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What changed in FOCUS UNIVERSAL INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FOCUS UNIVERSAL INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+226 added−207 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-31)

Top changes in FOCUS UNIVERSAL INC.'s 2023 10-K

226 paragraphs added · 207 removed · 158 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

73 edited+20 added−30 removed156 unchanged
Biggest changeAdditionally, we are performing research and development on an electric power line communication (“PLC”) technology and have filed three patents with the United States Patent and Trademark Office (USPTO) related to our Ubiquitor device and the design of a quantum PAR photo sensor.
Biggest changeAVX was established in 2000 with the goal of installing high-performance, easy-to-use Audio/Video, Home Theater, Lighting Control, Automation, and Integration systems for high-net-worth residential projects. ____________________ [21] Fortune, The global air filters market is projected to grow from $14.68 billion in 2022 to $23.83 billion by 2029, exhibiting a CAGR of 7.2% in forecast period, 2022-2029, https://www.fortunebusinessinsights.com/industry-reports/air-filters-market-101676, (last accessed March 7, 2023) 23 Additionally, we are performing research and development on an electric power line communication (“PLC”) technology and have filed three patents with the United States Patent and Trademark Office (USPTO) related to our Ubiquitor device and the design of a quantum PAR photo sensor.
Forecasts suggest that by 2030, around 50 billion of these IoT devices will be in use worldwide, creating a massive web of interconnected devices spanning everything from smartphones to kitchen appliances. [17]17 The IoT will significantly impact the economy by transforming many enterprises into digital businesses, facilitating new business models, improving efficiency, and increasing employee and customer engagement.
Forecasts suggest that by 2030, around 50 billion of these IoT devices will be in use worldwide, creating a massive web of interconnected devices spanning everything from smartphones to kitchen appliances. [17] The IoT will significantly impact the economy by transforming many enterprises into digital businesses, facilitating new business models, improving efficiency, and increasing employee and customer engagement.
We intend to sell and license the software to device manufacturers that use our DoC ICs and other industries where the software can be applied. 16 UIMAGP can be used in IoT software design and can be applied to other industry sectors. This division is planning to expand to other industries as well. Figure 16. Software market size.
We intend to sell and license the software to device manufacturers that use our DoC ICs and other industries where the software can be applied. UIMAGP can be used in IoT software design and can be applied to other industry sectors. This division is planning to expand to other industries as well. Figure 16. Software market size.
The small and cost-effective multicolor sensor and its related software protected by the potential patent we believe could achieve a spectral response that approximates an ideal photo response to measure optical measurement. The patent was issued on February 26, 2019.
We believe that the small and cost-effective multicolor sensor and its related software protected by the potential patent could achieve a spectral response that approximates an ideal photo response to measure optical measurement. The patent was issued on February 26, 2019.
On November 29, 2019, the Company filed an international utility patent application filed through the patent cooperation treaty as application PCT/US2019/63880. In April 2020, the Company was notified that it received a favorable international search report from the International Searching Authority regarding this patent application, which patents the Company’s PLC technology.
On November 29, 2019, the Company filed an international utility patent application through the patent cooperation treaty as application PCT/US2019/63880. In April 2020, the Company was notified that it received a favorable international search report from the International Searching Authority regarding this patent application, which patents the Company’s PLC technology.
We also intend to implement a direct sales method via Amazon.com and other online retailers. Raw Materials The electronic components used in the Ubiquitor are common and can be easily purchased through a variety of suppliers with little advanced notice. We predominantly use large-scale manufacturers in the United States such as Texas Instruments and Intel for the major components.
We also intend to implement a direct sales method via Amazon.com and other online retailers. 21 Raw Materials The electronic components used in the Ubiquitor are common and can be easily purchased through a variety of suppliers with little advanced notice. We predominantly use large-scale manufacturers in the United States such as Texas Instruments and Intel for the major components.
This two-phase approach will allow for continuous and increasing revenue growth. Moreover, during the industrial phase of development, the Company will test and refine its products to ensure that they are ready for the consumer and residential markets. 22 Once we have successfully entered the industrial sector, we intend to roll out additional technologies that are currently under development.
This two-phase approach will allow for continuous and increasing revenue growth. Moreover, during the industrial phase of development, the Company will test and refine its products to ensure that they are ready for the consumer and residential markets. Once we have successfully entered the industrial sector, we intend to roll out additional technologies that are currently under development.
This wholly owned subsidiary is registered to be engaged in IoT research and development, IoT sales and service, and other related activities. 29 Compliance with Environmental Laws We are not aware of any environmental laws that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our business.
This wholly owned subsidiary is registered to be engaged in IoT research and development, IoT sales and service, and other related activities. Compliance with Environmental Laws We are not aware of any environmental laws that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our business.
This makes the final programming much more efficient, as it needs relatively few lines of code to program a complicated application. d) Universal smart instrument division This division will focus on developing and marketing end-user universal smart instruments and shared distributed universal IoT devices for the commercial and residential markets.
This makes the final programming much more efficient, as it needs relatively few lines of code to program a complicated application. 16 d) Universal smart instrument division This division will focus on developing and marketing end-user universal smart instruments and shared distributed universal IoT devices for the commercial and residential markets.
Software also adds an element of flexibility and allows multiple discrete ICs, which in the past were unable to be further integrated into a single IC. Currently, ICs integration requires the development and manufacture of customized hardware and software. As a result, IC fabrication is too expensive to manufacture on a large scale.
Software also adds an element of flexibility and allows multiple discrete ICs, which in the past were unable to be further integrated into a single IC. 1 Currently, ICs integration requires the development and manufacture of customized hardware and software. As a result, IC fabrication is too expensive to manufacture on a large scale.
Our planned DoC technology allows devices to achieve interoperability with one another and are interchangeable, both features where traditional IoT devices fall short. 1 Our research and development suggest that the existing IC integration in IoT devices is mainly focused on hardware-to-hardware integration, not incorporating software solutions.
Our planned DoC technology allows devices to achieve interoperability with one another and are interchangeable, both features where traditional IoT devices fall short. Our research and development suggest that the existing IC integration in IoT devices is mainly focused on hardware-to-hardware integration, not incorporating software solutions.
The winning bids for all 5,684 available licenses totaled over $81 billion and were concentrated among just 21 bidders. [13] Given that Focus Universal operates in the ultra-narrowband spectrum where very limited spectrum is required and public access spectrum is also available, this is potentially less of a concern than pursuing the traditional broadband capacity pathways. ____________________ [13] Federal Communications Commissions (February 17, 2021), https://www.fcc.gov/document/fcc-announces-winning-bidders-37-ghz-service-auction, (last accessed March 7, 2023) 5 2) Coverage.
The winning bids for all 5,684 available licenses totaled over $81 billion and were concentrated among just 21 bidders. [13] Given that Focus Universal operates in the ultra-narrowband spectrum where very limited spectrum is required and public access spectrum is also available, this is potentially less of a concern than pursuing the traditional broadband capacity pathways F-24. ____________________ [13] Federal Communications Commissions (February 17, 2021), https://www.fcc.gov/document/fcc-announces-winning-bidders-37-ghz-service-auction, (last accessed March 7, 2023) 5 2) Coverage.
We also intend to promote and market ICs, licensing, and contract designing. Given that the power grid is an already established, ubiquitous network, connectivity via PLC technology may be the most cost-effective and scalable interconnectivity approach for the IoT.
We also intend to promote and market ICs, licensing, and contract designing. 14 Given that the power grid is an already established, ubiquitous network, connectivity via PLC technology may be the most cost-effective and scalable interconnectivity approach for the IoT.
A comparison of our ultra-narrowband technology with 4G and 5G is illustrated in the table below: Technology Bandwidth No. of subcarriers Operating Frequency Speed Spectral MHz GHz Mbps Bits/s/Hz 4G 20 1200 6 4-60 6 5G 100 3276 Up to 300 40-1100 10 UNB (finished) 0.001 1 0.004 4 ~4000 UNB (in development) 0.001 1 0.064 64-256 >4000 As shown in the table, our internal testing shows that our finished ultra-narrowband technology can achieve speeds of 4 Mbps per second at a bandwidth of less than 1000 Hz.
A comparison of our ultra-narrowband technology with 4G and 5G is illustrated in the table below: Technology Bandwidth No. of subcarriers Operating Frequency Speed Spectral MHz GHz Mbps Bits/s/Hz 4G 20 1200 6 4-60 6 5G 100 3276 Up to 300 40-1100 10 UNB (finished) 0.001 1 0.004 4 ~4000 UNB (in development) 0.001 1 0.064 64-256 >4000 As shown by the above table, our internal testing shows that our finished ultra-narrowband technology can achieve speeds of 4 Mbps per second at a bandwidth of less than 1000 Hz.
We intend to market the Ubiquitor to industrial end-users through Hydrofarm, through direct business-to-business sales channels and also directly to consumers via e-commerce internet platforms.
We intend to market the Ubiquitor to industrial end-users through direct business-to-business sales channels and also directly to consumers via e-commerce internet platforms.
One of our key strategies to grow through M&A is to acquire smaller businesses that focus on IoT installation technology (industrial or residential) and in the USIP or PLC industries. 25 Original Equipment Manufacturer (“OEM”) Engineering Consulting and Design Services Universal smart technology is new to most electronic engineers and manufacturers.
One of our key strategies to grow through M&A is to acquire smaller businesses that focus on IoT installation technology (industrial or residential) and in the USIP or PLC industries. 20 Original Equipment Manufacturer (“OEM”) Engineering Consulting and Design Services Universal smart technology is new to most electronic engineers and manufacturers.
Leveraging the same technical principles discussed above, we can simplify the smart control and monitoring in this and related industries (including agriculture and aquaculture) with a platform that requires little design work for interoperability between sensors and control devices. Figure 10. Traditional horticulture measurement and control devices. Figure 11.
Leveraging the same technical principles discussed above, we can simplify the smart control and monitoring in this and related industries (including agriculture and aquaculture) with a platform that requires little design work for interoperability between sensors and control devices. Figure 10. Traditional horticulture measurement and control devices. Figure 11. Universal Smart Device.
For our quantum light meters, and air filtration products, while we still continue to anticipate orders from Hydrofarm in 2023, we have begun to diversify away from one single dominant distributor into more diversified distribution channels, such as direct wholesale into retail outlets and direct distribution to end-users.
For our quantum light meters, and air filtration products, while we still continue to anticipate orders from Hydrofarm in 2024, we have begun to diversify away from one single dominant distributor into more diversified distribution channels, such as direct wholesale into retail outlets and direct distribution to end-users.
From March 14, 2014, through August 30, 2021, our securities traded on the OTCQB Market. From August 31, 2021, through January 27, 2022, our securities traded on the Nasdaq Capital Market. From January 28, 2022, to the present, our securities have traded on the Nasdaq Global Market. Our company websites are www.focusuniversal.com, www.avxdesign.com, and www.attechsystems.com.
From March 14, 2014, through August 30, 2021, our securities traded on the OTCQB Market. From August 31, 2021, through January 27, 2022, our securities traded on the Nasdaq Capital Market. From January 28, 2022, to the present, our securities have traded on the Nasdaq Global Market. Our company websites are www.focusuniversal.com, www.avxdesign.com, www.smart-avx.com, and www.attechsystems.com.
We filed 18 domestic patents in 2022 (plus two international patents in 2022), and so far have filed 3 patents in 2023. In addition, the Company’s patent number 11,488,468 was allowed and subsequently issued on November 1, 2022. The patent, titled Sensor for Detecting the Proximity of an IEEE 802.11 Protocol Connectable Device.
We filed 18 domestic patents in 2022 (plus two international patents in 2022), and filed 3 patents in 2023. In addition, the Company’s patent number 11,488,468 was allowed and subsequently issued on November 1, 2022. The patent, titled Sensor for Detecting the Proximity of an IEEE 802.11 Protocol Connectable Device.
The Company plans to use its current client base and expertise from these installation services to integrate products developed on the USIP into the project proposals. ____________________ [19] Market and Markets, May 2021, Agriculture IoT Market worth $18.1 billion by 2026, https://www.marketsandmarkets.com/PressReleases/iot-in-agriculture.asp, (last accessed March 7, 2023) [20] Cision, January 25, 2023, Integrated Circuits Market to Reach USD 1,248.6 Billion by 2030, https://www.prnewswire.com/news-releases/integrated-circuits-market-to-reach-usd-1-248-6-billion-by-2030--301730536.html, (last accessed March 7, 2023) 18 Products we are currently selling In addition to the technologies which we have developed and described above, we are a wholesaler of various digital, analog, and quantum light meters and filtration products, including fan speed adjusters, carbon filters, and HEPA filtration systems.
The Company plans to use its current client base and expertise from these installation services to integrate products developed on the USIP into the project proposals. ____________________ [19] Market and Markets, May 2021, Agriculture IoT Market worth $18.1 billion by 2026, https://www.marketsandmarkets.com/PressReleases/iot-in-agriculture.asp, (last accessed March 7, 2023) [20] Cision, January 25, 2023, Integrated Circuits Market to Reach USD 1,248.6 Billion by 2030, https://www.prnewswire.com/news-releases/integrated-circuits-market-to-reach-usd-1-248-6-billion-by-2030--301730536.html, (last accessed March 7, 2023) 17 Products we are currently selling We are a wholesaler of various digital, analog, and quantum light meters and filtration products, including fan speed adjusters, carbon filters and HEPA filtration systems.
