Document and Entity Information
Document and Entity Information - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Aug. 07, 2018 | Mar. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Focus Universal Inc. | ||
Entity Central Index Key | 1,590,418 | ||
Document Type | S1 | ||
Document Period End Date | Jun. 30, 2018 | ||
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 Public Float | $ 86,091,018 | ||
Entity Common Stock, Shares Outstanding | 40,907,010 | ||
Document Fiscal Period Focus | Q2 | ||
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | |||
Cash and cash equivalents | $ 3,721,226 | $ 394,398 | $ 340,071 |
Accounts receivable | 0 | 26,311 | 25,564 |
Accounts receivable - related party | 19,200 | 564 | 10,332 |
Inventories | 66,309 | 47,432 | 68,495 |
Prepaid expenses | 1,667 | 8,280 | 7,962 |
Total current assets | 3,808,402 | 476,985 | 452,424 |
Property and equipment, net | 5,246 | 6,336 | 8,517 |
Other assets | |||
Investment | 0 | 0 | |
Intercompany | 0 | 0 | |
Deposits | 7,210 | 7,210 | 24,726 |
Total Assets | 3,820,858 | 490,531 | 485,667 |
Current Liabilities: | |||
Accounts payable and accrued liabilities | 270,711 | 449,256 | 368,513 |
Customer deposit | 60,019 | 31,734 | 62,126 |
Loan from related party | 0 | 0 | |
Loan from stockholders | 50,000 | 0 | 0 |
Income taxes payable | 0 | 800 | 800 |
Total current liabilities | 380,730 | 481,790 | 431,439 |
Noncurrent Liabilities: | |||
Convertible promissory note, net | 0 | 81,342 | 0 |
Deferred rent | 0 | 468 | |
Total Liabilities | 380,730 | 563,132 | 431,907 |
Commitments and Contingencies | |||
Stockholders' Equity: | |||
Common stock | 40,644 | 34,575 | 34,575 |
Additional paid-in capital | 12,487,372 | 1,871,618 | 1,371,618 |
Subscriptions receivable | 6,267,360 | ||
Accumulated deficit | 457,377 | (1,978,794) | (1,352,433) |
Total stockholders' equity | (3,277,905) | (72,601) | 53,760 |
Total Liabilities and Stockholder's Equity | $ 3,440,128 | $ 490,531 | $ 485,667 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
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 | 40,644,319 | 34,574,706 | 34,574,706 |
Common stock, outstanding | 40,644,319 | 34,574,706 | 34,574,706 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Income Statement [Abstract] | ||||||||
Revenue | $ 36,580 | $ 625,068 | $ 97,757 | $ 891,513 | $ 891,513 | $ 1,116,219 | ||
Revenue - related party | 3,200 | 3,563 | 10,575 | 6,571 | 6,571 | 5,759 | ||
Total Revenue | 39,780 | 628,631 | 108,332 | 898,084 | 898,084 | 1,121,978 | ||
Cost of revenue | 9,761 | 544,898 | 27,685 | 752,496 | 726,252 | 866,559 | ||
Gross profit | 30,019 | 83,733 | 80,647 | 145,588 | 171,832 | 255,419 | ||
Operation Expenses: | ||||||||
Compensation - officers | 30,000 | 30,000 | 60,000 | 60,000 | 120,000 | 121,385 | ||
Research and development | 56,771 | 55,453 | 107,789 | 109,929 | 208,238 | 201,899 | ||
Professional fees | 513,736 | 41,797 | 563,897 | 69,777 | 107,899 | 142,955 | ||
General and administrative | 135,874 | 60,673 | 205,037 | 123,582 | 255,531 | 256,210 | ||
Total Operating Expenses | 736,381 | 187,923 | 936,723 | 363,289 | 691,668 | 722,449 | ||
Loss from Operations | (706,362) | (104,190) | (856,076) | (217,701) | (519,836) | (467,030) | ||
Other Income (Expense): | ||||||||
Interest expense, net | (388,901) | 20 | (443,020) | 53 | (105,830) | 91 | ||
Other income | 0 | 0 | 0 | 4,763 | 0 | 588 | ||
Other expense | (1) | (588) | ||||||
Total other expense | (388,901) | 20 | (443,020) | 4,816 | (105,831) | 91 | ||
Loss before income taxes | (1,095,263) | (104,170) | (1,299,096) | (212,885) | (625,667) | (466,939) | ||
Tax expense | 15 | 800 | 15 | 800 | 694 | 495 | ||
Net Loss | $ (1,095,278) | $ (104,970) | $ (1,299,111) | $ (213,685) | $ (626,361) | $ (467,434) | ||
Weighted Average Number of Common Shares Outstanding - Basic and Diluted | 34,641,405 | 34,574,706 | 34,417,219 | 34,574,706 | 34,574,706 | 34,574,706 | ||
Net loss per common share - Basic and Diluted | $ (0.03) | $ 0 | $ (0.04) | $ (0.01) | $ (.02) | [1] | $ (0.01) | [1] |
[1] | * Denotes a loss of less than $(0.01) per share |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2015 | 34,574,706 | |||
Beginning balance, value at Dec. 31, 2015 | $ 34,575 | $ 1,371,618 | $ (884,999) | |
Net loss | (467,434) | $ (467,434) | ||
Ending balance, shares at Dec. 31, 2016 | 34,574,706 | |||
Ending balance, value at Dec. 31, 2016 | $ 34,575 | 1,371,618 | (1,352,433) | 53,760 |
Issuance of promissory note | 500,000 | 500,000 | ||
Net loss | (626,361) | (626,361) | ||
Ending balance, shares at Dec. 31, 2017 | 34,574,706 | |||
Ending balance, value at Dec. 31, 2017 | $ 34,575 | $ 1,871,618 | $ (1,978,794) | (72,601) |
Net loss | (1,299,111) | |||
Ending balance, value at Jun. 30, 2018 | $ (3,277,905) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows From Operating Activities: | ||||
Net Loss | $ (1,299,111) | $ (213,685) | $ (626,361) | $ (467,434) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Inventory reserve | 39,089 | 0 | (9,270) | 26,528 |
Depreciation expense | 1,090 | 914 | 2,181 | 1,130 |
Amortization of debt discount | 336,713 | 0 | 81,342 | 0 |
Stock base compensation | 457,377 | 0 | ||
Changes in Operating Assets and Liabilities: | ||||
Accounts receivable | 26,311 | 14,043 | (747) | 81,325 |
Accounts receivable-related party | (18,636) | 0 | 9,768 | (10,332) |
Inventories | (57,966) | 20,179 | 30,333 | (53,258) |
Prepaid expenses | 6,613 | 636 | (318) | 6,999 |
Deposits | 0 | 13,116 | 17,516 | 0 |
Accounts payable and accrued liabilities | (47,649) | 9,743 | 80,743 | 92,585 |
Customer deposit | 28,285 | 47,145 | (30,392) | (77,903) |
Income taxes payable | (800) | (800) | ||
Deferred rent | 0 | (468) | (468) | (443) |
Net cash flows used in operating activities | (528,684) | (109,177) | (445,673) | (400,803) |
Cash Flows from Investing Activities: | ||||
Purchase of property and equipment | 0 | (8,239) | ||
Net cash flows used in investing activities | 0 | (8,239) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from convertible note payable | 0 | 420,000 | 500,000 | 0 |
Repayment of convertible notes | (548,949) | 0 | 0 | (63,368) |
Shares issued for convertible notes | 548,949 | 0 | ||
Proceeds from shareholders loan | 50,000 | 0 | ||
Proceeds from sale of common stock | 3,805,488 | 0 | ||
Repayment to related parties | (548,949) | 0 | 0 | (63,368) |
Repayment to shareholders | 0 | (19,534) | ||
Net cash flows provided by (used in) financing activities | 3,855,512 | 420,000 | 500,000 | (82,902) |
Net Change in Cash and Cash Equivalents | 3,326,828 | 310,823 | 54,327 | (491,944) |
Cash and cash equivalents - Beginning of Period | 394,398 | 340,071 | 340,071 | |
Cash and cash equivalents - End of Period | 3,721,226 | 650,896 | 394,398 | 340,071 |
Supplemental Disclosures for Statement of Cash Flows: | ||||
Interest paid | 0 | 0 | 105,831 | 501 |
Income tax paid | $ 15 | $ 800 | $ 694 | $ 495 |
1. Organization and Operations
1. Organization and Operations | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Organization and Operations | Note 1 – Organization and Operations Focus Universal Inc. (the “Company”) was incorporated under the laws of the State of Nevada on December 4, 2012 (“Inception”). We are a universal smart instrument developer and manufacturer, headquartered in the Los Angeles, California metropolitan area, specializing in the development and commercialization of the novel and proprietary universal smart technologies and instruments. Universal smart technology is an innovative, commercial, off-the-shelf technology with an innovative soft hardware integrated platform. Our platform provides a unique and universal wireless solution for embedded design, industrial control, test and measurement. Our smart technology software utilizes a smartphone, computer, or a mobile device as a platform and display that communicates and works in tandem with a group of external sensors and probes manufactured by different vendors in a manner that requires the user to have little or no knowledge of their unique characteristics. Our universal smart instrument (the “Ubiquitor”) consists of a reusable foundation component which includes a wireless gateway (which allows the instrument to connect to the smartphone via Bluetooth and wifi technology), a universal smart application software (our “Application”) which is installed on the user’s smartphone allowing the sensor readouts to be monitored on the smartphone screen. The Ubiquitor also connects to a variety of individual scientific sensors that collect unique data points, from moisture, light, and airflow to other things like electricity voltage meters and a wide variety of applications. These data points are then sent wirelessly to the smartphone and the data is organized on the smartphone screen. The smartphone, foundation, and sensor readouts together perform the functions of many traditional scientific and engineering instruments and are intended to replace the traditional, wired stand-alone instruments at a fraction of their cost. The Company and Perfecular were entities under common control; therefore, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) 805-50-45, the acquisition of Perfecular was accounted for as a business combination between entities under common control and treated similar to a pooling of interest transaction. Perfecular Inc. was founded in September 2009 and is headquartered in Walnut, California, and is engaged in designing certain digital sensor products and sells a broad selection of horticultural sensors and filters in North America and Europe. | Focus Universal Inc. (the “Company”) was incorporated under the laws of the State of Nevada on December 4, 2012 (“Inception”). We are a universal smart instrument developer and manufacturer, headquartered in the Los Angeles, California metropolitan area, specializing in the development and commercialization of the novel and proprietary universal smart technologies and instruments. Universal smart technology is an innovative, commercial, off-the-shelf technology with an innovative soft hardware integrated platform. Our platform provides a unique and universal wireless solution