responsibilities include monitoring the integrity of our financial
statements, monitoring the independence and performance of our external auditors, and monitoring our compliance with applicable
legal and regulatory requirements. The functions of the Audit Committee also include reviewing periodically with our independent
registered public accounting firm the performance of the services for which they are engaged, including reviewing the scope of
the annual audit and its results, reviewing with management and the auditors the adequacy of our internal accounting controls,
reviewing with management and the auditors the financial results prior to the filing of quarterly and annual reports, reviewing
fees charged by our independent registered public accounting firm and reviewing any transactions between our Company and related
parties. Our independent registered public accounting firm reports directly and is accountable solely to the Audit Committee. The
Audit Committee has the sole authority to hire and fire the independent registered public accounting firm and is responsible for
the oversight of the performance of their duties, including ensuring the independence of the independent registered public accounting
firm. The Audit Committee also approves in advance the retention of, and all fees to be paid to, the independent registered public
accounting firm. The rendering of any auditing services and all non-auditing services by the independent registered public accounting
firm is subject to prior approval of the Audit Committee.
The Audit Committee operates under a written
charter. The Audit Committee is required to be composed of directors who are independent under the rules of the SEC and the listing
standards of The NASDAQ Stock Market LLC (“NASDAQ”).
The current members of the Audit Committee
are directors Ms. Sheri Lofgren, the Chairperson of the Audit Committee, Mr. Michael Pope and Mr. Sean Warren, all of whom have
been determined by the Board to be independent under the NASDAQ listing standards and rules adopted by the SEC applicable to audit
committee members. The Board has determined that Mr. Sheri Lofgren qualifies as an “audit committee financial expert”
under the rules adopted by the SEC and the Sarbanes Oxley Act of 2002. The Audit Committee did not meet during 2018 and did not
take any actions by written consent.
Compensation Committee
The primary duties and responsibilities
of our standing Compensation Committee are to review, modify and approve the overall compensation policies for the Company, including
the compensation of the Company’s Chief Executive Officer and other senior management; establish and assess the adequacy
of director compensation; and approve the adoption, amendment and termination of the Company’s stock option plans, pension
and profit sharing plans, bonus plans and similar programs. The Compensation Committee may delegate to one or more officers the
authority to make grants of options and restricted stock to eligible individuals other than officers and directors, subject to
certain limitations. Additionally, the Compensation Committee has the authority to form subcommittees and to delegate authority
to any such subcommittee. The Compensation Committee also has the authority, in its sole discretion, to select, retain and obtain,
at the expense of the Company, advice and assistance from internal or external legal, accounting or other advisors and consultants.
Moreover, the Compensation Committee has sole authority to retain and terminate any compensation consultant to assist in the evaluation
of director, Chief Executive Officer or senior executive compensation, including sole authority to approve such consultant’s
reasonable fees and other retention terms, all at the Company’s expense.
The Compensation Committee operates under
a written charter. All members of the Compensation Committee must satisfy the independence requirements of NASDAQ applicable to
compensation committee members.
The Compensation Committee currently consists
of directors Mr. Carine S. Clark, Mr. Sean Warren, and Mr. Sheri Lofgren. Mr. Carine S. Clark is the Chairperson of the Compensation
Committee. Each of the Compensation Committee members have been determined by the Board to be independent under NASDAQ listing
standards applicable to compensation committee members. The Compensation Committee did not meet during 2018 and did not take any
actions by written consent.
Nominating and Corporate Governance
Committee
The Nominating and Corporate Governance
Committee identifies, reviews and evaluates candidates to serve on the Board; reviews and assesses the performance of the Board
and the committees of the Board; and assesses the independence of our directors. The Nominating and Corporate Governance Committee
is also responsible for reviewing the composition of the Board’s committees and making recommendations to the entire Board
regarding the chairpersonship and membership of each committee. In addition, the Nominating and Corporate Governance Committee
is responsible for developing corporate governance principles and periodically reviewing and assessing such principles, as well
as periodically reviewing the Company’s policy statements to determine their adherence to the Company’s Code of Business
Conduct and Ethics.
The Nominating and Corporate Governance
Committee has adopted a charter that identifies the procedures whereby Board candidates are identified primarily through suggestions
made by directors, management and stockholders of the Company. We have implemented no material changes to the procedures by which
stockholders may recommend nominees for the Board. The Nominating and Corporate Governance Committee will consider director nominees
recommended by stockholders that are submitted in writing to the Company’s Corporate Secretary in a timely manner and which
provide necessary biographical and business experience information regarding the nominee. The Nominating and Corporate Governance
Committee does not intend to alter the manner in which it evaluates candidates, including the criteria considered by the Nominating
Committee, based on whether or not the candidate was recommended by a stockholder. The Board does not prescribe any minimum qualifications
for director candidates, and all candidates for director will be evaluated based on their qualifications, diversity, age, skill
and such other factors as deemed appropriate by the Nominating and Corporate Governance Committee given the current needs of the
Board, the committees of the Board and the Company. Although the Nominating and Corporate Governance Committee does not have a
specific policy on diversity, it considers the criteria noted above in selecting nominees for directors, including members from
diverse backgrounds who combine a broad spectrum of experience and expertise. Absent other factors which may be material to its
evaluation of a candidate, the Nominating and Corporate Governance Committee expects to recommend to the Board for selection incumbent
directors who express an interest in continuing to serve on the Board. Following its evaluation of a proposed director’s
candidacy, the Nominating and Corporate Governance Committee will make a recommendation as to whether the Board should nominate
the proposed director candidate for election by the stockholders of the Company.
The Nominating and Corporate Governance
Committee operates under a written charter. No member of the Nominating and Corporate Governance Committee may be an employee of
the Company and each member must satisfy the independence requirements of NASDAQ and the SEC.
The Nominating and Corporate Governance
Committee currently consists of directors Sean Warren, who is the chairperson of the committee, Mr. Michael Pope and Ms. Carine
Clark. Each of the members of the Nominating and Corporate Governance Committee have been determined by the Board to be independent
under NASDAQ listing standards. The Nominating and Corporate Governance Committee did not meet or take any actions by written consent
during 2017.
Oversight of Risk Management
Risk is inherent with every business, and
how well a business manages risk can ultimately determine its success. We face a number of risks, including economic risks, financial
risks, legal and regulatory risks and others, such as the impact of competition. Management is responsible for the day-to-day management
of the risks that we face, while our Board, as a whole and through its committees, has responsibility for the oversight of risk
management. In its risk oversight role, our Board is responsible for satisfying itself that the risk management processes designed
and implemented by management are adequate and functioning as designed. Our Board assesses major risks facing our Company and options
for their mitigation in order to promote our stockholders’ interests in the long-term health of our Company and our overall
success and financial strength. A fundamental part of risk management is not only understanding the risks a company faces and what
steps management is taking to manage those risks, but also understanding what level of risk is appropriate for us. The involvement
of our full Board in the risk oversight process allows our Board to assess management’s appetite for risk and also determine
what constitutes an appropriate level of risk for our Company. Our Board regularly includes agenda items at its meetings relating
to its risk oversight role and meets with various members of management on a range of topics, including corporate governance and
regulatory obligations, operations and significant transactions, risk management, insurance, pending and threatened litigation
and significant commercial disputes.
While our Board is ultimately responsible
for risk oversight, various committees of our Board oversee risk management in their respective areas and regularly report on their
activities to our entire Board. In particular, the Audit Committee has the primary responsibility for the oversight of financial
risks facing our Company. The Audit Committee’s charter provides that it will discuss our major financial risk exposures
and the steps we have taken to monitor and control such exposures. Our Board has also delegated primary responsibility for the
oversight of all executive compensation and our employee benefit programs to the Compensation Committee. The Compensation Committee
strives to create incentives that encourage a level of risk-taking behavior consistent with our business strategy.
We believe the division of risk management
responsibilities described above is an effective approach for addressing the risks facing our Company and that our Board’s
leadership structure provides appropriate checks and balances against undue risk taking.
Code of Business Conduct and Ethics
Our Board has adopted a code of ethical
conduct that applies to our principal executive officer, principal financial officer and senior financial management. This code
of ethical conduct is embodied within our Code of Business Conduct and Ethics, which applies to all persons associated with our
Company, including our directors, officers and employees (including our principal executive officer, principal financial officer,
principal accounting officer and controller). In order to satisfy our disclosure requirements under Item 5.05 of Form 8-K, we will
disclose amendments to, or waivers of, certain provisions of our Code of Business Conduct and Ethics relating to our chief executive
officer, chief financial officer, chief accounting officer, controller or persons performing similar functions on our website promptly
following the adoption of any such amendment or waiver. The Code provides that any waivers of, or changes to, the Code that apply
to the Company’s executive officers or directors may be made only by the Audit Committee. In addition, the Code includes
updated procedures for non-executive officer employees to seek waivers of the Code.