Universal Smart Device. 12 All household measurement and control devices, such as air conditioner controls, swimming pool controls, garage door controls, sprinkler controls, lighting controls, and motorized curtain controls, can be replaced by a single universal device and corresponding unique accessories. Figure 12. A single universal smart device can replace all these household control devices.
All household measurement and control devices, such as air conditioner controls, swimming pool controls, garage door controls, sprinkler controls, lighting controls, and motorized curtain controls, can be replaced by a single universal device and corresponding unique accessories. Figure 12.
Once the technology is established there, the core technologies of universality and interoperability through a readily available device, such as a mobile device or smartphone, may be ported to products specifically intended for the consumer and residential markets. While industrial markets are large, the consumer and residential markets are even more significant.
Once the technology is established in that industry, the core technologies of universality and interoperability through a readily available device, such as a mobile device or smartphone, may be ported to products specifically intended for the consumer and residential markets. While industrial markets are large, the consumer and residential markets are even more significant.
We have finished designing smart devices for lighting control, air conditioner control, sprinkler control, garden light control, garage door control, and heating control. We are developing a swimming pool control device, smoke detector, and carbon monoxide monitor.
We have finished designing smart devices for lighting control, air conditioner control, sprinkler control, garden light control, garage door control, and heating control and are in the process of developing a swimming pool control device, smoke detector, and carbon monoxide monitor.
Employees As of the date of this report we have a total of 32 employees, with 25 full-time employees and 7 part-time employees. The Company’s Chief Executive Officer and Secretary is Dr. Desheng Wang, and our Chief Financial Officer is Irving Kau. We have a head of marketing whose efforts are focused on the controlled agricultural market segment.
Employees As of the date of this report we have a total of 46 employees, with 43 full-time employees and 3 part-time employees. The Company’s Chief Executive Officer and Secretary is Dr. Desheng Wang, and our Chief Financial Officer is Irving Kau. We have a head of marketing whose efforts are focused on the controlled agricultural market segment.
Research and Development Activities For the year ended December 31, 2022, we spent a total of $1,060,385 on research and development activities; and for the year ended December 31, 2021, we spent a total of $220,469. Focus Universal (Shenzhen) Technology Co. LTD was founded as a mainland China office for manufacturing procurement expertise and non-confidential support research and development activities.
Research and Development Activities For the year ended December 31, 2023, we spent a total of $1,386,810 on research and development activities; and for the year ended December 31, 2022, we spent a total of $1,060,385. Focus Universal (Shenzhen) Technology Co. LTD was founded as a mainland China office for manufacturing procurement expertise and non-confidential support research and development activities.
The Complaint alleges claims including discrimination, wrongful termination, retaliation and various other provisions of the California Labor Code, and various other claims under California state law. The complaint seeks unspecified economic and non-economic losses, as well as attorneys’ fees. We have completed written discovery and most of the non-expert discovery. Trial is set for October 11, 2023.
The Complaint alleges claims including discrimination, wrongful termination, retaliation and various other provisions of the California Labor Code, and various other claims under California state law. The complaint seeks unspecified economic and non-economic losses, as well as attorneys’ fees. The parties have completed written discovery and most of the non-expert discovery. Trial is set for May 8, 2024.
The cheapest competitor we can identify in this sector is Vivint Smart Home, which costs less than $5,000 to install; however, we understand that the Vivint Smart Home focuses on security systems only and that users have no other smart applications, which our smart home product line would include. 27 Air Filtration Systems and Meter Products Industry The air filtration system and meter products industry is a niche industry.
The cheapest competitor we can identify in this sector is Vivint Smart Home, which costs less than $5,000 to install; however, we understand that the Vivint Smart Home focuses on security systems only and that users have no other smart applications, which our smart home product line would include.
Four divisions have been established within our Company to develop and promote our technologies. We believe that our technologies, as depicted above, can be used in standalone device design and production and on large scale IoT device design and production, aiming to solve the attendant complexity and cost challenges. a) Ultra-narrowband power line communication division.
We believe that our technologies, as depicted above, can be used in standalone device design and production and on large scale IoT device design and production, aiming to solve the attendant complexity and cost challenges. a) Ultra-narrowband power line communication division.
We source these products from manufacturers in China and then sell them to a major U.S. distributor, Hydrofarm, who resells our products directly to consumers through retail distribution channels and, in some cases, places its branding on our products. Specifically, we sell the following products: Fan speed adjuster device .
We source these products from various manufacturers in China and then sell them to a major U.S. distributor, Hydrofarm, who resells our products directly to consumers through retail distribution channels and, in some cases, places its own branding on our products.
Internet of Things Overview IoT refers to the overarching network created by billions of internet-compatible devices and machines that share data and information worldwide. According to a Gartner report, by the end of 2020, there were an estimated 20 billion IoT-connected devices in use around the world.
A single universal smart device can replace all these household control devices. 12 Internet of Things Overview IoT refers to the overarching network created by billions of internet-compatible devices and machines that share data and information worldwide. According to a Gartner report, by the end of 2020, there were an estimated 20 billion IoT-connected devices in use around the world.
Also, the sensors’ real-time updates are slow; and we believe security of the web-based sensor data acquisition may be a concern. In addition to purchasing the device, consumers usually have to pay a monthly fee for using web-based services.
Many of Monnit’s products are web-based wireless sensors that usually are not portable because of their power consumption. Also, the sensors’ real-time updates are slow; and we believe security of the web-based sensor data acquisition may be a concern. In addition to purchasing the device, consumers usually have to pay a monthly fee for using web-based services.
On May 19, 2021, we filed thirteen provisional patent applications with the USPTO that we had been researching and developing for years encompassing a broad spectrum of technology areas including sensor technology, wired and wireless communications, power line communications, computer security, software solutions, interconnected technological communications, smart home systems and methods for both home and hydroponic areas, dynamic password cipher, local file security, payment card security, infrared sensor, and a method and apparatus for high data rate transmission.
Consequently, the Company is optimistic that the patent covering the claims for its PLC technology will be issued in due course and will allow the Company to implement strong protections on the PLC technology worldwide. 24 On May 19, 2021, we filed thirteen provisional patent applications with the USPTO that we had been researching and developing for years, encompassing a broad spectrum of technology areas including sensor technology, wired and wireless communications, power line communications, computer security, software solutions, interconnected technological communications, smart home systems and methods for both home and hydroponic areas, dynamic password cipher, local file security, payment card security, infrared sensor, and a method and apparatus for high data rate transmission.
LTD, was founded in December 2021 as an office for manufacturing procurement expertise and support research and development activities. Focus Universal (Shenzhen) Technology Co.
Our subsidiary unit in the Canton province of mainland China, Focus Universal (Shenzhen) Technology Co. LTD, was founded in December 2021 as an office for manufacturing procurement expertise and support research and development activities. Focus Universal (Shenzhen) Technology Co.
We believe that market size will increase significantly with the introduction of our ultra-narrowband PLC technology, which can overcome the interference and noise challenges presented by traditional PLC technology.
It is our understanding that no other vendor has developed a PLC technology application that is similar to our ultra-narrowband PLC technology. We believe that market size will increase significantly with the introduction of our ultra-narrowband PLC technology, which can overcome the interference and noise challenges presented by traditional PLC technology.
Operating in relatively lower frequency spectrum bands, when compared to 5G, also means that 5G+ would have a more extensive coverage area than that of 5G, in many cases three to ten times larger.
Operating in relatively lower frequency spectrum bands, when compared to 5G, also means that 5G+ would have a more extensive coverage area than that of 5G, in many cases three to ten times larger. It would also mean that we could reduce the number of subcarriers and reduce the overall costs of the 5G networks infrastructure.
In response to the Complaint, defendants filed a motion to compel arbitration asking the court to order Plaintiff to submit his claims to binding individual arbitration based on an arbitration agreement signed by Plaintiff at the outset of his employment. The motion was unfortunately denied, and in response, defendants filed an appeal. The appeal was also denied.
The complaint seeks unspecified economic and non-economic losses, as well as attorneys’ fees. In response to the Complaint, defendants filed a motion to compel arbitration asking the court to order Plaintiff to submit his claims to binding individual arbitration based on an arbitration agreement signed by Plaintiff at the outset of his employment.
Our patented PLC is an innovative communication technology that enables sending data over existing power cables in the electric grid. Because PLC uses the existing power lines, it does not require substantial new investment for a dedicated wiring infrastructure. Existing power lines already form a distribution network that penetrates every residential, commercial, and industrial property.
Leveraging ultra-narrowband power line communication (“PLC”) technology. Our patented PLC is an innovative communication technology that enables sending data over existing power cables in the electric grid. Because PLC uses the existing power lines, it does not require substantial new investment for a dedicated wiring infrastructure.
We have eleven full-time senior electrical and computer engineers working on the research and development of our products. We have one full-time sales employee and three full-time employees are working on administrative tasks. We also have a full-time accounting manager/controller. Four employees perform audio/visual home installations for our subsidiary AVX, with one employee serving as the supervisor and operational head.
We have eleven full-time senior electrical and computer engineers working on the research and development of our products. We have one full-time sales employee and three full-time employees are working on administrative tasks. We also have a full-time accounting manager/controller.
On or about April 14, 2020, Devesa Sarria, the Sales and Marketing Director, was terminated. On May 13, 2020, she filed an action in the Superior Court for the County of Los Angeles, State of California.
However, since litigation and investigations are inherently uncertain, the outcome of this litigation could have a material impact on the Company. On or about April 14, 2020, Devesa Sarria, the Sales and Marketing Director of the Company, was terminated. On May 13, 2020, she filed an action in the Superior Court for the County of Los Angeles, State of California.
Comparison between (a) a traditional machine to machine IoT and (b) a shared distributed universal IoT, which depicts a USIP and sensors forming a local network through PLC technology. The platform communicates with the cloud to form a remote cloud-based system. Figure 14.
Comparison between (a) a traditional machine to machine IoT and (b) a shared distributed universal IoT, which depicts a USIP and sensors forming a local network through PLC technology.
Given that the power grid is, for the most part, an established ubiquitous network, PLC is potentially the most cost-effective, scalable interconnectivity approach for the backbone communication infrastructure required for the IoT.
Existing power lines already form a distribution network that penetrates every residential, commercial, and industrial property. Given that the power grid is, for the most part, an established ubiquitous network, PLC is potentially the most cost-effective, scalable interconnectivity approach for the backbone communication infrastructure required for the IoT.
The narrower the bandwidth, the less energy consumption. By maintaining the 1,000 Hz bandwidth, our ultra-narrowband wireless technology can save electricity usage by a factor of up to 100,000 times when compared with a 5G network. We believe that our ultra-narrowband wireless technology has the potential to push the wireless frontier well beyond 5G.
Our technology’s 1,000 Hz bandwidth is approximately 20,000 times narrower than 4G networks and 100,000 times narrower than 5G networks. The narrower the bandwidth, the less energy consumption. By maintaining the 1,000 Hz bandwidth, our ultra-narrowband wireless technology can save electricity usage by a factor of up to 100,000 times when compared with a 5G network.
In the future, this office could also handle other online marketing and marketing production activities, provided a cost and quality benefit exists at the time. 24 Our goals over the next three years include: · Raise capital to move into full manufacturing and production for our Ubiquitor device; · Partner with manufacturers and promote the adoption of our Ubiquitor device in a USIP; · Acquire a stable market share of the sensor device market; · Continue performing research and development on PLC technology; · Focus on building our smart home offerings so that we can reduce the cost of smart home implementation to focus on expanding smart home installation and implementation beyond luxury homes; · File additional patents to expand our intellectual property portfolio related to the many uses of our Ubiquitor device; and · File patents to protect our PLC technology.
However, promoting universal smart technology and universal smart IoT devices to our customers, including traditional instrument manufacturers, will be the central focus of our future business. 19 Our goals over the next three years include: · Raise capital to move into full sales and marketing team for our Ubiquitor device and growing product lines; · Partner with manufacturers and promote the adoption of our Ubiquitor device in a USIP; · Acquire a stable market share of the sensor device market; · Continue performing research and development on PLC technology; · Focus on building our smart home offerings so that we can reduce the cost of smart home implementation to expand smart home installation and implementation beyond luxury homes; · File additional patents to expand our intellectual property portfolio related to the many uses of our Ubiquitor device; and · File patents to protect our PLC technology.
We expect our ultra-narrowband wireless technology to achieve data transfer rates of 256 Mbps using 4 subcarrier waves, which is close to 5G speeds requiring more than three thousand subcarrier waves. The projected speed can be further increased if multiple carrier waves or higher operating frequencies are used.
We expect our ultra-narrowband wireless technology to achieve data transfer rates of 256 Mbps using 4 subcarrier waves, which is close to 5G speeds requiring more than three thousand subcarrier waves.
After our internal research and development efforts, we filed with the USPTO on June 2, 2017, a patent application regarding a process for improving the spectral response curve of a photo sensor.
