Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 14, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Focus Universal Inc. | |
Entity Central Index Key | 1,590,418 | |
Document Type | S-1/A | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 34,574,706 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Current Assets: | |||
Cash and cash equivalents | $ 423,504 | $ 832,013 | $ 78,005 |
Accounts receivable | 35,946 | 106,889 | 0 |
Inventories | 40,673 | 51,574 | 0 |
Prepaid expenses | 10,426 | 14,961 | 11,865 |
Total current assets | 510,549 | 1,005,437 | 89,870 |
Property and equipment, net | 4,032 | 1,408 | 0 |
Other assets | |||
Deposits | 24,726 | 24,726 | 23,096 |
Total Assets | 539,307 | 1,031,571 | 112,966 |
Current Liabilities: | |||
Accounts payable and accrued liabilities | 311,620 | 275,925 | 8,853 |
Due to related party | 12,448 | ||
Accrued interest payable | 479 | ||
Customer deposit | 0 | 140,029 | 0 |
Loan from related party | 0 | 63,369 | 20,000 |
Loan from stockholder | 0 | 19,533 | 100,000 |
Income taxes payable | 800 | 800 | 0 |
Other current liabilities | 4,400 | 0 | |
Total current liabilities | 316,820 | 499,656 | 141,780 |
Noncurrent Liabilities: | |||
Deferred rent | 819 | 911 | 0 |
Total Liabilities | 317,639 | 500,567 | 141,780 |
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 September 30, 2016 and December 31, 2015 | 34,575 | 34,575 | 6,580 |
Additional paid-in capital | 713,239 | 713,239 | 71,801 |
Accumulated deficit | (526,146) | (216,810) | (107,195) |
Total stockholders' equity | 221,668 | 531,004 | (28,814) |
Total Liabilities and Stockholders' Equity | $ 539,307 | $ 1,031,571 | $ 112,966 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Statement of Financial Position [Abstract] | |||
Common stock, par value | $ 0.001 | $ .001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 | 75,000,000 |
Common stock, issued | 34,574,706 | 34,574,706 | 6,580,000 |
Common stock, outstanding | 34,574,706 | 34,574,706 | 6,580,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | |
Income Statement [Abstract] | |||||||
Revenue | $ 79,670 | $ 9,630 | $ 250,659 | $ 17,848 | $ 11,638 | $ 20,150 | $ 20,150 |
Cost of revenue | 13,232 | 2,025 | 31,326 | 6,075 | 5,750 | 9,000 | 10,700 |
Gross profit (loss) | 66,438 | 7,605 | 219,333 | 11,773 | 5,888 | 11,150 | 9,450 |
Operation Expenses: | |||||||
Compensation - officers | 30,000 | 0 | 90,000 | 0 | 0 | 9,000 | 9,000 |
General and administrative | 62,276 | 16,050 | 212,969 | 45,517 | 43,775 | 38,920 | 40,506 |
Professional fees | 25,996 | 28,370 | 95,468 | 71,153 | 69,203 | 12,000 | 44,285 |
Research and development | 53,255 | 0 | 136,237 | 0 | |||
Total Operating Expenses | 171,527 | 44,420 | 534,674 | 116,670 | 112,978 | 59,920 | 93,791 |
Loss from Operations | (105,089) | (36,815) | (315,341) | (104,897) | (107,090) | (48,770) | (84,341) |
Other Income (Expense): | |||||||
Interest expense, net | (3,918) | 0 | 0 | ||||
Interest income (expense), net | 65 | (1,878) | (253) | (3,351) | |||
Other income | 5,868 | 0 | 7,858 | 0 | 10,000 | 0 | 0 |
Other expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total other expense | 5,933 | (1,878) | 7,605 | (3,918) | 6,649 | 0 | 0 |
Loss before income taxes | (99,156) | (38,693) | (307,736) | (108,815) | (100,441) | (48,770) | (84,341) |
Income tax provision | 800 | 800 | 1,600 | 800 | 800 | 0 | 0 |
Net Loss | $ (99,956) | $ (39,493) | $ (309,336) | $ (109,615) | $ (101,241) | $ (48,770) | $ (84,341) |
Net Loss Per Common Share: | |||||||
Net loss per common share - Basic and Diluted | $ 0 | $ 0 | $ (.01) | $ (0.02) | $ (.01) | $ 0 | $ 0 |
Weighted Average Number of Common Shares Outstanding - Basic and Diluted | 34,574,706 | 6,580,000 | 34,574,706 | 6,681,799 | 6,580,000 | 6,494,545 | 6,473,973 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock | Common Stock Subscription | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning balance, shares at Mar. 31, 2014 | 4,000,000 | ||||
Beginning balance, value at Mar. 31, 2014 | $ 4,000 | $ 3,000 | $ 0 | $ (22,854) | $ (15,854) |
Common stock issued for cash, shares | 2,580,000 | ||||
Common stock issued for cash, value | $ 2,580 | 29,670 | 32,250 | ||
Common stock subscription | (3,000) | (3,000) | |||
Forgiveness of advances from former stockholders and accrued compensation officers | 42,131 | 42,131 | |||
Net loss | (84,341) | (84,341) | |||
Ending balance, shares at Mar. 31, 2015 | 6,580,000 | ||||
Ending balance, value at Mar. 31, 2015 | $ 6,580 | 0 | 71,801 | (107,195) | (28,814) |
Common stock issued in exchange for 587,713 shares of Perfecular Inc. common stock, shares issued | 27,994,706 | ||||
Common stock issued in exchange for 587,713 shares of Perfecular Inc. common stock, value | $ 27,995 | 641,438 | 669,433 | ||
Net loss | (65,670) | (109,615) | |||
Ending balance, shares at Dec. 31, 2015 | 34,574,706 | ||||
Ending balance, value at Dec. 31, 2015 | $ 34,575 | $ 0 | $ 713,239 | $ (216,810) | 531,004 |
Net loss | (309,336) | ||||
Ending balance, value at Sep. 30, 2016 | $ 221,668 |
Consolidated Statements of Cha6
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Parenthetical) | 9 Months Ended |
Dec. 31, 2015shares | |
Statement of Stockholders' Equity [Abstract] | |
Shares received from acquisition | 587,713 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Cash Flows From Operating Activities: | ||||
Net Loss | $ (309,336) | $ (109,615) | $ (101,241) | $ (48,770) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation expense | 672 | 232 | 150 | 0 |
Changes in Operating Assets and Liabilities: | ||||
Accounts receivable | 70,943 | (106,889) | 0 | 0 |
Inventories | 10,901 | (51,574) | 0 | 0 |
Prepaid expenses | 4,535 | (3,096) | (10,087) | (6,538) |
Other current liabilities | 4,400 | (1,630) | 0 | 0 |
Deposit | 0 | 267,072 | (24,726) | (16,945) |
Accounts payable and accrued liabilities | 35,695 | (12,927) | 14,829 | 9,000 |
Accrued interest payable - related party | 0 | 140,029 | 3,829 | 0 |
Customer deposit | (140,029) | 0 | ||
Income taxes payable | 0 | 800 | 800 | 0 |
Deferred rent | (92) | 911 | 570 | 0 |
Net Cash Used in Operating Activities | (322,311) | 123,313 | (115,876) | (63,253) |
Cash Flows used in Investing Activities: | ||||
Purchase of property and equipment | (3,296) | (1,640) | (1,640) | 0 |
Net Cash Used in Investing Activities | (3,296) | 1,640 | (1,640) | 0 |
Cash Flows from Financing Activities: | ||||
Proceeds from sale of common stock | 0 | 29,250 | ||
Proceeds from related party borrowing | (63,369) | 63,369 | 166,349 | 26,731 |
Repayment to related parties | (20,000) | 0 | ||
Proceeds from shareholders loan | (19,533) | 19,533 | 100,000 | 0 |
Repayment to shareholders | (100,000) | 0 | ||
Proceeds from issuing stock | 669,433 | 0 | ||
Net Cash (Used in) Provided by Financing Activities | (82,902) | 632,335 | 266,349 | 55,981 |
Net Change in Cash and Cash Equivalents | (408,509) | 754,008 | 148,833 | (7,272) |
Cash and cash equivalents - Beginning of Period | 832,013 | 78,005 | 136 | 7,408 |
Cash and cash equivalents - End of Period | 423,504 | 832,013 | 148,969 | 136 |
Supplemental Disclosures for Statement of Cash Flows: | ||||
Interest paid | 502 | 3,150 | 0 | 0 |
Income tax paid | $ 800 | $ 0 | $ 0 | $ 0 |
1. Organization and Operations
1. Organization and Operations | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Organization and Operations | Focus Universal Inc. (the “Company”) was incorporated under the laws of the State of Nevada on December 4, 2012 (“Inception”). Focus Universal Inc. offers 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. Change in Control On December 29, 2014, Xu Tang and Desheng Wang, two non-affiliate persons, acquired 5,970,000 shares of the Company’s Common Stock from the Company’s shareholders. This represents over 90% of the Company’s outstanding common stock and therefore represents a change in control of the Company’s ownership. Effective immediately on December 29, 2014, Ms. Popova resigned as Chief Executive Officer and President of the Company and Ms. Ignatenko resigned as Treasurer, Secretary, Chief Financial Officer, principal accounting officer, and principal financial officer of the Company. Upon such resignations, Desheng Wang was appointed as the Chief Executive Officer and Secretary of the Company, Xu Tang was appointed as the President of the Company, Yan Chen was appointed as the Senior Vice President, and Messrs. Wang, Tang, and Chen accepted such appointments. On October 21, 2015, Xu Tang entered into a stock purchase agreement whereby he collectively sold 3,260,000 shares of the Company’s Common Stock to eight persons using private funds to purchase the shares. This represents 49.5% of the Company’s outstanding common stock and represents a material