for embedded design, industrial control, test and measurement. Our smart technology software utilizes a smartphone, computer, or a mobile device as a platform and display that communicates and works in tandem with a group of external sensors and probes manufactured by different vendors in a manner that requires the user to have little or no knowledge of their unique characteristics. Our universal smart instrument (the “Ubiquitor”) consists of a reusable foundation component which includes a wireless gateway (which allows the instrument to connect to the smartphone via Bluetooth and wifi technology), a universal smart application software (our “Application”) which is installed on the user’s smartphone allowing the sensor readouts to be monitored on the smartphone screen. The Ubiquitor also connects to a variety of individual scientific sensors that collect unique data points, from moisture, light, and airflow to other things like electricity voltage meters and a wide variety of applications. These data points are then sent wirelessly to the smartphone and the data is organized on the smartphone screen. The smartphone, foundation, and sensor readouts together perform the functions of many traditional scientific and engineering instruments and are intended to replace the traditional, wired stand-alone instruments at a fraction of their cost. The Company and Perfecular were entities under common control; therefore, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) 805-50-45, the acquisition of Perfecular was accounted for as a business combination between entities under common control and treated similar to a pooling of interest transaction. Perfecular Inc. was founded in September 2009 and is headquartered in Walnut, California, and is engaged in designing certain digital sensor products and sells a broad selection of horticultural sensors and filters in North America and Europe. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of Focus Universal Inc. and its wholly-owned subsidiary, Perfecular Inc. All intercompany balances and transactions have been eliminated upon consolidation. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation. Such reclassifications have no effect on net income as previously reported. Please see Note 12, Restatement. Segment Reporting The Company currently has one operating segment. In accordance with ASC 280, Segment Reporting Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents. At times, such investments may be in excess of Federal Deposit Insurance Corporation (FDIC) insurance limit. There were no cash equivalents held by the Company at June 30, 2018 and December 31, 2017. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by investing its cash with high credit quality financial institutions. Fair Value of Financial Instruments The Company follows paragraph ASC 825-10-50-10 for disclosures about fair value of its financial instruments and paragraph ASC 820- 10-35-37 (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: · Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. · Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. · Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. Inventory Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. Inventory allowances are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specific identification of items, such as discontinued products. These estimates could vary significantly from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from expectations. The Company regularly reviews the value of inventory based on historical usage and estimated futu re usage. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method. Estimated useful lives range from three to seven years on all categories of depreciable assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts and any gain or loss is included in earnings. Maintenance and repairs are expensed currently. Major renewals and betterments are capitalized. Long-term assets of the Company are reviewed when circumstances warrant as to whether their carrying value has become impaired. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Company also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. Revenue Recognition The Company applies ASC 605-10-S99-1 for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of services. Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive. Perfecular’s primary business functions are designing and marketing products. Tianjin Guanglee serves as an original equipment manufacturer (“OEM”). Perfecular determines the product specifications and the sales prices, and bears physical loss risks during shipping. Perfecular collects full amount of accounts receivable from customers through direct wire transfers or letters of credit. Tianjin Guanglee invoices Perfecular for the manufacturing costs and Perfecular pays these invoices. Allowance for doubtful accounts The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. Management evaluated that there was no allowance for doubtful accounts at June 30, 2018 and December 31, 2017 based on collection history. Research and development Research and development costs are expensed as incurred. Research and development costs primarily consist of efforts to refine existing product models and develop new product models. Related Parties The Company follows ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Commitments and Contingencies The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. Stock Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. There were no outstanding stock options as of June 30, 2018 and December 31, 2017. Income Tax Provision Income taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax basis of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. There was no material deferred tax asset or liabilities as of June 30, 2018 and December 31, 2017. As of June 30, 2018 and December 31, 2017, the Company did not identify any material uncertain tax positions. Net Income (Loss) Per Common Share Net income (loss) per common share is computed pursuant to ASC 260-10-45. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. There were no potentially dilutive debt or equity instruments issued and outstanding at any time during the six months ended June 30, 2018 and 2017. Cash Flows Reporting The Company adopted ASC 230-10-45-24 for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to ASC 830-230-45-1. Subsequent Events The Company follows the guidance in ASC 855-10-50 for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR. | Basis of Presentation The accompanying consolidated financial statements include the accounts of Focus Universal Inc. and its wholly-owned subsidiary, Perfecular Inc. All intercompany balances and transactions have been eliminated upon consolidation. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation. Such reclassifications have no effect on net income as previously reported. Please see Note 11, Reclassifications. Segment Reporting The Company currently has one operating segment. In accordance with ASC 280, Segment Reporting Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents. At times, such investments may be in excess of Federal Deposit Insurance Corporation (FDIC) insurance limit. There were no cash equivalents held by the Company at December 31, 2017 and December 31, 2016. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company limits its exposure to credit loss by investing its cash with high credit quality financial institutions. Fair Value of Financial Instruments The Company follows paragraph ASC 825-10-50-10 for disclosures about fair value of its financial instruments and paragraph ASC 820- 10-35-37 (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: · Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. · Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. · Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. Inventory Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. Inventory allowances are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specific identification of items, such as discontinued products. These estimates could vary significantly from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from expectations. The Company regularly reviews the value of inventory based on historical usage and estimated futu re usage. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method. Estimated useful lives range from three to seven years on all categories of depreciable assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts and any gain or loss is included in earnings. Maintenance and repairs are expensed currently. Major renewals and betterments are capitalized. Long-term assets of the Company are reviewed when circumstances warrant as to whether their carrying value has become impaired. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Company also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. Revenue Recognition The Company applies ASC 605-10-S99-1 for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of services. Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive. Perfecular’s primary business functions are designing and marketing products. Tianjin Guanglee serves as an original equipment manufacturer (“OEM”). Perfecular determines the product specifications and the sales prices, and bears physical loss risks during shipping. Perfecular collects full amount of accounts receivable from customers through direct wire transfers or letters of credit. Tianjin Guanglee invoices Perfecular for the manufacturing costs and Perfecular pays these invoices. Allowance for doubtful accounts The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. Management evaluated that there was no allowance for doubtful accounts at December 31, 2017 and December 31, 2016 based on collection history. Research and development Research and development costs are expensed as incurred. Research and development costs primarily consist of efforts to refine existing product models and develop new product models. Related Parties The Company follows ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. Commitments and Contingencies The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. Stock Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. There were no outstanding stock options for the years ended December 31, 2017 and 2016. Income Tax Provision Income taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax basis of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. There was no material deferred tax assets or liabilities as of December 31, 2017 and December 31, 2016. As of December 31, 2017, and December 31, 2016, the Company did not identify any material uncertain tax positions. Net Income (Loss) Per Common Share Net income (loss) per common share is computed pursuant to ASC 260-10-45. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. There were no potentially dilutive debt or equity instruments issued and outstanding at any time during the years ended December 31, 2017 and 2016. Cash Flows Reporting The Company adopted ASC 230-10-45-24 for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to ASC 830-230-45-1. Subsequent Events The Company follows the guidance in ASC 855-10-50 for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR. |