Director Independence
Our Company is governed by our Board. Currently,
each member of our Board, other than Mr. Edward Lee, Mr. Desheng Wang, and Ms. Jennifer Gu, is an independent director and all
standing committees of our Board are composed entirely of independent directors, in each case under NASDAQ’s independence
definition applicable to boards of directors. For a director to be considered independent, our Board must determine that the director
has no relationship which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out
the responsibilities of a director. Members of the Audit Committee also must satisfy a separate SEC independence requirement, which
provides that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from us or any of our
subsidiaries other than their directors’ compensation. In addition, under SEC rules, an Audit Committee member who is an
affiliate of the issuer (other than through service as a director) cannot be deemed to be independent. In determining the independence
of members of the Compensation Committee, NASDAQ listing standards require our Board to consider certain factors, including but
not limited to: (1) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid
by us to the director, and (2) whether the director is affiliated with us, one of our subsidiaries or an affiliate of one of our
subsidiaries. Under our Compensation Committee Charter, members of the Compensation Committee also must qualify as “outside
directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and
as “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. The independent members of the Board
are Michael Pope, Sheri Lofgren, Sean Warren, and Carine Clark.
EXECUTIVE COMPENSATION
Compensation of Officers
The following summary compensation table
sets forth information concerning compensation for services rendered in all capacities during years ended 2017, 2016, and 2015
awarded to, earned by or paid to our executive officers.
Summary Compensation Table
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Name and Principal
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Non-Equity Incentive Plan Compensation
|
|
|
Change in Pension Value & Non-qualified Deferred Compensation Earnings
|
|
|
All Other
Compensation
|
|
|
Totals
|
|
Position
|
|
Year
|
|
|
($)*
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(S)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Edward Lee
President and Director
|
|
|
2017
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Jennifer Gu
Director
|
|
|
2017
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Desheng Wang
CEO, Secretary
|
|
|
2017
|
|
|
|
120,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
120,000
|
|
|
|
|
2016
|
|
|
|
121,385
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
121,385
|
|
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Duncan Lee
Chief Financial Officer
|
|
|
2017
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Xu Tang,
President and Director
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Yan Chen
Senior Vice President
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tatyana Popova, Former President, CEO
|
|
|
2015
|
|
|
|
4,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,500
|
|
|
|
4,500
|
|
Elena Ignatenko Former CFO, Treasurer, Secretary
|
|
|
2015
|
|
|
|
4,500
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
4,500
|
|
|
|
4,500
|
|
Narrative Disclosure Requirement for Summary Compensation
Table
Compensation
We have not provided our named executive
officers with perquisites or other personal benefits. As of year-end December 31, 2017, and 2016, only Dr. Wang has informally
entered into compensation arrangements pursuant to services provided. As of December 31, 2017, no other officer or director has
formally entered into any compensation arrangement for services provided under consulting agreements or employment agreements.
Retirement, Resignation, or Termination Plans
We sponsor no plan, whether written or
verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide
payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change
in the responsibilities of an executive following a change in control of our company.
Directors’ Compensation
The persons who served as members of our
board of directors, including executive officers, did not receive any compensation for services as directors for 2017, 2016, or
2015.
For our independent directors, Mr. Michael
Pope received 15,000 options to purchase common stock pursuant to our 2018 Stock Option Plan and will vest over a period of one
year, and $20,000 cash compensation per year from year 2018. Ms. Sheri Lofgren received 15,000 options to purchase common stock
pursuant to our 2018 Stock Option Plan and will vest over a period of one year, and $25,000 cash compensation per year from year
2018. Mr. Sean Warren received 15,000 options to purchase common stock pursuant to our 2018 Stock Option Plan and will vest over
a period of one year, and $20,000 cash compensation per year from year 2018. Ms. Carrie Clark received 15,000 options to purchase
common stock pursuant to our 2018 Stock Option Plan and will vest over a period of one year, and $20,000 cash compensation per
year from year 2018.
Option Exercises and Stock Vested
We previously did not have a stock
option plan in place; therefore, there were no options issued, outstanding, exercised, or stock issued or vested as compensation
during the years ended December 31, 2017, 2016, and 2015.
Pension Benefits and Nonqualified Deferred Compensation
The Company does not maintain any qualified
retirement plans or non-qualified deferred compensation plans for its employees or directors.
Executive Officer Outstanding Equity Awards at Fiscal
Year-End
The following table provides certain information
concerning any common share purchase options, stock awards or equity incentive plan awards held by each of our named executive
officers that were outstanding as of December 31, 2017.
Option Awards
|
|
|
|
Stock Awards
|
|
Name
|
|
|
Number of
Securities
Underlying
Unexercised
Options(#)
Exercisable
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options(#)
Unexercisable
|
|
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
|
Option
Exercise
Price ($)
|
|
|
|
Option
Expiration
Date
|
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
|
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
|
|
|
|
Equity
Incentive Plan
Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested
|
|
Edward Lee
President
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Desheng Wang
CEO, Secretary
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Duncan Lee,
CFO
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain
information regarding beneficial ownership of our common stock as of September 28, 2018: (i) by each of our directors, (ii)
by each of the Named Executive Officers, (iii) by all of our executive officers and directors as a group, and (iv) by each person
or entity known by us to beneficially own more than five percent (5%) of any class of our outstanding shares. As of September
28, 2018, there were 40,907,010 shares of our common stock outstanding:
Name and Address of Beneficial Owner
|
|
Amount and
Nature of
Beneficial Ownership (1)
|
|
|
Percentage
of Class
|
|
|
|
|
|
|
|
|
Named Directors and Executive Officers
|
|
|
|
|
|
|
|
|
Edward Lee
|
|
|
8,400,000
|
|
|
|
20.534%
|
|
Desheng Wang
|
|
|
14,392,400
|
|
|
|
35.183%
|
|
Duncan Lee
|
|
|
–
|
|
|
|
–
|
|
Jennifer Gu
|
|
|
–
|
|
|
|
–
|
|
Michael Pope
|
|
|
–
|
|
|
|
–
|
|
Sheri Lofgren
|
|
|
–
|
|
|
|
–
|
|
Sean Warren
|
|
|
–
|
|
|
|
–
|
|
Carine Clark
|
|
|
–
|
|
|
|
–
|
|
Directors
and Executive Officers as a Group
|
|
|
22,792,400
|
|
|
|
55.717%
|
|
|
|
|
|
|
|
|
|
|
5% Shareholders
|
|
|
|
|
|
|
|
|
Desheng Wang
|
|
|
14,392,400
|
|
|
|
35.183%
|
|
Yan Chen
|
|
|
3,000,000
|
|
|
|
7.334%
|
|
Edward Lee
|
|
|
8,400,000
|
|
|
|
20.534%
|
|
All 5%+ Shareholders as a Group
|
|
|
25,792,400
|
|
|
|
63.051%
|
|
(1) Applicable percentage of ownership
is based on 40,907,010 shares of common stock outstanding on September 28, 2018.
Percentage ownership is determined based
on shares owned together with securities exercisable or convertible into shares of common stock within 60 days after the date of
this prospectus, for each stockholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to securities. Shares of common stock subject to securities exercisable or convertible
into shares of common stock that are currently exercisable or exercisable within 60 days after the date of this prospectus, are
deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership
of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Our
common stock is our only issued and outstanding class of securities eligible to vote.
As of September 28, 2018, there were
25,400,000 shares of common stock outstanding owned by our officers and directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Revenue generated from Vitashower Corp.,
a company owned by the CEO, amounted to $10,575 and $6,571 for the six 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.
Consulting services provided by the President, Chief
Executive Officer, Secretary, Treasurer, and Chief Financial Officer for the years ended December 31, 2017 and 2016 were as
follows:
|
|
For the year
Ended
December 31,
2017
|
|
|
For the year
Ended
December 31,
2016
|
|
|
|
|
|
|
|
|
President
|
|
$
|
–
|
|
|
$
|
–
|
|
Chief Executive Officer, Chief Financial Officer, Secretary and
Treasurer
|
|
|
120,000
|
|
|
|
121,385
|
|
|
|
$
|
120,000
|
|
|
$
|
121,385
|
|
Advances to (from) related party
Prior to the merger, the Company granted
advances to or from Perfecular Inc. from time to time, and the advances are non-interest bearing. Total advances from Perfecular
amounted to $12,448 as of March 31, 2015. The entire balance was paid off in January 2016.
Loan from stockholders
On February 25, 2015, the Company borrowed
$100,000 from a stockholder for working capital. The loan bears an interest rate of 5% annually. The loan is unsecured and is due
on demand. The outstanding balance was $100,000 at March 31, 2015, with accrued interest payable of $479 as of March 31, 2015.
The entire balance plus accrued interest was paid off in October 2015.
From time to time, Perfecular has borrowed
short-term loans from shareholders. At December 31, 2015, Perfecular has short-term loans payable totaled approximately $19,533.
These loans are due upon the demand of the lender and were unsecured with annual interest rate of 0.55%. The entire balance plus
accrued interest was paid off in February 2016.
Loan from related party
On February 1, 2015, the Company borrowed
$20,000 from Perfecular. This loan is a demand loan payable upon the demand of the lender. The interest rate will accrue at 0.48%
per annum and is unsecured. The outstanding balance for this loan was $20,000 and $0 at March 31,2015 and December 31, 2015, respectively.
The entire balance plus accrued interest was paid off in June 2016.
From time to time, Perfecular borrows from
a related party entity, Vitashower Corp., which is under common ownership and management. At December 31, 2015, the outstanding
loan and accrued interest payable to Vitashower totaled $63,369. This loan also bears an annual interest rate of 5 percent. The
entire balance plus accrued interest was paid off in March 2016.
Our management is involved in other business
activities and may, in the future become involved in other business opportunities. If a specific business opportunity becomes available,
such persons may face a conflict in selecting between our business and their other business interests. In the event that a conflict
of interest arises at a meeting of our directors, a director who has such a conflict will disclose her interest in a proposed transaction
and will abstain from voting for or against the approval of such transaction.