change in control of the Company’s ownership. Buyers include Shuqin Xu (who now owns 19.7% of the Company), Tianzeng Xu and Youjuan Xiong (who now each own 7.5% of the Company) and five other unrelated persons. To the Company’s knowledge, there are no arrangements or understandings among members of both the former and new control groups and their associates with respect to election of directors or other matters. Effective October 21, 2015, Xu Tang and Yan Chen resigned from their positions as President and Senior Vice President, respectively, of the Company. There are no disagreements between the Company and Messrs. Tang and Chen. Dr. Edward Lee has been appointed to serve as President of the Company. Also effective 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, the entire Board of Directors consists of Dr. Desheng Wang, Dr. Jennifer Gu, and Dr. Edward Lee. On December 31, 2015, we filed Articles of Merger with the State of Nevada and filed a Certificate of Merger with the State of California which were the result of an agreement entered into on December 30, 2015, with a related party, Perfecular Inc., (“Perfecular”) a California corporation and FCUV Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of the Company, pursuant to which we agreed to acquire all of the issued and outstanding of 587,712 shares of Perfecular’s common stock in exchange for the issuance of 27,994,706 shares of the Company’s common stock to the shareholders of Perfecular Inc. in an exchange ratio of 47.6333 to one. This represents approximately 80% of the outstanding shares of the Company and represents a material change in control of the Company’s ownership. Perfecular Inc. was founded in September 2009 and is headquartered in City of Industry, 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. Change in fiscal year On December 11, 2015, the Board of Directors of the Company approved a change in the fiscal year end from a fiscal year end on March 31 to a calendar year end on December 31 effective immediately. The Company made the fiscal year change on a prospective basis and did not adjust operating results for prior periods. The change to the Company’s fiscal year did not impact the Company’s calendar year results for the year ended December 31, 2015. While the change has had some impact on the prior year comparability of each of the fiscal quarters and annual periods in fiscal years prior to calendar year 2016, the Company believes this impact is minimal. Change in fiscal year (continued) The Company made the fiscal year change on a prospective basis and did not adjust operating results for prior periods. The change to the Company’s fiscal year did not impact the Company’s calendar year results for the year ended December 31, 2015. While the change has had some impact on the prior year comparability of each of the fiscal quarters and annual periods in fiscal years prior to calendar year 2016, the Company believes this impact is minimal. The Company believes this change provides numerous benefits, including aligning its reporting periods to be more consistent with peer companies. | Focus Universal Inc. (the Company) was incorporated under the laws of the State of Nevada on December 4, 2012 (Inception). Focus Universal Inc. offers 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. Change in Control On December 29, 2014, Xu Tang and Desheng Wang, two non-affiliate persons, acquired 5,970,000 shares of the Companys Common Stock from the Companys shareholders. This represents over 90% of the Companys outstanding common stock and therefore represents a change in control of the Companys ownership. Effective immediately on December 29, 2014, Ms. Popova resigned as Chief Executive Officer and President of the Company and Ms. Ignatenko resigned as Treasurer, Secretary, Chief Financial Officer, principal accounting officer, and principal financial officer of the Company. Upon such resignations, Desheng Wang was appointed as the Chief Executive Officer and Secretary of the Company, Xu Tang was appointed as the President of the Company, Yan Chen was appointed as the Senior Vice President, and Messrs. Wang, Tang, and Chen accepted such appointments. On October 21, 2015, Xu Tang entered into a stock purchase agreement whereby he collectively sold his entire 3,260,000 shares of the Companys Common Stock to eight persons using private funds to purchase the shares. This represents 49.5% of the Companys outstanding common stock and represents a material change in control of the Companys ownership. Buyers include Shuqin Xu (who now owns 19.7% of the Company), Tianzeng Xu and Youjuan Xion (who now each own 7.5% of the Company) and five other unrelated persons. To the Companys knowledge, there are no arrangements or understandings among members of both the former and new control groups and their associates with respect to election of directors or other matters. Effective October 21, 2015, Xu Tang and Yan Chen resigned from their positions as President and Senior Vice President, respectively, of the Company. There are no disagreements between the Company and Messrs. Tang and Chen. Dr. Edward Lee has been appointed to serve as President of the Company. Also effective 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, the entire Board of Directors consists of Dr. Desheng Wang, Dr. Jennifer Gu, and Dr. Edward Lee. On December 31, 2015, we filed Articles of Merger with the State of Nevada and filed a Certificate of Merger with the State of California which were the result of an agreement entered into on December 30, 2015, with a related party, Perfecular Inc., (Perfecular) a California corporation and FCUV Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of the Company, pursuant to which we agreed to acquire all of the issued and outstanding 587,712 shares of Perfeculars common stock in exchange for the issuance of 27,994,706 shares of the Companys common stock to the shareholders of Perfecular Inc. in an exchange ratio of 47.6333 to one. This represents approximately 80% of the outstanding shares of the Company and represents a material change in control of the Companys ownership. Perfecular Inc. was founded in September 2009 and is headquartered in City of Industry, California, and is engaged in designing certain electronic products and sales of broad selection of garden equipment in North America and Europe. Change in fiscal year On December 11, 2015, the Board of Directors of the Company approved a change in the fiscal year end from a fiscal year end on March 31 to a calendar year end on December 31 effective immediately. The Company expects to make the fiscal year change on a prospective basis and will not adjust operating results for prior periods. The change to the Companys fiscal year will not impact the Companys calendar year results for the year ended December 31, 2015. While the change will have some impact on the prior year comparability of each of the fiscal quarters and annual periods in fiscal years prior to calendar year 2016 in future filings, the Company expects this impact will be minimal. The Company believes this change will provide numerous benefits, including aligning its reporting periods to be more consistent with peer companies. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | ||
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”)., Segment Reporting The Company currently has one operating segment. in accordance with ASC No. 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. Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals), which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2015 and notes thereto contained in the information as part of the Company’s Transition Report on the Form 10-KT, which was filed with the Securities and Exchange Commission on March 29, 2016 and amended on June 23, 2016. 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. 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 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (“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. Inventories Inventories consist primarily of electronic components, and are valued at the lower of cost or market. 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 paragraph 605-10-S99-1 of the FASB Accounting Standards Codification 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 reports net revenue for its sales to third parties in accordance to the Financial Accounting Standard Board Accounting Standards Codification 605-45, because its primary business functions are marketing and sales of Tianjin Guanglee’s, (a related party) products. Perfecular does not carry any inventory. While Tianjin Guanglee 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 and remits payments to Tianjin Guanglee for the intercompany invoices with amounts net of the sales commissions. Commission revenue is recognized when the sales booked by Perfecular is recognized. 