| Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation The unaudited condensed financial statements of
the Company for the nine months ended September 30, 2024 and 2023 have been prepared in accordance with accounting principles generally
accepted in the U.S. (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q
and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes
required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and
results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal
year. The balance sheet information as of December 31, 2023 was derived from the audited financial statements included in the Company’s
financial statements as of and for the years ended December 31, 2023 and 2022 contained in the Company’s Annual Report on Form 10-K
filed with the Securities and Exchange Commission, or the SEC, on April 1, 2024. These financial statements should be read in conjunction
with that report. The accompanying unaudited condensed consolidated
financial statements include the accounts of Focus and its wholly-owned subsidiaries, Perfecular, AVX, Focus Shenzhen, Lusher and AT Tech
Systems (collectively, the “Company,” “we,” “our,” or “us”). All intercompany balances
and transactions have been eliminated upon consolidation. The Company’s unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Segment Reporting The Company currently has one operating segment
in addition to our corporate overhead. In accordance with ASC 280, Segment Reporting Use of Estimates The preparation of unaudited condensed consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the accompanying unaudited condensed
consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its
estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual
of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company
may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates
and the actual results, future results of operations will be affected. Significant estimates in the accompanying financial statements
include the lease term impacting right-of use asset and lease liability, useful lives of property and equipment, allowance for doubtful
accounts, inventory reserves, and the valuation allowance on deferred tax assets. The Company regularly evaluates its estimates and assumptions. Allowance for doubtful accounts The Company estimates an allowance for doubtful
accounts based on historical collection trends and 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. As of September 30, 2024 and December 31, 2023,
allowance for doubtful accounts amounted to $ 278,201 249,603 Concentrations of Credit and Business 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. Major customers For the three months ended of September 30, 2024
and 2023, the Company’s revenue received from the following companies were set out as below:
Schedule of concentrations of credit and
business risk
Three months ended September 30,
2024 2023
Amount % of Total Amount % of Total
Customer A $ 37,981 51 $ (*) (*)
Customer B 18,923 25 24,051 33
Customer C (*) (*) 21,600 30
Customer D (*) (*) 12,500 17 _________________
(*) Revenue had not exceeded 10% or more of the Company’s consolidated revenue of the Company. For the nine months ended of September 30, 2024
and 2023, the Company’s revenue received from the following companies were set out as below:
Nine months ended September 30,
2024 2023
Amount % of Total Amount % of Total
Customer E $ 69,325 26 $ (*) (*)
Customer F 51,761 20 (*) (*)
Customer A 37,981 14 (*) (*)
Customer G (*) (*) 41,786 17
Customer B (*) (*) 24,051 10 _________________
(*) Revenue had not exceeded 10% or more of the Company’s consolidated revenue of the Company. As of September 30, 2024 and December 31, 2023,
the Company’s accounts receivable from the following companies were set out as below:
September 30, 2024 December 31, 2023
Amount % of Total Amount % of Total
Customer H $ (*) (*) $ 70,000 43 _________________
(*) Accounts receivable had not exceeded 10% or more of the Company’s consolidated accounts receivable of the Company. Major vendors No major vendor accounted more than 10% of total
purchase during nine months ended September 30, 2024 and 2023. Share-based Compensation The Company accounts for stock-based compensation
to employees in conformity with the provisions of ASC Topic 718, Stock-Based Compensation. Stock-based compensation to employees consist
of stock options, grants, and restricted shares that are recognized in the statement of operations based on their fair values at the date
of grant. The measurement of stock-based compensation is
subject to periodic adjustments as the underlying equity instruments vest and is recognized as an expense over the period during which
services are received. The Company calculates the fair value of option
grants utilizing the Black-Scholes pricing model and estimates the fair value of the stock based upon the estimated fair value of the
common stock. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that
are ultimately expected to vest. The resulting stock-based compensation expense
for both employee and non-employee awards is generally recognized on a straight- line basis over the requisite service period of the award. Fair Value of Financial Instruments The Company follows paragraph ASC 825-10-50-10
for disclosures about fair value of its financial instruments and paragraph ASC 820-10-35-37 (“Paragraph 820-10-35-37”) to
measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair
value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to
valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3)
levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
· Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
· Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
· Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data. The following table summarize financial assets
and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:
Schedule of financial assets
and liabilities measured at fair value
September 30, 2024 (unaudited)
Fair Value Carrying
Level 1 Level 2 Level 3 Value
Assets
Marketable securities:
Stock $ 27,043 $ – $ – $ 27,043
Total assets measured at fair value $ 27,043 $ – $ – $ 27,043
December 31, 2023
Fair Value Carrying
Level 1 Level 2 Level 3 Value
Assets
Marketable securities:
Stock $ 36,735 $ – $ – $ 36,735
Total assets measured at fair value $ 36,735 $ – $ – $ 36,735 The carrying amount of the Company’s financial
assets and liabilities, such as cash, accounts receivable, inventories, other receivable, prepaid expenses, deposit, accounts and accrued
expenses, payable, treasury stock payable, short-term loan, other current liabilities, customer deposit, approximate their fair value
because of the short maturity of those instruments. Comprehensive Income (Loss) Other comprehensive income (loss) refers to revenues,
expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income but are excluded from
net income (loss) as these amounts are recorded directly as an adjustment to stockholders’ equity. The Company’s other comprehensive
loss for the nine months ended September 30, 2024 and 2023 was comprised of foreign currency translation adjustments. Revenue Recognition Revenue from the Company is recognized under Topic
606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and
includes the following elements:
· executed contracts with the Company’s customers that it believes are legally enforceable;
· identification of performance obligations in the respective contract;
· determination of the transaction price for each performance obligation in the respective contract;
· Allocation of the transaction price to each performance obligation; and
· recognition of revenue only when the Company satisfies each performance obligation. These five elements, as applied to each of the
Company’s revenue category, is summarized below:
· Product sales – revenue is recognized at the time of sale upon the delivery of the equipment to the customer and completion of performance obligation.