Director Independence
A director is not considered to be independent
if he or she is also an executive officer or employee of the corporation. Our director, Edward Lee, is also our President; our
director Desheng Wang is also our Chief Executive Officer.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 75,000,000 common shares,
par value $0.001 per share.
Authorized and Issued Stock
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares at September 12, 2018
|
|
Title of Class
|
|
Authorized
|
|
|
Issued and
Outstanding
|
|
|
Reserved
|
|
Common stock, par value $.001 per share
|
|
|
75,000,000
|
|
|
|
40,907,010
|
|
|
|
-0-
|
|
Common Stock
Dividends
. Each share of our common
stock is entitled to receive an equal dividend, if one is declared. We cannot provide any assurance that we will declare or pay
cash dividends on our common stock in the future. Any future determination to declare cash dividends will be made at the discretion
of our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital
requirements, general business conditions and other factors that our board of directors may deem relevant. Our board of directors
may determine it to be necessary to retain future earnings (if any) to finance our growth. See “Risk Factors” and
“Dividend Policy.”
Liquidation
. If our company is liquidated,
then assets that remain (if any) after the creditors are paid and the owners of preferred stock receive liquidation preferences
(as applicable) will be distributed to the owners of our common stock
pro rata
.
Voting Rights
. Each share of our
common stock entitles the owner to one vote. There is no cumulative voting. A simple majority can elect all of the directors at
a given meeting, and the minority would not be able to elect any director at that meeting.
Preemptive Rights
. Owners of our
common stock have no preemptive rights. We may sell shares of our common stock to third parties without first offering such shares
to current stockholders.
Redemption Rights.
We do not have
the right to buy back shares of our common stock except in extraordinary transactions, such as mergers and court approved bankruptcy
reorganizations. Owners of our common stock do not ordinarily have the right to require us to buy their common stock. We do not
have a sinking fund to provide assets for any buy back.
Conversion Rights
. Shares of our
common stock cannot be converted into any other kind of stock except in extraordinary transactions, such as mergers and court approved
bankruptcy reorganizations.
Nonassessability
. All outstanding
shares of our common stock are fully paid and nonassessable.
N
evada Anti-Takeover Statutes
Nevada law provides that an acquiring person
who acquires a controlling interest in a corporation may only exercise the voting rights of control shares if those voting rights
are conferred by a majority vote of the corporation’s disinterested stockholders at a special meeting held upon the request
of the acquiring person. If the acquiring person is accorded full voting rights and acquires control shares with at least a majority
of all the voting power, then stockholders who did not vote in favor of authorizing voting rights for those control shares are
entitled to payment for the fair value of such stockholders’ shares. A “controlling interest” is an interest
that is sufficient to enable the acquiring person to exercise at least one-fifth of the voting power of the corporation in the
election of directors. “Control shares” are outstanding voting shares that an acquiring person or associated persons
acquire or offer to acquire in an acquisition and those shares acquired during the 90-day period before the person involved became
an acquiring person.
These provisions of Nevada law apply only
to “issuing corporations” as defined therein. An “issuing corporation” is a Nevada corporation that (a)
has 200 or more stockholders, with at least 100 of such stockholders being both stockholders of record and residents of Nevada,
and (b) does business in Nevada directly or through an affiliated corporation. As of the date of this prospectus, we do not have
100 stockholders of record that are residents of Nevada. Therefore, these provisions of Nevada law do not apply to acquisitions
of our shares and will not so apply until such time as both of the foregoing conditions are satisfied. At such time as these provisions
of Nevada law may apply to us, they may discourage companies or persons interested in acquiring a significant interest in or control
of our company, regardless of whether such acquisition may be in the interest of our stockholders.
Nevada law also restricts the ability of
a corporation to engage in any combination with an interested stockholder for three years from when the interested stockholder
acquires shares that cause the stockholder to become an interested stockholder, unless the combination or purchase of shares by
the interested stockholder is approved by the board of directors before the stockholder became an interested stockholder. If the
combination was not previously approved, then the interested stockholder may only effect a combination after the three-year period
if the stockholder receives approval from a majority of the disinterested shares or the offer satisfies certain fair price criteria.
An “interested stockholder” is a person who is:
|
·
|
the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding voting shares of the corporation; or
|
|
·
|
an affiliate or associate of the corporation and, at any time within three years immediately before the date in question, was the beneficial owner, directly or indirectly of 10% or more of the voting power of the then outstanding shares of the corporation.
|
Our articles of incorporation and bylaws do not exclude us from
these restrictions.
These provisions are intended to enhance
the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board
of directors and to discourage some types of transactions that may involve the actual or threatened change of control of our company.
These provisions are designed to reduce our vulnerability to an unsolicited proposal for the potential restructuring or sale of
all or a part of our company. However, these provisions could discourage potential acquisition proposals and could delay or prevent
a change in control of our company. They also may have the effect of preventing changes in our management.
SELLING STOCKHOLDERS
The following table presents information
regarding the selling stockholders and the shares of our common stock that may be sold by them pursuant to this prospectus. None
of the selling stockholders have had within the past three years any position, office or other material relationship with our company
or any of its predecessors or affiliates. No selling stockholder that is not a natural person is a broker-dealer or an affiliate
of a broker-dealer.
Our company issued the shares being offered
for resale pursuant to this prospectus to the selling stockholders who purchased shares of our common stock in a private placement
that we effected in July 2018.
Name
|
|
Number of
Shares of
Common Stock
Beneficially
Owned Prior
to the
Offering (1)
|
|
|
Number of
Shares of
Common Stock
Being Registered
in the Offering
|
|
|
Shares of Common Stock Beneficially Owned
After the Offering(1)
|
|
|
Percentage Beneficially Owned Before the Offering
|
KKone, Inc.
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
*
|
Sunshine Investec Limited
|
|
|
285,714
|
|
|
|
285,714
|
|
|
|
0
|
|
|
*
|
Hong Dong
|
|
|
400,000
|
|
|
|
400,000
|
|
|
|
0
|
|
|
*
|
Kemei Lin
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Qingqing Lin
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Hongda Jin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xiaogu Li
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
James Speer
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Guangming Xu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Wei Wang
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
*
|
Xuejing Zheng
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Zekun Li
|
|
|
232,000
|
|
|
|
232,000
|
|
|
|
0
|
|
|
*
|
Minghao Yan
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
*
|
Shelly Guo
|
|
|
1,200
|
|
|
|
1,200
|
|
|
|
0
|
|
|
*
|
Zhiyong Yang
|
|
|
1,200
|
|
|
|
1,200
|
|
|
|
0
|
|
|
*
|
Chun Zhou
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
0
|
|
|
*
|
Hui Xu
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Yan Wang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Nuo Xu
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Weining Xu
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
0
|
|
|
*
|
Changan Luo
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Cimu Wang
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Xiaohui Chai
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Zuwei Wang
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Yang Liu
|
|
|
571
|
|
|
|
571
|
|
|
|
0
|
|
|
*
|
Chunyao Feng
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Huimin Bie
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Xiaohui Zhao
|
|
|
16,000
|
|
|
|
16,000
|
|
|
|
0
|
|
|
*
|
Yufei He
|
|
|
2,300
|
|
|
|
2,300
|
|
|
|
0
|
|
|
*
|
Ling Zhao
|
|
|
17,143
|
|
|
|
17,143
|
|
|
|
0
|
|
|
*
|
Tianwei Zhang
|
|
|
1,143
|
|
|
|
1,143
|
|
|
|
0
|
|
|
*
|
Shangming Kao
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Jinbao He
|
|
|
16,000
|
|
|
|
16,000
|
|
|
|
0
|
|
|
*
|
Casey He
|
|
|
21,000
|
|
|
|
21,000
|
|
|
|
0
|
|
|
*
|
Oliver Law
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Ryan Chen
|
|
|
388
|
|
|
|
388
|
|
|
|
0
|
|
|
*
|
Min Cao
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xin Chen
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Qun Shang
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Hannah Yin
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
*
|
Paul Xu
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Liyie Han
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
0
|
|
|
*
|
Yueh Han
|
|
|
600
|
|
|
|
600
|
|
|
|
0
|
|
|
*
|
Christopher Khou
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Pattypohyu Wang
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Sharon Chao
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Mei Zheng
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Garywentsao Wang
|
|
|
9,000
|
|
|
|
9,000
|
|
|
|
0
|
|
|
*
|
Lin Cheng Speer
|
|
|
3,500
|
|
|
|
3,500
|
|
|
|
0
|
|
|
*
|
Jianhua Zhang
|
|
|
17,143
|
|
|
|
17,143
|
|
|
|
0
|
|
|
*
|
Qin Cai
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
0
|
|
|
*
|
Duncan Lee
|
|
|
1,400
|
|
|
|
1,400
|
|
|
|
0
|
|
|
*
|
Michael Law
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Li Rao
|
|
|
57,143
|
|
|
|
57,143
|
|
|
|
0
|
|
|
*
|
Xiaoming Zhang
|
|
|
1,400
|
|
|
|
1,400
|
|
|
|
0
|
|
|
*
|
Rick Li
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Hongjun Zhu
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
*
|
Man Chen
|
|
|
332,733
|
|
|
|
332,733
|
|
|
|
0
|
|
|
*
|
Don Chen Ngerng
|
|
|
788
|
|
|
|
788
|
|
|
|
0
|
|
|
*
|
Matthew Law
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Laura Tianjiao Wang
|
|
|
11,500
|
|
|
|
11,500
|
|
|
|
0
|
|
|
*
|
Peng Wang
|
|
|
1,400
|
|
|
|
1,400
|
|
|
|
0
|
|
|
*
|
Xiaoqiong Hou
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Aaron Zekai Li
|
|
|
5,714
|
|
|
|
5,714
|
|
|
|
0
|
|
|
*
|
Tiffany Chen
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Derek Sun
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Weiyang Yuan
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Haitao Zhang
|
|
|
332,733
|
|
|
|
332,733
|
|
|
|
0
|
|
|
*
|
Tzuyu Cathy Wen
|
|
|
1,400
|
|
|
|
1,400
|
|
|
|
0
|
|
|
*
|
Lihui Liao
|
|
|
28,000
|
|
|
|
28,000
|
|
|
|
0
|
|
|
*
|
Hung Yen Lee
|
|
|
600
|
|
|
|
600
|
|
|
|
0
|
|
|
*
|
Xiaolu Ma
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Jingqiao Guo
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
0
|
|
|
*
|
Jikai liang
|
|
|
93,100
|
|
|
|
93,100
|
|
|
|
0
|
|
|
*
|
Xiaoying Zhang
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Bin Liang
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
0
|
|
|
*
|
Ailing Huang
|
|
|
132,400
|
|
|
|
132,400
|
|
|
|
0
|
|
|
*
|
Lily Jamie Wang
|
|
|
7,900
|
|
|
|
7,900
|
|
|
|
0
|
|
|
*
|
Kaijian Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Haibo Gong
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Sheng Huang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Li Huang
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Yuefeng Liu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Jia Liu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xiaoyong Huang
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xin Chen
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Peiyu Yang
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Yaping Yang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiangshu Liao
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Yue Zou
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Fang Chen
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Xiaohong Lan
|
|
|
8,685
|
|
|
|
8,685
|
|
|
|
0
|
|
|
*
|
Li Luo
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Ying Yang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jinxiang Deng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Shicai Chen
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Haiyun Zhou
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiuping Wu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yu Zhao
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Xiumin Zhu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jine Tian
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Junmei Peng
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Haiying Tian
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xianming Deng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Shixiang Cheng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Feng Gao
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Xiaohong Deng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Hongjun Deng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Jie Yu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Lin Yuan
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Hongxia Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Shaohong Sun
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yanqiu Xu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yu Huang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jie Chen
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Shijun Wang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiaoyue Wang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Aiyun Chang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Quanle Xie
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhongyuan Huang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Qiutao Zhou
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Enxue Wang
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Zhaoxiu Zeng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Xiaoling Zhu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jianguo Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Daoxin Huang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zishun Xia
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Rui Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Shoufen Jiang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Libin Sun
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiaoli Lan
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Min Hao
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jun Ye
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhiwei Fu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xinlin Ma