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. There was no allowance for doubtful accounts at September 30, 2016 and December 31, 2015. Advertising costs Advertising costs are expensed as incurred. The Company recorded no advertising costs for the nine month periods ended September 30, 2016 and 2015. 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 subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 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 Section 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 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. No stock based compensation was issued or outstanding as of September 30, 2016 and December 31, 2015. 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 were no material deferred tax assets or liabilities as of September 30, 2016 and December 31, 2015. As of September 30, 2016 and December 31, 2015, 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 section 260-10-45 of the FASB Accounting Standards Codification. 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 nine month periods ended September 30, 2016 and 2015. Cash Flows Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification 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 paragraph 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 paragraph 830-230-45-1 of the FASB Accounting Standards Codification. Subsequent Events The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification 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 of the FASB Accounting Standards Codification, 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. New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB”) issued Accounting Standards Update ("ASU") ASU 2016-02 – Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the effect, if any, on its consolidated financial statements. There were other updates recently issued. The Company does not believe that other than disclosed above, the recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. Use of estimates In preparing the consolidated financial statements, management makes assumptions, estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Management’s estimates are based on historical experience and on our expectations that are believed to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material. | Basis of Presentation The companying consolidated financial statements include the accounts of Focus Universal Inc. and its wholly-owned subsidiary, Perfecular Inc. All intercompany balance sheet accounts, including receivable and payable have been eliminated upon consolidation. Due to the merger occurred on December 31, 2015, there was no business activity at Perfecular since the merger. Therefore, the consolidated statements of operations and changes in stockholder equity (deficit) only reflect activities at Focus for all periods presented. The Companys consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company filed Form 8-K dated December 11, 2015, the Company changed its fiscal year end from March 31 to December 31. As a result, the Company is reporting a nine-month transition period ended December 31, 2015 in order to change its fiscal year to match the calendar year. Unaudited results for the nine-month period ended December 31, 2014 has been included for comparative purposes. 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. 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 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (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 Companys 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. Inventories Inventories consist primarily of electronic components, and are valued at the lower of cost or market. 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 paragraph 605-10-S99-1 of the FASB Accounting Standards Codification 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 reports net revenue for its sales to third parties in accordance to the Financial Accounting Standard Board Accounting Standards Codification 605-45, because its primary business functions are marketing and sales of Tianjin Guanglees, (a related party) products. Perfecular does not carry any inventory of the products. While Tianjin Guanglee 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 and remits payments to Tianjin Guanglee for the intercompany invoices with amounts net of the sales commissions. Commission revenue is recognized when the sales booked by Perfecular is recognized. 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. There was no allowance for doubtful accounts at December 31, 2015 and March 31, 2015. Advertising costs Advertising costs are expensed as incurred. The Company recorded no advertising costs for the nine month periods ended December 31, 2015 and 2014. 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 subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 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 Section 8251015, 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 subtopic 450-20 of the FASB Accounting Standards Codification 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 Companys 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 Companys financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys 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. No stock based compensation was issued or outstanding as of December 31, 2015 and March 31, 2015. 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 were no material deferred tax assets or liabilities as of December 31, 2015 and March 31, 2015. As of December 31, 2015 and March 31, 2015, the Company did not identify any material uncertain tax positions. As of December 31, 2015, the Companys returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are filed. The Companys practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company has not filed its tax return for fiscal year ended March 31, 2015. Because the Company does not owe any income tax liability for the fiscal year ended March 31, 2015, the possible penalty for late filing is immaterial to the consolidated financial statements, and the Company did not accrual for interest or penalties on the Companys balance sheets at December 31, 2015 and March 31, 2015. Perfecular has not completed a formal Section 382 analysis regarding the limitation of net operating loss carryforwards. As such, Perfeculars net operating loss carryforwards may be limited if an ownership change occurred. Perfecular plans to perform a formal Section 382 analysis if there is sufficient taxable income in the future years to begin utilizing its net operating loss carryforwards. As of December 31, 2015, the cumulative federal and state net operating loss carryforwards of approximately $637,000 and $634,000, respectively. As of March 31, 2015, the cumulative federal and state net operating loss carryforwards of approximately $592,000 and $489,178, respectively. The cumulative operating loss carryforwards begin to expire in 2034. Net Income (Loss) Per Common Share Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. 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 nine month periods ended December 31, 2015 and 2014. Cash Flows Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification 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 paragraph 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 paragraph 830-230-45-1 of the FASB Accounting Standards Codification. Subsequent Events The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification 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 of the FASB Accounting Standards Codification, 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. New Accounting Pronouncements In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-17, Balance Sheet Classification of Deferred Taxes, There were other updates recently issued. The Company does not believe that other than disclosed above, the recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. Use of estimates In preparing the consolidated financial statements, management makes assumptions, estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Managements estimates are based on historical experience and on our expectations that are believed to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material. Reclassification Certain items in March 31, 2015 and December 31, 2014 financial statements have been reclassified to comply with the current period presentation. These reclassifications had no effect on previously reported net loss. |
3. Property and Equipment