3. Property and Equipment
3. Property and Equipment | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Property and Equipment | Note 3 – Property and Equipment At June 30, 2018 and December 31, 2017, property and equipment consisted of the following: June 30, 2018 December 31, 2017 Computers $ 1,029 $ 1,029 Furniture and fixture 8,850 8,850 Total cost 9,879 9,879 Less accumulated depreciation (4,633 ) (3,543 ) Property and equipment, net $ 5,246 $ 6,336 Depreciation expense for the six months ended June 30, 2018 and 2017 amounted to $1,090 and $914, respectively. | At December 31, 2017 and 2016, property and equipment consisted of the following: December 31, December 31, Computers $ 1,029 $ 1,029 Furniture and fixture 8,850 8,850 Total cost 9,879 9,879 Less accumulated depreciation (3,543 ) (1,362 ) Property and equipment, net $ 6,336 $ 8,517 Depreciation expense for the twelve months period ended December 31, 2017 and 2016 amounted to $2,181 and $1,130, respectively. |
4. Convertible Promissory Note
4. Convertible Promissory Note | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Convertible Promissory Note | Note 4 – Convertible Promissory Notes On June 30, 2017 and July 28, 2017, the Company received $420,000 and $80,000, respectively through a series of two unsecured convertible promissory notes from the same unrelated third party (the “2017 Notes”). The 2017 Notes bear interest at 10% per annum, are due on June 30, 2020 and July 28, 2020 respectively and are unsecured. The 2017 Notes contain a provision that allows the note holder to convert the outstanding balance into shares of the Company's common stock at $1.75 per share. The Company determined that the convertible promissory notes contain beneficial conversion features that are valued at $420,000 and $80,000 respectively; however, the amount recorded as the beneficial conversion feature is limited to the face amount of the convertible promissory note. This beneficial conversion feature of $420,000 and $80,000 has been recorded in the financial statements to additional paid-in capital and as a discount to the convertible promissory payable. The debt discounts are being amortized over the terms of the 2017 Notes. The Company recognized interest expense of $336,713 during the six months ended June 30, 2018 related to the amortization of the debt discounts. On June 27, 2018, the convertible holder elected the right to convert all of convertible notes to common stock at $1.75 per share. Total conversion amounted to $548,949, 313,686 shares. | On June 30, 2017 and again on July 28, 2017, the Company received $420,000 and $80,000, respectively through a series of two unsecured convertible promissory notes from the same unrelated third party (the “2017 Notes”). The 2017 Notes bear interest at 10% per annum, are due on June 30, 2020 and July 28, 2020 respectively and are unsecured. The 2017 Notes contain a provision that allows the note holder to convert the outstanding balance into shares of the Company's common stock at $1.75 per share. The Company determined that the convertible promissory notes contain beneficial conversion features that are valued at $420,000 and $80,000 respectively; however, the amount recorded as the beneficial conversion feature is limited to the face amount of the convertible promissory note. This beneficial conversion feature of $420,000 and $80,000 has been recorded in the financial statements to additional paid-in capital and as a discount to the convertible promissory payable. The debt discounts are being amortized over the terms of the 2017 Notes. The Company recognized interest expense of $81,342 during the year ended December 31, 2017 related to the amortization of the debt discounts. |
5. Related Party Transactions
5. Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Note 5 – Related Party Transactions Revenue generated from Vitashower Corp., a company owned by the CEO, amounted to $10,575 and $6,571 for the sixed months ended June 30, 2018 and 2017, respectively, $7,375 and $3,008 for the three months ended June 30, 2018 and 2017, respectively. Account receivable balance due from Vitashower Corp. amounted to $19,200 and $564 as of June 30, 2018 and December 31, 2017, respectively. On May 30, 2018, the CEO and majority shareholder of the Company lent the Company $50,000 for operation use. The loan had no interest and is due upon demand. The loan was repaid on July 12, 2018. Compensation for services provided by the President and Chief Executive Officer for the six months ended June 30, 2018 and 2017 amounted to $30,000 and $30,000, respectively and three months ended June 30, 2018 and 2017 amounted to $30,000 and $30,000, respectively. | Revenue generated from Vitashower Corp., a company owned by the CEO, amounted to $6,571 and $5,759 for the years ended December 31, 2017 and 2016. Compensation for services provided by the President and Chief Executive Officer for the years ended December 31, 2017 and 2016 amounted to $120,000 and $121,385, respectively. |
6. Business Concentrations and
6. Business Concentrations and Risk | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Risks and Uncertainties [Abstract] | ||
Business Concentrations and Risk | Note 6 – Business Concentration and Risks Major customers One customer accounted for 100% of the total accounts receivable as of December 31, 2017. The customer did not have balance due and receivable as of June 30, 2018 Major vendors One vendor accounted for 80% and 92% of total accounts payable at June 30, 2018 and December 31, 2017, respectively. | Major customers One customer accounted for 100% and 100% of the total accounts receivable at December 31, 2017 and December 31, 2016, respectively. Major vendors One vendor accounted for 93% and 97% of total accounts payable at December 31, 2017 and December 31, 2016, respectively. |
7. Commitments and Contingencie
7. Commitments and Contingencies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Note 7 – Commitments and Contingencies On April 24, 2017, we entered into a two-year industrial/commercial lease within a larger multi-tenant industrial complex with Walnut Park Business Center, LLC. We leased a 2,800-square foot warehouse with a 1,400-square foot office space inside which will allow us to assemble our products as well as efficiently run our administrative operations in the same building. The lease commenced on May 1, 2017 and will end on April 30, 2019. We will pay $3,500 per month until May 1, 2018 when the rent will increase to $3,605 per month. The warehouse is located at 820511 East Walnut Drive North, Walnut, California. Rent expense under this lease will be recognized over the life of the lease term on a straight-line basis. Straight-line monthly rent expense over the life of the lease will be $3,553. Total rent expense was $24,815 and $22,000 for the six months ended June 30, 2018 and 2017, respectively. Future minimum lease commitments are as follows: December 31, Rent Expense 2018 $ 21,630 2019 14,420 Thereafter – | On April 24, 2017, we entered into a two-year industrial/commercial lease within a larger multi-tenant industrial complex with Walnut Park Business Center, LLC. We leased a 2,800-square foot warehouse with a 1,400-square foot office space inside which will allow us to assemble our products as well as efficiently run our administrative operations in the same building. The lease commenced on May 1, 2017 and will end on April 30, 2019. We will pay $3,500 per month until May 1, 2018 when the rent will increase to $3,605 per month. The warehouse is located at 820511 East Walnut Drive North, Walnut, California. Rent expense under this lease will be recognized over the life of the lease term on a straight-line basis. Straight-line monthly rent expense over the life of the lease will be $3,553. In July 2016, we sub-leased a portion of the property to a third party. The lease is non-cancelable operating lease with monthly rent of $4,400. During the three months ended September 30, 2017, the Company recognized $8,800 in sub-lease income. The lease commenced on July 7, 2016 and expired on May 31, 2017. $3,300 of the rent deposit has been returned to the subtenant. Total rent expense was $51,167 and $66,585 for the twelve months ended December 31, 2017 and 2016, respectively. Future minimum lease commitments are as follows: December 31, Rent Expense 2018 $ 42,840 2019 14,420 Thereafter – |
8. Stockholders' Equity
8. Stockholders' Equity | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Stockholders' Equity | Note 8 – Stockholders’ Equity Shares authorized Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is seventy-five million (75,000,000) shares of common stock, par value $0.001 per share. Common stock During the six months ended June 30, 2018, the Company had the following transactions in its common stock: · issued 5,755,927 shares through private placement at $1.75 per share. · issued 313,686 shares for conversion debt rendered valued at $548,949 or $1.75 per share. As of June 30, 2018 the Company had 40,644,319 shares of common stock issued and outstanding. | Shares authorized Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is seventy-five million (75,000,000) shares of common stock, par value $0.001 per share. Common stock As of December 31, 2017 the Company had 34,574,706 shares of common stock issued and outstanding. |