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jie Deng
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xia Xu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Wenpei Zeng
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhiyong Ai
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Hongli Hu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Tianxia Xiang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Huaju Wang
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Chaoxia Shi
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Li Gong
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Gang Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jialian Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xinghua Yu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Lijun Fan
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhaoshun Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Bin Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Liqin Shi
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhishun Luo
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Tao Hu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jun Xia
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Qiong Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Hengxia Lu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Taile Yu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiaodong Wang
|
|
|
5,714
|
|
|
|
5,714
|
|
|
|
0
|
|
|
*
|
Hui Zan
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Baixiao Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yansheng Yuan
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Tao Xiang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Rongwei Xu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yueqin Han
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Rui Ye
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Ming Yin
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Bo Wang
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Songshuo Deng
|
|
|
11,758
|
|
|
|
11,758
|
|
|
|
0
|
|
|
*
|
Dian Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yaxuan Xiong
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Ju Wang
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Dong Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jianshe Luo
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Lan Wu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Ruifeng Yan
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yingju Du
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Qiyu Wang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Bin Ma
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Kerong Ye
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Haifeng Wu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yong Feng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Jun Yang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Rui Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Dibo Wei
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Xia Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Qiang He
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yun Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Fengqin Deng
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Tao Wang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Wanchao Wang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhicong Zhao
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Mengfei Zhang
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Miaomiao Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Shuangshuang Zhu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yajun Wang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiaoshuang Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yang Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Daihong Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yidang Hao
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xianzhou Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Fuying Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Liuyun Fang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Guobin Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Shuqing Xie
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Ying Xu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Mingdao Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jianyong Cheng
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Hongying Wu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Luyi Sun
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhaofang Hu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Hongbing Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Fengqing Lin
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Laiqun Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhiqiang Qi
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiaohong Zhao
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yanchun Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jinghui Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Shengli Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jianshe Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiangdong Sun
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Qin Ma
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yuting Liu
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Ping Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiuhua Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yuhua Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Bo Wei
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Kefu Xu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Fei Han
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiaobo Li
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Qunrui Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Li Yang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiangrong Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Ping Yang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Jing Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Ling Wu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiuqin Fang
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Guoping Chen
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Qingsheng Sun
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Guoqiang Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Xiumin Wang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yi Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Wenqiang Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Mingxing Hu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Wang Miao
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Tao Chen
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yanli Fang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Hong Dong
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Tong Chu
|
|
|
330
|
|
|
|
330
|
|
|
|
0
|
|
|
*
|
Mengjuan Xiong
|
|
|
27,500
|
|
|
|
27,500
|
|
|
|
0
|
|
|
*
|
Zhexu Yang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Dali Xiong
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Juanjuan Zhou
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Meiying Zeng
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Weisong Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Shaofei Zou
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xiyang Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Meifang Wan
|
|
|
93,000
|
|
|
|
93,000
|
|
|
|
0
|
|
|
*
|
Yuzhu Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Jiaqi Gui
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Ying Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Weida Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Zhimeng Wan
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Guoyang Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Meilian Yang
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Shufang Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Qingxia Hu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Tianmin Xu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Kaijun Yan
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Linyu Zhuang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Hongge Li
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
XingHua Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yan Fang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yao Wang
|
|
|
3000
|
|
|
|
3000
|
|
|
|
0
|
|
|
*
|
Yongyong Huang
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Yu Yu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Wenqing Liu
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
0
|
|
|
*
|
Jinming Yin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xiaofeng Mao
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Huimin Yin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xufen Liu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Heming Yin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Huifen Yin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xiuyu Chen
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Shaoping Mao
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Linghua Zhu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Zhiyuan Yin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Liangyuan Yin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Chenli Gao
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Lijian Liu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Zhou Yin
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Jie Wang
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Kunfan Shi
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Jueqian Shi
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
0
|
|
|
*
|
Jitang Cai
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
0
|
|
|
*
|
Jiyun Cai
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Fengnv Zhang
|
|
|
4,000
|
|
|
|
4,000
|
|
|
|
0
|
|
|
*
|
Dongmei Bian
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
0
|
|
|
*
|
Kun Yao
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Xiwen Zhou
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Haiping Xu
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Jiaping Xu
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Liyu Wang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Guizhi Liu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Zheng Zhou
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Guangxing Zhu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Guiying Lin
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Yue Zhu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Hui Li
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
0
|
|
|
*
|
Lixia Wang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Zhongqin Cheng
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
0
|
|
|
*
|
Chang Yang
|
|
|
40,714
|
|
|
|
40,714
|
|
|
|
0
|
|
|
*
|
Maolin Liao
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Haixia Deng
|
|
|
934,277
|
|
|
|
934,277
|
|
|
|
0
|
|
|
*
|
Guangyue Xu
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Wei Huang
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Xiulan Li
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Dong Liu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Yinhua Sun
|
|
|
11,000
|
|
|
|
11,000
|
|
|
|
0
|
|
|
*
|
Lijun Dong
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Lihong He
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Ling Du
|
|
|
40,695
|
|
|
|
40,695
|
|
|
|
0
|
|
|
*
|
Yun Sun
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Wenfei Liu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Zhong Liu
|
|
|
3,878
|
|
|
|
3,878
|
|
|
|
0
|
|
|
*
|
Feng Luo
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
*
|
Jianshe Yang
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Jianmin Zhao
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Jing Men
|
|
|
56,843
|
|
|
|
56,843
|
|
|
|
0
|
|
|
*
|
Yuehua Yang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Ziyun Lin
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Ning Sun
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Quan Yang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Fei Zhang
|
|
|
18,491
|
|
|
|
18,491
|
|
|
|
0
|
|
|
*
|
Zhijun Tan
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Jian Huang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Yanxia Tian
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Yuanli Miao
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Binghua Li
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Guobin Qin
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Hongxia Zhu
|
|
|
113,986
|
|
|
|
113,986
|
|
|
|
0
|
|
|
*
|
Chuhan Ma
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
0
|
|
|
*
|
Yu Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yun Zhang
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Changhua Cheng
|
|
|
85,714
|
|
|
|
85,714
|
|
|
|
0
|
|
|
*
|
Jialin Xia
|
|
|
45,713
|
|
|
|
45,713
|
|
|
|
0
|
|
|
*
|
Chongyi Zhou
|
|
|
11,429
|
|
|
|
11,429
|
|
|
|
0
|
|
|
*
|
Xinjia Chen
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Wenbo Liu
|
|
|
17,143
|
|
|
|
17,143
|
|
|
|
0
|
|
|
*
|
Guangxu Yang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Chongguang Ma
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Xin Li
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Jie Guo
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Wei Cao
|
|
|
108,343
|
|
|
|
108,343
|
|
|
|
0
|
|
|
*
|
Junqi Zhu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Fei Li
|
|
|
352
|
|
|
|
352
|
|
|
|
0
|
|
|
*
|
Lianqing Zhang
|
|
|
857,143
|
|
|
|
857,143
|
|
|
|
0
|
|
|
*
|
Guifang Hu
|
|
|
320
|
|
|
|
320
|
|
|
|
0
|
|
|
*
|
Yuliang Zhang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Wei Zhang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Bin Wang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Xiaotong Liu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Jinmei Liu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Siru Sun
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Mingxia Sun
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
0
|
|
|
*
|
Zhi Huang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Ming Li
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Dun Rao
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Fangxiu He
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Jun Zhang
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Linmin Zhao
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Junjie Zhu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Yuan Zhao
|
|
|
352
|
|
|
|
352
|
|
|
|
0
|
|
|
*
|
Liang Bai
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Fang Chu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Zeyang Zhu
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Fenglan Li
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Haoming Gu
|
|
|
62,857
|
|
|
|
62,857
|
|
|
|
0
|
|
|
*
|
Man Hing Lau
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Wan Kan Cheung
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Hiu Tan Cheung
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Harrison Chun Ming Hui
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Andrzej Szkodzinki
|
|
|
300
|
|
|
|
300
|
|
|
|
0
|
|
|
*
|
Shu-Li Wang
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Jen-Di Wen
|
|
|
500
|
|
|
|
500
|
|
|
|
0
|
|
|
*
|
Yen-En Wen
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
0
|
|
|
*
|
Yen-Ling Wen
|
|
|
39,714
|
|
|
|
39,714
|
|
|
|
0
|
|
|
*
|
Jianli Gao
|
|
|
571,429
|
|
|
|
571,429
|
|
|
|
0
|
|
|
*
|
TOTAL
|
|
|
6,069,613
|
|
|
|
6,069,613
|
|
|
|
0
|
|
|
|
* Less than one percent.