3. Property and Equipment | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Property and Equipment | At September 30, 2016 and December 31, 2015, property and equipment consisted of the following: September 30, 2016 December 31, 2015 Furniture and fixture $ 3,908 $ 1,640 Computer equipment 1,029 – Total 4,936 1,640 Less accumulated depreciation (905 ) (232 ) Property and equipment, net $ 4,032 $ 1,408 Depreciation expense for the nine months period ended September 30, 2016 and 2015 amounted to $673 and $150, respectively . | At December 31, 2015 and March 31, 2015, property and equipment consisted of the following: December 31, 2015 March 31, 2015 Furniture and fixture $ 1,640 $ Less accumulated depreciation (232 ) Property and equipment, net $ 1,408 $ Depreciation expense for the nine months period ended December 31, 2015 and 2014 amounted to $232 and $0, respectively . |
4. Related Party Transactions
4. Related Party Transactions | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Consulting services from President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer Consulting services provided by the President and Chief Executive Officer for the nine months ended September 30, 2016 and 2015 amounted to $90,000 and $0, respectively. Loan from stockholders From time to time, Perfecular has borrowed short-term loans from shareholders. At December 31, 2015, Perfecular had short-term loans payable totaling approximately $19,533. These loans were due upon the demand of the lender and were unsecured with annual interest rate of 0.55%. In February 2016, the entire balance of the loan was paid off with accrued interest. Loan from related party 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 bore an annual interest rate of 5 percent. This loan was paid off in February 2016. Advances to related party Perfecular grants advances to Vitashower Corp., from time to time, and the advances are non-interest bearing. Total advances amounted to $3,155 and $0 as of September 30, 2016 and December 2015, respectively. | Consulting services from President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer Consulting services provided by the President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer for the nine months ended December 31, 2015 and 2014 were as follows: For the Nine Months Ended December 31, 2015 For the Nine Months Ended December 31, 2014 President, Chief Executive Officer $ $ 4,500 Chief Financial Officer, Secretary and Treasurer 4,500 $ $ 9,000 Effective as of December 29, 2014, Ms. Popova resigned as Chief Executive Officer and President of the Company and Ms. Ignatenko resigned as Treasurer, Secretary, Chief Financial Officer, principal accounting officer, and principal financial officer of the Company following change of control. 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. 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 was unsecured and was due on demand. The outstanding balance was $100,000 at March 31, 2015, with accrued interest payable of $479 as of March 31, 2015. This loan was repaid in full including accrued interest of approximately $3,150 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 lenders and were unsecured with annual interest rate of 0.55%. Subsequently to the new fiscal year end at December 31, 2015, the entire balance of these loans was paid off with accrued interest. Please refer to Note 8 for additional information. 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 at March 31, 2015. This loan was repaid in full subsequent to March 31, 2015. 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%. This loan was paid off subsequent to year end. |
5. Business Concentration and R
5. Business Concentration and Risks | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | ||
Business Concentration and Risks | Major customers One customer accounted for 100% of the total accounts receivable at September 30, 2016. Major vendors One vendor accounted for 91% of total accounts payable at September 30, 2016. | Major customers One customer accounted for 100% of the total accounts receivable at December 31, 2015. Major vendors One vendor accounted for 98% of total accounts payable at December 31, 2015. |
6. Commitments and Contingencie
6. Commitments and Contingencies | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | On March 31, 2015, Focus entered into a two-year industrial/commercial multi-tenant lease with P.G.A. Lawson Limited Partnership, whereby we leased a 9,745 square foot warehouse with a 2,415 square foot office space inside. The lease commenced on April 20, 2015 and ends on April 30, 2017. We paid $7,699 per month until May 1, 2016 when the rent increased by 3%. We currently pay $7,930 per month. The warehouse is located at 829 Lawson Street in the City of Industry, 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 $7,812. During Nine months ended September 30, 2016, the variance between the straight line rent expense and the rent paid/abated was recorded as deferred rent at September 30, 2016. Focus sub-leases a portion of the property to Pefecular. The lease is a non-cancelable operating lease with monthly rent of $5,000. The lease commenced on May 1, 2015 and expires on April 30, 2017. The sublease income for the nine months ended September 30, 2016 amounted to $45,000. Rental income and expense are eliminated on the accompanying consolidated financial statements. In July 2016, Focus sub-leased a portion of the property to a third party. The lease is non-cancelable operating lease with monthly rent of $4,400. The lease commenced on July 7, 2016 and expires on January 7, 2017. Total rent expense was $62,225 and $32,926 for the nine months ended September 30, 2016 and 2015, respectively. Future minimum lease commitments are as follows: September 30, Rent Expense Sublease Net Rent 2017 $ 79,300 $ (26,400 ) $ 52,900 Thereafter – – – On December 29, 2014 Focus entered into a consulting agreement with Morepro Marketing, Inc., which was submitted to the Commission on January 5, 2015. Under the terms of this agreement, we agree to pay Morepro Marketing, Inc. a minimum of $625 per month, plus reimbursement of any expenses incurred by Morepro Marketing, Inc. There is a ninety-day minimum timeframe for each new client to cancel, after which either party can terminate after thirty days’ notice. This service was canceled on April 30, 2016. | On March 31, 2015, Focus entered into a two-year industrial/commercial multi-tenant lease with P.G.A. Lawson Limited Partnership, whereby we leased a 9,745 square foot warehouse with a 2,415 square foot office space inside. The lease commenced on April 20, 2015 and ends on April 30, 2017, and is subject to renewal. We will pay $7,699 per month until May 1, 2016 when the rent increases by 3% to $7,930 per month. The warehouse is located at 829 Lawson Street in the City of Industry, 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 $7,812. During nine months ended December 31, 2015, the variance between the straight line rent expense and the rent paid/abated was recorded as deferred rent at December 31, 2015. Focus sub-leases a portion of the property to Pefecular. The lease is a non-cancelable operating lease with monthly rent of $5,000. The lease commenced on May 1, 2015 and expires on April 30, 2017. The sublease income for the nine months ended December 31, 2015 amounted to $40,000. Rental income and expense are eliminated on the accompanying consolidated financial statements. Total rent expense was $65,409 and $0 for the nine months ended December 31, 2015 and 2014, respectively. Future minimum lease commitments are as follows: December 31, Rent Expense 2016 $ 94,236 2017 $ 31,720 Thereafter On December 29, 2014 Focus entered into a consulting agreement with Morepro Marketing, Inc., which was submitted to the Commission on January 5, 2015. Under the terms of this agreement, we agree to pay Morepro Marketing, Inc. a minimum of $625 per month, plus reimbursement of any expenses incurred by Morepro Marketing, Inc. There is a ninety-day minimum timeframe for each new client to cancel, after which either party can terminate after thirty days notice. We currently pay $625 per month, and will need to give at least thirty days notice if we choose to cancel their services. |
7. Stockholders' Equity