9. Going Concern
9. Going Concern | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Going Concern | Note 11 – Going Concern In August 2014, the FASB issued ACU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management to assess the company’s ability to continue as a going concern. Disclosures are required if there is substantial doubt as to the company’s continuation as a going concern within one year after the issue date of financial statements. The standard provides guidance for making the assessment, including consideration of management’s plans which may alleviate doubt regarding the Company’s ability to continue as a going concern. ASU 2014-15 is effective for years ending after December 15, 2016. The Company has adopted this standard for the year ending December 31, 2017 and six months ending June 30, 2018. These financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to repay its debt obligations, to obtain necessary equity financing to continue operations, and the attainment of profitable operations. Recently, the Company has devoted a substantial amount of resources to research and development to bring the Ubiquitor and its mobile application to full production and distribution. For the six months ended June 30, 2018, the Company had net loss of $1,299,111 and negative cash flow from operating activities of $528,684. As of June 30, 2018 the Company also had an accumulated deficit of $3,277,905. These factors raise certain doubts regarding the Company’s ability to continue as a going concern. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing for the long-term development and commercialization of its Ubiquitor product. | In August 2014, the FASB issued ACU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard requires management to assess the company’s ability to continue as a going concern. Disclosures are required if there is substantial doubt as to the company’s continuation as a going concern within one year after the issue date of financial statements. The standard provides guidance for making the assessment, including consideration of management’s plans which may alleviate doubt regarding the Company’s ability to continue as a going concern. ASU 2014-15 is effective for years ending after December 15, 2016. The Company has adopted this standard for the year ending December 31, 2017. These financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to repay its debt obligations, to obtain necessary equity financing to continue operations, and the attainment of profitable operations. Recently, the Company has devoted a substantial amount of resources to research and development to bring the Ubiquitor and its mobile application to full production and distribution. As of December 31, 2017, the Company had a net loss and had negative cash flow from operating activities of $626,361 and $445,673, respectively. The Company also had an accumulated deficit of $1,978,794. These factors raise certain doubts regarding the Company’s ability to continue as a going concern. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing for the long-term development and commercialization of its Ubiquitor product. |
10. Restatement
10. Restatement | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | ||
Restatement | Note 12 – Restatement Previously reported Restated For the six months ended For the six months ended 6/30/2017 Adjustment 6/30/2017 Revenue $ 211,086 680,427 {a} $ 891,513 Revenue - related party – 6,571 {b} 6,571 Total revenue 211,086 898,084 Cost of Revenue 65,498 686,998 {a} 752,496 Gross Profit 145,588 145,588 Operation Expenses: Compensation - officers 60,000 60,000 Research and development 109,929 109,929 Professional fees 69,777 69,777 General and administrative 123,083 123,083 Total Operating Expenses 362,789 362,789 Loss from Operations (217,201 ) (217,201 ) Other Income (Expense) Interest expense, net 53 53 Other income 4,763 4,763 Total other expense 4,815 4,815 Loss before income taxes (212,885 ) (212,885 ) Income tax expense 800 800 Net Loss $ (213,685 ) $ (213,685 ) Weight Average Number of Common Shares Outstanding - Basic and Diluted 34,574,706 34,574,706 Net Loss per common share Basic and diluted $ (0.01 ) $ (0.01 ) {a} The Company previously recorded shipment of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales at gross amount and separately record cost of goods sold amount. {b} Revenue generated from Vitashower Corp., a company owned by the CEO, amounted to $6,571 for the six months ended June 30, 2017 was reclassified to be separately disclosed. Previously reported Restated For the three months ended For the three months ended 6/30/2017 Adjustment 6/30/2017 Revenue $ 128,896 496,172 {a} $ 625,068 Revenue - related party – 3,563 {b} 3,563 Total revenue 128,896 628,631 Cost of Revenue 45,163 499,736 {a} 544,898 Gross Profit 83,733 83,733 Operation Expenses: Compensation - officers 30,000 30,000 Research and development 55,453 55,453 Professional fees 41,797 41,797 General and administrative 60,673 60,673 Total Operating Expenses 187,923 187,923 Loss from Operations (104,190 ) (104,190 ) Other Income (Expense) Interest expense, net 20 20 Other income – – Total other expense 20 20 Loss before income taxes (104,170 ) (104,170 ) Income tax expense 800 800 Net Loss $ (104,970 ) $ (104,970 ) Weight Average Number of Common Shares Outstanding - Basic and Diluted 34,574,706 34,574,706 Net Loss per common share Basic and diluted $ (0.00 ) $ (0.00 ) {a} The Company previously recorded shipment of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales at gross amount and separately record cost of goods sold amount. {b} Revenue generated from Vitashower Corp., a company owned by the CEO, amounted to $3,563 for the three months ended June 30, 2017 was reclassified to be separately disclosed. | The Company reevaluated inventory for slow moving and reserved a portion of slow moving inventory for obsolescence. In 2015 the Company entered into a business combination with an entity under common control. The accounting treatment for such business combination should have been recorded at carry value, similar to pooling of interest. The Company corrected the error in the accounting treatment of the transaction. In 2016, the Company recorded sales transactions net of cost of goods sold in error. The restatement corrected the error. Also, certain account classifications have been modified. Related party accounts receivable and accounts payable have been reclassified to their own line for disclosure purpose. See below for result of 2016 restatement and reclassification. Previous reported Restated 12/31/2016 Adjustment 12/31/2016 ASSETS CURRENT ASSETS Cash and cash equivalents $ 340,073 (2 ) $ 340,071 Accounts receivable 35,896 (10,332 ) {a} 25,564 Accounts receivable - related party – 10,332 {a} 10,332 Inventories, net 104,832 (36,337 ) {b} 68,495 Prepaid expenses 7,962 7,962 Total Current Assets 488,763 – 452,424 Property and equipment, net 8,517 – 8,517 Other assets: Deposits 24,726 – 24,726 Total assets: $ 522,006 – $ 485,667 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 372,912 (4,399 ) {c} $ 368,513 Customer deposit 57,726 4,400 {c} 62,126 Income taxes payable 800 – 800 Total Current Liabilities 431,438 431,439 Non-current Liabilities Deferred rent 468 – 468 Total Liabilities 431,906 431,907 Commitments and Contingencies Stockholders' Equity: Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of December 31, 2017 and 2016, respectively 34,575 – 34,575 Additional paid-in capital 713,239 658,379 {d} 1,371,618 Accumulated deficit (657,714 ) (694,719 ) {e} (1,352,433 ) Total stockholders' equity 90,100 53,760 Total Liabilities and Stockholders' Equity $ 522,006 $ 485,667 {a} The Company reclassified related party accounts receivable and payable balance into its own line item. {b}The Company reserved $36,337 for slow moving inventory items. {c} Customer deposit of $4,400 was reclassified out from accounts payable to correctly record in customer deposit. {d} The Company and Perfecular Inc. entered into merger agreement on December 30, 2015. The two entities are merger under common control. Per ASC 805-50-45, entities merger under common control should be recorded using book value and retained earnings is carried into the consolidated financial statements. The Company erroneously eliminated Perfecular Inc.’s retained earnings through consolidation. An adjustment is made to properly record investment made to the merger and record retained earnings of Perfecular Inc. {e} Accumulated adjustment effect in result of inventory reserve and adjustment to properly recorded investment made to the merger. Previously reported Restated 12/31/2016 Adjustment 12/31/2016 Revenue $ 337,496 778,723 {f} $ 1,116,219 Revenue - related party – 5,759 {g} 5,759 Total revenue 337,496 1,121,978 Cost of Revenue 57,128 809,431 {f}{h} 866,559 Gross Profit 280,368 255,419 Operation Expenses: Compensation - officers 121,385 121,385 Research and development 201,899 201,899 Professional fees 142,956 142,955 General and administrative 257,365 (1,155 ) {g} 256,210 Total Operating Expenses 723,605 722,449 Loss from Operations (443,237 ) (467,030 ) Other Income (Expense) Interest expense, net (203 ) 300 {g} 97 Other income 5,736 (5,148 ) {g} 588 Other expense (1,600 ) 1,012 {g} (588 ) Total other expense 3,933 91 Loss before income taxes (439,304 ) (466,939 ) Income tax provision 1,600 (1,105 ) {j} 495 Net Loss $ (440,904 ) $ (467,434 ) Weight Average Number of Common Shares Outstanding - Basic and Diluted 34,574,706 34,574,706 Net Loss per common share Basic and diluted $ (0.01 ) $ (0.01 ) {f} The Company previously recorded shipment of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales at gross amount and separately record cost of goods sold amount. {g} Other income and other expenses