1、Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2022 or TRANSITION REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCH
2、ANGE ACT OF 1934 For the transition period from _ to _ Commission file number 333-193087 FOCUS UNIVERSAL INC.(Exact name of registrant as specified in its charter)Nevada 46-3355876(State or other jurisdiction of(I.R.S.Employer Identification No.)Incorporation or organization)2311 East Locust Court,O
3、ntario,CA 91761(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code(626)272-3883 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.001 par valueFCUVThe N
4、asdaq Stock Market LLC(Nasdaq Global Market)Securities registered pursuant to Section 12(g)of the Act:Title of each classNone Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not r
5、equired to file reports pursuant to Section 13 or 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12months(or for such shorter period that the registran
6、t was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this c
7、hapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growthcomp
8、any.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth co
9、mpany,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attes
10、tation to its managements assessment of the effectiveness of its internal control over financialreporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 1
11、2(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect thecorrection of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis
12、 of incentive-based compensation received by any of theregistrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No As of June 30,2022,the aggregate market valu
13、e of shares held by non-affiliates of the registrant(based upon the closing price of such shares on the Nasdaq Global Market onJune 30,2022)was$495,782,364.14.For purposes of calculating the aggregate market value of shares held by non-affiliates,we have assumed that all outstanding shares areheld b
14、y non-affiliates,except for shares held by each of our executive officers,directors and 5%or greater stockholders.In the case of 5%or greater stockholders,we have notdeemed such stockholders to be affiliates unless there are facts and circumstances which would indicate that such stockholders exercis
15、e any control over our company,or unlessthey hold 10%or more of our outstanding common stock.These assumptions should not be deemed to constitute an admission that all executive officers,directors and 5%orgreater stockholders are,in fact,affiliates of our company,or that there are not other persons
16、who may be deemed to be affiliates of our company.Further informationconcerning shareholdings of our officers,directors and principal stockholders is included in Part III,Item 12 of this Annual Report on Form 10-K.The number of shares outstanding of the registrants common stock,$0.001 par value,outs
17、tanding as of March 22,2023:43,229,653.DOCUMENTS INCORPORATED BY REFERENCE None.TABLE OF CONTENTS Part IPage No.Item 1.Business1 Item 1A.Risk Factors31 Item 1B.Unresolved Staff Comments45 Item 2.Properties45 Item 3.Legal Proceedings45 Item 4.Mine Safety Disclosures45 Part II Item 5.Market for Regist
18、rants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities46 Item 6.Reserved47 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations47 Item 7A.Quantitative and Qualitative Disclosures About Market Risk55 Item 8.Financial Statements
19、 and Supplementary DataF-1 Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure56 Item 9A.Controls and Procedures56 Item 9B.Other Information57 Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections57 Part III Item 10.Directors,Executive Of
20、ficers and Corporate Governance58 Item 11.Executive Compensation64 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters67 Item 13.Certain Relationships and Related Transactions,and Director Independence67 Item 14.Principal Accounting Fees and Service
21、s68 Part IV Item 15.Exhibits,Financial Statement Schedules69 Item 16.Form 10-K Summary69 Signatures70 i FOCUS UNIVERSAL INC.FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements.Forward-looking statements are projections of events,revenues,income,future economic performan
22、ce ormanagements plans and objectives for our future operations.In some cases,you can identify forward-looking statements by terminology such as“may,”“should,”“expects,”“plans,”“anticipates,”“believes,”“estimates,”“predicts,”“potential”or“continue”or the negative of these terms or other comparable t
23、erminology.These statements are onlypredictions and involve known and unknown risks,uncertainties and other factors,including,but not limited to,the risks in the section entitled“Risk Factors”and the risks setout below,any of which may cause our or our industrys actual results,levels of activity,per
24、formance or achievements to be materially different from any future results,levelsof activity,performance or achievements expressed or implied by these forward-looking statements.These risks include,by way of example and not in limitation:the uncertainty of profitability based upon our history of lo
25、sses;risks related to failure to obtain adequate financing on a timely basis and on acceptable terms;risks related to our international operations and currency exchange fluctuations;and other risks and uncertainties related to our business plan and business strategy.This list is not an exhaustive li
26、st of the factors that may affect any of our forward-looking statements.These and other factors should be considered carefully,and readers shouldnot place undue reliance on our forward-looking statements.Forward-looking statements are made based on managements beliefs,estimates and opinions on the d
27、ate thestatements are made,and we undertake no obligation to update forward-looking statements if these beliefs,estimates and opinions or other circumstances should change.Although we believe that the expectations reflected in the forward-looking statements are reasonable,we cannot guarantee future
28、results,levels of activity,performance,orachievements.Except as required by applicable law,including the securities laws of the United States,we do not intend to update any of the forward-looking statements toconform these statements to actual results.Our financial statements are stated in United St
29、ates dollars(US$)and are prepared in accordance with United States Generally Accepted Accounting Principles.All referencesto“common stock”refer to the common shares in our capital stock.As used in this annual report,the terms“we,”“us,”“our,”the“Company”and“Focus Universal”mean Focus Universal Inc.un
30、less otherwise indicated.ii PART I Item 1.BUSINESS Company Background.Focus Universal Inc.(the“Company,”“we,”“us,”or“our”)is a Nevada corporation.We are based in the city of Ontario,California,and were incorporated in Nevada in 2012.In December of 2013,we filed an S-1 registration statement that wen
31、t effective on March 14,2014.From March 14,2014,through August 30,2021,our securities traded on theOTCQB 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 securitieshave traded on the Nasdaq Global Market.Our
32、 company websites are ,and .Our website and the information contained therein or connectedthereto are not intended to be incorporated into this report.We have developed five proprietary platform technologies that we believe solve the most fundamental problems plaguing the internet of things(“IoT”)in
33、dustry by:(1)increasing the overall degree of chip integration capabilities by shifting integration from the component level directly to the device level;(2)creating a faster 5G cellulartechnology by using ultra-narrowband technology;(3)leveraging ultra-narrowband power line communication(“PLC”)tech
34、nology;(4)developing a natural integratedprogramming language(“NIPL”)applied to software development,which generates a user interface through machine auto generation technology;and(5)developing auniversal smart instrumentation platform(“USIP”).Index of Key Technical Abbreviated Terms AbbreviationFul
35、l Term5GFifth Generation Mobile Wireless Telecommunications NetworkFSKGaussian Frequency Shift KeyingHANsHome Area NetworksICIntegrated ChipIoTInternet of ThingsLTE NetworksLong-Term Evolution NetworksMOS TransistorMetal-Oxide-Silicon TransistorPLCPower Line CommunicationUNBUltra-narrowbandUSIOUnive
36、rsal Smart Instrumentation Operating SystemUSIPUniversal Smart Instrumentation Platform 1.Our goal is to increase the overall degree of chip integration capabilities by shifting integration from the component level directly to the device level.We have developed an innovative and proprietary“device o
37、n a chip”(“DoC”)technology,which combines the required electronic circuits of various integrated circuitcomponents onto a single,integrated chip(“IC”)and pushes beyond the limits of current integrated chips.Our DoC technology works as a single component but is capable ofhandling entire IoT device fu
38、nctions(excluding sensors and architecture-specific components).Our DoC technology includes both the hardware and software,uses less powercompared to traditional IoT devices,with better performance,includes smaller overall devices,and offers greater reliability despite decreasing the number of inter
39、connectionsbetween components.We believe that incorporating our DoC technology into our product offering,will simplify the manufacturing process,lowering our costs and allowing usto achieve a faster time-to-market,when compared to our competitors who only manufacture and sell multi-chip devices.Our
40、planned DoC technology allows devices toachieve 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 integratio
41、n,not incorporating softwaresolutions.This lack of incorporating software under a common operating system,application software,and extra interface into ICs,limits IC integration to the component level.Software is a critical component in electronics,and the more tightly integrated the software,the be
42、tter the power and performance.Software also adds an element of flexibilityand 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 fa
43、brication is too expensive to manufacture on alarge scale.IC is ideally designed for products that are intended for mass production to keep manufacturing costs low by producing uniform products using repetitive andstandardized processes.Product standardization has become a major bottleneck in device
44、-level IC fabrication because most devices are custom-designed and manufactured.The Universal Smart Instrumentation Platform(“USIP”)we developed is a standardized,universal hardware and software integration platform that provides a universalcommon foundation for what we anticipate will be used by th
45、ousands of IoT and standalone devices.The electronic design and production start from a 90%completed commonfoundation,our USIP,instead of the individual components that necessitate the current method of building each standalone instrument from scratch.USIP allows ICs to beintegrated from the compone
46、nt level up to the device level,which pushes the frontier of semiconductor technology beyond Moores Law.Our USIP also eliminates redundanthardware and software and results in significant cost savings and production efficiency.Figure 1.From USIP to device level integrated circuits(“IC”).2.Creating a
47、faster 5G cellular technology by using ultra-narrowband technology.Fifth generation(“5G”)telecommunications networks will revolutionize the digital economy by enabling new applications that depend on ultra-fast communications on anindustrial scale.5G promises to deliver an improved end-user experien
48、ce by offering new applications and services through gigabit speeds and significantly improvedperformance and reliability.5G will build on the successes of 2G,3G,and 4G mobile networks,which have transformed society,supporting new services and new businessmodels.5G provides an opportunity for wirele