Patent Application No. 9924295 entitled “Universal Smart Device,” which covers a patent application regarding the Company’s Universal Smart Device. The patent was granted on March 20, 2018. After our internal research and development efforts, we filed with the USPTO on June 2, 2017, a patent application regarding a process for improving the spectral response curve of a photo sensor.
Leveraging the Company’s ultra-narrowband PLC technology and USIP, we intend to provide a more stable, secure, and faster network for large industrial operations requiring data-specific sensing and control automation to ensure optimal outcomes.
This division will also develop and market end-user universal smart instruments and shared distributed universal IoT devices in the horticulture, agriculture, and aquaculture industries. Leveraging the Company’s ultra-narrowband PLC technology and USIP, we intend to provide a more stable, secure, and faster network for large industrial operations requiring data-specific sensing and control automation to ensure optimal outcomes.
A blood pressure sensor is connected to our universal device, which we call the Ubiquitor, and changes our device into a blood pressure measurement instrument. ____________________ [16] Gartner Insights “Leading the IoT,” available at: https://www.gartner.com/imagesrv/books/iot/iotEbook_digital.pdf (last accessed March 7, 2023). 9 Similarly, if we remove the blood pressure sensor and connect our universal device to both a pH sensor and a CO2 sensor, the universal device changes to a two-sensor device capable of measuring pH and CO2 concentration.
A blood pressure sensor is connected to our universal device, which we call the Ubiquitor, and changes our device into a blood pressure measurement instrument. 9 Similarly, if we remove the blood pressure sensor and connect our universal device to both a pH sensor and a CO2 sensor, the universal device changes to a two-sensor device capable of measuring pH and CO2 concentration.
The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 30
The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Smart home products, including light controls, air conditioner controls, sprinkler controls, garden light controls, heating floor controls, motorized curtain controls, pool filtration and algae controls, smoke detector controls, carbon monoxide measurement, motion detectors, and doorbells, have been designed and tested. 17 This division will also develop and market end-user universal smart instruments and shared distributed universal IoT devices in the horticulture, agriculture, and aquaculture industries.
Smart home products, including light controls, air conditioner controls, sprinkler controls, garden light controls, heating floor controls, motorized curtain controls, pool filtration and algae controls, smoke detector controls, carbon monoxide measurement, motion detectors, and doorbells, have been designed and tested.
We finalized our ultra-narrowband technology research with data transfer speeds of 64-256 Mbps in the fourth quarter of 2022. We now need to build testing equipment. This requires us to design and build a digital device that can perform the digital speed testing.
We believe that our ultra-narrowband wireless technology has the potential to push the wireless frontier well beyond 5G. We finalized our ultra-narrowband technology research with data transfer speeds of 64-256 Mbps in the fourth quarter of 2022. We now need to build testing equipment.
Trial for this matter is not set, nor has discovery been conducted. AVX intends to vigorously contest this matter. Further, AVX disputes that the other defendants are proper parties to the litigation. However, litigation and investigations are inherently uncertain, but the outcome could have a material impact on the Company.
AVX intends to vigorously contest this matter. Further, AVX disputes that the other defendants are proper parties to the litigation. However, litigation and investigations are inherently uncertain, but the outcome could have a material impact on the Company. Reports to Securities Holders We provide an annual report that includes audited financial information to our shareholders.
Comparison between (a) a traditional wireless network and (b) Focus Universal Inc.’s PLC network. 14 How we will implement our business plan We currently operate in the scientific instruments industry and the smart home installations industry and plan to apply several of our new technologies to the IoT marketplace.
How we will implement our business plan We currently operate in the scientific instruments industry and the smart home installations industry and plan to apply several of our new technologies to the IoT marketplace. Four divisions have been established within our Company to develop and promote our technologies.
Reports to Securities Holders We provide an annual report that includes audited financial information to our shareholders. We make our financial information equally available to any interested parties or investors through compliance with the disclosure rules for a small business issuer under the Exchange Act.
We make our financial information equally available to any interested parties or investors through compliance with the disclosure rules for a small business issuer under the Exchange Act. We are subject to disclosure filing requirements including filing Form 10-K annually and Form 10-Q quarterly.
Our quantum light meters and handheld sensors are also manufactured in our Ontario, California facility. Our air filtration products are manufactured and assembled in China by a third-party contract manufacturer, Tianjin Guanglee. Our subsidiary unit in the Canton province of mainland China, Focus Universal (Shenzhen) Technology Co.
Manufacturing and Assembly We have an assembly facility in Ontario, California where we assemble the Ubiquitor from parts sourced predominantly in the United States. Our quantum light meters and handheld sensors are also manufactured in our Ontario, California facility. Our air filtration products are manufactured and assembled in China by a third-party contract manufacturer, Tianjin Guanglee.
On August 31, 2021, the Company commenced trading on the Nasdaq Capital Market under the symbol “FCUV.” ____________________ [21] Fortune, The global air filters market is projected to grow from $14.68 billion in 2022 to $23.83 billion by 2029, exhibiting a CAGR of 7.2% in forecast period, 2022-2029, https://www.fortunebusinessinsights.com/industry-reports/air-filters-market-101676, (last accessed March 7, 2023) 28 On September 2, 2021, the Company announced the closing of an underwritten public offering of 2,300,000 newly issued shares of common stock at a price to the public of $5.00 per share.
On August 31, 2021, the Company commenced trading on the Nasdaq Capital Market under the symbol “FCUV.” On September 2, 2021, the Company announced the closing of an underwritten public offering of 2,300,000 newly issued shares of common stock at a price to the public of $5.00 per share.
We have designed the devices and we should receive the finished circuit boards in the next few weeks and hope that such device will be completed by the end of 2023. Markets and Markets projects that the 5G infrastructure market will reach USD 47,775 million by 2027, at a CAGR of 67.1%.
Markets and Markets projects that the 5G infrastructure market will reach USD 47,775 million by 2027, at a CAGR of 67.1%.
However, their products are not compatible with smart phones yet; and we believe their price point is still prohibitive to consumers. Monnit Corporation offers a range of wireless and remote sensors. Many of Monnit’s products are web-based wireless sensors that usually are not portable because of their power consumption.
Hach developed and launched the SC1000 Multi-parameter Universal Controller, a probe module for connecting to 32 digital sensors or analyzers. However, their products are not compatible with smart phones yet; and we believe their price point is still prohibitive to consumers. Monnit Corporation offers a range of wireless and remote sensors.
Other key suppliers we could consider include Analog Devices, Skyworks Solutions, Infineon, STMicroelectronics, NXP Semiconductors, Maxim Integrated, On Semiconductor, and Microchip Technology.
Other key suppliers we could consider include Analog Devices, Skyworks Solutions, Infineon, STMicroelectronics, NXP Semiconductors, Maxim Integrated, On Semiconductor, and Microchip Technology. Production and assembly lines are also available worldwide if we needed to outsource or increase our capacity, though we intend to complete our assembly in our Ontario, California facility.
The World International Property Organization report cited only three category “A” documents, indicating that the Company’s application met both the novelty and non-obviousness patentability requirements. Consequently, the Company is optimistic that the patent covering the claims for its PLC technology will be issued in due course and will allow the Company to implement strong protections on the PLC technology worldwide.
The World International Property Organization report cited only three category “A” documents, indicating that the Company’s application met both the novelty and non-obviousness patentability requirements.
We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549.
The public may read and copy any materials that we file with the Securities and Exchange Commission at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The Company entered the residential and commercial automation installation service industry through the acquisition of AVX Design and Integration, Inc. (“AVX”) in March of 2019. AVX was established in 2000 with the goal of installing high-performance, easy-to-use Audio/Video, Home Theater, Lighting Control, Automation, and Integration systems for high-net-worth residential projects.
The Company entered the residential and commercial automation installation service industry through the acquisition of AVX Design and Integration, Inc. (“AVX”) in March of 2019.
We believe our USIP will revolutionize the field of instrumentation, measurement, control, and automation. 8 USIP is a versatile platform, able to perform and combine different measurements and controls, to substitute some instruments for others, and to integrate existing instruments into it.
We believe our USIP will revolutionize the field of instrumentation, measurement, control, and automation. ____________________ [15] Environmental Health Trust, https://ehtrust.org/science/reports-on-power-consumption-and-increasing-energy-use-of-wireless-systems-and-digital-ecosystem/, (last accessed March 7, 2023) [16] Gartner Insights “Leading the IoT,” available at: https://www.gartner.com/imagesrv/books/iot/iotEbook_digital.pdf (last accessed March 7, 2023). 8 USIP is a versatile platform, able to perform and combine different measurements and controls, to substitute some instruments for others, and to integrate existing instruments into it.
On January 26, 2022, the Company announced approval for the uplist of its stock onto the Nasdaq Global Market exchange under the symbol “FCUV.” Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions On November 4, 2016, we filed a U.S. patent application number 15/344,041 with the USPTO.
Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions On November 4, 2016, we filed a U.S. patent application number 15/344,041 with the USPTO. On March 5, 2018, we issued a press release announcing that the USPTO had issued an Issue Notification for U.S.
The complaint alleges claims including discrimination, wrongful termination, retaliation and various other provisions of the California Labor Code, and various other claims under California state law. The complaint seeks unspecified economic and non-economic losses, as well as attorneys’ fees.
Patterson filed an action in the Superior Court for the County of Los Angeles, State of California, against the Company, et. al. The complaint alleges claims including discrimination, wrongful termination, retaliation and various other provisions of the California Labor Code, and various other claims under California state law.
These differences make it challenging to create one standard interoperability format for acquiring, harmonizing, storing, accessing, analyzing, and sharing data in near real-time.
These differences make it challenging to create one standard interoperability format for acquiring, harmonizing, storing, accessing, analyzing, and sharing data in near real-time. In fact, not even those instruments built on the same platform are necessarily interoperable because they are often highly customized to an organization’s unique workflow and preferences. Wireless networks are far from perfect for IoT.
The major vendors of PLC technology include ABB, General Electric, Siemens, AMETEK, Schneider Electric, Texas Instruments, Maxim Integrated, Devolo, Cypress Semiconductor, ST Microelectronics, Panasonic, Microchip, Qualcomm Atheros, TP-Link Technologies, NETGEAR, D-Link, NXP Semiconductor NV, Landis+Gyr, Sigma Designs, Zyxel Communications, Nyx Hemera Technologies, and Renesas Electronics Corporation. ____________________ [18] GlobalNewswire, December 19, 2022, https://www.globenewswire.com/en/news-release/2022/12/19/2576452/0/en/Global-Programmable-Logic-Controller-PLC-Market-to-Reach-17-6-Billion-by- 2028-Presence-of-Over-1-500-Manufacturers-Makes-it-Highly-Fragmented.html, (March 7, 2023) 15 It is our understanding that no other vendor has developed a PLC technology application that is similar to our ultra-narrowband PLC technology.
The major vendors of PLC technology include ABB, General Electric, Siemens, AMETEK, Schneider Electric, Texas Instruments, Maxim Integrated, Devolo, Cypress Semiconductor, ST Microelectronics, Panasonic, Microchip, Qualcomm Atheros, TP-Link Technologies, NETGEAR, D-Link, NXP Semiconductor NV, Landis+Gyr, Sigma Designs, Zyxel Communications, Nyx Hemera Technologies, and Renesas Electronics Corporation.
It is designed to measure up to 10,000 µmol. Our Quantum Par Meter Device 21 Smart Home Installation Through AVX Design and Integration, Inc. (“AVX”), an IoT installation and management company based in southern California, and a subsidiary of the Company, we offer residential customers an entire smart home product line.
This one-of-a-kind Ubiquitor was first showcased at the Consumer Technology Association’s CES 2024 trade show, which attracted significant interest from potential customers. 18 Smart Home Installation Through AVX Design and Integration, Inc. (“AVX”), an IoT installation and management company based in southern California, and a subsidiary of the Company, we offer residential customers an entire smart home product line.
In fact, not even those instruments built on the same platform are necessarily interoperable because they are often highly customized to an organization’s unique workflow and preferences. ____________________ [17] Statista Report “Number of internet of things (IoT) connected devices worldwide in 2018, 2025 and 2030” available at https://www.statista.com/statistics/802690/worldwide-connected-devices-by-access-technology/ (last accessed March 7, 2023). 13 Wireless networks are far from perfect for IoT.
The platform communicates with the cloud to form a remote cloud-based system. ____________________ [17] Statista Report “Number of internet of things (IoT) connected devices worldwide in 2018, 2025 and 2030” available at https://www.statista.com/statistics/802690/worldwide-connected-devices-by-access-technology/ (last accessed March 7, 2023). 13 Figure 14. Comparison between (a) a traditional wireless network and (b) Focus Universal Inc.’s PLC network.
Legal Proceedings On or about April 13, 2020, Ian Patterson, the Chief Operations Officer of AVX resigned from his position. On May 5, 2020, Mr. Patterson filed an action in the Superior Court for the County of Los Angeles, State of California, against the Company, et al.
Four employees perform audio/visual home installations for our subsidiary AVX, with one employee serving as the supervisor and operational head. 25 Legal Proceedings On or about April 13, 2020, Ian Patterson, the Chief Operations Officer of AVX resigned from his position. On May 5, 2020, Mr.