_______________
(1)
|
|
The number of shares listed in these columns includes all shares beneficially owned, whether or not deemed to be beneficially owned, by the selling stockholder. The ownership percentages listed in these columns include only shares beneficially owned by the listed selling stockholder. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the percentage of shares beneficially owned by a selling stockholder, shares of our common stock subject to options or warrants, or debt convertible into our common stock, held by that selling stockholder that was exercisable or convertible on or within 60 days after the date of this prospectus were deemed outstanding for the purpose of computing the percentage ownership of that selling stockholder. The ownership percentages are calculated assuming that 40,907,010 shares of common stock were outstanding on the date of this prospectus.
|
PLAN OF DISTRIBUTION
The selling stockholders and any of its
pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of its shares of common
stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The selling stockholder may use any one or more of the following methods when selling shares:
·
|
|
ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;
|
|
|
|
·
|
|
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
|
|
|
·
|
|
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
|
|
·
|
|
an exchange distribution in accordance with the rules of the applicable exchange;
|
|
|
|
·
|
|
privately negotiated transactions;
|
|
|
|
·
|
|
to cover short sales made after the date that the registration statement of which this prospectus is a part is declared effective by the Securities and Exchange Commission;
|
|
|
|
·
|
|
broker-dealers may agree with the selling stockholder to sell a specified number of shares at a stipulated price per share;
|
|
|
|
·
|
|
a combination of any of such methods of sale; and
|
|
|
|
·
|
|
any other method permitted under applicable law.
|
The selling stockholders also may sell
their shares of our common stock under Rule 144 under the Securities Act or under another exemption from the registration requirements
of the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.
The selling stockholders from time to time
may pledge or grant a security interest in some or all of the shares of our common stock owned by them, and, if a selling stockholder
defaults in the performance of its secured obligations, then the pledgees or secured parties may offer and sell shares of our common
stock from time to time under this prospectus or under an amendment to this prospectus under Rule 424(b)(3) under the Securities
Act or other applicable provisions of the Securities Act amending the list of selling stockholders to include the pledgees, the
transferees or other successors in interest as selling stockholders under this prospectus.
Upon our company being notified in writing
by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of our common stock
through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed with the Securities and Exchange Commission, if required, pursuant to Rule 424(b) under
the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealers, (ii) the
number of shares of our common stock involved, (iii) the price at which such shares of our common stock were sold, (iv) the commissions
paid or discounts or concessions allowed to such broker dealers, where applicable, (v) that such broker-dealers did not conduct
any investigation to verify the information set out or incorporated by reference in this prospectus and (vi) other facts material
to the transaction. In addition, upon our company being notified in writing by a selling stockholder that a donee or pledgee intends
to sell more than 500 shares of our common stock, a supplement to this prospectus will be filed if then required in accordance
with applicable securities law.
The selling stockholder also may transfer
the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will
be the selling beneficial owners for purposes of this prospectus.
The selling stockholders and any broker-dealers
or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities
Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Because
the selling stockholder may be deemed to be an underwriter within the meaning of the Securities Act, they will be subject to the
prospectus delivery requirements of the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any,
that can be attributed to the sale of Securities will be paid by the selling stockholder and/or the purchasers. The selling stockholder
has represented and warranted to the company that it acquired the securities subject to this registration statement in the ordinary
course of the selling stockholder’s business and, at the time of its purchase of such securities the selling stockholder
had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
The company has advised the selling stockholders
that it may not use shares registered on this Registration Statement to cover short sales of common stock made prior to the date
on which this Registration Statement shall have been declared effective by the Commission. If the selling stockholder uses this
prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act.
The selling stockholder will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and
the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling stockholder
in connection with resales of their respective shares under this Registration Statement.
The company is required to pay all fees
and expenses incident to the registration of the shares, but the company will not receive any proceeds from the sale of the common
stock by selling stockholders. The company has agreed to indemnify the selling stockholder against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
DISCLOSURE OF SEC POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 78.7502 of the Nevada Revised Statutes
provides that directors and officers of Nevada corporations may, under certain circumstances, be indemnified against expenses (including
attorneys’ fees) and other liabilities actually and reasonably incurred by them as a result of any suit brought against them
in their capacity as a director or officer, if they acted in good faith and in a manner that they reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no
reasonable cause to believe their conduct was unlawful. Section 78.7502 of the Nevada Revised Statutes also provides that directors
and officers of Nevada corporation also may be indemnified against expenses (including attorneys’ fees) actually and reasonably
incurred by them in connection with a derivative suit if they acted in good faith and in a manner that they reasonably believed
to be in or not opposed to the best interests of the corporation, except that no indemnification may be made without court approval
if such person was adjudged liable to the corporation.
Article VIII of our articles of incorporation
provides that we shall, to the fullest extent permitted by the laws of the State of Nevada, indemnify our directors, officers and
certain other persons. Article V, Section 1 of our bylaws provides that our directors, officers and certain other persons shall
be indemnified and held harmless by us to the fullest extent permitted by the laws of the State of Nevada.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to the directors, officers or persons controlling the registrant pursuant to
the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable.
In the event that a claim for indemnification
against such liabilities (other than the payment by our company of expenses incurred or paid by such director, officer or controlling
person of our company in the successful defense of any action, suit or proceeding) is asserted by any director, officer or controlling
person of our company in connection with the securities being registered in the registration statement of which this prospectus
is a part, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by our company is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
LEGAL OPINION
The validity of the shares covered by the
registration statement of which this prospectus is a part has been passed upon for us by Wilson Bradshaw & Cao, LLP.
EXPERTS
The financial statements included in this
prospectus as of years ended December 31, 2017 and 2016 have been audited by BF Borgers CPA PC, an independent registered public
accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and are included in reliance
upon such report given upon the authority of said firm as experts in auditing and accounting.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Neither the named experts nor counsel own
any shares of our common stock.
ADDITIONAL INFORMATION
We are subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended, and file reports, proxy statements and other information with the SEC. These
reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the
SEC at 100 F Street, N.E., Washington, D.C. 20549 and at the SEC’s regional offices located at the Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 233 Broadway, New York, New York 10279. You can obtain copies
of these materials from the Public Reference Section of the SEC upon payment of fees prescribed by the SEC. You may obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC’s website contains reports, proxy
and information statements and other information regarding registrants that file electronically with the SEC. The address of that
site is http://www.sec.gov.
We have filed a registration statement
on Form S-1 with the SEC under the Securities Act of 1933, as amended, with respect to the securities offered in this prospectus.
This prospectus, which is filed as part of a registration statement, does not contain all of the information set forth in the registration
statement, some portions of which have been omitted in accordance with the SEC’s rules and regulations. Statements made in
this prospectus as to the contents of any contract, agreement or other document referred to in this prospectus are not necessarily
complete and are qualified in their entirety by reference to each such contract, agreement or other document that is filed as an
exhibit to the registration statement. The registration statement may be inspected without charge at the public reference facilities
maintained by the SEC, and copies of such materials can be obtained from the Public Reference Section of the SEC at prescribed
rates. You may obtain additional information regarding our company on our website, located at
www.focusuniversal.com
.
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, a total of 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 six 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 operational 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 any balance due or receivables outstanding 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.