7. Stockholders' Equity | 9 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Deficit | 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 On September 30, 2013, the Company sold 4,000,000 shares of its common stock at par to its directors for $4,000 in cash. As at March 31, 2014, the Company received $3,000 in common stock subscription funds. The Company completed the sale of 2,580,000 shares of common stock at $0.0125 per share for total proceeds of $32,250 during the year ended March 31, 2015. On December 30, 2015, the Company issued 27,994,706 shares of common stock to shareholders of Perfecular Inc. to acquire all of the issued and outstanding shares of Perfeculars common stock in 47.6333 to one exchange ratio. Three individuals had entered separate convertible note agreements with Perfecular in June 2015, and three notes amounted to $130,000. Prior to the merger, all three individuals elected to exercise their rights to convert a total of $57,313 of the combined notes into 16,054 shares of common stock of Perfecular and forgive outstanding $72,687 remaining balance under the terms of the original notes. As of December 31, 2015 and March 31, 2015, the Company had 34,574,706 and 6,580,000 shares of common stock issued and outstanding, respectively. Additional Paid in Capital On December 29, 2014, pursuant to the terms of the Stock Purchase Agreements, the former officers and stockholders forgave advances of $26,731 and accrued compensation of $15,400, respectively or approximately $42,131 in aggregate. The gains arising on forgiveness of these liabilities were recorded as contributions to capital and accordingly recognized in additional paid in capital. |
7. Subsequent Events
7. Subsequent Events | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Subsequent Events [Abstract] | ||
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. The Management of the Company determined that other than as disclosed above, there were no reportable subsequent events to be disclosed. | On February 29, 2016, the Company repaid $63,369 of loan with any accrued interest back to Vitashower. On February 29, 2016, the Company also repaid $19,533 of loans with any accrued interest back to shareholders. 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. The Management of the Company determined that other than as disclosed above, there were no reportable subsequent events to be disclosed. |
8. Condensed Financial Informat
8. Condensed Financial Information of Focus | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Condensed Financial Information of Focus | The following table sets forth financial information of Focus Universal only as of September 30, 2016 and December 31, 2015, and for three and nine months ended September 30, 2016 and 2015. FOCUS UNIVERSAL INC. BALANCE SHEET September 30, 2016 December 31, 2015 (Unaudited) (Audited) ASSETS Current Assets : Cash and cash equivalents $ 17,942 $ 5,681 Prepaid expenses 9,896 14,961 Total Current Assets 27,838 20,642 Property and equipment, net 1,162 1,408 Other Assets: Investment in Perfecular Inc. 469,485 669,433 Deposits 24,726 24,726 Total Assets $ 523,211 716,209 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 21,861 5,745 Due to Perfecular Inc. 273,663 177,749 Income taxes payable 800 800 Other current liabilities 4,400 – Total Current Liabilities 300,724 184,294 Noncurrent Liabilities: Deferred rent 819 911 Total Liabilities 301,543 185,205 Commitments and Contingencies Stockholders' Equity: Common stock, par value $0.001 per share 75,000,000 shares authorized; 34,574,706 and shares issued and outstanding as of September 30, 2016 and December 31, 2015 34,575 34,575 Additional paid-in capital 713,239 713,239 Accumulated deficit (526,146 ) (216,810 ) Total stockholders' equity 221,668 531,004 Total Liabilities and Stockholders' Equity $ 523,211 $ 716,209 FOCUS UNIVERSAL INC. STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 Revenue $ – $ 9,630 $ 1,780 $ 11,638 Cost of Revenue – 2,025 2,700 5,750 Gross Loss – 7,605 (920 ) 5,888 Operation Expenses: General and administrative 6,461 16,050 39,455 43,775 Professional fees 18,896 28,370 72,726 69,203 Total Operating Expenses 25,357 44,420 112,181 112,978 Loss from Operations (25,357 ) (36,815 ) (113,101 ) (107,090 ) Other Income (Expense): Loss from investment in Perfecular Inc. (78,562 ) – (199,948 ) – Other income 4,763 – 4,763 10,000 Other expense – (1,878 ) (250 ) (3,351 ) Total Other Income (Expense) (73,799 ) 1,878 (195,435 ) 6,649 Loss before income taxes (99,156 ) (38,693 ) (308,536 ) (100,441 ) Income tax provision 800 800 800 800 Net Loss $ (99,956 ) $ (39,493 ) $ (309,336 ) $ (101,241 ) |
9. Pro Forma Consolidated State
9. Pro Forma Consolidated Statements of Operations | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Pro Forma Consolidated Statements of Operations | The Basis of the following unaudited pro forma consolidated statements of operations of the Company is as if the acquisition of Perfecular by Focus had occurred on January 1, 2015. The pro forma consolidated statements of operations were derived from Focus and Perfecular’s the statements of operations for the three and nine months ended September 30, 2016. The pro forma consolidated statements of operations do not necessarily reflect what the consolidated company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the consolidated company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. FOCUS UNIVERSAL INC. UNAUDITED PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 30, 2015 FOCUS UNIVERSAL INC. PERFECULAR INC. PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS TOTALS Revenue $ 9,630 $ 138,973 $ – $ 148,603 Cost of Revenue 2,025 64,027 – 66,052 Gross Profit (Loss) 7,605 74,946 – 82,551 Operation Expenses: Compensation - officers – – 30,000 30,000 General and administrative 16,050 46,736 – 62,786 Professional fees 28,370 1,530 – 29,900 Research and development – 74,023 (30,000 ) 44,023 Total Operating Expenses 44,420 122,289 – 166,709 Loss from Operations (36,815 ) (47,343 ) – (84,158 ) Other Income (Expense): Interest income, net (1,878 ) (622 ) – (2,500 ) Total Other (Expense) Income (1,878 ) (622 ) – (2,500 ) Loss before income taxes (38,693 ) (47,965 ) – (86,658 ) Income tax provision 800 – – 800 Net Loss $ (39,493 ) $ (47,965 ) $ – $ (87,458 ) FOCUS UNIVERSAL INC. UNAUDITED PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 2015 FOCUS UNIVERSAL INC. PERFECULAR INC. PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS TOTALS Revenue $ 11,638 296,964 – 308,602 Cost of Revenue 5,750 93,781 – 99,531 Gross Profit (Loss) 5,888 203,183 – 209,071 Operation Expenses: Compensation - officers – – 75,250 75,250 General and administrative 43,775 128,877 (10,000 ) 162,652 Professional fees 69,203 14,085 – 83,288 Research and development – 307,872 (75,250 ) 232,622 Total Operating Expenses 112,978 450,834 (10,000 ) 553,812 Loss from Operations (107,090 ) (247,651 ) 10,000 (344,741 ) Other Income (Expense): Interest expense, net (3,351 ) (9,202 ) – (12,553 ) Other income 10,000 – (10,000 ) – Other expense – – – – Total Other (Expense) Income 6,649 (9,202 ) (10,000 ) (12,553 ) Loss before income taxes (100,441 ) (256,853 ) – (357,294 ) Income tax provision 800 – – 800 Net Loss $ (101,241 ) (256,853 ) – (358,094 ) |
2. Summary of Significant Acc18
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | ||
Basis of Presentation | 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”). | Basis of Presentation The companying consolidated financial statements include the accounts of Focus Universal Inc. and its wholly-owned subsidiary, Perfecular Inc. All intercompany balance sheet accounts, including receivable and payable have been eliminated upon consolidation. Due to the merger occurred on December 31, 2015, there was no business activity at Perfecular since the merger. Therefore, the consolidated statements of operations and changes in stockholder equity (deficit) only reflect activities at Focus for all periods presented. The Companys consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The Company filed Form 8-K dated December 11, 2015, the Company changed its fiscal year end from March 31 to December 31. As a result, the Company is reporting a nine-month transition period ended December 31, 2015 in order to change its fiscal year to match the calendar year. Unaudited results for the nine-month period ended December 31, 2014 has been included for comparative purposes. |
Segment Reporting | Segment Reporting The Company currently has one operating segment. in accordance with ASC No. 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. | |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals), which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2015 and notes thereto contained in the information as part of the Company’s Transition Report on the Form 10-KT, which was filed with the Securities and Exchange Commission on March 29, 2016 and amended on June 23, 2016. | |
Cash and Cash Equivalents | 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. | 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. |