items were reclassified to other income statement accounts. Refund of rent expense of $1,155 was reclassified from other income to general and administrative expenses. Other expenses items including interest expense and cost of sales were reclassified to their respective accounts. Interest expense was reclassified from other income. {h} The Company reserved $36,337 for slow moving inventory items into cost of goods sold. {i}Income tax refund was reclassified from other income to income tax expense. Previously Restated 12/31/2016 Adjustment 12/31/2016 Cash flows from operating activities: Net Loss $ (440,904 ) (26,530 ) $ (467,434 ) Adjustments to reconcile net loss to net cash used in operating activities: Inventory reserve – 26,528 {j} 26,528 Depreciation expense 1,130 1,130 Changes in Operating Assets and Liabilities: Accounts receivable 70,993 10,332 {k} 81,325 Accounts receivable - related party – (10,332 ) {k} (10,332 ) Inventories (53,258 ) (53,258 ) Prepaid expenses 6,999 6,999 Accounts payable and accrued liabilities 96,987 (4,402 ) {l} 92,585 Customer deposit (82,303 ) 4,400 {l} (77,903 ) Deferred rent (443 ) (443 ) Net cash flows used in operating activities (400,799 ) (400,803 ) Cash flows from investing activities: Purchase of property and equipment (8,239 ) (8,239 ) Net cash flows used in investing activities (8,239 ) (8,239 ) Cash flows from financing activities: Repayment to related parties (63,369 ) (63,368 ) Repayment to shareholders (19,533 ) (19,534 ) Net cash flows provided by (used in) financing activities (82,902 ) (82,902 ) Net Change in Cash and Cash Equivalents (491,940 ) (491,944 ) Cash and cash equivalents - Beginning of Period 832,015 832,015 Cash and cash equivalents - End of Period $ 340,071 $ 340,071 {j} The Company reserved $36,337 for slow moving inventory items into cost of goods sold. {k} The Company reclassified related party accounts receivable and payable balance into its own line item. {l} Customer deposit of $4,400 was reclassified out from accounts payable to correctly record in customer deposit. |
9. Subscription Receivable (Jun
9. Subscription Receivable (June 2018 Note) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Subscription Receivable | Note 9 – Subscription Receivable As of June 30, 2018, the Company issued 3,581,328 shares through private placement with subscription receivable amounting to $6,267,360 or $1.75 per share. |
10. Shares to be Issued, Common
10. Shares to be Issued, Common Shares (June 2018 Note) | 6 Months Ended |
Jun. 30, 2018 | |
Shares To Be Issued Common Shares | |
Shares to be Issued, Common Shares | Note 10 – Shares to be Issued, Common Shares During the six months ended June 30, 2018, the Company incurred professional expenses amounting to $457,377 which were paid for by issuing common 261,358 shares at $1.75 per share. |
11. Subsequent Events
11. Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Note 13 – Subsequent Events The Company has evaluated all events that occurred after the consolidated balance sheet date through the date when the consolidated financial statements were issued to determine if they must be reported. From July 1, 2018 to July 17, 2018, the Company received additional $5,658,243 for subscription receivable. On July 1, 2018, the Company entered into an Advisory Agreement with Oakshore Consulting (“Oakshore”). Pursuant to the Advisory Agreement, Oakshore provided consulting services to the Company starting from July 2018. The total advisory fee is $8,000 per month and payable on the sixth day of each month. The advisory fee may be paid in either cash or in the Company’s common stock. A finder’s fee will be 8% of the enterprise value of any acquisition closed during the term of this advisory agreement or any acquisition introduced to the Company. Both the Company and Oakshore may terminate this advisory agreement by providing written notice thirty days in advance of intended termination. | The Company has evaluated all events that occurred after the consolidated balance sheet date through the date when the consolidated financial statements were issued to determine if they must be reported. On March 2, 2018, Focus Universal Inc. (the “Company”) executed a letter of intent with Aloha Island Cable, Inc. (the “Letter of Intent”) whereby the Company will purchase one hundred percent of Aloha Island Cable, Inc. through a mixture of stock, cash, and a promissory note. The Letter of Intent is non-binding, but the parties expect to consummate the transaction as soon as reasonably practical. The Letter of Intent is only an expression of interest and is not binding on the parties. The parties contemplate the closing date to take place on April 28, 2018. On March 5, 2018, Focus Universal Inc. (the "Company") issued a press release announcing that the U.S. Patent and Trademark Office has issued an Issue Notification for U.S. Patent Application No. 9924295 entitled “Universal Smart Device,” which covers a patent application regarding the Company’s Universal Smart Device. The USPTO had previously issued a Notice of Allowance for the same patent. Barring any unforeseen circumstances, this patent, when issued, will be valid until 2036. |
2. Summary of Significant Acc20
2. Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
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”). Certain reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation. Such reclassifications have no effect on net income as previously reported. Please see Note 12, Restatement. | Basis of Presentation The accompanying consolidated financial statements include the accounts of Focus Universal Inc. and its wholly-owned subsidiary, Perfecular Inc. All intercompany balances and transactions have been eliminated upon consolidation. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain reclassifications have been made to the consolidated financial statements for prior years to the current year’s presentation. Such reclassifications have no effect on net income as previously reported. Please see Note 11, Reclassifications. |
Segment Reporting | Segment Reporting The Company currently has one operating segment. In accordance with ASC 280, Segment Reporting | Segment Reporting The Company currently has one operating segment. In accordance with ASC 280, Segment Reporting |
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. There were no cash equivalents held by the Company at June 30, 2018 and December 31, 2017. | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents. At times, such investments may be in excess of Federal Deposit Insurance Corporation (FDIC) insurance limit. There were no cash equivalents held by the Company at December 31, 2017 and December 31, 2016. |
Concentrations of Credit Risk | 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 ASC 825-10-50-10 for disclosures about fair value of its financial instruments and paragraph ASC 820- 10-35-37 (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: · Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. · Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. · Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. | Fair Value of Financial Instruments The Company follows paragraph ASC 825-10-50-10 for disclosures about fair value of its financial instruments and paragraph ASC 820- 10-35-37 (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below: · Level 1: quoted market prices available in active markets for identical assets or liabilities as of the reporting date. · Level 2: pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. · Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial assets and liabilities, such as cash and cash equivalent, prepaid expenses, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not however practical to determine the fair value of advances from stockholders, if any, due to their related party nature. |
Inventory | Inventory Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. Inventory allowances are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specific identification of items, such as discontinued products. These estimates could vary significantly from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from expectations. The Company regularly reviews the value of inventory based on historical usage and estimated futu re usage. | Inventory Inventory is valued at the lower of the inventory’s cost (first in, first out basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower. Inventory allowances are recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specific identification of items, such as discontinued products. These estimates could vary significantly from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from expectations. The Company regularly reviews the value of inventory based on historical usage and estimated futu re usage. |
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 ASC 605-10-S99-1 for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of services. Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive. Perfecular’s primary business functions are designing and marketing products. Tianjin Guanglee serves as an original equipment manufacturer (“OEM”). Perfecular determines the product specifications and the sales prices, and bears physical loss risks during shipping. Perfecular collects full amount of accounts receivable from customers through direct wire transfers or letters of credit. Tianjin Guanglee invoices Perfecular for the manufacturing costs and Perfecular pays these invoices. | Revenue Recognition The Company applies ASC 605-10-S99-1 for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of services. Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive. Perfecular’s primary business functions are designing and marketing products. Tianjin Guanglee serves as an original equipment manufacturer (“OEM”). Perfecular determines the product specifications and the sales prices, and bears physical loss risks during shipping. Perfecular collects full amount of accounts receivable from customers through direct wire transfers or letters of credit. Tianjin Guanglee invoices Perfecular for the manufacturing costs and Perfecular pays these invoices. |