We are subject to disclosure filing requirements including filing Form 10-K annually and Form 10-Q quarterly. In addition, we will file Form 8-K and other proxy and information statements from time to time as required.
In addition, we will file Form 8-K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act.
It would also mean that we could reduce the number of subcarriers and reduce the overall costs of the 5G networks infrastructure. ____________________ [14] “How much does it cost to build a 5G base station?” Phate Zhang, April 7, 2020, CNTechPost (available at: https://cntechpost.com/2020/04/07/how-much-does-it-cost-to-build-a-5g-base-station/ (last accessed March 7, 2023)). [15] Environmental Health Trust, https://ehtrust.org/science/reports-on-power-consumption-and-increasing-energy-use-of-wireless-systems-and-digital-ecosystem/, (last accessed March 7, 2023) 6 Further, the design of 5G+ infrastructure means that cost savings could be realized as there is the potential of piggybacking the required 5G+ infrastructure on the current 4G infrastructure.
As outlined above, 5G+ has the potential to overcome the challenges presented using higher broadband spectrums required for the implementation of the broadband technology used in 5G. ____________________ [14] “How much does it cost to build a 5G base station?” Phate Zhang, April 7, 2020, CNTechPost (available at: https://cntechpost.com/2020/04/07/how-much-does-it-cost-to-build-a-5g-base-station/ (last accessed March 7, 2023)). 6 3.
Our current research and development efforts are focused on an operating frequency of 64 megahertz (MHz), which is about 100 times lower than 4G networks (6 gigahertz (GHz)) and 5,000 times lower than 5G networks (up to 300 GHz). Our technology’s 1,000 Hz bandwidth is approximately 20,000 times narrower than 4G networks and 100,000 times narrower than 5G networks.
The projected speed can be further increased if multiple carrier waves or higher operating frequencies are used. ____________________ [18] GlobalNewswire, December 19, 2022, https://www.globenewswire.com/en/news-release/2022/12/19/2576452/0/en/Global-Programmable-Logic-Controller-PLC-Market-to-Reach-17-6-Billion-by- 2028-Presence-of-Over-1-500-Manufacturers-Makes-it-Highly-Fragmented.html, (March 7, 2023) 15 Our current research and development efforts are focused on an operating frequency of 64 megahertz (MHz), which is about 100 times lower than 4G networks (6 gigahertz (GHz)) and 5,000 times lower than 5G networks (up to 300 GHz).
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Finally, 5G+ only consumes 1/25,000 to 1/6,250 of the energy consumed by 5G. As outlined above, 5G+ has the potential to overcome the challenges presented using higher broadband spectrums required for the implementation of the broadband technology used in 5G. 3. Leveraging ultra-narrowband power line communication (“PLC”) technology.
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Further, the design of 5G+ infrastructure means that cost savings could be realized as there is the potential of piggybacking the required 5G+ infrastructure on the current 4G infrastructure. Finally, 5G+ only consumes 1/25,000 to 1/6,250 of the energy consumed by 5G.
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We provide a fan speed adjuster device to our client Hydrofarm. Designed specifically for centrifugal fans with brushless motors, our adjuster device helps ensure longer life by preventing damage to fan motors by adjusting the speed of centrifugal fans without causing the motor to hum.
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This requires us to design and build a digital device that can perform the digital speed testing. We have designed the devices and we should receive the finished circuit boards in the next few weeks and hope that such device will be completed by the end of 2023.
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These devices are rated for 350 watts max, have 120VAC voltage capacity, and feature an internal, electronic auto-resetting circuit breaker. Our Fan Speed Adjuster Device 19 Carbon filter devices. We sell two types of carbon filter devices to our client Hydrofarm.
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In an effort to continually develop our product lines, we plan to phase out the traditional, lower-margin products and are preparing to launch a new line of products that have been in development for several years. These newer technology products will be released in phases, and we intend that increasing amounts of technology will be layered upon these products.
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These carbon filter devices are professional-grade filters specifically designed and used to filter the air in greenhouses that might be polluted by fermenting organics.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

44 edited+18 added−7 removed138 unchanged
Biggest changeOur executive officers and directors collectively have the power to control our management and operations and have a significant majority in voting power on all matters submitted to the stockholders of the Company. Our CEO and one of our directors, Dr. Desheng Wang, owns 33.345% of the outstanding shares of our common stock as of the date of this report.
Biggest changeOur CEO and one of our directors, Dr. Desheng Wang, owns 33.343% of the outstanding shares of our common stock as of the date of this report. Two of our directors together own over 50% of the outstanding shares of our common stock.
This, in turn, will depend on several factors, including: · Our ability to generate significant sales and profit margin from the Ubiquitor device; · Worldwide market conditions and demand for sensor devices and other products we may continue to add as we move forward; · Our success in meeting targeted availability dates for our products and services; 35 · Our ability to develop and commercialize new intellectual property and to protect existing intellectual property; · Our ability to maintain profitable relationships with our distributors, retailers and other resellers; · Our ability to maintain an appropriate cost structure; · Our ability to attract and retain competent, motivated employees; · Our ability to comply with applicable legal requirements throughout the world; and · Our ability to successfully manage litigation, including enforcing our rights, protecting our interests, and defending claims made against us.
This, in turn, will depend on several factors, including: · Our ability to generate significant sales and profit margin from the Ubiquitor device; · Worldwide market conditions and demand for sensor devices and other products we may continue to add as we move forward; · Our success in meeting targeted availability dates for our products and services; · Our ability to develop and commercialize new intellectual property and to protect existing intellectual property; · Our ability to maintain profitable relationships with our distributors, retailers and other resellers; · Our ability to maintain an appropriate cost structure; · Our ability to attract and retain competent, motivated employees; · Our ability to comply with applicable legal requirements throughout the world; and · Our ability to successfully manage litigation, including enforcing our rights, protecting our interests, and defending claims made against us.
The potential consequences of a material cyber, or other security incident include financial loss, reputational damage, negative media coverage, litigation with third parties, which in turn could adversely affect our competitiveness, business, financial condition, results of operations and cash flows. 33 Our sensor segment is subject to risks associated with operations as we diversify away from a single dominant customer.
The potential consequences of a material cyber, or other security incident include financial loss, reputational damage, negative media coverage, litigation with third parties, which in turn could adversely affect our competitiveness, business, financial condition, results of operations and cash flows. Our sensor segment is subject to risks associated with operations as we diversify away from a single dominant customer.
To compete successfully, we must accurately forecast demand, closely monitor inventory levels, secure quality products, continuously drive down costs, meet aggressive product price and performance targets, create market demand for our brand and hold sufficient, but not excess, inventory. 36 Our Ubiquitor device greatly depends on the growth and adoption of the IoT market, and other next-generation internet and smartphone-based applications.
To compete successfully, we must accurately forecast demand, closely monitor inventory levels, secure quality products, continuously drive down costs, meet aggressive product price and performance targets, create market demand for our brand and hold sufficient, but not excess, inventory. Our Ubiquitor device greatly depends on the growth and adoption of the IoT market, and other next-generation internet and smartphone-based applications.
These factors are difficult to manage, satisfy and influence and we cannot provide any assurance that we will be able to generate significant demand for and sales of our products. The Ubiquitor device could fail to gain traction in the marketplace for several reasons that would adversely impact our financial results and cause our investors to lose money.
These factors are difficult to manage, satisfy and influence and we cannot provide any assurance that we will be able to generate significant demand for and sales of our products. 31 The Ubiquitor device could fail to gain traction in the marketplace for several reasons that would adversely impact our financial results and cause our investors to lose money.
These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers. 41 Risks Related to the Ownership of our Common Stock Our shares may be affected by short selling practices which may decrease the stock price.
These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers. Risks Related to the Ownership of our Common Stock Our shares may be affected by short selling practices which may decrease the stock price.
Members of our Board of Directors are inexperienced with U.S. GAAP and the related internal control procedures required of U.S. public companies. Management has determined that our internal audit function is also significantly deficient due to insufficient qualified resources to perform internal audit functions. 40 We are a smaller reporting company with limited resources.
Members of our Board of Directors are inexperienced with U.S. GAAP and the related internal control procedures required of U.S. public companies. Management has determined that our internal audit function is also significantly deficient due to insufficient qualified resources to perform internal audit functions. We are a smaller reporting company with limited resources.
Because we do not intend to declare dividends, any gain on an investment in Focus Universal Inc. will need to come through appreciation of the stock’s price. Sales of a substantial number of shares of our common stock in the public market by certain of our shareholders could cause our stock price to fall.
Because we do not intend to declare dividends, any gain on an investment in Focus Universal Inc. will need to come through appreciation of the stock’s price. 38 Sales of a substantial number of shares of our common stock in the public market by certain of our shareholders could cause our stock price to fall.
Updating our platform to stay compatible with new components could increase our costs unexpectedly. Using wireless transmission technologies such as Wi-Fi and Bluetooth may create security risks. There is also a risk of failure based on the wireless transmission of data used by our smartphone platform.
Updating our platform to stay compatible with new components could increase our costs unexpectedly. 32 Using wireless transmission technologies such as Wi-Fi and Bluetooth may create security risks. There is also a risk of failure based on the wireless transmission of data used by our smartphone platform.
If the demand is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our business. If we are unable to properly forecast future demand of our products, our production levels may not meet demands, which could negatively impact our operating results.
If the demand is smaller than we have estimated, it may impair our projected sales growth and have an adverse impact on our business. 28 If we are unable to properly forecast future demand of our products, our production levels may not meet demands, which could negatively impact our operating results.
In addition, some of our competitors have attempted or may attempt to use regulatory actions to reduce the market opportunity for our products or to increase the market opportunity for their own products. 31 We outsource our product manufacturing and are susceptible to problems in connection with procurement, decreasing quality, reliability and protectability.
In addition, some of our competitors have attempted or may attempt to use regulatory actions to reduce the market opportunity for our products or to increase the market opportunity for their own products. We outsource our product manufacturing and are susceptible to problems in connection with procurement, decreasing quality, reliability and protectability.
Litigation may be necessary to protect our rights to our intellectual property. Even if we are successful, litigation could result in substantial costs and be a distraction to our management team. If we are not successful, we could lose valuable intellectual property rights. 38 Product defects could result in costly fixes, litigation, and damages.
Litigation may be necessary to protect our rights to our intellectual property. Even if we are successful, litigation could result in substantial costs and be a distraction to our management team. If we are not successful, we could lose valuable intellectual property rights. Product defects could result in costly fixes, litigation, and damages.
We cannot guarantee purchases in the volume that justifies such selective supply arrangements. Thus, we could be subject to price volatility. Prices and availability for the electronic parts and plastics we need to assemble the Ubiquitor could fluctuate.
We cannot guarantee purchases in the volume that justifies such selective supply arrangements. Thus, we could be subject to price volatility. 29 Prices and availability for the electronic parts and plastics we need to assemble the Ubiquitor could fluctuate.
Thus, a delisting from NASDAQ may have a material adverse effect on the trading and price of our common stock. 43 If we are unable to maintain compliance with NASDAQ continued listing standards, including maintenance of at least $2.5 million of stockholders’ equity and maintenance of a $1.00 minimum bid price, our common stock may be delisted from NASDAQ.
Thus, a delisting from NASDAQ may have a material adverse effect on the trading and price of our common stock. 39 If we are unable to maintain compliance with NASDAQ continued listing standards, including maintenance of at least $2.5 million of stockholders’ equity and maintenance of a $1.00 minimum bid price, our common stock may be delisted from NASDAQ.
Alternatively, we may not be able to achieve a smart home installation at a cost-effective price that is sufficient to distinguish us from amongst the competition in this market segment. 44 Item 1B. UNRESOLVED STAFF COMMENTS None.
Alternatively, we may not be able to achieve a smart home installation at a cost-effective price that is sufficient to distinguish us from amongst the competition in this market segment. 40 Item 1B. UNRESOLVED STAFF COMMENTS None.
We have concluded that we have not maintained effective internal control over financial reporting through the years ended December 31, 2022, and December 31, 2021. Significant deficiencies and material weaknesses in our internal control could have material adverse effects on us.
We have concluded that we have not maintained effective internal control over financial reporting through the years ended December 31, 2023, and December 31, 2022. Significant deficiencies and material weaknesses in our internal control could have material adverse effects on us.
If the result of these efforts are not successful, or if material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation.
If the result of these efforts are not successful, or if material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation. 36 The requirements of being a public company may strain our resources and distract our management.
If any of our directors and officers choose to leave the company, we will face significant difficulties in attracting potential candidates for replacement of our key personnel due to our limited financial resources and operating history.
If any of our directors and officers choose to leave the company, we will face significant difficulties in attracting potential candidates for replacement of our key personnel due to our limited financial resources and operating history. Regulatory actions could limit our ability to market and sell our products.
You could be diluted from our future issuance of capital stock and derivative securities. As of December 31, 2022, we had 43,530,915 shares of common stock outstanding and no shares of preferred stock outstanding. We are authorized to issue up to 75,000,000 shares of common stock and no shares of preferred stock.
You could be diluted from our future issuance of capital stock and derivative securities. As of December 31, 2023, we had 64,771,817 shares of common stock outstanding and no shares of preferred stock outstanding. We are authorized to issue up to 75,000,000 shares of common stock and no shares of preferred stock.