Concentrations of Credit Risk | 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. | 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 | Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (“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. | Fair Value of Financial Instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820- 10-35-37 of the FASB Accounting Standards Codification (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 Companys 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. |
Inventories | Inventories Inventories consist primarily of electronic components, and are valued at the lower of cost or market. | Inventories Inventories consist primarily of electronic components, and are valued at the lower of cost or market. |
Property and Equipment | 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. | 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 | Revenue Recognition The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification 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 reports net revenue for its sales to third parties in accordance to the Financial Accounting Standard Board Accounting Standards Codification 605-45, because its primary business functions are marketing and sales of Tianjin Guanglee’s, (a related party) products. Perfecular does not carry any inventory. While Tianjin Guanglee 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 and remits payments to Tianjin Guanglee for the intercompany invoices with amounts net of the sales commissions. Commission revenue is recognized when the sales booked by Perfecular is recognized. | Revenue Recognition The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification 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 reports net revenue for its sales to third parties in accordance to the Financial Accounting Standard Board Accounting Standards Codification 605-45, because its primary business functions are marketing and sales of Tianjin Guanglees, (a related party) products. Perfecular does not carry any inventory of the products. While Tianjin Guanglee 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 and remits payments to Tianjin Guanglee for the intercompany invoices with amounts net of the sales commissions. Commission revenue is recognized when the sales booked by Perfecular is recognized. |
Allowance for doubtful accounts | 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. There was no allowance for doubtful accounts at September 30, 2016 and December 31, 2015. | 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. There was no allowance for doubtful accounts at December 31, 2015 and March 31, 2015. |
Advertising costs | Advertising costs Advertising costs are expensed as incurred. The Company recorded no advertising costs for the nine month periods ended September 30, 2016 and 2015. | Advertising costs Advertising costs are expensed as incurred. The Company recorded no advertising costs for the nine month periods ended December 31, 2015 and 2014. |
Research and development | 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. | 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 | Related Parties The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 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 Section 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. | Related Parties The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 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 Section 8251015, 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 | Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification 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. | Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards Codification 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 Companys 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 Companys financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys business, financial position, and results of operations or cash flows. |
Stock Based Compensation | 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. No stock based compensation was issued or outstanding as of September 30, 2016 and December 31, 2015. | 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. No stock based compensation was issued or outstanding as of December 31, 2015 and March 31, 2015. |
Income Tax Provision | 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 were no material deferred tax assets or liabilities as of September 30, 2016 and December 31, 2015. As of September 30, 2016 and December 31, 2015, the Company did not identify any material uncertain tax positions. | 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 were no material deferred tax assets or liabilities as of December 31, 2015 and March 31, 2015. As of December 31, 2015 and March 31, 2015, the Company did not identify any material uncertain tax positions. As of December 31, 2015, the Companys returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are filed. The Companys practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company has not filed its tax return for fiscal year ended March 31, 2015. Because the Company does not owe any income tax liability for the fiscal year ended March 31, 2015, the possible penalty for late filing is immaterial to the consolidated financial statements, and the Company did not accrual for interest or penalties on the Companys balance sheets at December 31, 2015 and March 31, 2015. Perfecular has not completed a formal Section 382 analysis regarding the limitation of net operating loss carryforwards. As such, Perfeculars net operating loss carryforwards may be limited if an ownership change occurred. Perfecular plans to perform a formal Section 382 analysis if there is sufficient taxable income in the future years to begin utilizing its net operating loss carryforwards. As of December 31, 2015, the cumulative federal and state net operating loss carryforwards of approximately $637,000 and $634,000, respectively. As of March 31, 2015, the cumulative federal and state net operating loss carryforwards of approximately $592,000 and $489,178, respectively. The cumulative operating loss carryforwards begin to expire in 2034. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. 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 nine month periods ended September 30, 2016 and 2015. | Net Income (Loss) Per Common Share Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. 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 nine month periods ended December 31, 2015 and 2014. |
Cash Flows Reporting | Cash Flows Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification 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 paragraph 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 paragraph 830-230-45-1 of the FASB Accounting Standards Codification. | Cash Flows Reporting The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification 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 paragraph 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 paragraph 830-230-45-1 of the FASB Accounting Standards Codification. |
Subsequent Events | Subsequent Events The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification 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 of the FASB Accounting Standards Codification, 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. | Subsequent Events The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification 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 of the FASB Accounting Standards Codification, 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. |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB”) issued Accounting Standards Update ("ASU") ASU 2016-02 – Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the effect, if any, on its consolidated financial statements. There were other updates recently issued. The Company does not believe that other than disclosed above, the recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. | New Accounting Pronouncements In November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-17, Balance Sheet Classification of Deferred Taxes, There were other updates recently issued. The Company does not believe that other than disclosed above, the recently issued, but not yet adopted, accounting pronouncements will have a material impact on its financial position, results of operations or cash flows. |
Use of estimates | Use of estimates In preparing the consolidated financial statements, management makes assumptions, estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Management’s estimates are based on historical experience and on our expectations that are believed to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material. | Use of estimates In preparing the consolidated financial statements, management makes assumptions, estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of net sales and expenses during the reported periods. Managements estimates are based on historical experience and on our expectations that are believed to be reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our current estimates and those differences may be material. |