· Service sales – revenue is recognized based on the service been provided and the agreed upon performance obligation has been completed to the customer. Revenue from our project construction is recognized
over time using the percentage-of-completion method under the cost approach. The percentage of completion is determined by estimating
stage of work completed. Under this approach, recognized contract revenue equals the total estimated contract revenue multiplied by the
percentage of completion. Our construction contracts are unit priced, and an account receivable is recorded for amounts invoiced based
on actual units produced. Due to the Company discontinuing operations of AT Tech Systems in August 2024, the Company currently only have
one operating and reportable segment which is IoT Products. 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. Basic and Fully Diluted Net Income (Loss) Per Share Net income (loss) per share is computed pursuant
to ASC 260-10-45. Basic net income (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted average
number of shares outstanding during the period. Fully diluted EPS is computed by dividing net
income (loss) by the weighted average number of shares of stock and potentially outstanding shares of stock during the period to reflect
the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants,
unless these shares are covered by anti-dilutive protections. The denominator comprises the Company’s weighted average number of
outstanding shares to extent the related shares are dilutive and, if dilutive, and other contracts to issue shares of common stock and
stock options. As a result, they are included in the fully diluted EPS computation to the extent that the effect would be dilutive. As of each period end, all potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is
the same as basic loss for all periods presented. The following potentially dilutive shares were excluded from the shares used to
calculate diluted earnings per share as their inclusion would be anti-dilutive.
Schedule of anti-dilutive shares
Nine Months Ended September 30, 2024 2023
Stock options 626,374 497,092 Foreign Currency Translation and Transactions The reporting and functional currency of Focus
is the USD. The functional currency of Focus Universal (Shenzhen) Technology Co. LTD, a wholly owned subsidiary of Focus located in China,
is the Renminbi (“RMB”). For financial reporting purposes, the financial
statements of the Company’s Chinese subsidiary, which are prepared using the RMB, are translated into the Company’s reporting
currency, USD. Assets and liabilities are translated using the exchange rate on the balance sheet date. Revenue and expenses are translated
using average exchange rates prevailing during each reporting period. Stockholders’ equity is translated at historical exchange
rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive loss in stockholders’
equity. Transactions denominated in currencies other than
the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions.
The resulting exchange difference, presented as foreign currency transaction loss, is included in the accompanying unaudited condensed
consolidated statements of operations. The exchange rates used for unaudited condensed consolidated financial statements are as follows:
Schedule of exchange rates
Average Rate for the Nine Months Ended September 30,
2024 2023
(Unaudited) (Unaudited)
China Yuan (RMB) RMB 7.1843 RMB 7.2942
United States Dollar ($) $ 1.0000 $ 1.0000
Exchange Rate at
September 30, 2024 December 31, 2023
(Unaudited)
China Yuan (RMB) RMB 7.0138 RMB 7.0698
United States Dollar ($) $ 1.0000 $ 1.0000 Going Concern The Company has assessed its ability to continue
as a going concern for a period of one year from the date of the issuance of these condensed consolidated financial statements. The Company
has a net loss of $ 1,238,776 3,100,442 23,820,946 22,582,170 3,658,901 2,603,545 At September 30, 2024, the Company had cash and
cash equivalents, and short-term investments, in the amount of $ 5,368,273 |