The number of shares of our common stock issued in connection with a capital raise or acquisition could constitute a material portion of our then-outstanding shares of our common stock and have a dilutive effect on our shareholders which could have a material negative effect on our stock price. 42 Future sales of our common stock by existing stockholders could cause our stock price to decline.
The number of shares of our common stock issued in connection with a capital raise or acquisition could constitute a material portion of our then-outstanding shares of our common stock and have a dilutive effect on our shareholders which could have a material negative effect on our stock price.
They also have the power to prevent or cause a change in control. The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. Management currently beneficially owns most of our outstanding common stock.
The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders. Management currently beneficially owns most of our outstanding common stock.
Since wireless networks are susceptible to interference and other limitations, and one advantage of our Ubiquitor device and our USIP platform is that it can connect to wireless networks as one way to transmit data, wireless network limitations may reduce the competitive advantage of the Ubiquitor and USIP platform in the marketplace.
Our failure to do so would lead to a material adverse impact on our business. 30 Since wireless networks are susceptible to interference and other limitations, and one advantage of our Ubiquitor device and our USIP platform is that it can connect to wireless networks as one way to transmit data, wireless network limitations may reduce the competitive advantage of the Ubiquitor and USIP platform in the marketplace.
Because we have a limiting operating history with positive revenues, you may not be able to accurately evaluate our operations. We were incorporated on December 4, 2012, and have had limited profitable operations to date. Therefore, we have a limited profitable operating history upon which to evaluate the merits of investing in our company.
We were incorporated on December 4, 2012, and have had limited profitable operations to date. Therefore, we have a limited profitable operating history upon which to evaluate the merits of investing in our company.
If we are not successful in growing revenues and controlling costs, we will not maintain profitable operations or positive cash flow, and even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.
If we are not successful in growing revenues and controlling costs, we will not maintain profitable operations or positive cash flow, and even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. 26 Because we have a limiting operating history with positive revenues, you may not be able to accurately evaluate our operations.
Complying with these reporting and other regulatory requirements is time-consuming and may result in increased costs to us and could have a negative effect on our business, results of operations and financial condition.
We are required to comply with various regulatory and reporting requirements, including those required by the Securities and Exchange Commission. Complying with these reporting and other regulatory requirements is time-consuming and may result in increased costs to us and could have a negative effect on our business, results of operations and financial condition.
If our estimates and projections overestimate the size of this market, our sales growth may be adversely affected. Our estimates of the size and future growth in the market for our Ubiquitor device or our PLC technology is based on several internal studies, reports and estimates.
Our estimates of the size and future growth in the market for our Ubiquitor device or our PLC technology is based on several internal studies, reports and estimates.
Any governmental or regulatory action that restricts the ability of investors to effect short sales of our common stock, borrow our common stock or enter into swaps on our common stock could adversely affect the trading price and liquidity of our shares.
Any governmental or regulatory action that restricts the ability of investors to effect short sales of our common stock, borrow our common stock or enter into swaps on our common stock could adversely affect the trading price and liquidity of our shares. 37 An increase of free trading shares of our common stock could result in substantial sales of common stock on the open market which could cause our stock price to fall substantially.
Even if we can obtain and maintain product liability insurance, if a successful claim in excess of our insurance coverage is made, then we may have to indemnify some or all of our manufacturers or distributors for their losses, which could materially deplete our assets.
Even if we can obtain and maintain product liability insurance, if a successful claim in excess of our insurance coverage is made, then we may have to indemnify some or all of our manufacturers or distributors for their losses, which could materially deplete our assets. 33 We may not be able to identify suitable acquisition targets or otherwise successfully implement a growth strategy reliant on mergers and acquisitions.
NASDAQ requires companies to fulfill specific requirements in order for their shares to continue to be listed. There is no guarantee that our common stock will maintain NASDAQ continued listing standards and we may be delisted. If our common stock is delisted from NASDAQ, our shareholders could find it difficult to sell their common stock.
Our shares of common stock are only recently listed on NASDAQ, and we may not be able to maintain the continued listing standards. NASDAQ requires companies to fulfill specific requirements in order for their shares to continue to be listed. There is no guarantee that our common stock will maintain NASDAQ continued listing standards and we may be delisted.
If we are unable to report financial information timely and accurately or to maintain effective disclosure controls and procedures, we could be subject to, among other things, regulatory or enforcement actions by the SEC, any one of which could adversely affect our business prospects.
If we are unable to report financial information timely and accurately or to maintain effective disclosure controls and procedures, we could be subject to, among other things, regulatory or enforcement actions by the SEC, any one of which could adversely affect our business prospects. 35 Our executive officers and directors collectively have the power to control our management and operations and have a significant majority in voting power on all matters submitted to the stockholders of the Company.
Given the relatively fluid regulatory environment in China and the United States, there could be additional tax, tariffs, or other regulatory changes in the future.
Given the relatively fluid regulatory environment in China and the United States, there could be additional tax, tariffs, or other regulatory changes in the future. Any such changes could directly and materially adversely impact our business, financial condition, and operating results.
If our existing stockholders sell substantial shares of our common stock in the public market, then the market price of our common stock could decrease significantly. The perception in the public market that our stockholders might sell shares of common stock also could depress the market price of our common stock.
Future sales of our common stock by existing stockholders could cause our stock price to decline. If our existing stockholders sell substantial shares of our common stock in the public market, then the market price of our common stock could decrease significantly.
We outsource the manufacturing of key elements of our quantum light meters and air filters to a single manufacturing partner, with whom we do not have a formal contractual relationship. We outsource the manufacture of our quantum light meter and air filtration devices to a single contract manufacturer, Tianjin Guanglee Technologies Ltd. (“Tianjin Guanglee”).
We outsource the manufacture of our quantum light meter and air filtration devices to a single contract manufacturer, Tianjin Guanglee Technologies Ltd. (“Tianjin Guanglee”).
Our future success will depend significantly on our ability to develop and market new products that keep pace with technological developments and evolving industry standards for technology.
Our failure to respond to rapid change in the technology markets could cause us to lose revenue and harm our competitive position. Our future success will depend significantly on our ability to develop and market new products that keep pace with technological developments and evolving industry standards for technology.
We may also be subject to litigation alleging the improper use, transmission, or storage of confidential information, which could damage our reputation among our current and potential clients and cause us to lose business and revenue. 37 Product liability associated with the production, marketing, and sale of our products, and/or the expense of defending against claims of product liability, could materially deplete our assets and generate negative publicity which could impair our reputation.
We may also be subject to litigation alleging the improper use, transmission, or storage of confidential information, which could damage our reputation among our current and potential clients and cause us to lose business and revenue.
Item 1A. RISK FACTORS Risks Related to our Business and Industry We have a history of operating losses, and we may not be able to sustain profitability. We were incorporated on December 4, 2012; and as of December 31, 2022, we had an accumulated deficit of $17,864,028.
We have a history of operating losses, and we may not be able to sustain profitability. We were incorporated on December 4, 2012; and as of December 31, 2023, we had an accumulated deficit of $22,582,170.
Should review of our tax filings result in unfavorable adjustments, our operating results, cash flows, and financial position could be materially and adversely affected. 32 The size and future growth in the market for our Ubiquitor device or our PLC technology has not been established with precision and may be smaller than we estimate, possibly materially.
The size and future growth in the market for our Ubiquitor device or our PLC technology has not been established with precision and may be smaller than we estimate, possibly materially. If our estimates and projections overestimate the size of this market, our sales growth may be adversely affected.
Two of our directors together own over 50% of the outstanding shares of our common stock. Accordingly, our directors have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations, and the sale of all or substantially all of our assets.
Accordingly, our directors have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations, and the sale of all or substantially all of our assets. They also have the power to prevent or cause a change in control.
We may not be able to identify suitable acquisition targets or otherwise successfully implement a growth strategy reliant on mergers and acquisitions. To expand our business, we hope to pursue mergers and acquisitions to acquire new or complementary businesses, services or technologies. We expect to continue evaluating potential strategic acquisitions of businesses, services, and technologies.
To expand our business, we hope to pursue mergers and acquisitions to acquire new or complementary businesses, services or technologies. We expect to continue evaluating potential strategic acquisitions of businesses, services, and technologies.
We assemble our Ubiquitor devices by using fully manufactured parts, the manufacturing of which has been fully outsourced. We have no direct control over the manufacturing processes of our products. This lack of control may increase quality or reliability risks and could limit our ability to quickly increase or decrease production rates.
We assemble our Ubiquitor devices by using fully manufactured parts, the manufacturing of which has been fully outsourced. We have no direct control over the manufacturing processes of our products.
Some of our officers, directors, consultants, and advisors are involved in other businesses and not obligated to commit their time and attention exclusively to our business and therefore they may encounter conflicts of interest with respect to the allocation of time and business opportunities between our operations and those of other businesses.
If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our Company. 34 Some of our officers, directors, consultants, and advisors are involved in other businesses and not obligated to commit their time and attention exclusively to our business and therefore they may encounter conflicts of interest with respect to the allocation of time and business opportunities between our operations and those of other businesses.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 39 A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Moreover, the complexities that arise from operating in a different tax jurisdiction inevitably led to an increased exposure to international taxation.
Moreover, the complexities that arise from operating in a different tax jurisdiction inevitably led to an increased exposure to international taxation. Should review of our tax filings result in unfavorable adjustments, our operating results, cash flows, and financial position could be materially and adversely affected.
In 2021, our common stock was listed on the Nasdaq Capital Market. Our stock was uplisted onto the Nasdaq Global Market on January 28, 2022. Our shares of common stock are only recently listed on NASDAQ, and we may not be able to maintain the continued listing standards.
In 2021, our common stock was listed on the Nasdaq Capital Market. Our stock was uplisted onto the Nasdaq Global Market on January 28, 2022. On March 20, 2024 and March 22, 2024, we received two separate letters from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”).
Removed
In addition, the loss of any key employees or the inability to attract or retain qualified personnel could delay our plan of operations and harm our ability to provide services to our current customer, Hydrofarm, and harm the market’s perception of us. Regulatory actions could limit our ability to market and sell our products.
Added
Item 1A. RISK FACTORS Risks Related to our Business and Industry Although our financial statements have been prepared on a going concern basis, we must complete the sale of our facility to fund our operations in order to alleviate as a going concern. Our current liquidity position raises substantial doubt about our ability to continue as a going concern.
Removed
Any such changes could directly and materially adversely impact our business, financial condition, and operating results. 34 Our failure to respond to rapid change in the technology markets could cause us to lose revenue and harm our competitive position.
Added
If we are able to improve our liquidity position by completing the sale of our facility, we may alleviate our going concern.
Removed
Our failure to do so would lead to a material adverse impact on our business.
Added
While we believe the sale of the facility and the sale of real estate as a whole to be less speculative as a whole, we acknowledge that the transaction still remains to be completed and the risks remain in completion of that transaction. The accompanying consolidated financial statements do not include any adjustments that might result.
Removed
If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our Company.
Added
This lack of control may increase quality or reliability risks and could limit our ability to quickly increase or decrease production rates. 27 We outsource the manufacturing of key elements of our quantum light meters and air filters to a single manufacturing partner, with whom we do not have a formal contractual relationship.
Removed
The requirements of being a public company may strain our resources and distract our management. We are required to comply with various regulatory and reporting requirements, including those required by the Securities and Exchange Commission.
Added
Product liability associated with the production, marketing, and sale of our products, and/or the expense of defending against claims of product liability, could materially deplete our assets and generate negative publicity which could impair our reputation.
Removed
An increase of free trading shares of our common stock could result in substantial sales of common stock on the open market which could cause our stock price to fall substantially.
Added
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Removed
There are approximately 43,229,653 shares of our common stock outstanding as of March 22, 2023, of which approximately 17,946,923 shares are currently freely tradable.
Added
The perception in the public market that our stockholders might sell shares of common stock also could depress the market price of our common stock. There are approximately 64,771,817 shares of our common stock outstanding as of April 1, 2024, of which approximately 26,989,222 shares are currently freely tradable.
Added
The March 20, 2024 letter was notifying the Company that based upon the closing bid price for the last 30 consecutive business days, the Company no longer meets the Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”).
Added
In addition, on March 22, 2024, Nasdaq notified the Company that since the Company’s Market Value of Listed Securities (“MVLS”) has fallen below $50,000,000 the Company no longer satisfies the requirements to qualify for the Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(b)(2)(A) (the “MVLS Rule”). The notification received has no immediate effect on the Company’s Nasdaq listing.
Added
In accordance with Nasdaq Listing Rule 5810(c)(3)(A) and 5810(c)(3)(C) (the “Compliance Period Rule”), the Company has been provided an initial period of 180 calendar days, or until September 16, 2024 and September 18, 2024, (the “Compliance Date”), to regain compliance with the Bid Price Rule and the MVLS Rule, respectively.
Added
If, at any time before the Compliance Date, the bid price of the Company’s security is at least $1 for a minimum of ten consecutive business days, the Staff will provide written confirmation of compliance to the Company and this matter will be closed with respect to the Bid Price Rule.