49、ss operators to move beyond providing connectivity services to developing rich solutions and services for consumers andindustries across a wide range of sectors at an affordable cost.5G is an opportunity to implement wired and wireless converged networks and offers opportunities to integratenetwork
50、management systems.The United States and China are in a race to deploy 5G wireless networks,and the country that gets there first will lead in standard-setting,patents,and the global supply chain.A World Economic Forum report stated that by 2035 5G networks would contribute$13.2 trillion in economic
51、 value globally and generate22.3 million jobs in the 5G global value chain from direct network investments and residual services1.5G networks and their related applications are expected to add threemillion jobs and$1.2 trillion to the economy in the U.S.2 _1World Economic Forum,January 2020“The Impa
52、ct of 5G:Creating New Value across Industries and Society,”available at:http:/www3.weforum.org/docs/WEF_The_Impact_of_5G_Report.pdf(last accessed March 6,2023).2https:/ accessed on March 6,2023).2 Though 5G offers a significant increase in speed and bandwidth over previous generation telecommunicati
53、on networks,its more limited range for high-speed internet willrequire further infrastructure investments.A 5G network requires spectrum across low,mid,and high spectrum bands to deliver widespread coverage and support a wide rangeof use cases3.A low-band cell site can cover hundreds of square miles
54、 and deliver a downlink data rate in the range of 30-250 Mbps.4 Mid-band frequencies(2.5/3.5Ghz)can also travel long distances but can carry a lot more data than low-band cell sites.5 Mid-band 5G base stations can transmit and receive high-capacity signals over fairlylarge areas.They can represent a
55、n ideal mix of performanceincluding some networks providing download speeds around 100-900 Mbpsfor the bulk of 5G traffic inmetropolitan areas.6 High-band 5G uses millimeter-wave(mmWave)frequency bands.Despite receiving plenty of publicity,high-band is a very specialized part of the 5Goffering.7 Fun
56、ctioning over a shorter radius,its particularly useful in urban areas and busy venues like stadiums and shopping malls.8 With the potential to offer data rates ofup to 10 Gbps,high-band 5G is already being deployed in several major cities.Download speeds for carriers high band 5G can sometimes clock
57、 in around 450 Mbps,withpeak speeds of nearly 1 Gbps,and upload speeds near 50 Mbps.9 High band,mmWave spectrum is used primarily for urban and dense urban markets.The characteristics of high band,mmWave spectrum is that it is very wide and provides asignificant increase in capacity.Because of the g
58、reater spectrum width,speed is increased,and transmission latency is reduced.However,the drawback is that high-bandspectrum does not propagate over a large coverage area.For example,a 28 GHz mmWave spectrum can only travel 500 feet.10 Low-band frequencies can travel long distances and penetrate buil
59、dings but can only carry a limited amount of data.High-band frequencies can carry a substantial amount ofdata,but due to their shorter wavelength,they travel shorter distances and are more susceptible to buildings and trees blocking the signal.11 _3Horwitz,Jeremy(December 10,2019).“The definitive gu
60、ide to 5G low,mid,and high band speeds.”VentureBeat online magazine(available at:https:/ accessed March 7,2023).4Id.5Id.6Id.7See“5G RolloutBeyond the Hype.”Parsons Cyber Blog,June 16,2020(“As a result,5G base stations must be positioned as close as a third of a mile,whereas 4G basestations can provi
61、de coverage of 20 to 45 miles.This limitation becomes especially acute in more rural and/or remote areas,wherein 5G networks become impractical”)(available at:https:/ accessed,March 7,2023).8Id.9https:/www.t- accessed March 7,2023).10https:/ accessed March 7,2023).11https:/ accessed March 7,2023).3
62、Unlike 4G LTE,which operates on established frequency bands below 6GHz,5G requires frequencies up to 300GHz.Wireless carriers still need to bid for the costly higherspectrum bands,as they build and roll out their respective 5G networks.Adding the hardware required for 5G networks can significantly i
63、ncrease operating expenses.Building5G networks is expensive.According to THALES,total global spending on 5G is set to reach$620 billion by 2025.12 A typical 5G base station consumes up to twice or more the power of a 4G base station.Energy costs can grow even more at higher frequencies due to a need
64、 for more antennasand a denser layer of small cells.Edge computing facilities needed to support local processing and new internet of things(IoT)services will also add to overall network powerusage.Our ultra-narrowband wireless communication 5G+technology aims to achieve both low band 5G coverage and
65、 1 Gbps high-band speed because we employ an ultra-narrowspectrum channel(1KHz)to establish an ultra-long-distance link between the 5G base station and the receiver.The ultra-narrowband modulation was initially conceived in1985 by Dr.Harold R.Walker as a method to be used with frequency modulation(F
66、M)Sub-Carriers(as opposed to“FM Supplementary Carriers”or“In Band On Channel”Carriers).In its original form,data rates as high as 196 kb/s were obtained from a subcarrier at 98 kHz,and bandwidth spectral efficiencies as high as 15 bits/sec/Hz wereachieved.A pulse width modulation baseband encoding m
67、ethod called the“Slip Code”was used.That method,which was a baseband method,was limited in data rate andrequired excessive filtering,which precluded it from being a practical ultra-narrowband method.Ultra-narrowband(“UNB”)technology employs an ultra-narrow spectrum channel(4000 As shown in the table
68、,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.The spectral efficiency of our finished technology has reached 4000 bits/sec/Hz.Development work of our ultra-narrowband technology is underway for sp
69、eeds of 64 Mbps at abandwidth of 64 MHz with spectral efficiency of over 4000 bits/sec/Hz.UNB speeds will increase proportionally if it operates at the higher frequencies used by 4G or 5G networks or adopts multiple subcarriers,equivalent to increasing bandwidth.As a result,we believe that our ultra
70、-narrowband technology can reach 5G speeds and has the potential for much higher speeds.Utilizing the same bandwidth,our internalresults show that UNB can save energy of up to 20,000 times when compared to current 4G technology and 100,000 times when compared to current 5G technology.Keepingthe same
71、 bandwidth and energy consumption,our internal testing results suggest the coverage provided by UNB can increase by two orders of magnitude.UNB breaks throughthe Shannon Laws critical limit that current 5G cellular communication is reaching,overcomes the current 5G challenges,and allows cellular com
72、munication developmentbeyond 5G.Despite the excitement surrounding 5G networks,several challenges need to be address before global adoption of 5G technology can occur.1)Spectrum availability.5G networks operate on higher bandwidth frequencies reaching up to 300 GHz,which permit data rates capable of
73、 delivering ultra-fast speeds measuring as much as20 times more than those provided by 4G LTE networks.However,the availability and cost of spectrum bands are still an issue for wireless operators.Wirelessoperators need to bid for these costly higher spectrum bands as they build and deploy their res
74、pective 5G networks.On February 24,2021,the FederalCommunications Commission announced the winning bids in Auction 107,the auction of 3.7 GHz service licenses.The winning bids for all 5,684 available licensestotaled over$81 billion and were concentrated among just 21 bidders.13 Given that Focus Univ
75、ersal operates in the ultra-narrowband spectrum where very limitedspectrum is required and public access spectrum is also available,this is potentially less of a concern than pursuing the traditional broadband capacity pathways._13Federal Communications Commissions(February 17,2021),https:/www.fcc.g
76、ov/document/fcc-announces-winning-bidders-37-ghz-service-auction,(last accessed March7,2023)5 2)Coverage.Despite 5G networks offering significantly increased speeds,their more limited range will require increased infrastructure investments.5G requires three to four timesthe number of base stations t
77、o provide the same coverage area as 4G LTE because higher frequencies are more readily absorbed by solid objects than lowerfrequencies.For example,a signal at 700 MHz provides a coverage area three to four times that of a 2.6 GHz signal.Likewise,we expect UNB coverage to potentiallyincrease coverage
78、 over standard 5G broadband pathways.3)Cost.Building a 5G network is expensive.To do so is not just building a layer on top of an existing 4G network;instead,it is laying the groundwork for something newaltogether.The cost of a current 5G base station is approximately three times that of a 4G base s
79、tation.14 4)Energy consumption.Two factors relate directly to the increased energy consumption of 5G networks.First,5Gs operating on higher frequency spectrums require greater energy input.15For example,a typical 5G base station consumes up to twice the power consumed by a 4G base station.Second,to
80、provide the same coverage area as a 4G network,a5G network requires three to four times the number of base stations.Accordingly,the overall energy consumption of a typical 5G network will be at least six to eighttimes more than the energy consumption of a 4G network with equivalent coverage.Like the
81、 coverage applications,we also expect energy consumption to bepotentially significantly less with UNB technologies over the conventional broadband pathways.5G+We are currently developing 5G+,which we believe is a promising alternative wireless technology that uses our innovative ultra-narrowband(UNB
82、)wireless technology.UNBtechnology employs an ultra-narrow spectrum channel(1 kHz)to establish an ultra-long-distance link between transmitter and receiver.Our internal testing suggests that asingle 5G+subcarrier wave has the potential to provide speeds of 64 to 256 Mbps.Moreover,multiple UNB subcar
83、riers may be combined,which effectively increasesbandwidth.Given anticipated data rates of 64 Mbps,we believe only 4 to 16 5G+subcarrier waves would be needed to achieve the current 5G speeds,and just 40 to 160 5G+subcarrier waves would be needed to achieve 6G speeds.By contrast,5G technology requir
84、es 3,276 subcarrier waves to achieve its current speeds.Fewer subcarriers translateinto cost savings because they are more compact and consume less energy.Our goal is to increase the speed of 5G networks while simultaneously reducing the number ofsubcarriers.Our internal testing suggests that to ach
85、ieve speeds of 1 Gbps,our 5G+technology would only require bandwidths of 4 to 16 kHz,which is narrow enough to be operated inlower frequency spectrums.This would mean that 5G+providers would not need to purchase the higher frequency spectrums required by 5G technology.Accordingly,a 5G+provider would
86、 realize significant savings from not having to bid for costly higher spectrum band licenses.Operating in relatively lower frequency spectrum bands,whencompared 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 me
87、an that we couldreduce 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:/ accessed March 7,2023).15Environmental Health Trust,https:/ehtrust.org/scien
88、ce/reports-on-power-consumption-and-increasing-energy-use-of-wireless-systems-and-digital-ecosystem/,(lastaccessed 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
89、4Ginfrastructure.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 presentedusing higher broadband spectrums required for the implementation of the broadband technology used in 5G.3.Leveraging ultra-narrowband
90、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 powerlines,it does not require substantial new investment for a dedicated wiring infrastructure