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the shareholders and the board of directors
of Focus Universal, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Focus Universal, Inc. (the "Company") as of December 31, 2017 and 2016, the related statement of operations,
stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
Substantial Doubt about the Company’s
Ability to Continue as a Going Concern
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 9 to the financial statements, the
Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
/s BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company’s auditor
since 2017.
Lakewood, CO
April 10, 2018
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
|
|
As of December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(Restated)
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
394,398
|
|
|
$
|
340,071
|
|
Accounts receivable
|
|
|
26,311
|
|
|
|
25,564
|
|
Account receivable- related party
|
|
|
564
|
|
|
|
10,332
|
|
Inventories
|
|
|
47,432
|
|
|
|
68,495
|
|
Prepaid expenses
|
|
|
8,280
|
|
|
|
7,962
|
|
Total Current Assets
|
|
|
476,985
|
|
|
|
452,424
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
6,336
|
|
|
|
8,517
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
7,210
|
|
|
|
24,726
|
|
|
|
|
|
|
|
|
|
|
Total assets:
|
|
$
|
490,531
|
|
|
$
|
485,667
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
449,256
|
|
|
$
|
368,513
|
|
Customer deposit
|
|
|
31,734
|
|
|
|
62,126
|
|
Income taxes payable
|
|
|
800
|
|
|
|
800
|
|
Total Current Liabilities
|
|
|
481,790
|
|
|
|
431,439
|
|
Non-current Liabilities
|
|
|
|
|
|
|
|
|
Convertible promissory note, net
|
|
|
81,342
|
|
|
|
–
|
|
Deferred rent
|
|
|
–
|
|
|
|
468
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
563,132
|
|
|
|
431,907
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
|
Common stock, par value $0.001 per share, 75,000,000 shares authorized, 34,574,706 shares issued and outstanding as of December 31, 2017 and 2016, respectively
|
|
|
34,575
|
|
|
|
34,575
|
|
Additional paid-in capital
|
|
|
1,871,618
|
|
|
|
1,371,618
|
|
Accumulated deficit
|
|
|
(1,978,794
|
)
|
|
|
(1,352,433
|
)
|
Total stockholders' equity
|
|
|
(72,601
|
)
|
|
|
53,760
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
490,531
|
|
|
$
|
485,667
|
|
The accompanying notes are an integral part
of these consolidated financial statements.
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATION
|
|
Years Ended December 31
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(Restated)
|
|
Revenue
|
|
$
|
891,513
|
|
|
$
|
1,116,219
|
|
Revenue – related party
|
|
|
6,571
|
|
|
|
5,759
|
|
Total revenue
|
|
|
898,084
|
|
|
|
1,121,978
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
726,252
|
|
|
|
866,559
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
171,832
|
|
|
|
255,419
|
|
|
|
|
|
|
|
|
|
|
Operation Expenses:
|
|
|
|
|
|
|
|
|
Compensation - officers
|
|
|
120,000
|
|
|
|
121,385
|
|
Research and development
|
|
|
208,238
|
|
|
|
201,899
|
|
Professional fees
|
|
|
107,899
|
|
|
|
142,955
|
|
General and administrative
|
|
|
255,531
|
|
|
|
256,210
|
|
Total Operating Expenses
|
|
|
691,668
|
|
|
|
722,449
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(519,836
|
)
|
|
|
(467,030
|
)
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(105,830
|
)
|
|
|
91
|
|
Other income
|
|
|
(1
|
)
|
|
|
588
|
|
Other expense
|
|
|
–
|
|
|
|
(588
|
)
|
Total other expense
|
|
|
(105,831
|
)
|
|
|
91
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(625,667
|
)
|
|
|
(466,939
|
)
|
|
|
|
|
|
|
|
|
|
Tax expense
|
|
|
694
|
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(626,361
|
)
|
|
$
|
(467,434
|
)
|
|
|
|
|
|
|
|
|
|
Weight Average Number of Common Shares Outstanding - Basic and Diluted
|
|
|
34,574,706
|
|
|
|
34,574,706
|
|
|
|
|
|
|
|
|
|
|
Net Loss per common share - Basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
* Denotes a loss of less than $(0.01) per share
The accompanying notes are an integral part of these consolidated
financial statements.
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the years Ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(Restated)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(626,361
|
)
|
|
$
|
(467,434
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Inventory reserve
|
|
|
(9,270
|
)
|
|
|
26,528
|
|
Depreciation expense
|
|
|
2,181
|
|
|
|
1,130
|
|
Amortization of debt discount
|
|
|
81,342
|
|
|
|
–
|
|
Changes in Operating Assets and Liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(747
|
)
|
|
|
81,325
|
|
Accounts receivable- related party
|
|
|
9,768
|
|
|
|
(10,332
|
)
|
Inventories
|
|
|
30,333
|
|
|
|
(53,258
|
)
|
Prepaid expenses
|
|
|
(318
|
)
|
|
|
6,999
|
|
Deposits
|
|
|
17,516
|
|
|
|
–
|
|
Accounts payable and accrued liabilities
|
|
|
80,743
|
|
|
|
92,585
|
|
Customer deposit
|
|
|
(30,392
|
)
|
|
|
(77,903
|
)
|
Deferred rent
|
|
|
(468
|
)
|
|
|
(443
|
)
|
Net cash flows used in operating activities
|
|
|
(445,673
|
)
|
|
|
(400,803
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
–
|
|
|
|
(8,239
|
)
|
Net cash flows used in investing activities
|
|
|
–
|
|
|
|
(8,239
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from convertible note payable
|
|
|
500,000
|
|
|
|
–
|
|
Repayment to related parties
|
|
|
–
|
|
|
|
(63,368
|
)
|
Repayment to shareholders
|
|
|
–
|
|
|
|
(19,534
|
)
|
Net cash flows provided by (used in) financing activities
|
|
|
500,000
|
|
|
|
(82,902
|
)
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
|
54,327
|
|
|
|
(491,944
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - Beginning of Period
|
|
|
340,071
|
|
|
|
832,015
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - End of Period
|
|
$
|
394,398
|
|
|
$
|
340,071
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures for Statement of Cash Flows:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
105,831
|
|
|
$
|
501
|
|
Income tax paid
|
|
$
|
694
|
|
|
$
|
495
|
|
The accompanying notes are an integral
part of these consolidated financial statements.
FOCUS UNIVERSAL INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2017
AND 2016
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Common stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance - December 31, 2015 (Restated)
|
|
|
34,574,706
|
|
|
$
|
34,575
|
|
|
$
|
1,371,618
|
|
|
$
|
(884,999
|
)
|
|
$
|
521,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(467,434
|
)
|
|
|
(467,434
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2016 (Restated)
|
|
|
34,574,706
|
|
|
$
|
34,575
|
|
|
$
|
1,371,618
|
|
|
$
|
(1,352,433
|
)
|
|
$
|
53,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of promissory note
|
|
|
–
|
|
|
|
–
|
|
|
|
500,000
|
|
|
|
–
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(626,361
|
)
|
|
|
(626,361
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2017
|
|
|
34,574,706
|
|
|
$
|
34,575
|
|
|
$
|
1,871,618
|
|
|
$
|
(1,978,794
|
)
|
|
$
|
(72,601
|
)
|
The accompanying notes are an integral
part of these consolidated financial statements.
FOCUS UNIVERSAL INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2017 AND 2016
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 11, Reclassifications.
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 December
31, 2017 and December 31, 2016.
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 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 December 31, 2017 and 2016, inventory reserve amounted to $27,067 and $36,337, 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 December 31, 2017
and December 31, 2016 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
for the years ended December 31, 2017 and 2016.
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 assets or liabilities as of December 31, 2017 and December
31, 2016.
As of December 31, 2017, and December 31,
2016, 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 years ended December 31, 2017 and 2016.
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 December 31, 2017 and 2016, property
and equipment consisted of the following:
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
Computers
|
|
$
|
1,029
|
|
|
$
|
1,029
|
|
Furniture and fixture
|
|
|
8,850
|
|
|
|
8,850
|
|
Total cost
|
|
|
9,879
|
|
|
|
9,879
|
|
Less accumulated depreciation
|
|
|
(3,543
|
)
|
|
|
(1,362
|
)
|
Property and equipment, net
|
|
$
|
6,336
|
|
|
$
|
8,517
|
|
Depreciation expense for the twelve months
period ended December 31, 2017 and 2016 amounted to $2,181 and $1,130, respectively.
Note 4 – Convertible Promissory
Note
On June 30, 2017 and again on 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 $81,342 during the year ended December 31, 2017 related to the amortization of the debt discounts.
Note 5 – Related Party Transactions
Revenue generated from Vitashower Corp.,
a company owned by the CEO, amounted to $6,571 and $5,759 for the years ended December 31, 2017 and 2016.
Compensation for services provided by the
President and Chief Executive Officer for the years ended December 31, 2017 and 2016 amounted to $120,000 and $121,385, respectively.
Note 6 – Business Concentration
and Risks
Major customers
One customer accounted for 100% and 100% of
the total accounts receivable at December 31, 2017 and December 31, 2016, respectively.
Major vendors
One vendor accounted for 93% and 97% of
total accounts payable at December 31, 2017 and December 31, 2016, 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.
In July 2016, we sub-leased a portion of
the property to a third party. The lease is non-cancelable operating lease with monthly rent of $4,400. During the three months
ended September 30, 2017, the Company recognized $8,800 in sub-lease income. The lease commenced on July 7, 2016 and expired on
May 31, 2017. $3,300 of the rent deposit has been returned to the subtenant.