Reclassification | Reclassification Certain items in March 31, 2015 and December 31, 2014 financial statements have been reclassified to comply with the current period presentation. These reclassifications had no effect on previously reported net loss. |
3. Property and Equipment (Tabl
3. Property and Equipment (Tables) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of property and equipment | At September 30, 2016 and December 31, 2015, property and equipment consisted of the following: September 30, 2016 December 31, 2015 Furniture and fixture $ 3,908 $ 1,640 Computer equipment 1,029 – Total 4,936 1,640 Less accumulated depreciation (905 ) (232 ) Property and equipment, net $ 4,032 $ 1,408 | December 31, 2015 March 31, 2015 Furniture and fixture $ 1,640 $ Less accumulated depreciation (232 ) Property and equipment, net $ 1,408 $ |
5. Related Party Transactions (
5. Related Party Transactions (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related party transaction table | For the Nine Months Ended December 31, 2015 For the Nine Months Ended December 31, 2014 President, Chief Executive Officer $ $ 4,500 Chief Financial Officer, Secretary and Treasurer 4,500 $ $ 9,000 |
6. Commitments and Contingenc21
6. Commitments and Contingencies (Tables) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Future minimum lease commitments | September 30, Rent Expense Sublease Net Rent 2017 $ 79,300 $ (26,400 ) $ 52,900 Thereafter – – – | December 31, Rent Expense 2016 $ 94,236 2017 $ 31,720 Thereafter |
8. Condensed Financial Inform22
8. Condensed Financial Information of Focus (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Focus Universal, Inc. Condensed Balance Sheet | FOCUS UNIVERSAL INC. BALANCE SHEET September 30, 2016 December 31, 2015 (Unaudited) (Audited) ASSETS Current Assets : Cash and cash equivalents $ 17,942 $ 5,681 Prepaid expenses 9,896 14,961 Total Current Assets 27,838 20,642 Property and equipment, net 1,162 1,408 Other Assets: Investment in Perfecular Inc. 469,485 669,433 Deposits 24,726 24,726 Total Assets $ 523,211 716,209 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 21,861 5,745 Due to Perfecular Inc. 273,663 177,749 Income taxes payable 800 800 Other current liabilities 4,400 – Total Current Liabilities 300,724 184,294 Noncurrent Liabilities: Deferred rent 819 911 Total Liabilities 301,543 185,205 Commitments and Contingencies Stockholders' Equity: Common stock, par value $0.001 per share 75,000,000 shares authorized; 34,574,706 and shares issued and outstanding as of September 30, 2016 and December 31, 2015 34,575 34,575 Additional paid-in capital 713,239 713,239 Accumulated deficit (526,146 ) (216,810 ) Total stockholders' equity 221,668 531,004 Total Liabilities and Stockholders' Equity $ 523,211 $ 716,209 |
Focus Universal, Inc. Condensed Statement of Operations | FOCUS UNIVERSAL INC. STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 Revenue $ – $ 9,630 $ 1,780 $ 11,638 Cost of Revenue – 2,025 2,700 5,750 Gross Loss – 7,605 (920 ) 5,888 Operation Expenses: General and administrative 6,461 16,050 39,455 43,775 Professional fees 18,896 28,370 72,726 69,203 Total Operating Expenses 25,357 44,420 112,181 112,978 Loss from Operations (25,357 ) (36,815 ) (113,101 ) (107,090 ) Other Income (Expense): Loss from investment in Perfecular Inc. (78,562 ) – (199,948 ) – Other income 4,763 – 4,763 10,000 Other expense – (1,878 ) (250 ) (3,351 ) Total Other Income (Expense) (73,799 ) 1,878 (195,435 ) 6,649 Loss before income taxes (99,156 ) (38,693 ) (308,536 ) (100,441 ) Income tax provision 800 800 800 800 Net Loss $ (99,956 ) $ (39,493 ) $ (309,336 ) $ (101,241 ) |
9. Pro Forma Consolidated Sta23
9. Pro Forma Consolidated Statements of Operations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Pro Forma Consolidated Statements of Operations | FOCUS UNIVERSAL INC. UNAUDITED PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 30, 2015 FOCUS UNIVERSAL INC. PERFECULAR INC. PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS TOTALS Revenue $ 9,630 $ 138,973 $ – $ 148,603 Cost of Revenue 2,025 64,027 – 66,052 Gross Profit (Loss) 7,605 74,946 – 82,551 Operation Expenses: Compensation - officers – – 30,000 30,000 General and administrative 16,050 46,736 – 62,786 Professional fees 28,370 1,530 – 29,900 Research and development – 74,023 (30,000 ) 44,023 Total Operating Expenses 44,420 122,289 – 166,709 Loss from Operations (36,815 ) (47,343 ) – (84,158 ) Other Income (Expense): Interest income, net (1,878 ) (622 ) – (2,500 ) Total Other (Expense) Income (1,878 ) (622 ) – (2,500 ) Loss before income taxes (38,693 ) (47,965 ) – (86,658 ) Income tax provision 800 – – 800 Net Loss $ (39,493 ) $ (47,965 ) $ – $ (87,458 ) FOCUS UNIVERSAL INC. UNAUDITED PRO FORMA CONSOLIDATING STATEMENTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 2015 FOCUS UNIVERSAL INC. PERFECULAR INC. PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS TOTALS Revenue $ 11,638 296,964 – 308,602 Cost of Revenue 5,750 93,781 – 99,531 Gross Profit (Loss) 5,888 203,183 – 209,071 Operation Expenses: Compensation - officers – – 75,250 75,250 General and administrative 43,775 128,877 (10,000 ) 162,652 Professional fees 69,203 14,085 – 83,288 Research and development – 307,872 (75,250 ) 232,622 Total Operating Expenses 112,978 450,834 (10,000 ) 553,812 Loss from Operations (107,090 ) (247,651 ) 10,000 (344,741 ) Other Income (Expense): Interest expense, net (3,351 ) (9,202 ) – (12,553 ) Other income 10,000 – (10,000 ) – Other expense – – – – Total Other (Expense) Income 6,649 (9,202 ) (10,000 ) (12,553 ) Loss before income taxes (100,441 ) (256,853 ) – (357,294 ) Income tax provision 800 – – 800 Net Loss $ (101,241 ) (256,853 ) – (358,094 ) |
2. Summary of Significant Acc24
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Accounting Policies [Abstract] | |||
Allowance for doutful accounts | $ 0 | $ 0 | |
Advertising costs | 0 | $ 0 | |
Stock based compensation | 0 | 0 | |
Deferred tax assets or liabilities | 0 | 0 | |
Uncertain tax positions | $ 0 | $ 0 | |
Potentially dilutive securities | 0 | 0 |
3. Property and Equipment (Deta
3. Property and Equipment (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Property, Plant and Equipment [Abstract] | |||
Furniture and fixtures | $ 3,908 | $ 1,640 | |
Computer equipment | 1,029 | 0 | |
Property and equipment, gross | 4,936 | 1,640 | |
Less accumulated depreciation | (905) | (232) | |
Property and equipment, net | $ 4,032 | $ 1,408 | $ 0 |
3. Property and Equipment (De26
3. Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 150 | $ 673 |
4. Related Party Transactions (
4. Related Party Transactions (Details Narrative) - USD ($) | 9 Months Ended | ||||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | |
Consulting services | $ 90,000 | $ 0 | |||
Loan from stockholders | 0 | $ 19,533 | $ 100,000 | ||
Loans from related parties | 0 | 63,369 | $ 20,000 | ||
Repay related party debt | 20,000 | $ 0 | |||
Vitashower [Member] | |||||
Loans from related parties | 63,369 | ||||
Advances to related parties | 3,155 | 3,155 | |||
Repay related party debt | 63,369 | ||||
Perfecular [Member] | Stockholder [Member] | |||||
Loan from stockholders | $ 19,533 | ||||
Repay related party debt | $ 19,533 |
5. Business Concentrations and
5. Business Concentrations and Risk (Details Narrative) | 9 Months Ended |
Sep. 30, 2016 | |
Accounts Receivable [Member] | |
Concentration risk percentage | 100.00% |
Accounts Payable [Member] | |
Concentration risk percentage | 91.00% |
6. Commitments and Contingenc29
6. Commitments and Contingencies (Details) | Sep. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Lease commitment 2017 | $ 79,300 |
Lease commitment thereafter | 0 |
Sublease income | (26,400) |
Net rent expense | $ 52,900 |
6. Commitments and Contingenc30
6. Commitments and Contingencies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 62,225 | $ 32,926 |
Sublease income | $ 45,000 |
8. Condensed Financial Inform31
8. Condensed Financial Information of Focus (Details - Balance Sheet) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
Current Assets: | ||||||
Cash and cash equivalents | $ 423,504 | $ 832,013 | $ 148,969 | $ 78,005 | $ 136 | $ 7,408 |
Prepaid expenses | 10,426 | 14,961 | 11,865 | |||
Total current assets | 510,549 | 1,005,437 | 89,870 | |||
Property and equipment, net | 4,032 | 1,408 | 0 | |||
Other assets | ||||||