91、.Existing power lines already form a distribution network that penetrates everyresidential,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 backbo
92、ne communication infrastructure required for the IoT.PLC allows IoT devices to be plugged into power outlets to establish aconnection using the existing electrical wiring,permitting data sharing without the substantial investment and inconvenience of running dedicated network cables.Historically,the
93、 primary design goal of the power line network was electric power distribution.The power line network was not originally designed to function as acommunication channel.Consequently,while PLC has been around for many years,the harsh electrical noise present on power lines and variations in equipment
94、and standardsmake communications over the power grid difficult and present several challenges for data transfer.Signals propagating along the power line are subjected to substantialamounts of noise,attenuation,and distortion that make them erratic,with several attributes varying over time.PLC is sus
95、ceptible to noise from devices linked to the powersupply infrastructure,including,for example,fluorescent tube lights,drills,hair dryers,microwave ovens,computers,switch-mode power supply,cellphone chargers,dimmers,refrigerators,televisions,washing machines,and vacuum cleaners.The result is that pre
96、vious attempts at implementing PLC technology resulted in power companies andinternet service providers deciding that the technology is not a viable means of delivering data or broadband internet access.These technological challenges have impeded oreven halted progress in PLC technologys development
97、.We have successfully developed ultra-narrowband PLC technology that can transfer data through the power grid.According to our internal testing,our ultra-narrowband PLCtechnology can send and receive data without the customary interference that occurs in standard office and residential environments,
98、achieving speeds of 4 Mbps at a bandwidthof less than 1000 Hz.To test noise interference and disturbance,we utilized six industrial blowers simultaneously when testing,and no significant interference was found.Bycomparison,a single hair dryer will render our competitors legacy PLC technology complet
99、ely useless.We have completed the development of our 4Mbps PLC modules andthe printed circuit board layout.These modules will be used for IoT systems involving over 1,000 sensors.Our ultra-narrowband PLC technology is a considerably more effective way to transfer data than current in-home and commer
100、cial network systems,such as Zigbee and Z-Wave.While Zigbee and Z-Wave will need new infrastructure to be installed,our PLC technology could operate by itself or complement existing wideband communicationtools like Wi-Fi,Zigbee,or Z-Wave.Penetrating physical barriers like walls within a single floor
101、 or reaching out to different floors in a single building is a challenge for thewireless technology that current IoT systems are using.Moreover,wireless networks often face performance issues due to radio-frequency interference caused by microwaveovens,cordless telephones,or even Bluetooth devices a
102、t home.However,our PLC technology can reach every node connected via the power lines.Our technology convertsvirtually every standard wall socket into an access point,in many ways incorporating the best of wired and wireless communication,making it a more consistent and reliablesystem for crucial and
103、 sensitive operations.Our ultra-narrowband PLC technologys ability to reach long distances via power lines becomes especially useful in commercialnetworks that require the ability to avoid physical barriers like walls,underground structures,and hills,such as those networks used in industrial facilit
104、ies,undergroundstructures,golf course irrigation systems,and campuses.Moreover,our technology can be an integral part of any smart city,community,or campus.7 4.Developing a natural integrated programming language(“NIPL”)applied to software development,which generates a user interface through machine
105、 auto generationtechnology.We have developed a proprietary and patented“user interface machine auto generation platform”(“UIMAGP”)to replace the manual software designs that are currently used.This platform is used to build the IoT user interface.The natural integrated programming language we have d
106、eveloped is like the language humans use to communicate witheach other,which makes it is easy for humans to learn,while still being understood by a machine.The UIMAGP simplifies the process of software programming by savinghundreds of lines of code into a micro code that can be saved to a sensor mod
107、ule.When that sensor module is plugged into a USIP,the user interface specification codes savedto the sensor module is sent to the platform and a universal display,such as a smartphone,a computer,or a display unit.The UIMAGP saved on the universal displayautomatically generates the user interface wi
108、thin milliseconds instead of requiring months or years of software development work.An embedded coding hardware engineer candesign sensor module hardware and provide the user interface specification code.Thus,the hardware-defining software is achieved.UIMAGP is similar to low code or no code program
109、ming because it reduces the amount of traditional hand-coding,enabling accelerated delivery of business applications.However,low code and no code programming suffer from integration restrictions,absence of customization,and security risks issues,making them unsuitable for large-scaleand mission-crit
110、ical enterprise applications such as IoT applications.UIMAGP has overcome these challenges while requiring only a minimum amount of coding.TheUIMAGP and user interface specification codes work collectively to perform the function of traditional customized software,enabling UIMAGP to be shared by the
111、 estimated20 billion IoT devices worldwide,1516 a feat that current manual software designs could not achieve.5.Developing a universal smart instrumentation platform(“USIP”)Instrumentation is a vast industry that covers a variety of fields,including medical,healthcare,scientific,commercial,industria
112、l,military,and daily life.Lack ofinstrumentation universality results in every instrument design starting from scratch.Moreover,each instrument can only carry out a determined measurement or control aspecific operation.Integrating existing instruments that lack interoperability and compatibility int
113、o a platform can be difficult and expensive.This integration is impeded by theinability of instruments to easily communicate with devices and sensors for perception,mobility,and manipulation.As society enters the IoT era,it is not unreasonable toassume that millions of devices will need to be connec
114、ted in one square kilometer.If each IoT device requires unique hardware and software developed from scratch,implementation in dense urban areas is simply not feasible.Wireless networks can be accessed by any device within the networks signal range.USIP is an advanced hardware and software integrated
115、 instrumentation platform with a large-scale modular design approach.USIP integrates many technologies,includingcloud technology,wired and wireless communication technology,software programming,instrumentation technology,artificial intelligence,PLC,sensor networking,and IoTtechnology into a single p
116、latform.This results in circuit designs that we believe are vastly cheaper and faster than those constructed of discrete integrated circuit componentsdesigned from scratch.USIP has primary functionalities and an open architecture capable of incorporating a variety of individual instruments,functions
117、,sensors,and probes from different industriesand vendors into a single unit.Instruments,sensors,or probes ranging from a few to several hundred or even thousands in any combination from various industries and vendorscan share or reuse the same platform.Adding,removing,or changing instruments or sens
118、ors is all the platform requires to switch from one type of device to another withoutrevising the software and redesigning the hardware.Compared to traditional stand-alone instruments,USIP exploits the processing power of a computer or a mobile device.Productivity,display,and connectivity capabiliti
119、es toprovide a more powerful,flexible,and cost-effective measurement solution.Traditional hardware-centered instrumentation systems are made up of multiple stand-aloneinstruments interconnected to carry out a determined measurement or control an operation.They have fixed vendor-defined functionality
120、,and the components that comprise theinstruments are also fixed and permanently associated with each other.Different instruments provided by different vendors cannot be interoperated and interchanged.Forexample,we simply cannot use a traditional blood pressure meter to measure temperature or vice ve
121、rsa.USIP is designated to be compatible with all instruments,sensors,orprobes on the market and capable of monitoring and controlling any combination of instruments or sensors.We believe our USIP will revolutionize the field of instrumentation,measurement,control,and automation.8 USIP is a versatile
122、 platform,able to perform and combine different measurements and controls,to substitute some instruments for others,and to integrate existing instrumentsinto it.The development of USIP is closely associated with the development and proliferation of computers and mobile devices that provide the found
123、ation and technicalsupport to the universal smart instrument such as an attractive graphical user touch screen interface,data processing and analysis capabilities,video and audio,cameras,GPS,ubiquitous wireless connectivity,artificial intelligence,cloud-based communications and a diverse number of f
124、unctions and software available to users that are not contained intraditional instruments.These features embody the advantages of USIP,which are lacking stand-alone instrument systems.When compared with traditional instrument systems,USIPs biggest advantage is cost savings.Other distinctive features
125、 include universality,interoperability,flexibility,compatibility,upgradeability,expandability,scalability,security,modularity,fast prototyping,reducing inventory,plug-and-play operation,remote accessibility,simplification,standardization,and cloud instrumentation.We have been dedicated to solving in
126、strumentation interoperability for over a decade.We subdivide instruments into a reusable foundation component to the maximum extentpossible,architecture-specific components,and sensor modules,which perform traditional instruments functions at a fraction of their cost.For most instruments,90%of thed
127、esign,parts,and firmware are the same.These parts can be replaced by USIP.USIP utilizes a computer or a mobile device as its display and control to communicate with a group of sensors,instruments,probes,or controllers manufactured by differentvendors in a manner that requires the user to have little
128、 or no knowledge of their unique characteristics.The portable version of USIP is illustrated below.When a blood pressure sensor is plugged into the universal device,the user interface specification code saved on the bloodpressure sensor is sent to the universal device,and a computer or smartphone wi
129、ll then generate the user interface for the blood pressure device based on the interfacespecification code saved in the sensor.Figure 5.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._ 16Gar
130、tner Insights“Leading the IoT,”available at:https:/ 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-sensordevice capable of measuring pH and CO2 concentration.Each se
131、nsor has its own user interface automatically generated based on the user interface specification codesaved in each sensor.Figure 6.A pH sensor and a CO2 sensor are connected to our universal device,and our device changes into a two-sensor device.A computer or smartphone can also beused for display.