Added
Concurrently, if, at any time before the Compliance date the Company’s MVLS is over $50,000,000 or more for a minimum of ten consecutive business days then this matter will be closed with respect to the MVLS Rule.
Added
If the Company is not in compliance with the Bid Price Rule by September 16, 2024, the Company may be afforded a second 180 calendar day period to regain compliance.
Added
Pursuant to Rule 5810(c)(3)(A)(i)-(ii), to qualify, the Company would be required to transfer to The Nasdaq Capital Market and then meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.
Added
For the MVLS Rule, if the Company does not regain compliance by September 18, 2024, then the Company will be required to transfer to the Nasdaq Capital Market where the MVLS is $35,000,000.
Added
The Company will continue to actively monitor the closing bid price of its common stock and will evaluate available options, including, without limitation, submitting a transfer application to the Nasdaq Capital Market and/or seeking to effect a reverse stock split, in order to resolve the deficiency and regain compliance with the Bid Price Rule and the MVLS Rule.
Added
The Company’s common stock will continue to be listed and traded on The Nasdaq Global Market during the first 180-day compliance period that ends on the Compliance Date, subject to the Company’s compliance with the other continued listing requirements of the Nasdaq Global Market.
Added
If our common stock is delisted from NASDAQ, our shareholders could find it difficult to sell their common stock.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeThe property includes 58 parking spaces. The purchase price for the property was approximately $4.62 million dollars.
Biggest changeThe property includes 58 parking spaces. The purchase price for the property was approximately $4.62 million dollars. 41

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed6 unchanged
Biggest changeAVX intends to vigorously contest this matter. Further, AVX disputes that the other defendants are proper parties to the litigation. However, litigation and investigations are inherently uncertain, but the outcome could have a material impact on the Company. Item 4. MINE SAFETY DISCLOSURES Not applicable to our Company. 45 PART II
Biggest changeAVX intends to vigorously contest this matter. Further, AVX disputes that the other defendants are proper parties to the litigation. However, litigation and investigations are inherently uncertain, but the outcome could have a material impact on the Company.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed9 unchanged
Biggest changeHigh Low 2021: First Quarter $ 4.25 $ 3.56 2021: Second Quarter $ 10.00 $ 4.25 2021: Third Quarter $ 25.25 $ 4.49 2021: Fourth Quarter $ 15.52 $ 7.33 2022: First Quarter $ 14.17 $ 6.18 2022: Second Quarter $ 14.58 $ 10.00 2022: Third Quarter $ 16.43 $ 9.38 2022: Fourth Quarter $ 13.49 $ 5.90 Holders.
Biggest changeHigh Low 2022: First Quarter $ 9.45 $ 4.12 2022: Second Quarter $ 9.72 $ 6.67 2022: Third Quarter $ 10.95 $ 6.25 2022: Fourth Quarter $ 8.99 $ 3.93 2023: First Quarter $ 4.71 $ 2.37 2023: Second Quarter $ 2.46 $ 1.45 2023: Third Quarter $ 1.97 $ 1.5 2023: Fourth Quarter $ 2.17 $ 1.37 Holders.
Any future determination to declare cash dividends will be made at the discretion of our Board of Directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant. 46 Securities Authorized for Issuance Under Equity Compensation Plans On December 15, 2018, our Board of Directors presented the 2018 Equity Incentive Plan to the shareholders.
Any future determination to declare cash dividends will be made at the discretion of our Board of Directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant. 43 Securities Authorized for Issuance Under Equity Compensation Plans On December 15, 2018, our Board of Directors presented the 2018 Equity Incentive Plan to the shareholders.
The following table sets forth for the indicated periods the high and low intra-day sales price per share for our common stock on the Nasdaq Capital Market (as applicable) for the four quarters of 2021 and 2022. As of March 22, 2023, our common stock trades upon the Nasdaq Global Market.
The following table sets forth for the indicated periods the high and low intra-day sales price per share for our common stock on the Nasdaq Capital Market (as applicable) for the four quarters of 2022 and 2023. As of April 1, 2024, our common stock trades upon the Nasdaq Global Market.
Market Information On August 31, 2021, the Company commenced the trading of its common stock on the Nasdaq Capital Market under the symbol “FCUV.” On January 28, 2022, the Company commenced trading of its common stock on the Nasdaq Global Market under the symbol “FCUV.” On March 22, 2022, the last reported sale price of our common stock as reported on the Nasdaq Global Market was $3.84 per share.
Market Information On August 31, 2021, the Company commenced the trading of its common stock on the Nasdaq Capital Market under the symbol “FCUV.” On January 28, 2022, the Company commenced trading of its common stock on the Nasdaq Global Market under the symbol “FCUV.” On April 1, 2024, the last reported sale price of our common stock as reported on the Nasdaq Global Market was $0.40 per share.
The Board of Directors determines the vesting schedule of the grants with broad discretion. On August 6, 2019, each member of the Board was granted 30,000 options to purchase shares at $5.70 per share. On December 11, 2020, each member of the Board was granted 15,000 options to purchase shares at $3.00 per share.
The Board of Directors determines the vesting schedule of the grants with broad discretion. On August 6, 2019, each member of the Board was granted 45,000 options to purchase shares at $3.80 per share. On December 11, 2020, each member of the Board was granted 22,500 options to purchase shares at $2.00 per share.
As of March 22, 2022, there were 366 record holders of 43,229,653 shares of the Company’s common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.
As of April 1, 2024, there were 361 record holders of 64,771,817 shares of the Company’s common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.
On December 31, 2021, each member of the Board was granted 15,000 options to purchase shares at $8.86 per share. On December 30, 2022, each member of the Board was granted 15,000 options to purchase shares at $6.41 per share. Recent sales of unregistered securities. None.
On December 31, 2021, each member of the Board was granted 22,500 options to purchase shares at $5.91 per share. On December 30, 2022, each member of the Board was granted 22,500 options to purchase shares at $4.27 per share. Recent sales of unregistered securities. None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

32 edited+30 added−12 removed43 unchanged
Biggest changeWhile statistics regarding the IoT installation sectors are difficult to aggregate given that the work is often are pieced off into various contractor service categories, the residential custom installation market ranges from $5.7B to $12.1B 27 , and we would expect the commercial and industrial installation markets to be larger than the residential for IoT devices. ________________________ 22 Cisco Systems, Connected Futures, Executive Business Insights, May 2017, The Journey to IOT Value, Challenges, Breakthroughs, and Best Practices, https://www.slideshare.net/CiscoBusinessInsights/journey-to-iot-value-76163389, https:// newsroom .cisco.com/c/r/newsroom/en/us/a/y2017/m05/cisco-survey-reveals-close-to-three-fourths-of-iot-projects-are-failing.html 23 IoT Analytics, Market Insights for the Internet of Things, February 7, 2023, Global IoT market size to grow 19% in 2023—IoT shows resilience despite economic downturn, https://iot-analytics.com/iot-market-size/ 24 Markets and Markets, IoT Sensors Market by Sensor Type, Network Technology, Vertical, Application, and Geography – Global Forecast -2026, https://www.marketsandmarkets.com/Market-Reports/sensors-iot-market-26520972.html 25 Cision PRNewswire, Research and Markets, Global $664.75 Billion 5G Services Markets to 2028: Rising Need for High Bandwidth to Provide Reliable Communication to IoT Devices is Expected to Boost Overall Market Growth, https://www.prnewswire.com/news-releases/global-664-75-billion-5g-services-markets-to-2028-rising-need-for-high-bandwidth-to-provide- reliable-communication-to-iot-devices-is-expected-to-boost-overall-market-growth-301432173.html 26 CEPro.
Biggest changeFinancial Reporting Software We have launched a beta version of our new SEC financial reporting automation software and are testing this new software product so that we can obtain marketing data and feedback to our development team. ___________________ [23] Cisco Systems, Connected Futures, Executive Business Insights, May 2017, The Journey to IOT Value, Challenges, Breakthroughs, and Best Practices, https://www.slideshare.net/CiscoBusinessInsights/journey-to-iot-value-76163389, https://newsroom.cisco.com/c/r/newsroom/en/us/a/y2017/m05/cisco-survey-reveals-close-to-three-fourths-of-iot-projects-are-failing.html [24] IoT Analytics, Market Insights for the Internet of Things, February 7, 2023, Global IoT market size to grow 19% in 2023—IoT shows resilience despite economic downturn, https://iot-analytics.com/iot-market-size/ [25] Markets and Markets, IoT Sensors Market by Sensor Type, Network Technology, Vertical, Application, and Geography – Global Forecast -2026, https://www.marketsandmarkets.com/Market-Reports/sensors-iot-market-26520972.html [26] Cision PRNewswire, Research and Markets, Global $664.75 Billion 5G Services Markets to 2028: Rising Need for High Bandwidth to Provide Reliable Communication to IoT Devices is Expected to Boost Overall Market Growth, https://www.prnewswire.com/news-releases/global-664-75-billion-5g-services-markets-to-2028-rising-need-for-high-bandwidth-to-provide-reliable- communication-to-iot-devices-is-expected-to-boost-overall-market-growth-301432173.html [27] CEPro.
The global industrial air filtration market was valued at $23.83 billion by 2029 and analysts expect it to register a CAGR of 7.2% because of the industrial need to control air quality across a range of industries. 22 Air purification methods are an effective way to control contaminants and improve indoor air quality and as a result, many national and local governments overseeing indoor air quality and other emissions are enacting stricter workforce health and safety regulations in this area, which drives demand. ___________________ 22 Fortune, The global air filters market is projected to grow from $14.68 billion in 2022 to $23.83 billion by 2029, exhibiting a CAGR of 7.2% in forecast period, 2022-2029, https://www.fortunebusinessinsights.com/industry-reports/air-filters-market-101676, (last accessed March 7, 2023) 52 Market Potential We believe universal wireless smart technology will play a critical role for traditional instrument manufacturers, as currently simply the undertaking of an IoT project is too expensive and difficult to develop for medium or smaller companies and carries 75% failure rate according to Cisco Systems 22 .
The global industrial air filtration market was valued at $23.83 billion by 2029 and analysts expect it to register a CAGR of 7.2% because of the industrial need to control air quality across a range of industries. [22] Air purification methods are an effective way to control contaminants and improve indoor air quality and as a result, many national and local governments overseeing indoor air quality and other emissions are enacting stricter workforce health and safety regulations in this area, which drives demand. ___________________ [22] Fortune, The global air filters market is projected to grow from $14.68 billion in 2022 to $23.83 billion by 2029, exhibiting a CAGR of 7.2% in forecast period, 2022-2029, https://www.fortunebusinessinsights.com/industry-reports/air-filters-market-101676, (last accessed March 7, 2023) 48 Market Potential We believe universal wireless smart technology will play a critical role for traditional instrument manufacturers, as currently simply the undertaking of an IoT project is too expensive and difficult to develop for medium or smaller companies and carries 75% failure rate according to Cisco Systems [23] .
We employ an ultra-narrow spectrum channel ( For a description of the ultra-narrowband technology and the 5G applications, see “Part I - Item 1. Business, Section 2. “Creating a faster 5G cellular technology by using ultra-narrowband technology” above. 50 Intellectual Property Protection On November 4, 2016, we filed a U.S. patent application number 15/344,041 with the USPTO.
We employ an ultra-narrow spectrum channel ( For a description of the ultra-narrowband technology and the 5G applications, see “Part I - Item 1. Business, Section 2. “Creating a faster 5G cellular technology by using ultra-narrowband technology” above. Intellectual Property Protection On November 4, 2016, we filed a U.S. patent application number 15/344,041 with the USPTO.
We are not trying to compete with traditional instruments or device manufacturers because we utilize our Ubiquitor device in conjunction with our smartphone application, which we believe will be a completely different product category. 51 IoT Installation Industry There are several companies that compete with AVX in smart home installations, including Vivint Smart Home, Crestron and Control4.
We are not trying to compete with traditional instruments or device manufacturers because we utilize our Ubiquitor device in conjunction with our smartphone application, which we believe will be a completely different product category. IoT Installation Industry There are several companies that compete with AVX in smart home installations, including Vivint Smart Home, Crestron and Control4.
The IoT marketplace size assessments usually include the hardware components and the software components which often contain a Software as a Service (SaaS) model. Additionally, the rising need for reliable high bandwidth communication for IoT devices is expected to rise to $664.75 Billion in 2028, spearheaded by the currently predominant services in the 5G category 25 .
The IoT marketplace size assessments usually include the hardware components and the software components which often contain a Software as a Service (SaaS) model. Additionally, the rising need for reliable high bandwidth communication for IoT devices is expected to rise to $664.75 Billion in 2028, spearheaded by the currently predominant services in the 5G category [26] .
Regarding the larger IoT industry statistics, overall enterprise IoT spending increased to $201 Billion in 2022, an increase of 21.5%. The outlook for growth in 2023 is 18.5% from this large base of enterprise spending 23 . More specifically, the IoT sensors market is projected to reach $26 Billion by 2026 from $11.1 Billion in 2022 24 .
Regarding the larger IoT industry statistics, overall enterprise IoT spending increased to $201 Billion in 2022, an increase of 21.5%. The outlook for growth in 2023 is 18.5% from this large base of enterprise spending [24] . More specifically, the IoT sensors market is projected to reach $26 Billion by 2026 from $11.1 Billion in 2022 [25] .