Allowance for doubtful accounts | Allowance for doubtful accounts The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. Management evaluated that there was no allowance for doubtful accounts at June 30, 2018 and December 31, 2017 based on collection history. | Allowance for doubtful accounts The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. Management evaluated that there was no allowance for doubtful accounts at December 31, 2017 and December 31, 2016 based on collection history. |
Research and development | Research and development 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 ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. | Related Parties The Company follows ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20 the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly Influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. |
Commitments and Contingencies | Commitments and Contingencies The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. | Commitments and Contingencies The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. |
Stock Based Compensation | Stock Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. There were no outstanding stock options as of June 30, 2018 and December 31, 2017. | Stock Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. There were no outstanding stock options for the years ended December 31, 2017 and 2016. |
Income Tax Provision | Income Tax Provision Income taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax basis of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. There was no material deferred tax asset or liabilities as of June 30, 2018 and December 31, 2017. As of June 30, 2018 and December 31, 2017, the Company did not identify any material uncertain tax positions. | Income Tax Provision Income taxes are accounted for using the asset and liability method. Deferred income taxes are provided for temporary differences in recognizing certain income, expense and credit items for financial reporting purposes and tax reporting purposes. Such deferred income taxes primarily relate to the difference between the tax basis of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. There was no material deferred tax assets or liabilities as of December 31, 2017 and December 31, 2016. As of December 31, 2017, and December 31, 2016, the Company did not identify any material uncertain tax positions. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Net income (loss) per common share is computed pursuant to ASC 260-10-45. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. There were no potentially dilutive debt or equity instruments issued and outstanding at any time during the six months ended June 30, 2018 and 2017. | Net Income (Loss) Per Common Share Net income (loss) per common share is computed pursuant to ASC 260-10-45. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. There were no potentially dilutive debt or equity instruments issued and outstanding at any time during the years ended December 31, 2017 and 2016. |
Cash Flows Reporting | Cash Flows Reporting The Company adopted ASC 230-10-45-24 for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to ASC 830-230-45-1. | Cash Flows Reporting The Company adopted ASC 230-10-45-24 for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to ASC 830-230-45-1. |
Subsequent Events | Subsequent Events The Company follows the guidance in ASC 855-10-50 for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR. | Subsequent Events The Company follows the guidance in ASC 855-10-50 for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR. |
3. Property and Equipment (Tabl
3. Property and Equipment (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Schedule of property and equipment | June 30, 2018 December 31, 2017 Computers $ 1,029 $ 1,029 Furniture and fixture 8,850 8,850 Total cost 9,879 9,879 Less accumulated depreciation (4,633 ) (3,543 ) Property and equipment, net $ 5,246 $ 6,336 | December 31, December 31, Computers $ 1,029 $ 1,029 Furniture and fixture 8,850 8,850 Total cost 9,879 9,879 Less accumulated depreciation (3,543 ) (1,362 ) Property and equipment, net $ 6,336 $ 8,517 |
7. Commitments and Contingenc22
7. Commitments and Contingencies (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Future minimum lease commitments | December 31, Rent Expense 2018 $ 21,630 2019 14,420 Thereafter – | December 31, Rent Expense 2018 $ 42,840 2019 14,420 Thereafter – |
10. Restatement (Tables)
10. Restatement (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | ||
Restatements | Previously reported Restated For the six months ended For the six months ended 6/30/2017 Adjustment 6/30/2017 Revenue $ 211,086 680,427 {a} $ 891,513 Revenue - related party – 6,571 {b} 6,571 Total revenue 211,086 898,084 Cost of Revenue 65,498 686,998 {a} 752,496 Gross Profit 145,588 145,588 Operation Expenses: Compensation - officers 60,000 60,000 Research and development 109,929 109,929 Professional fees 69,777 69,777 General and administrative 123,083 123,083 Total Operating Expenses 362,789 362,789 Loss from Operations (217,201 ) (217,201 ) Other Income (Expense) Interest expense, net 53 53 Other income 4,763 4,763 Total other expense 4,815 4,815 Loss before income taxes (212,885 ) (212,885 ) Income tax expense 800 800 Net Loss $ (213,685 ) $ (213,685 ) Weight Average Number of Common Shares Outstanding - Basic and Diluted 34,574,706 34,574,706 Net Loss per common share Basic and diluted $ (0.01 ) $ (0.01 ) {a} The Company previously recorded shipment of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales at gross amount and separately record cost of goods sold amount. {b} Revenue generated from Vitashower Corp., a company owned by the CEO, amounted to $6,571 for the six months ended June 30, 2017 was reclassified to be separately disclosed. Previously reported Restated For the three months ended For the three months ended 6/30/2017 Adjustment 6/30/2017 Revenue $ 128,896 496,172 {a} $ 625,068 Revenue - related party – 3,563 {b} 3,563 Total revenue 128,896 628,631 Cost of Revenue 45,163 499,736 {a} 544,898 Gross Profit 83,733 83,733 Operation Expenses: Compensation - officers 30,000 30,000 Research and development 55,453 55,453 Professional fees 41,797 41,797 General and administrative 60,673 60,673 Total Operating Expenses 187,923 187,923 Loss from Operations (104,190 ) (104,190 ) Other Income (Expense) Interest expense, net 20 20 Other income – – Total other expense 20 20 Loss before income taxes (104,170 ) (104,170 ) Income tax expense 800 800 Net Loss $ (104,970 ) $ (104,970 ) Weight Average Number of Common Shares Outstanding - Basic and Diluted 34,574,706 34,574,706 Net Loss per common share Basic and diluted $ (0.00 ) $ (0.00 ) {a} The Company previously recorded shipment of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales at gross amount and separately record cost of goods sold amount. {b} Revenue generated from Vitashower Corp., a company owned by the CEO, amounted to $3,563 for the three months ended June 30, 2017 was reclassified to be separately disclosed. | See below for result of 2016 restatement and reclassification. Previous reported Restated 12/31/2016 Adjustment 12/31/2016 ASSETS CURRENT ASSETS Cash and cash equivalents $ 340,073 (2 ) $ 340,071 Accounts receivable 35,896 (10,332 ) {a} 25,564 Accounts receivable - related party – 10,332 {a} 10,332 Inventories, net 104,832 (36,337 ) {b} 68,495 Prepaid expenses 7,962 7,962 Total Current Assets 488,763 – 452,424 Property and equipment, net 8,517 – 8,517 Other assets: Deposits 24,726 – 24,726 Total assets: $ 522,006 – $ 485,667 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable and accrued liabilities $ 372,912 (4,399 ) {c} $ 368,513 Customer deposit 57,726 4,400 {c} 62,126 Income taxes payable 800 – 800 Total Current Liabilities 431,438 431,439 Non-current Liabilities Deferred rent 468 – 468 Total Liabilities 431,906 431,907 Commitments and Contingencies Stockholders' Equity: Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of December 31, 2017 and 2016, respectively 34,575 – 34,575 Additional paid-in capital 713,239 658,379 {d} 1,371,618 Accumulated deficit (657,714 ) (694,719 ) {e} (1,352,433 ) Total stockholders' equity 90,100 53,760 Total Liabilities and Stockholders' Equity $ 522,006 $ 485,667 {a} The Company reclassified related party accounts receivable and payable balance into its own line item. {b}The Company reserved $36,337 for slow moving inventory items. {c} Customer deposit of $4,400 was reclassified out from accounts payable to correctly record in customer deposit. {d} The Company and Perfecular Inc. entered into merger agreement on December 30, 2015. The two entities are merger under common control. Per ASC 805-50-45, entities merger under common control should be recorded using book value and retained earnings is carried into the consolidated financial statements. The Company erroneously eliminated Perfecular Inc.’s retained earnings through consolidation. An adjustment is made to properly record investment made to the merger and record retained earnings of Perfecular Inc. {e} Accumulated adjustment effect in result of inventory reserve and adjustment to properly recorded investment made to the merger. Previously reported Restated 12/31/2016 Adjustment 12/31/2016 Revenue $ 337,496 778,723 {f} $ 1,116,219 Revenue - related party – 5,759 {g} 5,759 Total revenue 337,496 1,121,978 Cost of Revenue 57,128 809,431 {f}{h} 866,559 Gross Profit 280,368 255,419 Operation Expenses: Compensation - officers 121,385 121,385 Research and development 201,899 201,899 Professional fees 142,956 142,955 General and administrative 257,365 (1,155 ) {g} 256,210 Total Operating Expenses 723,605 722,449 Loss from Operations (443,237 ) (467,030 ) Other Income (Expense) Interest expense, net (203 ) 300 {g} 97 Other income 5,736 (5,148 ) {g} 588 Other expense (1,600 ) 1,012 {g} (588 ) Total other expense 3,933 91 Loss before income taxes (439,304 ) (466,939 ) Income tax provision 1,600 (1,105 ) {j} 495 Net Loss $ (440,904 ) $ (467,434 ) Weight Average Number of Common Shares Outstanding - Basic and