132、As illustrated below,when a light sensor is also plugged into our universal device using a three-way splitter,the universal device becomes a three-sensor device.Figure 7.A pH sensor,a CO2 sensor,and a light sensor are connected to the universal device,and the device changes into a three-sensor devic
133、e.A computer or smartphonecan also be used for display.10 As illustrated in Figure 8,the universal device can connect any number of sensors in any combination.Figure 8.Any number of sensors in any combination can be connected to the universal device and changed it into a multiple sensor device.A com
134、puter or smartphone canalso be used for the display.As an example of the capabilities of the Ubiquitor,we implemented our universal device in the configuration pictured in Figure 9.This configuration demonstrates that ouruniversal device simultaneously controls 27 light sensors,21 pH sensors,and 23
135、temperature humidity sensors(which have 23 temperature sensors and 23 humidity sensors),representing one device controlling a total of 72 devices and 95 sensors.Our universal device also controls two lights in this configuration,which it can control by turning thelights on or off(including on a sche
136、dule)or by using a light sensor to control the lights output intensity.Figure 9.Our universal platform simultaneously monitors and controls 72 different devices and 95 sensors.11 To illustrate,the entire horticulture industry has only a few hundred devices from different vendors for various measurem
137、ent and control purposes.One of our universal smartdevices and corresponding sensors or actuators can replace all at a fraction of the cost.Leveraging the same technical principles discussed above,we can simplify the smartcontrol and monitoring in this and related industries(including agriculture an
138、d aquaculture)with a platform that requires little design work for interoperability between sensorsand control devices.Figure 10.Traditional horticulture measurement and control devices.Figure 11.Universal Smart Device.12 All household measurement and control devices,such as air conditioner controls
139、,swimming pool controls,garage door controls,sprinkler controls,lighting controls,andmotorized 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.Internet of Thin
140、gs 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.As the sophist
141、ication of both hardware and software in the consumerelectronics industry skyrockets,an increasing share of the electronic devices produced around the world are manufactured with internet connectivity.Forecasts suggest that by2030,around 50 billion of these IoT devices will be in use worldwide,creat
142、ing a massive web of interconnected devices spanning everything from smartphones to kitchenappliances.1717 The IoT will significantly impact the economy by transforming many enterprises into digital businesses,facilitating new business models,improvingefficiency,and increasing employee and customer
143、engagement.It is foreseeable that the explosive growth in IoT will rapidly deplete natural and human labor resources.Webelieve that IoT will soon reach a critical limit;we do not have enough human labor and natural resources to support IoT growth.Twenty billion IoT devices challenge existingresource
144、s.We have overcome the current massive IoT production challenges by developing a shared distributed universal IoT.Billions of internet-compatible devices andmachines share data and information around the world and share a large section of hardware and software(up to 90%).Billions of IoT devices are
145、in use worldwide,each with different terminologies,technical specifications,and functional capabilities.These differences make it challenging tocreate one standard interoperability format for acquiring,harmonizing,storing,accessing,analyzing,and sharing data in near real-time.In fact,not even those
146、instruments builton the same platform are necessarily interoperable because they are often highly customized to an organizations unique workflow and preferences._ 17Statista Report“Number of internet of things(IoT)connected devices worldwide in 2018,2025 and 2030”available athttps:/ accessed March 7
147、,2023).13 Wireless networks are far from perfect for IoT.They are typically slower,expensive,and highly susceptible to radio signals and radiation interference.They can be accessed byany device within range of the networks signal,so unauthorized users may intercept information transmitted through th
148、e network(including encrypted data).Walls and floorscan seriously limit the range of the wireless network.Our proprietary ultra-narrowband PLC technology offers a promising alternative to wireless networks.Integrating USIPwith our ultra-narrowband PLC technology results in significant simplification
149、 and cost savings in implementing IoT,as illustrated in Figure 13.Using these technologies,wehave designed IoT products for both residential and industrial usage and are now in the process of testing.Figure 13.Comparison between(a)a traditional machine to machine IoT and(b)a shared distributed unive
150、rsal IoT,which depicts a USIP and sensors forming a local networkthrough PLC technology.The platform communicates with the cloud to form a remote cloud-based system.Figure 14.Comparison between(a)a traditional wireless network and(b)Focus Universal Inc.s PLC network.14 How we will implement our busi
151、ness 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.We believe that our
152、 technologies,as depicted above,can be used instandalone 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.Our ultra-narrowband PLC technology has achieved
153、 data transfer speeds of 4 megabits per second(“Mbps”),with a bandwidth of less than 1000 hertz(Hz).These results are15 times faster than the Zigbee short-range wireless technology mesh networks and 100-400 times faster than Z-Waves low-energy wave short-range wireless technology.Thecurrent 4Mbps PL
154、C modules will be used for IoT applications involving thousands of sensors.We are developing even higher communication speeds through our PLC.Theultra-narrowband PLC module will be integrated into ICs.This division will focus on ultra-narrowband PLC research and development,promoting and marketing u
155、ltra-narrowband PLC,ICs and finished products.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 interconnectivityapproach for the
156、 IoT.Due to the harsh electrical noise and interference currently present on power lines and to the variations in equipment and standards,that make datatransfer using PLC technology limited and difficult,the global market for PLC technology is very limited.Figure 15.Markets and Markets Updated date
157、Oct 25 The market size for PLC is expected to reach$17.4 billion at the end of 2028.18 This prediction is based on current PLC technology,which provides speeds that are too slow(usually less than 9,600 bps),coverage that is too short(200-300 yards),and harsh electrical noise and interference.The maj
158、or 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
159、 Communications,Nyx Hemera Technologies,and Renesas Electronics Corporation._ 18GlobalNewswire,December 19,2022,https:/ 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.We believe that market size
160、will increase significantly with the introduction of our ultra-narrowband PLC technology,which can overcome the interference and noise challenges presented by traditionalPLC technology.We believe that by utilizing ultra-narrowband PLC,the global IoT communication infrastructure costs and operating c
161、osts can be reduced.b)Ultra-narrowband wireless division This division will focus on developing ultra-narrowband wireless technology and overcoming the challenges facing current 5G networks.We intend to sell DoC for wirelesscommunication,licensing,and contract designing.While developing our ultra-na
162、rrowband PLC technology,we gained insight into the development of a single carrier wave ultra-narrowband wireless technology,which aims toincrease data transfer rates from 4 Mbps to 64 Mbps.We expect our ultra-narrowband wireless technology to achieve data transfer rates of 256 Mbps using 4 subcarri
163、er 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 operatingfrequencies are used.Our current research and development efforts are focused on an operating frequency of 64 megahertz(M
164、Hz),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 technologys 1,000 Hz bandwidth is approximately 20,000 times narrower than 4G networks and100,000 times narrower than 5G networks.The narrower the bandwidth,the less energy c
165、onsumption.By maintaining the 1,000 Hz bandwidth,our ultra-narrowband wirelesstechnology 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 thepotential to push the wireless frontier well beyond 5
166、G.We finalized our ultra-narrowband technology research with data transfer speeds of 64-256 Mbps in the fourth quarter of2022.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 have designed the devices andwe sho
167、uld 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%.The major players in the 5G infrastructuremarket are Hu
168、awei(China),Ericsson(Sweden),Samsung(South Korea),Nokia Networks(Finland),ZTE(China),NEC(Japan),CISCO(US),CommScope(US),CombaTelecom Systems(Hong Kong),Alpha Networks(Taiwan),Siklu Communication(Israel),and Mavenir(US).Huawei(China)is the leader in the 5G infrastructure market.Limited coverage,high
169、energy consumption,and expensive infrastructure installation are the major holdups for the successful deployment of 5G technology.Most 5Gtechnologies are based on broadband technology;our research suggests there are very few companies working on ultra-narrowband technology.We believe that adopting o
170、urultra-narrowband wireless technology can provide significant cost savings to 5G spectrum bands,5G network hardware,and 5G energy consumption.c)User interface machine auto generation division Established in 2009,our Companys software user interface machine auto generation technology division has de
171、veloped 100 sensors in arbitrary combinations,all of whichhave been tested for the iOS system.RS-485 is an industrial specification that defines the electrical interface and physical layer for point-to-point communication of electricaldevices.RS-485 is widely adopted and used in the IoT industry.Sta
172、ndard RS-485 modules available today usually do not support more than 100 sensors.The first version ofUIMAGP has been completed and we believe should support more than 1,000 sensors.We intend to sell and license the software to device manufacturers that use our DoC ICsand other industries where the
173、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.Today,some of the biggest companies within the software industry,including Microsoft,IBM,Or