The change in operating assets and liabilities includes an increase in accounts receivable of $37,335, increase in accounts receivable – related party of $19,331, increase in inventory of $53,684, decrease in other receivable of $13,057, decrease in prepaid expenses of $158,474, decrease in deposits of $4,035, decrease in operating lease right-of-use asset of $139,754, decrease in accounts payable and accrued liabilities of $21,722, decrease in other current liabilities of $17,135, decrease in customer deposit of $271, decrease in lease liabilities of $117,245, and increase in other liabilities of $12,335.
The change in operating assets and liabilities includes an increase in accounts receivable of $37,335, increase in accounts receivable – related party of $19,331, increase in inventory of $53,684, decrease in other receivable of $13,057, decrease in prepaid expenses of $158,474, decrease in deposits of $4,035, decrease in operating lease right-of-use asset of $139,754, decrease in accounts payable and accrued liabilities of $21,722, decrease in other current liabilities of $17,135, decrease in lease liabilities of $117,245, and increase in other liabilities of $12,064.
For the year ended December 31, 2021, our primary source of revenue was from sales of these agricultural sensors and measurement equipment sold through Hydrofarm. Hydrofarm was not our primary source of revenue for the year ended December 31, 2022.
For the year ended December 31, 2021, our primary source of revenue was from sales of these agricultural sensors and measurement equipment sold through Hydrofarm.
Preliminary internal testing suggests that we have achieved significant noise rejection and interference suppression. In our preliminary internal testing, we have been able to increase bandwidth to 4 megabits per second with the potential for more, while simultaneously effectively dealing with electrical noise and interference.
In our preliminary internal testing, we have been able to increase bandwidth to 4 megabits per second with the potential for more, while simultaneously effectively dealing with electrical noise and interference.
The increase was mainly due to increased expense in China entity. 54 Other Income (expense) Other income of $278,709 incurred during the year ended December 31, 2022, primarily consisted of interest income of $3,887, forgiveness of debt of $158,547, unrealized loss on marketable equity securities of $42,395, realized loss on marketable equity securities of $21,205, rental income of $166,288 and other income of $13,587.
Other income of $278,709 incurred during the year ended December 31, 2022, primarily consisted of interest income of $3,887, forgiveness of debt of $158,547, unrealized loss on marketable equity securities of $42,395, realized loss on marketable equity securities of $21,205, rental income of $166,288 and other income of $13,587.
Selling expense incurred was mainly from third party advertising fees. The increase of selling expense was due to an increase in advertising fees. Compensation – officers and directors were $1,055,133 and $661,171 for the years ended December 31, 2022 and 2021, respectively. The increase was due to increase in directors’ stock-based compensation - options.
Selling expense incurred was mainly from third party advertising fees. The decrease of selling expense was due to a decrease in advertising fees and trade show expenses. Compensation – officers and directors were $1,082,775 and $1,055,133 for the years ended December 31, 2023 and 2022, respectively. The increase was due to increase in directors’ stock-based compensation - options.
On May 19, 2021, we filed thirteen provisional patent applications with the USPTO that we had been researching and developing for years encompassing a broad spectrum of technology areas including sensor technology, wired and wireless communications, power line communications, computer security, software solutions, interconnected technological communications, smart home systems and methods for both home and hydroponic areas, dynamic password cipher, local file security, payment card security, infrared sensor, and a method and apparatus for high data rate transmission.
Consequently, the Company is optimistic that the patent covering the claims for its PLC technology will be issued in due course and will allow the Company to implement strong protections on the PLC technology worldwide. 47 On May 19, 2021, we filed thirteen provisional patent applications with the USPTO that we had been researching and developing for years encompassing a broad spectrum of technology areas including sensor technology, wired and wireless communications, power line communications, computer security, software solutions, interconnected technological communications, smart home systems and methods for both home and hydroponic areas, dynamic password cipher, local file security, payment card security, infrared sensor, and a method and apparatus for high data rate transmission.
The primary design goal of the power line network is electric power distribution, not data transmission. The harsh electrical noise present on power lines and variations in equipment and standards make data transmission over the power grid difficult.
The primary design goal of the power line network is electric power distribution, not data transmission. The harsh electrical noise present on power lines and variations in equipment and standards make data transmission over the power grid difficult. These technological challenges have impeded, or even halted, progression of PLC technology.
These technological challenges have impeded, or even halted, progression of PLC technology. 49 We continue to build upon our existing research and development with the intention of inventing an ultra-narrowband PLC technology that attempts to tackle two challenges: 1) overcoming interference caused by electronic noise on the power line system; and 2) bandwidth.
We continue to build upon our existing research and development with the intention of inventing an ultra-narrowband PLC technology that attempts to tackle two challenges: 1) overcoming interference caused by electronic noise on the power line system; and 2) bandwidth. Preliminary internal testing suggests that we have achieved significant noise rejection and interference suppression.
For a description of the physical hardware, see illustrations in “Figures 5-10 in Part I - Item 1. Business Section 5.
For a description of the physical hardware, see illustrations in “Figures 5-10 in Part I - Item 1. Business Section 5. “Developing a universal smart instrumentation platform (“USIP”)” above.
Cash Flows from Investing Activities For the year ended December 31, 2022, we had cash outflow from investing activities of $211,257. That was primarily the result from the purchase of property and equipment of $42,187, purchase of marketable securities of $768,949 and proceeds from sales of marketable securities of $599,879.
That was primarily the result from the purchase of property and equipment of $42,187, purchase of marketable securities of $768,949 and proceeds from sales of marketable securities of $599,879. 52 Cash Flows from Financing Activities For the year ended December 31, 2023, cash outflows from financing activities of $434,048.
As disclosed in our patent application, we have already tested up to 256 sensor instrument readouts. Most types of nodes and probes can connect to the hardware. If the sensor size is bigger than the standard probe size, it is possible to simply use a USB cable to connect the probe and the hub.
Most types of nodes and probes can connect to the hardware. If the sensor size is bigger than the standard probe size, it is possible to simply use a USB cable to connect the probe and the hub.
All data and analytics are displayed on a single screen, with tools that record and keep track of all measurements, and sort and display analytic information in easy-to-read charts. The Ubiquitor is a general platform that collects data in real time and is intended to be adapted to many industrial uses.
All data and analytics are displayed on a single screen, with tools that record and keep track of all measurements, and sort and display analytic information in easy-to-read charts.
“Developing a universal smart instrumentation platform (“USIP”)” above. 48 We believe the Ubiquitor device can connect up to thousands of potential sensor nodes integrate data using embedded software to display the data and all analytics onto a digital screen (desktop, smartphone or mobile device displays) using a wired or Wi-Fi connection.
We believe the Ubiquitor device can connect up to thousands of potential sensor nodes integrate data using embedded software to display the data and all analytics onto a digital screen (desktop, smartphone or mobile device displays) using a wired or Wi-Fi connection. As disclosed in our patent application, we have already tested up to 256 sensor instrument readouts.
For the year ended December 31, 2021, we had cash outflow from investing activities of $22,990 from the purchase of property and equipment. Cash Flows from Financing Activities For the year ended December 31, 2022, cash outflows from financing activities of $1,158,547. That was primarily the result from purchase of treasury stock of $1,000,000, and forgiveness of debt of $158,547.
That was primarily the result from related party loan of $1,000,000, and purchases of treasury stock of $1,434,048. For the year ended December 31, 2022, cash outflows from financing activities of $1,158,547. That was primarily the result from purchase of treasury stock of $1,000,000 and forgiveness of debt of $158,547.
Also, we plan to design a full line of products for the gardening industry by integrating the Ubiquitor device into a gardening system. The system would include the Ubiquitor connected to a light control node, temperature sensor, humidity sensor, digital light sensor, quantum PAR sensor, pH sensor, total dissolved solids (“TDS”) sensor and carbon dioxide sensor.
The system would include the Ubiquitor connected to a light control node, temperature sensor, humidity sensor, digital light sensor, quantum PAR sensor, pH sensor, total dissolved solids (“TDS”) sensor and carbon dioxide sensor.
We believe that because residential and commercial structures already include multiple power outlets, the power line infrastructure represents an excellent network to share data among intelligent devices, particularly in the smart home installations that we are currently performing through AVX.
Based on the promising results of our internal testing, we have begun designing a proprietary PLC microchip and have set an intended launch date for 2023. 46 We believe that because residential and commercial structures already include multiple power outlets, the power line infrastructure represents an excellent network to share data among intelligent devices, particularly in the smart home installations that we are currently performing through AVX.
Non-cash expense included add-backs of $136,337 in bad debt expense, $166,266 in depreciation expense, $42,395 in unrealized loss on marketable equity securities, $21,205 in realized loss on marketable equity securities, $719,975 in stock-based compensation – shares, $849,043 in stock-based compensation - options, reduction in inventory fair value net realizable of $27,199. 55 Our net cash outflows from operating activities of $1,969,445 for the year ended December 31, 2021, was primarily the result of our net loss of $3,220,977 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Non-cash expense included add-backs of $136,337 in bad debt expense, $166,266 in depreciation expense, $42,395 in unrealized loss on marketable equity securities, $21,205 in realized loss on marketable equity securities, $719,975 in stock-based compensation – shares, $849,043 in stock-based compensation - options, and reduction in inventory fair value net realizable of $27,199.
Liquidity and Capital Resources Working Capital December 31, 2022 December 31, 2021 Current Assets $ 4,807,830 $ 9,214,340 Current Liabilities (1,387,239 ) (571,442 ) Working Capital $ 3,420,591 $ 8,642,898 Cash Flows The table below, for the periods indicated, provides selected cash flow information: For the year ended December 31, 2022 For the year ended December 31, 2021 Net cash used in operating activities $ (2,957,983 ) $ (1,969,445 ) Net cash used in investing activities (211,257 ) (22,990 ) Net cash provided by (used in) financing activities (1,158,547 ) 10,087,818 Effect of exchange rate (7,452 ) (43 ) Net change in cash $ (4,335,239 ) $ 8,095,340 Cash Flows from Operating Activities Our net cash outflows from operating activities of $2,957,983 for the year ended December 31, 2022, was primarily the result of our net loss of $4,926,937 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Net Losses During the years ended December 31, 2023, and 2022, we incurred net losses of $4,718,142 and $4,926,937 respectively, due to the factors discussed above. 51 Liquidity and Capital Resources Working Capital December 31, 2023 December 31, 2022 Current Assets $ 1,028,278 $ 4,807,830 Current Liabilities (1,657,646 ) (1,387,239 ) Working Capital $ (629,368 ) $ 3,420,591 Cash Flows The table below, for the periods indicated, provides selected cash flow information: For the year ended December 31, 2023 For the year ended December 31, 2022 Net cash used in operating activities $ (3,528,762 ) $ (2,957,983 ) Net cash provided by (used in) investing activities 54,146 (211,257 ) Net cash used in financing activities (434,048 ) (1,158,547 ) Effect of exchange rate (6,508 ) (7,452 ) Net change in cash $ (3,915,172 ) $ (4,335,239 ) Cash Flows from Operating Activities Our net cash outflows from operating activities of $3,528,762 for the year ended December 31, 2023, was primarily the result of our net loss of $4,718,142 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Off-Balance Sheet Arrangements As of December 31, 2022, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation SK.
As a note, the interest rate increases to 15% as of the due date of loan on any unpaid principal balance outstanding. Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation SK.
Focus Universal Inc., a Nevada corporation (the “Company,” “we,” “us,” or “our”), has developed the five proprietary platform technologies described in the Business Section, starting on page 1.
Focus Universal Inc., a Nevada corporation (the “Company,” “we,” “us,” or “our”), has developed the five proprietary platform technologies described in the Business Section, starting on page 1. These are: (1) device on a chip; (2) universal smart instrumentation platform (“USIP”); (3) ultra-narrowband technology; (4) ultra-narrowband power line communication (“PLC”) technology; and (5) natural integrated programming language (“NIPL”).
Research and development costs were $1,060,385 and $220,469 for the years ended December 31, 2022 and 2021, respectively. The increase was due to an increase number of employee in research and development department. Professional fees were $896,385 during the year ended December 31, 2022 compared to $1,030,159 during the year ended December 31, 2021.
Research and development costs were $1,386,810 and $1,060,385 for the years ended December 31, 2023 and 2022, respectively. The increase was due to an increase in total number of research and development employee headcount in the Ontario, California headquarters and the Shenzhen, China subsidiary.
These are: (1) device on a chip; (2) universal smart instrumentation platform (“USIP”); (3) ultra-narrowband technology; (4) ultra-narrowband power line communication (“PLC”) technology; and (5) natural integrated programming language (“NIPL”). 47 Our main sources of revenue are derived from our sales of sensor devices and our wholesaling of various digital, analog, and quantum light meters and filtration products, including fan speed adjusters, carbon filters and HEPA filtration systems.
Our main sources of revenue are derived from our sales of sensor devices and our wholesaling of various digital, analog, and quantum light meters and filtration products, including fan speed adjusters, carbon filters and HEPA filtration systems.