Total rent expense was $51,167 and $66,585
for the twelve months ended December 31, 2017 and 2016, respectively.
Future minimum lease commitments are as follows:
December 31,
|
|
|
Rent Expense
|
|
2018
|
|
|
$
|
42,840
|
|
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
As of December 31, 2017 the Company had
34,574,706 shares of common stock issued and outstanding.
Note 9 – 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.
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. As of December 31, 2017, the
Company had a net loss and had negative cash flow from operating activities of $626,361 and $445,673, respectively. The Company
also had an accumulated deficit of $1,978,794. 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 10 – Restatement
The Company reevaluated inventory for slow
moving and reserved a portion of slow moving inventory for obsolescence.
In 2015 the Company entered into a business
combination with an entity under common control. The accounting treatment for such business combination should have been recorded
at carry value, similar to pooling of interest. The Company corrected the error in the accounting treatment of the transaction.
In 2016, the Company recorded sales transactions net of cost of goods sold in error. The restatement corrected the error.
Also, certain account classifications have
been modified. Related party accounts receivable and accounts payable have been reclassified to their own line for disclosure purpose.
See below for result of 2016 restatement and reclassification.
|
|
Previous reported
|
|
|
|
|
|
|
Restated
|
|
|
|
12/31/2016
|
|
|
Adjustment
|
|
|
|
12/31/2016
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
340,073
|
|
|
|
(2
|
)
|
|
|
$
|
340,071
|
|
Accounts receivable
|
|
|
35,896
|
|
|
|
(10,332
|
)
|
{a}
|
|
|
25,564
|
|
Accounts receivable - related party
|
|
|
–
|
|
|
|
10,332
|
|
{a}
|
|
|
10,332
|
|
Inventories, net
|
|
|
104,832
|
|
|
|
(36,337
|
)
|
{b}
|
|
|
68,495
|
|
Prepaid expenses
|
|
|
7,962
|
|
|
|
|
|
|
|
|
7,962
|
|
Total Current Assets
|
|
|
488,763
|
|
|
|
–
|
|
|
|
|
452,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
8,517
|
|
|
|
–
|
|
|
|
|
8,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
24,726
|
|
|
|
–
|
|
|
|
|
24,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets:
|
|
$
|
522,006
|
|
|
|
–
|
|
|
|
$
|
485,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
372,912
|
|
|
|
(4,399
|
)
|
{c}
|
|
$
|
368,513
|
|
Customer deposit
|
|
|
57,726
|
|
|
|
4,400
|
|
{c}
|
|
|
62,126
|
|
Income taxes payable
|
|
|
800
|
|
|
|
–
|
|
|
|
|
800
|
|
Total Current Liabilities
|
|
|
431,438
|
|
|
|
|
|
|
|
|
431,439
|
|
Non-current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred rent
|
|
|
468
|
|
|
|
–
|
|
|
|
|
468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
431,906
|
|
|
|
|
|
|
|
|
431,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of December 31, 2017 and 2016, respectively
|
|
|
34,575
|
|
|
|
–
|
|
|
|
|
34,575
|
|
Additional paid-in capital
|
|
|
713,239
|
|
|
|
658,379
|
|
{d}
|
|
|
1,371,618
|
|
Accumulated deficit
|
|
|
(657,714
|
)
|
|
|
(694,719
|
)
|
{e}
|
|
|
(1,352,433
|
)
|
Total stockholders' equity
|
|
|
90,100
|
|
|
|
|
|
|
|
|
53,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
522,006
|
|
|
|
|
|
|
|
$
|
485,667
|
|
{a} The Company reclassified related party
accounts receivable and payable balance into its own line item.
{b}The Company reserved $36,337 for slow
moving inventory items.
{c} Customer deposit of $4,400 was reclassified
out from accounts payable to correctly record in customer deposit.
{d} The Company and Perfecular Inc. entered
into merger agreement on December 30, 2015. The two entities are merger under common control. Per ASC 805-50-45, entities merger
under common control should be recorded using book value and retained earnings is carried into the consolidated financial statements.
The Company erroneously eliminated Perfecular Inc.’s retained earnings through consolidation. An adjustment is made to properly
record investment made to the merger and record retained earnings of Perfecular Inc.
{e} Accumulated adjustment effect in result
of inventory reserve and adjustment to properly recorded investment made to the merger.
|
|
Previously reported
|
|
|
|
|
|
|
Restated
|
|
|
|
12/31/2016
|
|
|
Adjustment
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
337,496
|
|
|
|
778,723
|
|
{f}
|
|
$
|
1,116,219
|
|
Revenue - related party
|
|
|
–
|
|
|
|
5,759
|
|
{g}
|
|
|
5,759
|
|
Total revenue
|
|
|
337,496
|
|
|
|
|
|
|
|
|
1,121,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
57,128
|
|
|
|
809,431
|
|
{f}{h}
|
|
|
866,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
280,368
|
|
|
|
|
|
|
|
|
255,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operation Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation - officers
|
|
|
121,385
|
|
|
|
|
|
|
|
|
121,385
|
|
Research and development
|
|
|
201,899
|
|
|
|
|
|
|
|
|
201,899
|
|
Professional fees
|
|
|
142,956
|
|
|
|
|
|
|
|
|
142,955
|
|
General and administrative
|
|
|
257,365
|
|
|
|
(1,155
|
)
|
{g}
|
|
|
256,210
|
|
Total Operating Expenses
|
|
|
723,605
|
|
|
|
|
|
|
|
|
722,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(443,237
|
)
|
|
|
|
|
|
|
|
(467,030
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(203
|
)
|
|
|
300
|
|
{g}
|
|
|
97
|
|
Other income
|
|
|
5,736
|
|
|
|
(5,148
|
)
|
{g}
|
|
|
588
|
|
Other expense
|
|
|
(1,600
|
)
|
|
|
1,012
|
|
{g}
|
|
|
(588
|
)
|
Total other expense
|
|
|
3,933
|
|
|
|
|
|
|
|
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(439,304
|
)
|
|
|
|
|
|
|
|
(466,939
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
1,600
|
|
|
|
(1,105
|
)
|
{j}
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(440,904
|
)
|
|
|
|
|
|
|
$
|
(467,434
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
{f} 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.
{g} Other income and other expenses items
were reclassified to other income statement accounts. Refund of rent expense of $1,155 was reclassified from other income to general
and administrative expenses. Other expenses items including interest expense and cost of sales were reclassified to their respective
accounts. Interest expense was reclassified from other income.
{h} The Company reserved $36,337 for slow
moving inventory items into cost of goods sold.
{i}Income tax refund was reclassified from
other income to income tax expense.
|
|
Previously
reported
|
|
|
|
|
|
|
Restated
|
|
|
|
12/31/2016
|
|
|
Adjustment
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(440,904
|
)
|
|
|
(26,530
|
)
|
|
|
$
|
(467,434
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory reserve
|
|
|
–
|
|
|
|
26,528
|
|
{j}
|
|
|
26,528
|
|
Depreciation expense
|
|
|
1,130
|
|
|
|
|
|
|
|
|
1,130
|
|
Changes in Operating Assets and Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
70,993
|
|
|
|
10,332
|
|
{k}
|
|
|
81,325
|
|
Accounts receivable - related party
|
|
|
–
|
|
|
|
(10,332
|
)
|
{k}
|
|
|
(10,332
|
)
|
Inventories
|
|
|
(53,258
|
)
|
|
|
|
|
|
|
|
(53,258
|
)
|
Prepaid expenses
|
|
|
6,999
|
|
|
|
|
|
|
|
|
6,999
|
|
Accounts payable and accrued liabilities
|
|
|
96,987
|
|
|
|
(4,402
|
)
|
{l}
|
|
|
92,585
|
|
Customer deposit
|
|
|
(82,303
|
)
|
|
|
4,400
|
|
{l}
|
|
|
(77,903
|
)
|
Deferred rent
|
|
|
(443
|
)
|
|
|
|
|
|
|
|
(443
|
)
|
Net cash flows used in operating activities
|
|
|
(400,799
|
)
|
|
|
|
|
|
|
|
(400,803
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(8,239
|
)
|
|
|
|
|
|
|
|
(8,239
|
)
|
Net cash flows used in investing activities
|
|
|
(8,239
|
)
|
|
|
|
|
|
|
|
(8,239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment to related parties
|
|
|
(63,369
|
)
|
|
|
|
|
|
|
|
(63,368
|
)
|
Repayment to shareholders
|
|
|
(19,533
|
)
|
|
|
|
|
|
|
|
(19,534
|
)
|
Net cash flows provided by (used in) financing activities
|
|
|
(82,902
|
)
|
|
|
|
|
|
|
|
(82,902
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
|
(491,940
|
)
|
|
|
|
|
|
|
|
(491,944
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - Beginning of Period
|
|
|
832,015
|
|
|
|
|
|
|
|
|
832,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - End of Period
|
|
$
|
340,071
|
|
|
|
|
|
|
|
$
|
340,071
|
|
{j} The Company reserved $36,337 for slow
moving inventory items into cost of goods sold.
{k} The Company reclassified related party
accounts receivable and payable balance into its own line item.
{l} Customer deposit of $4,400 was reclassified
out from accounts payable to correctly record in customer deposit.
Note 11 – 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.
On March 2, 2018, Focus Universal Inc.