174、acle,SAP,and Salesforce,have still not developed a UIMAGP.Any softwarethat can be created by low code and no code programming can also be created by using UIMAGP.However,the software created by UIMAGP achieves what low code and nocode programming cannot because of the complexities of applying the co
175、de to different platforms and the accompanying required customization.One of the distinct features ofUIMAGP is that the programming provides a starting point that includes foundational code that may be used on any platform or operating system.This makes the finalprogramming much more efficient,as it
176、 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 residentialmarkets.The developm
177、ent of universal smart instruments and IoT have considerable overlap,with the only difference being the number of devices involved.We will capitalizeon this overlap by unifying universal smart instruments and IoT into a single system,eliminating any distinction between them.USIP,a cost-effective and
178、 fully production-ready hardware and software platform,provides a considerable advantage in shorting design,building,testing,and fixing cycles.Smart home products,including light controls,air conditioner controls,sprinkler controls,garden light controls,heating floor controls,motorized curtain contr
179、ols,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,
180、agriculture,and aquacultureindustries.Leveraging the Companys ultra-narrowband PLC technology and USIP,we intend to provide a more stable,secure,and faster network for large industrial operationsrequiring data-specific sensing and control automation to ensure optimal outcomes.According to Markets an
181、d Markets,the agriculture IoT market is expected to grow from$11.4 billion in 2021 to$18.1 billion by 2026,at a CAGR of 9.8%.19 A key factor driving the growth of this market is the rising demand for agricultural production due toincreasing population and adoption of IoT and AI technologies by farme
182、rs and growers.Deere&Company(US),Trimble(US),Raven Industries(US),AGCO Corporation(AGCO)(US),AgJunction Inc.(AgJunction)(US),DeLaval(Sweden),GEA Farm Technology(Germany),Lely(Netherlands),Antelliq(France),AG Leader Technology(AGLeader)(US),Tigercat(Canada),Ponsse(Finland),Komatsu Forest AB(Sweden),C
183、aterpillar(US),Treemetrics(Ireland),Topcon Positioning Systems(US),and DICKEY-john Corporation(US)are some of the major players in the agriculture IoT market.We have completed the design of certain PLC industrial IoT devices,including industriallight controls,temperature controls,humidity controls,c
184、arbon dioxide controls,digital lighting controls,quantum PAR measurement and controls,pH measurement andcontrols,TDS measurement and controls,and fan speed controls.This division will also focus on developing device-on-a-chip(DoC)ICs,which we intend to sell to electronic device manufacturers for use
185、 in conjunction with the USIP.Wewill distinguish our DoC technology from the component ICs;these ICs can perform entire device functions.According to the Cision the globally integrated circuits market willbe worth$1,248.6 billion in 2030.20 Major players in the IC market are Intel Corporation,Texas
186、Instruments,Analog Devices,STMicroelectronics,NXP,ON Semiconductor,Micron,Toshiba,Broadcom,and Qualcomm.This division will also install and design customer solutions for residential and commercial IoT projects.The Company currently specializes in high-performance,easy-to-useaudio/video,home theater,
187、lighting control,automation,and home integration solutions for residential installation and custom solution services.On the commercial side,weplan to add well-trained staff ready to handle all aspects of voice,data,fiber,paging,audio-video services,CATV,and other low voltage premise cabling.All of o
188、ur serviceproviders hold certifications for multiple product lines and specialty work.The Company plans to use its current client base and expertise from these installation services tointegrate products developed on the USIP into the project proposals._ 19Market and Markets,May 2021,Agriculture IoT
189、Market worth$18.1 billion by 2026,https:/ March 7,2023)20Cision,January 25,2023,Integrated Circuits Market to Reach USD 1,248.6 Billion by 2030,https:/ 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 whol
190、esaler of various digital,analog,and quantum light meters and filtration products,including fan speed adjusters,carbon filters,and HEPA filtration systems.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
191、 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 provide a fan speed adjuster device to our client Hydrofarm.Designed specifically for centrifugal fans with brushless motors,
192、our adjuster devicehelps ensure longer life by preventing damage to fan motors by adjusting the speed of centrifugal fans without causing the motor to hum.These devices are rated for 350 wattsmax,have 120VAC voltage capacity,and feature an internal,electronic auto-resetting circuit breaker.Our Fan S
193、peed Adjuster Device 19 Carbon filter devices.We sell two types of carbon filter devices to our client Hydrofarm.These carbon filter devices are professional-grade filters specifically designed andused to filter the air in greenhouses that might be polluted by fermenting organics.One of these filter
194、s can be attached to a centrifugal fan to scrub the air in a constant circle orcan be attached to an exhaust line as a single pass filter,which moves air out of the growing area,filters unwanted odors,and removes pollen,dust,and other debris in the air.The other filter is designed to be used with fa
195、ns from 0-6000 C.F.M.Our Carbon Filter Device HEPA filtration device.We provide a high-efficiency particulate arrestance(“HEPA”)filtration device at wholesale prices to our client Hydrofarm.Manufactured,tested,certified,and labeled in accordance with current HEPA filter standards,this device is targ
196、eted towards greenhouses and grow rooms and designed to keep insects,bacteria,andmold out of grow rooms.We sell these devices in various sizes.Our HEPA Filtration Device 20 Digital light meter.We provide a handheld digital light meter to measure luminance in FC units or foot-candles.Our Digital Ligh
197、t Meter Device Quantum par meter.We provide a handheld quantum PAR meter to measure photosynthetically active radiation(“PAR”).This fully portable handheld PAR meter measuresPAR flux in wavelengths ranging from 400 to 700 nm.It is designed to measure up to 10,000 mol.Our Quantum Par Meter Device 21
198、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 offerresidential customers an entire smart home product line.We have finished designing smart devices for lighting control
199、,air conditioner control,sprinkler control,garden lightcontrol,garage door control,and heating control.We are developing a swimming pool control device,smoke detector,and carbon monoxide monitor.We believe smart installation based on the USIP,and our Ubiquitor together will include more functionalit
200、ies than the current systems offered by our competitors.It is our goalthat our smart systems would integrate,exchange data,interact and connect utilizing our forthcoming PLC technology.As a result,the installation process would be simplified,and its costs would be reduced.Once successfully integrate
201、d,the Ubiquitor will be central to every smart installation with our IoT Installation Services segment.The Ubiquitors connectivity capabilities willallow that system to be expanded and customized in the future.We also plan to offer zero down payment options for installation of our smart systems and
202、charge a monthlysubscription fee instead.Notwithstanding the foregoing,should we be unable to successfully integrate the Ubiquitor into our smart installations,the Ubiquitor will continue to be a flagship product ofour Company that can be applied to various other purposes in the different industries
203、 and fields mentioned above.Strategy and Marketing Plan The Company plans to market the USIP to the industrial sector first,including key growth industries such as indoor agriculture.Once the technology is established there,thecore technologies of universality and interoperability through a readily
204、available device,such as a mobile device or smartphone,may be ported to products specifically intendedfor the consumer and residential markets.While industrial markets are large,the consumer and residential markets are even more significant.This two-phase approach will allow for continuous and incre
205、asing revenuegrowth.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 residentialmarkets.22 Once we have successfully entered the industrial sector,we intend to roll out additional technologies that ar
206、e currently under development.These technologies will advance andsupport the core technologies marketed in phases one and two to the industrial and consumer markets.We will continue to design,manufacture,market,and distribute our electronic measurement devices,such as temperature humidity meters,dig
207、ital meters,quantum PAR meters,pH meters,TDS meters,and CO2 monitors.Over the years,Hydrofarm has developed a broad and loyal customer base that buys our existing products on a repeat basis.Theuniversal smart technology has been applied to our existing traditional devices and demonstrated significan
208、t functional improvement and hardware cost savings.We believehardware cost reductions of up to 90%have been achieved.However,promoting universal smart technology and universal smart IoT devices to our customers,includingtraditional instrument manufacturers,will be the central focus of our business i
209、n the future.Different markets require different strategies.We divided our customers into a few segments to determine what specific marketing technique will reach each targeted group andits needs.a)Our Existing Customer,Hydrofarm Our universal smart instruments design,development,and manufacture are
210、 targeted to increase current sales to Hydrofarm,our existing customer.Our current customer,Hydrofarm,is the largest distributor in the horticulture industry,with roughly 50%of the market share in the U.S.horticulture industry.All our current universal smart devices,including sensors and controllers
211、,will be distributed to Hydrofarm.Smartphones can be used to display and control all the sensors andcontrollers in the horticulture industry.By the end of 2020,we completed the development of several sensors that are used in the gardening industry,including a light controlnode,temperature sensor,hum
212、idity sensor,digital light sensor,quantum PAR sensor,pH sensor,TDS sensor and carbon dioxide sensor;and we finished the circuit layouts forthe pilot IoT system for the gardening industry(consisting of approximately 1,000 sensor nodes and controllers).These circuit layouts are in the possession of ou