The World International Property Organization report cited only three category “A” documents, indicating that the Company’s application met both the novelty and non-obviousness patentability requirements. Consequently, the Company is optimistic that the patent covering the claims for its PLC technology will be issued in due course and will allow the Company to implement strong protections on the PLC technology worldwide.
The World International Property Organization report cited only three category “A” documents, indicating that the Company’s application met both the novelty and non-obviousness patentability requirements.
Operating Expenses The major components of our operating expenses for the years ended December 31, 2022 and 2021 are outlined in the table below: For the year ended December 31, 2022 For the year ended December 31, 2021 Increase (Decrease) $ Selling expense $ 142,372 $ 39,821 $ 102,551 Compensation – officers and directors 1,055,133 661,171 393,962 Research and development 1,060,385 220,469 839,916 Professional fees 896,385 1,030,159 (133,774 ) General and administrative 2,074,091 1,362,126 711,965 Total costs and operating expenses $ 5,228,366 $ 3,313,746 $ 1,914,620 Selling expense for the year ended December 31, 2022 was $142,372, compared to $39,821 for the year ended December 31, 2021.
In addition to the increase in revenue, gross profit increased to $93,785 for the year ended December 31, 2023, compared to $22,720 for the year ended December 31, 2022. 50 Operating Expenses The major components of our operating expenses for the years ended December 31, 2023 and 2022 are outlined in the table below: For the year ended December 31, 2023 For the year ended December 31, 2022 Increase (Decrease) $ Selling expense $ 140,994 $ 142,372 $ (1,378 ) Compensation – officers and directors 1,082,775 1,055,133 27,642 Research and development 1,386,810 1,060,385 326,425 Professional fees 705,234 896,385 (191,151 ) General and administrative 1,740,779 2,074,091 (333,312 ) Total operating expenses $ 5,056,592 $ 5,228,366 $ (171,774 ) Selling expense for the year ended December 31, 2023 was $140,994, compared to $142,372 for the year ended December 31, 2022.
How Big is the Custom Installation Market?, February 5, 2018, https://www.cepro.com/news/how_big_is_custom_installation_market/ 53 Results of Operations For the year ended December 31, 2022 compared to the year ended December 31, 2021 Revenue Our consolidated gross revenue for the years ended December 31, 2022 and 2021 was $353,619 and $1,434,446, respectively, which included revenue from related parties of $49,782 and $29,084, respectively.
How Big is the Custom Installation Market?, February 5, 2018, https://www.cepro.com/news/how_big_is_custom_installation_market/ 49 Results of Operations For the year ended December 31, 2023 compared to the year ended December 31, 2022 Revenue in operating segments is primarily generated from IoT product and IoT project construction and installation services. The following tables summarize revenue from each segment.
The change in operating assets and liabilities includes an increase in accounts receivable of $28,875, increase in accounts receivable – related party of $15,176, decrease in inventory of $21,229, increase in other receivable of $13,057, increase in prepaid expenses of $210,017, decrease in deposits of $66,767, increase in operating lease right-of-use asset of $333,140, increase in accounts payable and accrued liabilities of $94,484, decrease in accounts payable – related party of $17,471, increase in other current liabilities of $17,299, decrease in customer deposit of $57,106, increase in lease liabilities of $328,846, and decrease in other liabilities of $17,135.
The change in operating assets and liabilities includes an increase in accounts receivable of $112,716, decrease in accounts receivable – related party of $34,507, increase in inventory of $178,299, increase in other receivable of $20,519, decrease in prepaid expenses of $45,602, decrease in deposits of $8,336, decrease in operating lease right-of-use asset of $325,329, increase in accounts payable and accrued liabilities of $215,531, increase in other current liabilities of $78,455, and decrease in lease liabilities of $342,732.
Removed
Based on the promising results of our internal testing, we have begun designing a proprietary PLC microchip and have set an intended launch date for 2023.
Added
Hydrofarm was not our primary source of revenue for the year ended December 31, 2023. 44 While currently, we do not believe that inflation will play a large role and have a large affect on our current business, as our business grows, inflation may play a larger role as our need to procure supplies increases and our borrowing requirements increase as well.
Removed
The number of new contracts we have signed thus far in a limited amount of time through the segment is 9 with an average value of $52,257.44 and a total collection value of $470,317 in signed contracts to date, of which we have already collected $233,515.89.
Added
As we begin to diversify away from both one single sector and one single large customer, we also believe that market volatility in any single sector is also diminished significantly. We believe this should have a stabilizing affect on revenues.
Removed
Additionally, thus far, we have an aggregate $615,797 in contracts agreed in principle, of which we expect to be signed and deposits paid. This is compared to our highest AVX revenue for calendar year of $817,233 in 2019, $705,877 for 2020, $252,958 for 2021, and $260,871 for 2022 for the entire calendar year.
Added
However, as our new products begin to reach maturation and completion in development, we do believe supply chain risk as our company needs for consistently procuring reliable inputs increases. We also believe this may hold the largest risk factor for cash flow as production increases.
Removed
Revenue for the year ended December 31, 2022 decreased $1,080,827 due to AVX Design & Integration Inc. being unable to generate more service work or develop a big project during the pandemic. As mentioned, the company is midstream in shifting toward more higher technology products and revenues and diversifying away from generalized hydroponic equipment.
Added
The Ubiquitor is a general platform that collects data in real time and is intended to be adapted to many industrial uses. 45 Also, we plan to design a full line of products for the gardening industry by integrating the Ubiquitor device into a gardening system.
Removed
Cost of revenue and Gross Profit Cost of revenue for the year ended December 31, 2022 was $330,899, compared to $1,137,287 for the year ended December 31, 2021. This decrease in cost of revenue was related to the decrease in revenues.
Added
While statistics regarding the IoT installation sectors are difficult to aggregate given that the work is often are pieced off into various contractor service categories, the residential custom installation market ranges from $5.7B to $12.1B [27] , and we would expect the commercial and industrial installation markets to be larger than the residential for IoT devices.
Removed
In addition to the decrease in revenue, gross profit decreased to $22,720 for the year ended December 31, 2022 compared to $297,159 for the year ended December 31, 2021.
Added
Year Ended December 31, 2023 Corporate IoT Products IoT Installation Services Total Revenue $ – $ 281,117 $ 705,538 $ 986,655 Revenue - related party – 28,375 37,168 65,543 Total revenue $ – $ 309,492 $ 742,706 $ 1,052,198 Year Ended December 31, 2022 Corporate IoT Products IoT Installation Services Total Revenue $ – $ 51,302 $ 252,535 $ 303,837 Revenue - related party – 41,536 8,246 49,782 Total revenue $ – $ 92,838 $ 260,781 $ 353,619 Revenue, cost of revenue and gross profit For the year ended December 31, 2023 For the year ended December 31, 2022 Increase (Decrease) $ Revenue $ 986,655 $ 303,837 $ 682,818 Revenue – related party 65,543 49,782 15,761 Total Revenue 1,052,198 353,619 698,579 Cost of revenue 958,413 330,899 627,514 Gross Profit $ 93,785 $ 22,720 $ 71,065 Our consolidated gross revenue for the years ended December 31, 2023 and 2022 was $1,052,198 and $353,619, respectively, which included revenue from related parties of $65,543 and $49,782, respectively.
Removed
The decrease in professional fees mainly resulted from the Nasdaq uplist in 2021 compared to the current period. General and administrative expenses of $2,074,091 incurred during the year ended December 31, 2022 primarily consisted of salaries of $739,943, insurance expense of $406,612, rent of $209,738, office expense of $188,464, payroll taxes of $136,614 and depreciation expense of $165,293.
Added
Revenue for the year ended December 31, 2023 increased $698,579 due to a sales increase from our acquisition of AT Tech Systems and sales increase in AVX sales due to ramping up marketing efforts. This increase of revenue was mainly a result of the increase of IoT Installation Services being bolstered by additional resources such as increased headcount.
Removed
General and administrative expenses of $1,362,126 incurred during the year ended December 31, 2021 primarily consisted of salaries of $487,073, insurance expense of $359,372 and depreciation expense of $162,160.
Added
Cost of revenue for the year ended December 31, 2023 was $958,413, compared to $330,899 for the year ended December 31, 2022. While the overall cost of revenue increased, as a percent of revenue, costs went down because of higher margin contracts for IoT Installation Services being signed.
Removed
Other expense of $204,390 incurred during the year ended December 31, 2021, primarily consisted of interest expense of $37,608, forgiveness of debt of $371,118, change in fair value of warrant liability of $1,284,780, gain on settlement of derivative liability of $550,406, rental income of $186,212 and other income of $10,262.
Added
Professional fees were $705,234 during the year ended December 31, 2023 compared to $896,385 during the year ended December 31, 2022.
Removed
Net Losses During the years ended December 31, 2022, and 2021, we incurred net losses of $4,926,937 and $3,220,977 respectively, due to the factors discussed above.
Added
The decrease in these professional fees compared to the prior period was due to a decrease in new transaction-based legal paperwork for the Company (as much of this paperwork was completed earlier) and a decrease in employment litigation legal fees.
Removed
Non-cash expense included add-backs of $42,116 in bad debt expense, $162,160 in depreciation expense, $1,284,780 in change in fair value of warrant liability, $48,000 in stock-based compensation, $429,856 in stock option compensation, reduction in inventory reserve of $1,622, and gain on settlement of derivative liability of $550,406.
Added
General and administrative expenses for the year ended December 31, 2023 was $1,740,779, compared to $2,074,091 for the year ended December 31, 2022.
Removed
For the year ended December 31, 2021, cash inflows of $10,087,818 were due to proceeds of SBA loans of $267,297, repayment of SBA loans of $246,650, proceeds from bank loan of $1,500,000, repayment of the bank loan of $1,500,000, proceeds from issuance of shares of $10,326,131, and forgiveness of debt of $258,960.
Added
The relating decrease was due to the following reasons: a) Decreased number of general and administrative employees in our headquarters due to outsourcing of work to third parties; b) Relocated Focus Shenzhen office to lower lease expense; and c) Obtained better insurance deal from another insurance company.
Added
Other Income (expense) Other income of $244,665 incurred during the year ended December 31, 2023, primarily consisted of interest income of $38,339, interest expense – related party of $38,333, unrealized gain on marketable equity securities of $8,033, realized loss on marketable equity securities of $2,002, rental income of $160,910 and other income of $77,718.
Added
Non-cash expense included add-backs of $26,631in bad debt expense, $167,983 in depreciation expense, $8,033 in unrealized gain on marketable equity securities, $2,002 in realized loss on marketable equity securities, $431,813 in stock-based compensation – shares, and $515,490 in stock-based compensation – options.
Added
Our net cash outflows from operating activities of $2,957,983 for the year ended December 31, 2022, was primarily the result of our net loss of $4,926,937 and changes in our operating assets and liabilities offset by the add-back of non-cash expenses.
Added
Cash Flows from Investing Activities For the year ended December 31, 2023, we had cash inflow from investing activities of $54,146. That was primarily the result from the purchase of property and equipment of $20,620, purchase of marketable securities of $43,644 and proceeds from sales of marketable securities of $118,410.
Added
For the year ended December 31, 2022, we had cash outflow from investing activities of $211,257.
Added
Going Concern The Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these unconsolidated financial statements. The Company has a net loss of $4,718,142 and $4,926,937 for the years ended December 31, 2023 and 2022, respectively.
Added
In addition, the Company had an accumulated deficit of $22,582,170 and $17,864,028 as of December 31, 2023 and 2022, respectively, and negative cash flow from operating activities of $3,528,762 and $2,957,983 for the years ended December 31, 2023 and 2022, respectively.
Added
Substantial doubt about the Company’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year from the financial statement issuance date.
Added
The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern.
Added
The Company currently suffered recurring loss from operations, generated negative cash flow from operating activities, has an accumulated deficit and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These conditions raise substantial doubt as to its ability to continue as a going concern.
Added
These consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. At December 31, 2023, the Company had cash and cash equivalents, and short-term investments, in the amount of $464,989.
Added
The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and raising additional capital to meet its obligations and repay its liabilities arising from normal business operations when they come due.
Added
Since inception, the Company has funded its operations primarily through equity and debt financings, and it expects to continue to rely on these sources of capital in the future. In addition, subsequent to year end, the Company has entered into an agreement to sell its Land and Buildings which upon completion, will provide additional working capital to the Company.
Added
No assurance can be given that the sale of the land and building will occur, or any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company.
Added
Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing, or grant unfavorable terms in future licensing agreements.
Added
Related Party Loan On August 3, 2023, the Company submitted a written consent, and the Board approved a loan amount between $1 million and $5 million. On September 7, 2023, the Company entered into a loan agreement with Golden Sunrise Investment LLC in the amount of $1,000,000.
Added
This loan is secured against the Company’s property, which serves as collateral, with a net book value of $4.5 million pledged. At the time of entering the loan agreement, Golden Sunrise Investment LLC was owned by two of the Company’s shareholders who collectively owned approximately 19% of the Company’s outstanding shares.
Added
The loan has an annual interest rate of 12% and the principal amount has a due date of September 7, 2024. The interest expense amount was $38,333 for the year ended December 31, 2023. There was no accrued interest as of December 31, 2023, and the total principal outstanding loan amount was $1,000,000 as of December 31, 2023.

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