Investment in Perfecular Inc. | 0 | 0 | ||||
Deposits | 24,726 | 24,726 | 23,096 | |||
Total Assets | 539,307 | 1,031,571 | 112,966 | |||
Current Liabilities: | ||||||
Accounts payable and accrued liabilities | 311,620 | 275,925 | 8,853 | |||
Due to Perfecular Inc. | 0 | 63,369 | 20,000 | |||
Income taxes payable | 800 | 800 | 0 | |||
Other current liabilities | 4,400 | 0 | ||||
Total current liabilities | 316,820 | 499,656 | 141,780 | |||
Noncurrent Liabilities: | ||||||
Deferred rent | 819 | 911 | 0 | |||
Total Liabilities | 317,639 | 500,567 | 141,780 | |||
Stockholders' Equity: | ||||||
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of September 30, 2016 and December 31, 2015 | 34,575 | 34,575 | 6,580 | |||
Additional paid-in capital | 713,239 | 713,239 | 71,801 | |||
Accumulated deficit | (526,146) | (216,810) | (107,195) | |||
Total stockholders' equity | 221,668 | 531,004 | (28,814) | $ (15,854) | ||
Total Liabilities and Stockholder's Equity: | 539,307 | 1,031,571 | $ 112,966 | |||
Focus Universal, Inc. [Member] | ||||||
Current Assets: | ||||||
Cash and cash equivalents | 17,942 | 5,681 | ||||
Prepaid expenses | 9,896 | 14,961 | ||||
Total current assets | 27,838 | 20,642 | ||||
Property and equipment, net | 1,162 | 1,408 | ||||
Other assets | ||||||
Investment in Perfecular Inc. | 469,485 | 669,433 | ||||
Deposits | 24,726 | 24,726 | ||||
Total Assets | 523,211 | 716,209 | ||||
Current Liabilities: | ||||||
Accounts payable and accrued liabilities | 21,861 | 5,745 | ||||
Due to Perfecular Inc. | 273,663 | 177,749 | ||||
Income taxes payable | 800 | 800 | ||||
Other current liabilities | 4,400 | 0 | ||||
Total current liabilities | 300,724 | 184,294 | ||||
Noncurrent Liabilities: | ||||||
Deferred rent | 819 | 911 | ||||
Total Liabilities | 301,543 | 185,205 | ||||
Stockholders' Equity: | ||||||
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of September 30, 2016 and December 31, 2015 | 34,575 | 34,575 | ||||
Additional paid-in capital | 713,239 | 713,239 | ||||
Accumulated deficit | (526,146) | (216,810) | ||||
Total stockholders' equity | 221,668 | 531,004 | ||||
Total Liabilities and Stockholder's Equity: | $ 523,211 | $ 716,209 |
8. Condensed Financial Inform32
8. Condensed Financial Information of Focus (Details - Income Statement) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | |
Revenue | $ 79,670 | $ 9,630 | $ 250,659 | $ 17,848 | $ 11,638 | $ 20,150 | $ 20,150 |
Cost of revenue | 13,232 | 2,025 | 31,326 | 6,075 | 5,750 | 9,000 | 10,700 |
Gross loss | 66,438 | 7,605 | 219,333 | 11,773 | 5,888 | 11,150 | 9,450 |
Operation Expenses: | |||||||
General and administrative | 62,276 | 16,050 | 212,969 | 45,517 | 43,775 | 38,920 | 40,506 |
Professional fees | 25,996 | 28,370 | 95,468 | 71,153 | 69,203 | 12,000 | 44,285 |
Total operating expenses | 171,527 | 44,420 | 534,674 | 116,670 | 112,978 | 59,920 | 93,791 |
Loss from Operations | (105,089) | (36,815) | (315,341) | (104,897) | (107,090) | (48,770) | (84,341) |
Other Income (Expense): | |||||||
Loss from investment in Perfecular Inc. | 0 | 0 | 0 | 0 | |||
Other income | 5,868 | 0 | 7,858 | 1,000 | |||
Other expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total other income (expense) | 5,933 | (1,878) | 7,605 | (3,918) | 6,649 | 0 | 0 |
Loss before income taxes | (99,156) | (38,693) | (307,736) | (108,815) | (100,441) | (48,770) | (84,341) |
Income tax provision | 800 | 800 | 1,600 | 800 | 800 | 0 | 0 |
Net Loss | (99,956) | (39,493) | (309,336) | $ (109,615) | (101,241) | $ (48,770) | $ (84,341) |
Focus Universal, Inc. [Member] | |||||||
Revenue | 0 | 9,630 | 1,780 | 11,638 | |||
Cost of revenue | 0 | 2,025 | 2,700 | 5,750 | |||
Gross loss | 0 | 7,605 | (920) | 5,888 | |||
Operation Expenses: | |||||||
General and administrative | 6,461 | 16,050 | 39,455 | 43,775 | |||
Professional fees | 18,896 | 28,370 | 72,726 | 69,203 | |||
Total operating expenses | 25,357 | 44,420 | 112,181 | 112,978 | |||
Loss from Operations | (25,357) | (36,815) | (113,101) | (107,090) | |||
Other Income (Expense): | |||||||
Loss from investment in Perfecular Inc. | (78,562) | 0 | (199,948) | 0 | |||
Other income | 4,763 | 0 | 4,763 | 10,000 | |||
Other expense | 0 | (1,878) | (250) | (3,351) | |||
Total other income (expense) | (58,221) | 8,527 | (123,636) | 8,527 | |||
Loss before income taxes | (99,156) | (38,693) | (308,536) | (100,441) | |||
Income tax provision | 800 | 800 | 800 | 800 | |||
Net Loss | $ (99,956) | $ (39,493) | $ (309,336) | $ (101,241) |
9. Pro Forma Consolidated Sta33
9. Pro Forma Consolidated Statements of Operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | |
Revenue | $ 79,670 | $ 9,630 | $ 250,659 | $ 17,848 | $ 11,638 | $ 20,150 | $ 20,150 |
Cost of revenue | 13,232 | 2,025 | 31,326 | 6,075 | 5,750 | 9,000 | 10,700 |
Gross profit (loss) | 66,438 | 7,605 | 219,333 | 11,773 | 5,888 | 11,150 | 9,450 |
Operation Expenses: | |||||||
Compensation - officers | 30,000 | 0 | 90,000 | 0 | 0 | 9,000 | 9,000 |
General and administrative | 62,276 | 16,050 | 212,969 | 45,517 | 43,775 | 38,920 | 40,506 |
Professional fees | 25,996 | 28,370 | 95,468 | 71,153 | 69,203 | 12,000 | 44,285 |
Research & development | 53,255 | 0 | 136,237 | 0 | |||
Total operating expenses | 171,527 | 44,420 | 534,674 | 116,670 | 112,978 | 59,920 | 93,791 |
Loss from Operations | (105,089) | (36,815) | (315,341) | (104,897) | (107,090) | (48,770) | (84,341) |
Other Income (Expense): | |||||||
Interest expense, net | (3,918) | 0 | 0 | ||||
Total other (expense) income | 5,933 | (1,878) | 7,605 | (3,918) | 6,649 | 0 | 0 |
Loss before income taxes | (99,156) | (38,693) | (307,736) | (108,815) | (100,441) | (48,770) | (84,341) |
Income tax provision | 800 | 800 | 1,600 | 800 | 800 | 0 | 0 |
Net Loss | $ (99,956) | (39,493) | $ (309,336) | $ (109,615) | (101,241) | $ (48,770) | $ (84,341) |
Focus Universal, Inc. Historical [Member] | |||||||
Revenue | 9,630 | 11,638 | |||||
Cost of revenue | 2,025 | 5,750 | |||||
Gross profit (loss) | 7,605 | 5,888 | |||||
Operation Expenses: | |||||||
Compensation - officers | 0 | 0 | |||||
General and administrative | 16,050 | 43,775 | |||||
Professional fees | 28,370 | 69,203 | |||||
Research & development | 0 | 0 | |||||
Total operating expenses | 44,420 | 112,978 | |||||
Loss from Operations | (36,815) | (107,090) | |||||
Other Income (Expense): | |||||||
Interest expense, net | 0 | (3,351) | |||||
Total other (expense) income | (1,878) | 6,649 | |||||
Loss before income taxes | (38,693) | (100,441) | |||||
Income tax provision | 800 | 800 | |||||
Net Loss | (39,493) | (101,241) | |||||
Perfecular, Inc. Historical [Member] | |||||||
Revenue | 138,973 | 296,964 | |||||
Cost of revenue | 64,027 | 93,781 | |||||
Gross profit (loss) | 74,946 | 203,183 | |||||
Operation Expenses: | |||||||
Compensation - officers | 0 | 0 | |||||
General and administrative | 46,736 | 128,877 | |||||
Professional fees | 1,530 | 14,085 | |||||
Research & development | 74,023 | 307,872 | |||||
Total operating expenses | 122,289 | 450,834 | |||||
Loss from Operations | (47,343) | (247,651) | |||||
Other Income (Expense): | |||||||
Interest expense, net | 0 | (9,202) | |||||
Total other (expense) income | (622) | (9,202) | |||||
Loss before income taxes | (47,965) | (256,853) | |||||
Income tax provision | 0 | 0 | |||||
Net Loss | (47,965) | (256,853) | |||||
Pro Forma Adjustment [Member] | |||||||
Revenue | 0 | 0 | |||||
Cost of revenue | 0 | 0 | |||||
Gross profit (loss) | 0 | 0 | |||||
Operation Expenses: | |||||||
Compensation - officers | 30,000 | 75,250 | |||||
General and administrative | 0 | (10,000) | |||||
Professional fees | 0 | 0 | |||||
Research & development | (30,000) | (75,250) | |||||
Total operating expenses | 0 | (10,000) | |||||
Loss from Operations | 0 | 10,000 | |||||
Other Income (Expense): | |||||||
Interest expense, net | 0 | 0 | |||||
Total other (expense) income | 0 | (10,000) | |||||
Loss before income taxes | 0 | 0 | |||||
Income tax provision | 0 | 0 | |||||
Net Loss | 0 | 0 | |||||
Pro Forma Consolidated [Member] | |||||||
Revenue | 148,603 | 308,602 | |||||
Cost of revenue | 66,052 | 99,531 | |||||
Gross profit (loss) | 82,551 | 209,071 | |||||
Operation Expenses: | |||||||
Compensation - officers | 30,000 | 75,250 | |||||
General and administrative | 62,786 | 162,652 | |||||
Professional fees | 29,900 | 83,288 | |||||
Research & development | 44,023 | 232,622 | |||||
Total operating expenses | 166,709 | 553,812 | |||||
Loss from Operations | (84,158) | (344,741) | |||||
Other Income (Expense): | |||||||
Interest expense, net | 0 | (12,553) | |||||
Total other (expense) income | (2,500) | (12,553) | |||||
Loss before income taxes | (86,658) | (357,294) | |||||
Income tax provision | 800 | 800 | |||||
Net Loss | $ (87,458) | $ (358,094) |