213、r manufacturerin China for production.We have now received the circuit boards and are trying to launch the pilot production.We are designing the injection molding tooling so that we cancreate the casing.We believe we will be able to launch the pilot production once the casing tooling is fixed.In 202
214、3,we intend to extend our product line to Hydrofarm,who inturn will resell and market our systems and devices to its customers in the horticulture industry.b)Online Customers We intend to use traditional and specialized e-commerce outlets to help with online brand awareness.By analyzing Amazons data
215、,we plan to determine which traditionalinstruments have the highest selling volumes and at what price point.Future research and development will focus on integrating the sensors used in these instruments into theuniversal smart instruments to leverage on their existing markets.c)Traditional Controll
216、er and Remote-Control Customers Traditional controllers monitor and control their sensors through bi-directional communication implemented by hardware.The sensors or probes in controllers not only measurethe physical environment but also give feedback to the input actuators that can make necessary c
217、orrections.They are expensive and require a corresponding monitor in whichunidirectional communication is needed.For example,a traditional temperature meter may cost approximately$15 and a temperature controller may cost approximately$100.The wireless bi-directional communication supported by a smar
218、tphone or mobile device offers cost reduction in controller design and manufacturing.Traditional remote controlis accomplished through hardware,which can be replaced by a smartphone.Universal smart technology will also play an important role in traditional control applications.Traditional controller
219、 users are one of highest profit margin customers of universal smart technology.23 d)Special Customers For customers who consider an instruments compatibility,interoperability,interchangeability,universality,upgradeability,expandability,scalability,and remote access abilityas crucial,universal smart
220、 technology has several fundamental advantages over traditional instruments in terms of hardware cost and functionality.End users will not onlyenjoy the remote access to their sensors wirelessly but also save the cost of the hardware module which will be replaced by a smartphone.e)Traditional Instru
221、ments Manufacturers We may consider selling the Ubiquitor directly to instrument manufacturers and allowing them to distribute it through their established platforms.We are putting together aninternal sales team in order to establish the marketing campaign for our sensor devices,including the Ubiqui
222、tor.We are also expanding the sales team for AVX because webelieve that the Ubiquitor device will be integral to smart home installations.We believe that universal smart technology will play a critical role for traditional industrial instrument manufacturers,because it is too expensive and difficult
223、 to developindustrial instrument sensors for medium or smaller companies or individual homes.The cost factor is the first consideration when deciding whether a company wants todevelop universal smart technologies and implement them in their products.On December 23,2021,Focus Universal(Shenzhen)Techn
224、ology Co.LTD was founded as a mainland China office for manufacturing procurement expertise and supportresearch and development activities.Focus Universal(Shenzhen)Technology Co.LTD is 100%owned by Focus Universal Inc.and designed to function as a branch officeaccessing high level ability to source
225、products and build relationships with manufacturers in the region and as a lower cost form of support research and development asengineers are more plentiful in the region.In the future,this office could also handle other online marketing and marketing production activities,provided a cost and quali
226、tybenefit 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 m
227、arket;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 andimplementation beyond luxury homes;File additional patents to expand our intell
228、ectual property portfolio related to the many uses of our Ubiquitor device;and File patents to protect our PLC technology.To achieve these goals,we intend to focus on the following initiatives:Position the Ubiquitor device as the industry standard in universal sensor reading technology;Establish str
229、ategic supply chain channels to facilitate efficient production operations;and Communicate the product and service differentiation through direct networking and effective marketing.Growth Strategy Growth through Mergers and Acquisitions Mergers and acquisitions(“M&A”)represent a significant part of
230、our growth strategy because M&A can fill business gaps or add key business operations without requiring usto wait years for marketing and sales cycles to materialize.We have used this growth strategy in our acquisition of AVX,and in the future intend to continue to use M&A to findand secure opportun
231、ities that will either:(i)achieve the objective of growth in our market segments;or(ii)provide an area of expansion that will add to the Companysproducts and/or service lines in markets that we are currently not serving,but could serve if we had the appropriate expertise.The resulting combination of
232、 our existingproducts and services,new key personnel,and strategic partnerships through M&A will allow us to operate in new markets and provide new offerings to our existing market.Acquiring key competitors may allow the addition of key personnel to our team.These additions may include people with v
233、ast industry knowledge,which can act as a catalystto further our growth and lead to the development of new products and business lines.We will seek to target synergistic acquisitions in the same industry,targeting differentgeographic locations,which will allow us to actively compete on a regional or
234、 national scale in the IoT segment.If we target businesses in the same sector or location,we hopeto combine resources to reduce costs,eliminate duplicate facilities or departments and increase revenue.We believe this strategy will allow for accelerated growth andmaximize investor returns.One of our
235、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 PLCindustries.25 Original Equipment Manufacturer(“OEM”)Engineering Consulting and Design Services Universal smart technology is new to most elect
236、ronic engineers and manufacturers.One way to promote our universal smart technology is to provide direct OEM engineeringdesign consulting services to potential industrial customers.Direct,on-site consulting will educate our industrial consumers on the many ways our technology can beimplemented in a
237、variety of industrial applications.We believe that we are well positioned to perform product design and engineering consulting services for future OEMcustomers.We believe we can operate as a seamless extension of our customers engineering organizations and add scale,flexibility,and speed to their de
238、sign processes.Wewill not be able to offer such engineering consulting and design consulting services until the Ubiquitor is being produced and distributed.We believe that once the Ubiquitor isbeing produced and distributed,we will have hired and trained enough engineers to execute our consulting st
239、rategy.Through our engineering consulting services strategy,weintend to become our customers engineering partner at all stages of the design cycle so that we may effectively assist them in transforming ideas into production-readyproducts and accelerate time to market for our universal smart technolo
240、gy product segment.Technology Licensing We may also consider entering into licensing arrangements with our customers for our technology.We believe that once we educate our industrial consumers,they may want tointegrate our universal smart technology into their own technology through licensing agreem
241、ents.We believe licensing our intellectual property may provide a revenue streamwith no additional overhead,all while allowing us to retain proprietary ownership and create long-term industrial consumers who rely on our products.By creating incentives,such as cost incentives,to license our IP rather
242、 than design their own technology,we believe potential customers could save on design costs and create business developmentopportunities.Licensing may also allow us to rely on the expertise,capacity,and skill of a licensee to commercialize our IP,which is especially valuable if we lack theinfrastruc
243、ture,financial resources,and know-how to bring a product to market independently.Distribution Method We intend to engage in relationships predominantly with standard U.S.component manufacturers and similar electronics providers for the manufacturing of unassembled partsof the Ubiquitor and its senso
244、r nodes,and to then ship such parts to our Ontario,California facility where we will assemble the Ubiquitor devices and sensor nodes.Afterwards,we would distribute our Ubiquitor devices to distributors and retailers directly and also ship directly to traditional industrial instrument manufacturers.W
245、e have a salesdepartment operating out of our Ontario,California office and eventually plan to open a second sales department in China dedicated to promoting our technologies to localinstrument manufacturers who can utilize our Ubiquitor devices in their manufacturing and other processes.We intend t
246、o market the Ubiquitor to industrial end-users throughHydrofarm,through direct business-to-business sales channels and also directly to consumers via e-commerce internet platforms.For our quantum light meters,and airfiltration products,while we still continue to anticipate orders from Hydrofarm in 2
247、023,we have begun to diversify away from one single dominant distributor into morediversified distribution channels,such as direct wholesale into retail outlets and direct distribution to end-users.We also intend to implement a direct sales method viaA and other online retailers.Raw Materials The el
248、ectronic components used in the Ubiquitor are common and can be easily purchased through a variety of suppliers with little advanced notice.We predominantly uselarge-scale manufacturers in the United States such as Texas Instruments and Intel for the major components.Other key suppliers we could con
249、sider include Analog Devices,Skyworks Solutions,Infineon,STMicroelectronics,NXP Semiconductors,Maxim Integrated,On Semiconductor,and Microchip Technology.Production and assembly lines arealso available worldwide if we needed to outsource or increase our capacity,though we intend to complete our asse
250、mbly in our Ontario,California facility.26 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 andhandheld sensors are also manufactured in our Ontario,California