Diluted 34,574,706 34,574,706 Net Loss per common share Basic and diluted $ (0.01 ) $ (0.01 ) {f} The Company previously recorded shipment of sales shipped directly from vendor to customer as net of cost of goods sold. The Company corrected the error by recording sales at gross amount and separately record cost of goods sold amount. {g} Other income and other expenses items were reclassified to other income statement accounts. Refund of rent expense of $1,155 was reclassified from other income to general and administrative expenses. Other expenses items including interest expense and cost of sales were reclassified to their respective accounts. Interest expense was reclassified from other income. {h} The Company reserved $36,337 for slow moving inventory items into cost of goods sold. {i}Income tax refund was reclassified from other income to income tax expense. Previously Restated 12/31/2016 Adjustment 12/31/2016 Cash flows from operating activities: Net Loss $ (440,904 ) (26,530 ) $ (467,434 ) Adjustments to reconcile net loss to net cash used in operating activities: Inventory reserve – 26,528 {j} 26,528 Depreciation expense 1,130 1,130 Changes in Operating Assets and Liabilities: Accounts receivable 70,993 10,332 {k} 81,325 Accounts receivable - related party – (10,332 ) {k} (10,332 ) Inventories (53,258 ) (53,258 ) Prepaid expenses 6,999 6,999 Accounts payable and accrued liabilities 96,987 (4,402 ) {l} 92,585 Customer deposit (82,303 ) 4,400 {l} (77,903 ) Deferred rent (443 ) (443 ) Net cash flows used in operating activities (400,799 ) (400,803 ) Cash flows from investing activities: Purchase of property and equipment (8,239 ) (8,239 ) Net cash flows used in investing activities (8,239 ) (8,239 ) Cash flows from financing activities: Repayment to related parties (63,369 ) (63,368 ) Repayment to shareholders (19,533 ) (19,534 ) Net cash flows provided by (used in) financing activities (82,902 ) (82,902 ) Net Change in Cash and Cash Equivalents (491,940 ) (491,944 ) Cash and cash equivalents - Beginning of Period 832,015 832,015 Cash and cash equivalents - End of Period $ 340,071 $ 340,071 {j} The Company reserved $36,337 for slow moving inventory items into cost of goods sold. {k} The Company reclassified related party accounts receivable and payable balance into its own line item. {l} Customer deposit of $4,400 was reclassified out from accounts payable to correctly record in customer deposit. |
2. Summary of Significant Acc24
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Inventory reserve | $ 27,067 | $ 36,337 | ||
Allowance for doubtful accounts | $ 0 | $ 0 | ||
Options outstanding | 0 | 0 | ||
Uncertain tax positions | $ 0 | $ 0 | ||
Potentially dilutive securities | 0 | 0 | ||
Allowance for slow moving or obsolete inventory | $ 66,155 | $ 27,067 |
3. Property and Equipment (Deta
3. Property and Equipment (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Abstract] | |||
Computers | $ 1,029 | $ 1,029 | $ 1,029 |
Furniture and fixtures | 8,850 | 8,850 | 8,850 |
Total cost | 9,879 | 9,879 | 9,879 |
Less accumulated depreciation | (4,633) | (3,543) | (1,362) |
Property and equipment, net | $ 5,246 | $ 6,336 | $ 8,517 |
3. Property and Equipment (De26
3. Property and Equipment (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 1,090 | $ 914 | $ 2,181 | $ 1,130 |
4. Convertible Promissory Note
4. Convertible Promissory Note (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Proceeds from convertible note | $ 0 | $ 420,000 | $ 500,000 | $ 0 |
Interest expense | 81,342 | |||
Interest expense, related to the amortization of the debt discount | 336,713 | $ 0 | 81,342 | $ 0 |
Debt converted, amount converted | $ 548,949 | |||
Debt converted, shares issued | 313,686 | |||
Convertible Note 1 [Member] | ||||
Proceeds from convertible note | $ 420,000 | |||
Debt stated interest rate | 10.00% | |||
Debt maturity date | Jun. 30, 2020 | |||
Beneficial conversion feature | $ 420,000 | |||
Convertible Note 2 [Member] | ||||
Proceeds from convertible note | $ 80,000 | |||
Debt stated interest rate | 10.00% | |||
Debt maturity date | Jul. 28, 2020 | |||
Beneficial conversion feature | $ 80,000 |
5. Related Party Transactions (
5. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Compensation for services | $ 513,736 | $ 41,797 | $ 563,897 | $ 69,777 | $ 107,899 | $ 142,955 |
Revenue from related parties | 3,200 | 3,563 | 10,575 | 6,571 | 6,571 | 5,759 |
President and CEO [Member] | ||||||
Compensation for services | 30,000 | 30,000 | 30,000 | 30,000 | 120,000 | 121,385 |
Vitashower Corp [Member] | ||||||
Revenue from related parties | $ 7,375 | $ 3,008 | $ 10,575 | $ 6,571 | $ 6,571 | $ 5,759 |
5. Related Party Transactions29
5. Related Party Transactions (June 2018 Note) (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Compensation for services | $ 513,736 | $ 41,797 | $ 563,897 | $ 69,777 | $ 107,899 | $ 142,955 |
Revenue from related parties | 3,200 | 3,563 | 10,575 | 6,571 | 6,571 | 5,759 |
Vitashower Corp [Member] | ||||||
Revenue from related parties | 7,375 | 3,008 | 10,575 | 6,571 | 6,571 | 5,759 |
Account receivable, Related Parties | 19,200 | 19,200 | 564 | |||
President and CEO [Member] | ||||||
Compensation for services | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | $ 120,000 | $ 121,385 |
6. Business Concentrations an30
6. Business Concentrations and Risk (Details Narrative) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts Receivable [Member] | One Customer [Member] | |||
Concentration risk percentage | 0.00% | 100.00% | 100.00% |
Accounts Payable [Member] | One Vendor [Member] | |||
Concentration risk percentage | 80.00% | 93.00% | 97.00% |
7. Commitments and Contingenc31
7. Commitments and Contingencies (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Commitments and Contingencies Disclosure [Abstract] | ||
Lease commitment 2018 | $ 21,630 | $ 42,840 |
Lease commitment 2019 | 14,420 | 14,420 |
Lease commitment thereafter | $ 0 | $ 0 |
7. Commitments and Contingenc32
7. Commitments and Contingencies (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 24,815 | $ 22,000 | $ 51,167 | $ 66,585 |
Sublease income | $ 8,800 |
9. Going Concern (Details Narra
9. Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Net loss | $ (1,095,278) | $ (104,970) | $ (1,299,111) | $ (213,685) | $ (626,361) | $ (467,434) |
Cash flows from operations | (528,684) | $ (109,177) | (445,673) | (400,803) | ||
Accumulated deficit | $ 457,377 | $ 457,377 | $ (1,978,794) | $ (1,352,433) |
10. Restatement (Details - Bala
10. Restatement (Details - Balance Sheet) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | |||||
Cash and cash equivalents | $ 3,721,226 | $ 394,398 | $ 650,896 | $ 340,071 | |
Accounts receivable | 0 | 26,311 | 25,564 | ||
Accounts receivable - related party | 19,200 | 564 | 10,332 | ||
Inventories, net | 66,309 | 47,432 | 68,495 | ||
Prepaid expenses | 1,667 | 8,280 | 7,962 | ||
Total Current Assets | 3,808,402 | 476,985 | 452,424 | ||
Property and equipment, net | 5,246 | 6,336 | 8,517 | ||
Deposits | 7,210 | 7,210 | 24,726 | ||
Total assets: | 3,820,858 | 490,531 | 485,667 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Accounts payable and accrued liabilities | 270,711 | 449,256 | 368,513 | ||
Customer deposit | 60,019 | 31,734 | 62,126 | ||
Income taxes payable | 0 | 800 | 800 | ||
Total Current Liabilities | 380,730 | 481,790 | 431,439 | ||
Deferred rent | 0 | 468 | |||
Total Liabilities | 380,730 | 563,132 | 431,907 | ||
Commitments and Contingencies | |||||
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of December 31, 2017 and 2016, respectively | 40,644 | 34,575 | 34,575 | ||
Additional paid-in capital | 12,487,372 | 1,871,618 | 1,371,618 | ||
Accumulated deficit | 457,377 | (1,978,794) | (1,352,433) | ||
Total stockholders' equity | (3,277,905) | (72,601) | 53,760 | ||
Total Liabilities and Stockholders' Equity | $ 3,440,128 | $ 490,531 | 485,667 | ||
Scenario, Previously Reported [Member] | |||||
CURRENT ASSETS | |||||
Cash and cash equivalents | 340,071 | $ 822,015 | |||
Accounts receivable | 35,896 | ||||
Accounts receivable - related party | 0 | ||||
Inventories, net | 104,832 | ||||
Prepaid expenses | 7,962 | ||||
Total Current Assets | 488,763 | ||||
Property and equipment, net | 8,517 | ||||
Deposits | 24,726 | ||||
Total assets: | 522,006 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Accounts payable and accrued liabilities | 372,912 | ||||
Customer deposit | 57,726 | ||||
Income taxes payable | 800 | ||||
Total Current Liabilities | 431,438 | ||||
Deferred rent | 468 | ||||
Total Liabilities | 431,906 | ||||
Commitments and Contingencies | |||||
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 34,574,706 shares issued and outstanding as of December 31, 2017 and 2016, respectively | 34,575 | ||||
Additional paid-in capital | 713,239 | ||||
Accumulated deficit | (657,714) | ||||
Total stockholders' equity | 90,100 | ||||
Total Liabilities and Stockholders' Equity | 522,006 | ||||
Adjustment [Member] | |||||
CURRENT ASSETS | |||||
Accounts receivable | (10,332) | ||||
Accounts receivable - related party | 10,332 | ||||
Inventories, net | (36,337) | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Accounts payable and accrued liabilities | (4,399) | ||||
Customer deposit | 4,400 | ||||
Commitments and Contingencies | |||||
Additional paid-in capital | 658,379 | ||||
Accumulated deficit | $ (694,719) |
10. Restatement (Details - Stat
10. Restatement (Details - Statement of Operations) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Revenue | $ 36,580 | $ 625,068 | $ 97,757 | $ 891,513 | $ 891,513 | $ 1,116,219 | ||
Revenue - related party | 3,200 | 3,563 | 10,575 | 6,571 | 6,571 | 5,759 | ||
Total revenue | 39,780 | 628,631 | 108,332 | 898,084 | 898,084 | 1,121,978 | ||
Cost of Revenue | 9,761 | 544,898 | 27,685 | 752,496 | 726,252 | 866,559 | ||
Gross Profit | 30,019 | 83,733 | 80,647 | 145,588 | 171,832 | 255,419 | ||
Compensation - officers | 30,000 | 30,000 | 60,000 | 60,000 | 120,000 | 121,385 | ||
Research and development | 56,771 | 55,453 | 107,789 | 109,929 | 208,238 | 201,899 | ||
Professional fees | 513,736 | 41,797 | 563,897 | 69,777 | 107,899 | 142,955 | ||