(the “Company”) executed a letter of intent with Aloha Island Cable, Inc. (the “Letter of Intent”) whereby
the Company will purchase one hundred percent of Aloha Island Cable, Inc. through a mixture of stock, cash, and a promissory note.
The Letter of Intent is non-binding, but the parties expect to consummate the transaction as soon as reasonably practical. The
Letter of Intent is only an expression of interest and is not binding on the parties. The parties contemplate the closing date
to take place on April 28, 2018.
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.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
Our Chief Executive Officer and Principal
Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Registration Statement
on Form S-1 (the "Evaluation Date"), concluded that as of the Evaluation Date, our disclosure controls and procedures
were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms.
Changes in internal control over financial
reporting.
There were no changes in our internal control
over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially
affect, our internal control over financial reporting.
Limitations on the Effectiveness of
Internal Controls
Disclosure controls and procedures, no
matter how well designed and implemented, can provide only reasonable assurance of achieving an entity's disclosure objectives.
The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include
the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human
failures such as simple errors or mistakes or intentional circumvention of the established process.
Management's Report on Internal Control
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting; as such term is defined in the Securities Exchange Act of 1934
Rule 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based
on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("1992 COSO Framework").
A material weakness is a deficiency or
combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Our management
concluded we did not maintain effective controls over the Company’s financial reporting. The material weaknesses in our internal
control over financial reporting, caused principally by inadequate staffing and technical expertise in key positions, resulted
in overly relying on outside consultants to make numerous adjustments to our financial statements. Additionally, the significant
deficiencies or material weaknesses could result in future material misstatement of the consolidated financial statements that
would not be prevented or detected. Management has concluded that the identified control deficiency constitutes a material weakness.
This Registration Statement does not include
an attestation report of the Company's independent registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant
to rules of the SEC that permit the company to provide only management's report on internal control in this Registration Statement.
Background and Remediation Plan
Management has
determined that its processes and procedures over accounting and financial reporting are not adequate. As a result, the Company
plans to implement a number of steps to remediate the material weakness discussed above and improve its internal control over financial
reporting. Specifically, the following are planned: hiring additional qualified accounting personnel; reviewing all areas of the
accounting process; strengthening controls and improving the reporting tools and quality of data used in the analysis of disclosures
to review activities relevant to the financial reporting process.
Management believes
that the measures described above should remediate the material weakness identified and strengthen the Company’s internal
control over financial reporting. As the Company continues to evaluate and improve its internal control over financial reporting,
additional measures to remediate the material weakness or modifications to certain of the remediation procedures described above
may be necessary. The Company expects to complete the required remedial actions during 2015.
PART II — INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses
expected to be incurred by us in connection with the issuance and distribution of the securities being registered. No portion of
any of such expenses will be borne by any of the selling stockholders.
SEC Registration
|
|
$
|
5
,100
|
|
Legal Fees and Expenses*
|
|
$
|
25,000
|
|
Accounting Fees*
|
|
$
|
15,000
|
|
Miscellaneous*
|
|
$
|
10,000
|
|
Total
|
|
$
|
55,100
|
|
Item 14. Indemnification of Directors and Officers.
Section 78.7502 of the Nevada Revised Statutes provides that
directors and officers of Nevada corporations may, under certain circumstances, be indemnified against expenses (including attorneys’
fees) and other liabilities actually and reasonably incurred by them as a result of any suit brought against them in their capacity
as a director or officer, if they acted in good faith and in a manner that they reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause
to believe their conduct was unlawful. Section 78.7502 of the Nevada Revised Statutes also provides that directors and officers
of Nevada corporations also may be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred
by them in connection with a derivative suit if they acted in good faith and in a manner that they reasonably believed to be in
or not opposed to the best interests of the corporation, except that no indemnification may be made without court approval if such
person was adjudged liable to the corporation.
Article VIII of our articles of incorporation provides that
we shall, to the fullest extent permitted by the laws of the State of Nevada, indemnify our directors, officers and certain other
persons. Article V, Section 1 of our bylaws provides that our directors, officers and certain other persons shall be indemnified
and held harmless by us to the fullest extent permitted by the laws of the State of Nevada.
Item 15. Recent sales of unregistered securities.
None.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity
securities during the quarter ended March 31, 2018, the year ended December 31, 2017, or 2016.
Item 16. EXHIBITS
EXHIBIT NUMBER
|
|
DESCRIPTION
|
|
|
|
2.1
|
|
Agreement and Plan of Merger by and among FCUV Acquisition Corp. and Perfecular Inc. dated December 30, 2015 filed with the SEC on January 5, 2016 and amended on January 7, 2016.
|
3.1
|
|
Articles of Incorporation. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on December 26, 2013.
|
3.2
|
|
Bylaws. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on December 26, 2013.
|
4.2
|
|
Subscription Agreement. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on December 26, 2013.
|
5.1 *
|
|
Opinion of Wilson Bradshaw & Cao, LLP.
|
10.1
|
|
Consulting Agreement with MorePro Marketing, Inc. Incorporated by reference to the Company’s 8-K filed with the SEC on January 5, 2015.
|
10.2
|
|
Stock Purchase Agreement dated December 29, 2015. Incorporated by reference to the Company’s 8-K filed with the SEC on January 5, 2015.
|
10.3
|
|
Unsecured Demand Promissory Note dated February 1, 2015 in the amount of $20,000 filed with the SEC on July 28, 2015
|
10.4
|
|
Unsecured Demand Promissory Note dated February 25, 2015 in the amount of $100,000 filed with the SEC on July 28, 2015
|
10.5
|
|
Master Revolving Note dated May 21, 2015 in the amount of $1,000,000 filed with the SEC on July 28, 2015
|
2.1
|
|
Agreement and Plan of Merger by and among Focus Universal Inc., FCUV Acquisition Corp. and Perfecular Inc. filed with the SEC on January 5, 2016.
|
99.1
|
|
Perfecular, Inc. audited financial statements for the years ended December 31, 2015 and 2014, filed with the SEC on June 23, 2016.
|
23.1*
|
|
Consent of BF Borgers CPA PC
|
23.2 *
|
|
Consent of Wilson Bradshaw & Cao, LLP (included in Exhibit 5.1).
|
24.1*
|
|
Power of Attorney (included on signature page)*
|
101.INS
|
|
XBRL Instance Document **
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document **
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document **
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document **
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document **
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document **
|
* Filed herewith.
** XBRL (Extensible Business Reporting
Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11
or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, and otherwise is not subject to liability under these sections - Previously filed.
Item 17. Undertakings.
The undersigned hereby undertakes:
(1)
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
|
|
(i)
|
|
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
|
|
|
|
|
|
(ii)
|
|
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
|
|
|
|
|
|
(iii)
|
|
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
|
|
|
|
(2)
|
That, for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
|
|
|
(3)
|
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
|
|
(4)
|
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness;
provided, however,
that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
|
|
(5)
|
|
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
|
|
|
(i)
|
|
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
|
|
|
|
|
(ii)
|
|
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
|
|
|
|
(iii)
|
|
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
|
|
|
|
(iv)
|
|
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: October 3,
2018
|
FOCUS UNIVERSAL INC.
|
|
|
|
|
By:
|
/s/ Duncan Lee
|
|
|
Duncan Lee
|
|
|
Chief Financial Officer and Principal Accounting Officer
|
In accordance with the Exchange Act, this
report has been signed below by the following persons on behalf of Focus Universal Inc. and in the capacities and on the dates
indicated.
SIGNATURES
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/ Desheng Wang
|
|
Chief Executive Officer, Secretary and Director
|
|
October 3,
2018
|
Desheng Wang
|
|
|
|
|
POWER OF ATTORNEY AND SIGNATURES
The undersigned, a majority of the officers
and directors of the company hereby constitute and appoint Desheng Wang and Duncan Lee, and each of them singly, with full
power of substitution, our true and lawful attorneys-in-fact and agents to take any actions to enable the company to comply with
the Securities Act, and any rules, regulations and requirements of the SEC, in connection with this registration statement, including
the power and authority to sign for us in our names in the capacities indicated below any and all amendments to this registration
statement and any other registration statement filed pursuant to the provisions of Rule 462 under the Securities Act.
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/Desheng Wang
|
|
Chief Executive Officer, Director
|
|
October 3, 2018
|
Desheng Wang
|
|
|
|
|
|
|
|
|
|
/s/Edward Lee
|
|
President, Director
|
|
October 3, 2018
|
Edward Lee
|
|
|
|
|
|
|
|
|
|
/s/ Duncan Lee
|
|
Chief Financial Officer
|
|
October 3, 2018
|
Duncan Lee
|
|
|
|
|
|
|
|
|
|
/s/Jennifer Gu
|
|
Director
|
|
October 3, 2018
|
Jennifer Gu
|
|
|
|
|
|
|
|
|
|
/s/Michael Pope
|
|
Director
|
|
October 3, 2018
|
Michael Pope
|
|
|
|
|
|
|
|
|
|
/s/Sheri Lofgren
|
|
Director
|
|
October 3, 2018
|
Sheri Lofgren
|
|
|
|
|
|
|
|
|
|
/s/ Sean Warren
|
|
Director
|
|
October 3, 2018
|
Sean Warren
|
|
|
|
|
|
|
|
|
|
/s/Carine Clark
|
|
Director
|
|
October 3, 2018
|
Carine Clark
|
|
|
|
|