251、facility.Our air filtration products are manufactured and assembled in China by a third-party contractmanufacturer,Tianjin Guanglee.Our subsidiary unit in the Canton province of mainland China,Focus Universal(Shenzhen)Technology Co.LTD,was founded in December 2021 as an office formanufacturing procu
252、rement expertise and support research and development activities.Focus Universal(Shenzhen)Technology Co.LTD is designed to function as a branchoffice accessing high level ability to source products and build relationships with manufacturers in the region and as a lower cost form of support research
253、and development asengineers are more plentiful in the region.In the future,this office could also handle other online marketing and marketing production activities,provided a cost and qualitybenefit exists at the time.This excludes any projects subject to approval or that require a separate business
254、 license in accordance with the local laws.China allows foreignentities to setup wholly owned limited liability companies in China,also known as Wholly Foreign Owned Enterprises(WFOEs),in non“restricted”or“prohibited”industriesor business activities.The subsidiarys business operation has been approv
255、ed by the local government in Shenzhen to be qualified as a WFOE entity in China.The entity is100%owned by Focus Universal Inc.Competitors Sensor Node Industry There are several competitors we have identified in the sensor node industry,including traditional instruments or devices manufacturers such
256、 as Hanna Instruments or ExtechInstruments.Hach developed and launched the SC1000 Multi-parameter Universal Controller,a probe module for connecting to 32 digital sensors or analyzers.However,their products arenot compatible with smart phones yet;and we believe their price point is still prohibitive
257、 to consumers.Monnit Corporation offers a range of wireless and remote sensors.Many of Monnits products are web-based wireless sensors that usually are not portable because of theirpower consumption.Also,the sensors real-time updates are slow;and we believe security of the web-based sensor data acqu
258、isition may be a concern.In addition to purchasingthe device,consumers usually have to pay a monthly fee for using web-based services.IoT Installation Industry There are several companies that compete with AVX in smart home installations,including Vivint Smart Home,Crestron and Control4.However,we b
259、elieve we can distinguishourselves from our competitors by offering a substantially lower price.An installation by Crestron ranges between$20,000 and$100,000 and by Control4 between$20,000 and$40,000.The cheapest competitor we can identify in this sector is Vivint Smart Home,which costs less than$5,
260、000 to install;however,we understand that the Vivint SmartHome 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
261、is a niche industry.The global industrial air filtration market was valued at$23.83 billion by 2029 and analysts expect it toregister a CAGR of 7.2%because of the industrial need to control air quality across a range of industries.21 Air purification methods are an effective way to controlcontaminan
262、ts and improve indoor air quality and as a result,many national and local governments overseeing indoor air quality and other emissions are enacting stricterworkforce health and safety regulations in this area,which drives demand.We are not trying to compete with traditional instruments or device ma
263、nufacturers because we plan to utilize our Ubiquitor device in conjunction with our smartphoneapplication.We believe the resulting product may compete in a much wider product category due to its many potential applications.Our Corporate History We are based in the City of Ontario,California,and were
264、 incorporated in Nevada in 2012.In December of 2013,we filed an S-1 registration statement that went effective onMarch 14,2014.From March 14,2014,through August 30,2021,our securities traded on the OTCQB Market.From August 31,2021,our securities traded on the NasdaqCapital Market.From January 28,202
265、2,our securities traded on the Nasdaq Global Market.Our website is .Our website and the information contained therein or connected thereto are not intended to be incorporated into this report.The Company entered the residential and commercial automation installation service industry through the acqu
266、isition of AVX Design and Integration,Inc.(“AVX”)in March of2019.AVX was established in 2000 with the goal of installing high-performance,easy-to-use Audio/Video,Home Theater,Lighting Control,Automation,and Integrationsystems for high-net-worth residential projects.Additionally,we are performing res
267、earch and development on an electric power line communication(“PLC”)technology and have filed three patents with the United StatesPatent and Trademark Office(USPTO)related to our Ubiquitor device and the design of a quantum PAR photo sensor.Eventually,we hope that PLC technology will furtherenhance
268、smart IoT installations performed by AVX and powered by the Ubiquitor.In late 2018,we purchased a manufacturing warehouse and office space addressed at 2311 East Locust Court,Ontario,CA,91761.The property consists of an industrial type,two-story building,with a total building area of 30,740 square f
269、eet.Ten thousand square feet will be utilized for office space;and 20,000 square feet will be utilized forwarehouse space.The property includes 58 parking spaces.The purchase price for the property was approximately$4.62 million.On March 15,2019,the Company entered into a stock purchase agreement wi
270、th Patrick Calderone,the CEO and owner of AVX,whereby the Company purchased 100%of theoutstanding stock of AVX(the“AVX Acquisition”)for$890,716.The purchase price was structured as follows:(1)$550,000 payable in cash at closing;(2)$290,716 payablein 39,286 shares of the Companys common stock issued
271、upon closing;and(3)$50,000 payable in the form of a secured promissory note at 6%interest over 12 months securedby six shares of AVX common stock.In connection with the AVX Acquisition,Patrick Calderone also entered into a consulting agreement with the Company pursuant to whichhe would offer consult
272、ing and training services during the 12-month period following the closing of the AVX Acquisition.Since AVX is an installer of smart home products,and since we anticipate that our Ubiquitor device can enhance smart home installations,we believe that this acquisition will allow us to test new applica
273、tions and the integrationcapabilities of our Ubiquitor device in smart homes.On August 31,2021,the Company commenced trading on the Nasdaq Capital Market under the symbol“FCUV.”_ 21Fortune,The global air filters market is projected to grow from$14.68 billion in 2022 to$23.83 billion by 2029,exhibiti
274、ng a CAGR of 7.2%in forecast period,2022-2029,https:/ 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.The closing included the full exercise o
275、f the underwriters over-allotment option to purchase 300,000 shares of common stock at the public offering price,forgross proceeds to the Company of$11.5 million,prior to deducting underwriting discounts and commissions and offering expenses payable by us.On January 26,2022,the Company announced app
276、roval 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.On March 5,2018,we iss
277、ued a press release announcing that the USPTO hadissued an Issue Notification for U.S.Patent Application No.9924295 entitled“Universal Smart Device,”which covers a patent application regarding the Companys UniversalSmart Device.The patent was granted on March 20,2018.After our internal research and
278、development efforts,we filed with the USPTO on June 2,2017,a patent application regarding a process for improving the spectral responsecurve of a photo sensor.The small and cost-effective multicolor sensor and its related software protected by the potential patent we believe could achieve a spectral
279、 responsethat 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 April2020,the C
280、ompany was notified that it received a favorable international search report from the International Searching Authority regarding this patent application,whichpatents the Companys PLC technology.The World International Property Organization report cited only three category“A”documents,indicating tha
281、t the Companysapplication met both the novelty and non-obviousness patentability requirements.Consequently,the Company is optimistic that the patent covering the claims for its PLCtechnology will be issued in due course and will allow the Company to implement strong protections on the PLC technology
282、 worldwide.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 oftechnology areas including sensor technology,wired and wireless communications,power line communications,computer security,
283、software solutions,interconnectedtechnological 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.We continue to ultilize the ser
284、vices of the law firm of Knobbe Martens,Olson&Bear,LLP based in Orange County,CA to serve as outside intellectual property counsel for theCompany.The firm is working on transferring the Companys provisional patent applications to formal patent applications in addition to filing new provisional paten
285、ts.In 2021,we filed 14 patents.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 Companys patent number 11,488,468 was allowed and subsequently issued on November 1,2022.The patent,titled Sensor for Detecting the Prox
286、imity of anIEEE 802.11 Protocol Connectable Device.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.L
287、TD was founded as a mainland China office for manufacturing procurement expertise and non-confidential support research anddevelopment activities.This wholly owned subsidiary is registered to be engaged in IoT research and development,IoT sales and service,and other related activities.29 Compliance
288、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 ourbusiness.Employees As of the date of this report we have a total of 32 employees,with 25 full-time employees
289、 and 7 part-time employees.The Companys Chief Executive Officer and Secretary isDr.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.Wehave eleven full-time senior electrical and computer eng
290、ineers 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 oursubsidiary AVX,wi
291、th one employee serving as the supervisor and operational head.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 Courtfor the County of Los Angeles,State of California,ag
292、ainst the Company,et al.The complaint alleges claims including discrimination,wrongful termination,retaliation andvarious other provisions of the California Labor Code,and various other claims under California state law.The complaint seeks unspecified economic and non-economiclosses,as well as attor