General and administrative | 135,874 | 60,673 | 205,037 | 123,582 | 255,531 | 256,210 | ||
Total Operating Expenses | 736,381 | 187,923 | 936,723 | 363,289 | 691,668 | 722,449 | ||
Loss from Operations | (706,362) | (104,190) | (856,076) | (217,701) | (519,836) | (467,030) | ||
Interest expense, net | (388,901) | 20 | (443,020) | 53 | (105,830) | 91 | ||
Other income | 0 | 0 | 0 | 4,763 | 0 | 588 | ||
Other expense | (1) | (588) | ||||||
Total other expense | (388,901) | 20 | (443,020) | 4,816 | (105,831) | 91 | ||
Loss before income taxes | (1,095,263) | (104,170) | (1,299,096) | (212,885) | (625,667) | (466,939) | ||
Income tax provision | 15 | 800 | 15 | 800 | 694 | 495 | ||
Net Loss | $ (1,095,278) | $ (104,970) | $ (1,299,111) | $ (213,685) | $ (626,361) | $ (467,434) | ||
Weight Average Number of Common Shares Outstanding - Basic and Diluted | 34,641,405 | 34,574,706 | 34,417,219 | 34,574,706 | 34,574,706 | 34,574,706 | ||
Net Loss per common share - Basic and diluted | $ (0.03) | $ 0 | $ (0.04) | $ (0.01) | $ (.02) | [1] | $ (0.01) | [1] |
Scenario, Previously Reported [Member] | ||||||||
Revenue | $ 337,496 | |||||||
Revenue - related party | $ 0 | $ 0 | 0 | |||||
Total revenue | 128,896 | 211,086 | 337,496 | |||||
Cost of Revenue | 45,163 | 65,498 | 57,128 | |||||
Gross Profit | 83,733 | 145,588 | 280,368 | |||||
Compensation - officers | 30,000 | 60,000 | 121,385 | |||||
Research and development | 55,453 | 109,929 | 201,899 | |||||
Professional fees | 41,797 | 69,777 | 142,956 | |||||
General and administrative | 60,673 | 123,083 | 257,365 | |||||
Total Operating Expenses | 187,923 | 362,789 | 723,605 | |||||
Loss from Operations | (104,190) | (217,201) | (443,237) | |||||
Interest expense, net | 20 | 53 | (203) | |||||
Other income | 0 | 4,763 | 5,736 | |||||
Other expense | (1,600) | |||||||
Total other expense | 20 | 4,815 | 3,933 | |||||
Loss before income taxes | (104,170) | (212,885) | (439,304) | |||||
Income tax provision | 800 | 800 | 1,600 | |||||
Net Loss | $ (104,970) | $ (213,685) | $ (440,904) | |||||
Weight Average Number of Common Shares Outstanding - Basic and Diluted | 34,574,706 | 34,574,706 | 34,574,706 | |||||
Net Loss per common share - Basic and diluted | $ 0 | $ (0.01) | $ (0.01) | |||||
Adjustment [Member] | ||||||||
Revenue | $ 778,723 | |||||||
Revenue - related party | $ 3,563 | $ 6,571 | 5,759 | |||||
Cost of Revenue | $ 499,736 | $ 686,998 | 809,431 | |||||
General and administrative | (1,155) | |||||||
Interest expense, net | 300 | |||||||
Other income | (5,148) | |||||||
Other expense | 1,012 | |||||||
Income tax provision | (1,105) | |||||||
Net Loss | $ (26,530) | |||||||
[1] | * Denotes a loss of less than $(0.01) per share |
12. Restatement (June 2018 Note
12. Restatement (June 2018 Note) (Details - Statement of Operations) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Revenue | $ 625,068 | $ 891,513 | ||||||
Revenue - related party | $ 3,200 | 3,563 | $ 10,575 | 6,571 | $ 6,571 | $ 5,759 | ||
Total revenue | 39,780 | 628,631 | 108,332 | 898,084 | 898,084 | 1,121,978 | ||
Cost of Revenue | 9,761 | 544,898 | 27,685 | 752,496 | 726,252 | 866,559 | ||
Gross Profit | 30,019 | 83,733 | 80,647 | 145,588 | 171,832 | 255,419 | ||
Compensation - officers | 30,000 | 30,000 | 60,000 | 60,000 | 120,000 | 121,385 | ||
Research and development | 56,771 | 55,453 | 107,789 | 109,929 | 208,238 | 201,899 | ||
Professional fees | 513,736 | 41,797 | 563,897 | 69,777 | 107,899 | 142,955 | ||
General and administrative | 135,874 | 60,673 | 205,037 | 123,582 | 255,531 | 256,210 | ||
Total Operating Expenses | 736,381 | 187,923 | 936,723 | 363,289 | 691,668 | 722,449 | ||
Loss from Operations | (706,362) | (104,190) | (856,076) | (217,701) | (519,836) | (467,030) | ||
Interest expense, net | (388,901) | 20 | (443,020) | 53 | (105,830) | 91 | ||
Other income | 0 | 0 | 0 | 4,763 | 0 | 588 | ||
Total other expense | (388,901) | 20 | (443,020) | 4,816 | (105,831) | 91 | ||
Loss before income taxes | (1,095,263) | (104,170) | (1,299,096) | (212,885) | (625,667) | (466,939) | ||
Income tax provision | 15 | 800 | 15 | 800 | 694 | 495 | ||
Net Loss | $ (1,095,278) | $ (104,970) | $ (1,299,111) | $ (213,685) | $ (626,361) | $ (467,434) | ||
Weight Average Number of Common Shares Outstanding - Basic and Diluted | 34,641,405 | 34,574,706 | 34,417,219 | 34,574,706 | 34,574,706 | 34,574,706 | ||
Net Loss per common share - Basic and diluted | $ (0.03) | $ 0 | $ (0.04) | $ (0.01) | $ (.02) | [1] | $ (0.01) | [1] |
Scenario, Previously Reported [Member] | ||||||||
Revenue | $ 128,896 | $ 211,086 | ||||||
Revenue - related party | 0 | 0 | $ 0 | |||||
Total revenue | 128,896 | 211,086 | 337,496 | |||||
Cost of Revenue | 45,163 | 65,498 | 57,128 | |||||
Gross Profit | 83,733 | 145,588 | 280,368 | |||||
Compensation - officers | 30,000 | 60,000 | 121,385 | |||||
Research and development | 55,453 | 109,929 | 201,899 | |||||
Professional fees | 41,797 | 69,777 | 142,956 | |||||
General and administrative | 60,673 | 123,083 | 257,365 | |||||
Total Operating Expenses | 187,923 | 362,789 | 723,605 | |||||
Loss from Operations | (104,190) | (217,201) | (443,237) | |||||
Interest expense, net | 20 | 53 | (203) | |||||
Other income | 0 | 4,763 | 5,736 | |||||
Total other expense | 20 | 4,815 | 3,933 | |||||
Loss before income taxes | (104,170) | (212,885) | (439,304) | |||||
Income tax provision | 800 | 800 | 1,600 | |||||
Net Loss | $ (104,970) | $ (213,685) | $ (440,904) | |||||
Weight Average Number of Common Shares Outstanding - Basic and Diluted | 34,574,706 | 34,574,706 | 34,574,706 | |||||
Net Loss per common share - Basic and diluted | $ 0 | $ (0.01) | $ (0.01) | |||||
Adjustment [Member] | ||||||||
Revenue | $ 496,172 | $ 680,427 | ||||||
Revenue - related party | 3,563 | 6,571 | $ 5,759 | |||||
Cost of Revenue | $ 499,736 | $ 686,998 | 809,431 | |||||
General and administrative | (1,155) | |||||||
Interest expense, net | 300 | |||||||
Other income | (5,148) | |||||||
Income tax provision | (1,105) | |||||||
Net Loss | $ (26,530) | |||||||
[1] | * Denotes a loss of less than $(0.01) per share |
10. Restatement (Details - Cash
10. Restatement (Details - Cash Flow) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||||||
Net Loss | $ (1,095,278) | $ (104,970) | $ (1,299,111) | $ (213,685) | $ (626,361) | $ (467,434) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Inventory reserve | 39,089 | 0 | (9,270) | 26,528 | ||
Depreciation expense | 1,090 | 914 | 2,181 | 1,130 | ||
Changes in Operating Assets and Liabilities: | 336,713 | 0 | 81,342 | 0 | ||
Accounts receivable | 26,311 | 14,043 | (747) | 81,325 | ||
Accounts receivable - related party | (18,636) | 0 | 9,768 | (10,332) | ||
Inventories | (57,966) | 20,179 | 30,333 | (53,258) | ||
Prepaid expenses | 6,613 | 636 | (318) | 6,999 | ||
Accounts payable and accrued liabilities | (47,649) | 9,743 | 80,743 | 92,585 | ||
Customer deposit | 28,285 | 47,145 | (30,392) | (77,903) | ||
Deferred rent | 0 | (468) | (468) | (443) | ||
Net cash flows used in operating activities | (528,684) | (109,177) | (445,673) | (400,803) | ||
Purchase of property and equipment | 0 | (8,239) | ||||
Net cash flows used in investing activities | 0 | (8,239) | ||||
Repayment to related parties | (548,949) | 0 | 0 | (63,368) | ||
Repayment to shareholders | 0 | (19,534) | ||||
Net cash flows provided by (used in) financing activities | 3,855,512 | 420,000 | 500,000 | (82,902) | ||
Net Change in Cash and Cash Equivalents | 3,326,828 | 310,823 | 54,327 | (491,944) | ||
Cash and cash equivalents - Beginning of Period | 394,398 | 340,071 | 340,071 | |||
Cash and cash equivalents - End of Period | $ 3,721,226 | 650,896 | $ 3,721,226 | 650,896 | 394,398 | 340,071 |
Scenario, Previously Reported [Member] | ||||||
Cash flows from operating activities: | ||||||
Net Loss | $ (104,970) | (213,685) | (440,904) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Inventory reserve | 0 | |||||
Depreciation expense | 1,130 | |||||
Accounts receivable | 70,993 | |||||
Accounts receivable - related party | 0 | |||||
Inventories | (53,258) | |||||
Prepaid expenses | 6,999 | |||||
Accounts payable and accrued liabilities | 96,987 | |||||
Customer deposit | (82,303) | |||||
Purchase of property and equipment | (8,239) | |||||
Net cash flows used in investing activities | (8,239) | |||||
Repayment to related parties | (63,369) | |||||
Repayment to shareholders | (19,533) | |||||
Net cash flows provided by (used in) financing activities | (82,902) | |||||
Net Change in Cash and Cash Equivalents | (491,940) | |||||
Cash and cash equivalents - Beginning of Period | $ 340,071 | $ 340,071 | 822,015 | |||
Cash and cash equivalents - End of Period | 340,071 | |||||
Adjustment [Member] | ||||||
Cash flows from operating activities: | ||||||
Net Loss | (26,530) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Inventory reserve | 26,528 | |||||
Accounts receivable | 10,332 | |||||
Accounts receivable - related party | (10,332) | |||||
Accounts payable and accrued liabilities | (4,402) | |||||
Customer deposit | $ 4,400 |
6. Business Concentrations an38
6. Business Concentrations and Risk (June 2018 Note) (Details Narrative) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts Receivable [Member] | One Customer [Member] | |||
Concentration risk percentage | 0.00% | 100.00% | 100.00% |
Accounts Payable [Member] | One Vendor [Member] | |||
Concentration risk percentage | 80.00% | 93.00% | 97.00% |
9. Subscription Receivable (J39
9. Subscription Receivable (June 2018 Note) (Details Narrative) - Private Placement [Member] - Investors [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 19, 2018 | |
Shares issued under private placement, Shares | 5,755,927 | |
Shares issued under private placement, Value | $ 6,267,360 | |
Share price | $ 1.75 |
10. Shares to be Issued, Comm40
10. Shares to be Issued, Common Shares (June 2018 Note) (Details Narrative) | 3 Months Ended |
Jun. 30, 2018USD ($)shares | |
Shares To Be Issued Common Shares | |
Stock issued for payment of professional expenses, Shares | shares | 261,358 |
Stock issued for payment of professional expenses, Value | $ | $ 457,377 |