293、neys fees.In response to the Complaint,defendants filed a motion to compel arbitration asking the court to order Plaintiff to submit his claims to bindingindividual arbitration based on an arbitration agreement signed by Plaintiff at the outset of his employment.The motion was unfortunately denied,a
294、nd in response,defendantsfiled an appeal.The appeal was also denied.Trial for this matter is not set,nor has discovery been conducted.AVX intends to vigorously contest this matter.Further,AVXdisputes that the other defendants are proper parties to the litigation.However,litigation and investigations
295、 are inherently uncertain,but the outcome could have a materialimpact on the Company.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 LosAngeles,State of California.The Complaint alleges
296、 claims including discrimination,wrongful termination,retaliation and various other provisions of the California LaborCode,and various other claims under California state law.The complaint seeks unspecified economic and non-economic losses,as well as attorneys fees.We have completedwritten discovery
297、 and most of the non-expert discovery.Trial is set for October 11,2023.AVX intends to vigorously contest this matter.Further,AVX disputes that the otherdefendants are proper parties to the litigation.However,litigation and investigations are inherently uncertain,but the outcome could have a material
298、 impact on the Company.On January 19,2023,the company filed an action in the Superior Court of California,County of San Bernardino against Jacqueline Li.AVX Design and Integration pre-paidfor equipment toward a joint project with her father Jeffrey Li.Payment was made to Jaquelines fathers company S
299、ing Young Music,while no goods or services were everreceived.Upon death,Jacqueline Li distributed assets from the business Sing Young Music without consideration toward the business entity or any formation of an estate forJeffrey Li.We attended the trial on March 17,2023 to represent our side of the
300、 case and are awaiting judgement from the court.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 orinvestors through compliance with the disclosure r
301、ules for a small business issuer under the Exchange Act.We are subject to disclosure filing requirements including filingForm 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.We do not intend tovoluntaril
302、y 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 wefile with the Securities and Exchange Commission at the SECs Public Reference Room at 100 F Street NE,Washington,DC 20549.The public ma
303、y 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 Item 1A
304、.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.If we are not successful in growing revenues a
305、ndcontrolling 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 profitabilityin subsequent periods.Because we have a limiting operating history with positive revenues,you may not be able to accurate
306、ly 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 toevaluate the merits of investing in our company.The likelihood of success must be considered in light of the pro
307、blems,expenses,difficulties,complications and delaysencountered in connection with the operations that we plan to undertake.These potential problems include,but are not limited to,unanticipated problems relating to the abilityto generate sufficient cash flow to operate our business,and additional co
308、sts and expenses that may exceed current estimates.However,we expect to continue generatingrevenues.Additionally,we recognize that if the effectiveness of our business plan is not forthcoming,we will not be able to continue business operations.If we are unsuccessfulin addressing these risks,our busi
309、ness will most likely fail.We require significant funding to develop,manufacture and market our Ubiquitor wireless sensor.We may ultimately require up to$20 million to fund the development,manufacturing,assembly and marketing strategy for the Ubiquitor.Once we achieve this fund-raisinggoal,we intend
310、 to position ourselves in the small device market,establishing the price at below a few hundred dollars.Due to superior functionality and low price,we expect tocapture this section of the market easily.Once our product and service mature,and the Company becomes better known,we believe we could gain
311、market share in the high-endmarket.None of this will be possible if we fail to obtain the funding we require.There is no guarantee that additional funding can be obtained on favorable terms,if at all.We depend on key personnel.Our future success will depend in part on the continued service of key pe
312、rsonnel,particularly,Desheng Wang,our Chief Executive Officer,and Edward Lee,the Chairman ofour Board.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 dueto our limited finan
313、cial resources and operating history.In addition,the loss of any key employees or the inability to attract or retain qualified personnel could delay our plan ofoperations and harm our ability to provide services to our current customer,Hydrofarm,and harm the markets perception of us.Regulatory actio
314、ns could limit our ability to market and sell our products.Many of our products and the industries in which they are used are subject to U.S.and foreign regulation.Government regulatory action could greatly reduce the market for ourUbiquitor device and for smart home installation.For example,the pow
315、er line grid,which is the communications grid that could be used by some of our products,is subject tospecial regulations in North America,Europe and Japan.In general,these regulations limit the ability of companies such as ours to use power lines as a communicationmedium.In addition,some of our com
316、petitors have attempted or may attempt to use regulatory actions to reduce the market opportunity for our products or to increase themarket opportunity for their own products.31 We outsource our product manufacturing and are susceptible to problems in connection with procurement,decreasing quality,r
317、eliability and protectability.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 manufacturingprocesses of our products.This lack of control may increase quality or reliability risks and could li
318、mit our ability to quickly increase or decrease production rates.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 formalcontractual relationship.We outsource the manufacture of our quantum light me
319、ter and air filtration devices to a single contract manufacturer,Tianjin Guanglee Technologies Ltd.(“Tianjin Guanglee”).If Tianjin Guanglees operations are interrupted or if Tianjin Guanglee is unable to meet our delivery requirements due to capacity limitations or other constraints,we may belimited
320、 in our ability to fulfill new customer orders,and we may be required to seek new manufacturing partners in the future.Tianjin Guanglee has limited manufacturingcapacity,is itself dependent upon third-party suppliers and is dependent on trained technical labor to effectively create components making
321、 up our devices or to repair specialtooling.In addition,as of the date of this report,we do not have a formal development and manufacturing agreement that regulates our business relationship with TianjinGuanglee.Although we continue to operate under the terms of an oral agreement,and we believe ther
322、e are a multitude of manufacturers that could quickly replace TianjinGuanglee,our manufacturing operations could be adversely impacted if we are unable to enforce Tianjin Guanglees performance.Our potential inability to adequately protect our intellectual property during the outsource manufacturing
323、of our quantum light meters and filtration products in Chinacould negatively impact our performance.In connection with our manufacturing outsourcing arrangements,we rely on third-party manufacturers to implement customary manufacturer safeguards onsite,such as the useof confidentiality agreements wi
324、th employees,to protect our proprietary information and technologies during the manufacturing process.However,these safeguards may noteffectively prevent unauthorized use of such information and technical knowhow or prevent the manufacturers from retaining them.We face risks that our proprietaryinfo
325、rmation may not be afforded the same protection in China as it is in countries with more comprehensive intellectual property laws,and local laws may not provide anadequate remedy in the event of unauthorized disclosure of confidential information.Costly and time-consuming litigation could be necessa
326、ry to enforce and determine thescope of our proprietary rights in China,and failure to obtain or maintain intellectual property or trade secret protection could adversely affect our competitive businessposition.If the third-party manufacturers of our proprietary products misappropriate our intellect
327、ual property,our business,prospects and financial condition could bematerially and adversely affected.Our business operations in China may negatively affect our ability to protect our intellectual property and our financial position.On December 31,2021,we set up a branch office in mainland China.His
328、torically,China has not protected intellectual property rights to the same extent as the United States,and infringement of intellectual property rights continues to pose a serious risk of doing business in China.Monitoring and preventing unauthorized use is difficult.Themeasures we take to protect o
329、ur intellectual property rights may not be adequate.Any unauthorized use of our intellectual property rights could harm our competitiveadvantages and business.Furthermore,the application of laws governing intellectual property rights in China is uncertain and evolving and could involve substantial r
330、isks to us.If we are unable to adequately protect our intellectual property rights,we may lose these rights and our business may suffer materially.Moreover,the complexities that arisefrom operating in a different tax jurisdiction inevitably led to an increased exposure to international taxation.Shou
331、ld 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
332、 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.Our estimates of the size and future growth in the market for our Ubiquitor device or our PLC technology is based on several internal stud
333、ies,reports and estimates.In addition,our internal estimates are based on current feedback from clients using current generation technology and our belief is that the use and implementation of our technologies inthe United States and worldwide will be extensive.While we believe we are using effective tools in estimating the total market for Ubiquitor device or our PLC technology,these estimates m
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