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 31,2023 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 30,2023,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 30,2023)was$47,304,201.87.For purposes of calculating the aggregate market value of shares held by non-affiliates,we have assumed that all outstanding shares areheld by
14、 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 exercise
15、 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 w
16、ho 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,outst
17、anding as of April 1,2024:64,771,817.DOCUMENTS INCORPORATED BY REFERENCE None.TABLE OF CONTENTS Part IPage No.Item 1.Business1 Item 1A.Risk Factors26 Item 1B.Unresolved Staff Comments41 Item 1C.Cybersecurity41 Item 2.Properties41 Item 3.Legal Proceedings42 Item 4.Mine Safety Disclosures42 Part II It
18、em 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities43 Item 6.Reserved44 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations44 Item 7A.Quantitative and Qualitative Disclosures About Market Risk53 Item
19、8.Financial Statements and Supplementary DataF-1 Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure54 Item 9A.Controls and Procedures54 Item 9B.Other Information56 Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections56 Part III Item 10.
20、Directors,Executive Officers and Corporate Governance57 Item 11.Executive Compensation62 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters65 Item 13.Certain Relationships and Related Transactions,and Director Independence65 Item 14.Principal Accou
21、nting Fees and Services66 Part IV Item 15.Exhibits,Financial Statement Schedules67 Item 16.Form 10-K Summary67 Signatures68 i FOCUS UNIVERSAL INC.FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements.Forward-looking statements are projections of events,revenues,income,fut
22、ure economic performance 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
23、 or other comparable terminology.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,
24、levels of activity,performance 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
25、upon our history of losses;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 i
26、s not an exhaustive list 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
27、 and opinions on the date 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 ca
28、nnot guarantee future 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 a
29、re stated in United States 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
30、Focus Universal Inc.unless 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 registrat
31、ion statement that went 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 Na
32、sdaq Global Market.Our company websites are ,www.smart-,and .Our website and the information containedtherein or connected thereto are not intended to be incorporated into this report.We have developed five proprietary platform technologies that we believe solve the most fundamental problems plaguin
33、g the internet of things(“IoT”)industry 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 po
34、wer line communication(“PLC”)technology;(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
35、Abbreviated Terms AbbreviationFull Term5GFifth Generation Mobile Wireless Telecommunications NetworkFSKGaussian Frequency Shift KeyingHANsHome Area NetworksICIntegrated ChipIoTInternet of ThingsLTE NetworksLong-Term Evolution NetworksMOS TransistorMetal-Oxide-Silicon TransistorPLCPower Line Communic
36、ationUNBUltra-narrowbandUSIOUniversal 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 in
37、novative and proprietary“device on 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 capabl
38、e ofhandling entire IoT device functions(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 despi
39、te decreasing the number of interconnectionsbetween 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
40、 and sell multi-chip devices.Our planned DoC technology allows devices toachieve interoperability with one another and are interchangeable,both features where traditional IoT devices fall short.Our research and development suggest that the existing IC integration in IoT devices is mainly focused on
41、hardware-to-hardware integration,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
42、 integrated the software,the better 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.1 Currently,ICs integration requires the development and manufacture of customized hardwa
43、re and software.As a result,IC fabrication 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 be
44、come a major bottleneck in device-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
45、 we anticipate will be used by thousands 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
46、 to beintegrated from the component 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 integr
47、ated circuits(“IC”).2.Creating a 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 deli
48、ver an improved end-user experience 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 p
49、rovides an opportunity for wireless 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 o
50、pportunities to integratenetwork 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 con
51、tribute$13.2 trillion in economic 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 Eco
52、nomic Forum,January 2020“The Impact 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 pr
53、evious generation telecommunication 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 c
54、an cover hundreds of square miles 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 fairl
55、ylarge areas.They can represent an 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 special
56、ized part of the 5Goffering.7 Functioning 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
57、 high band 5G can sometimes clock 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 incr
58、ease in capacity.Because of the greater 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
59、long distances and penetrate buildings 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(Dec
60、ember 10,2019).“The definitive guide 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,
61、whereas 4G basestations can provide 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).11
62、https:/ accessed March 7,2023).3 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 fo
63、r 5G networks can significantly increase 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
64、 higher frequencies due to a need 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 achi
65、eve both low band 5G coverage and 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
66、 used with frequency modulation(FM)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 wid
67、th modulation baseband encoding method 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 c
68、hannel(4000 As shown by the above table,our internal testing shows that our finished ultra-narrowband technology can achieve speeds of 4 Mbps per second at a bandwidth of less than1000 Hz.The spectral efficiency of our finished technology has reached 4000 bits/sec/Hz.Development work of our ultra-na
69、rrowband technology is underway for speeds of 64Mbps at a bandwidth 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
70、.As a result,we believe that our ultra-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
71、 current 5G technology.Keepingthe same 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
72、 5G challenges,and allows cellular communication 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
73、GHz,which permit data rates capable of 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 ba
74、nds as they build and deploy their respective 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 ju
75、st 21 bidders.13 Given that Focus Universal 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 F-24._13Federal Communications Com
76、missions(February 17,2021),https:/www.fcc.gov/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
77、 to four timesthe number of base stations to 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 U
78、NB coverage to potentiallyincrease coverage 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 ap
79、proximately three times that of a 4G base station.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 pow
80、er consumed by a 4G base station.Second,to 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 4
81、G network with equivalent coverage.Like the 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 th
82、at uses our innovative ultra-narrowband(UNB)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
83、64 to 256 Mbps.Moreover,multiple UNB subcarriers 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
84、 6G speeds.By contrast,5G technology requires 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 ofsubcarrier
85、s.Our internal testing suggests that to achieve 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
86、 technology.Accordingly,a 5G+provider would 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
87、 three to ten times larger.It would also mean that we couldreduce the number of subcarriers and reduce the overall costs of the 5G networks infrastructure.Further,the design of 5G+infrastructure means that cost savings could be realized as there is the potential of piggybacking the required 5G+infra
88、structure on the current 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._14“H
89、ow much does it cost to build a 5G base station?”Phate Zhang,April 7,2020,CNTechPost(available at:https:/ accessed March 7,2023).6 3.Leveraging ultra-narrowband power line communication(“PLC”)technology.Our patented PLC is an innovative communication technology that enables sending data over existin
90、g power cables in the electric grid.Because PLC uses the existing powerlines,it does not require substantial new investment for a dedicated wiring infrastructure.Existing power lines already form a distribution network that penetrates everyresidential,commercial,and industrial property.Given that th
91、e power grid is,for the most part,an established ubiquitous network,PLC is potentially the most cost-effective,scalable interconnectivity approach for the backbone communication infrastructure required for the IoT.PLC allows IoT devices to be plugged into power outlets to establish aconnection using
92、 the existing electrical wiring,permitting data sharing without the substantial investment and inconvenience of running dedicated network cables.Historically,the primary design goal of the power line network was electric power distribution.The power line network was not originally designed to functi
93、on as acommunication channel.Consequently,while PLC has been around for many years,the harsh electrical noise present on power lines and variations in equipment and standardsmake communications over the power grid difficult and present several challenges for data transfer.Signals propagating along t
94、he power line are subjected to substantialamounts of noise,attenuation,and distortion that make them erratic,with several attributes varying over time.PLC is susceptible to noise from devices linked to the powersupply infrastructure,including,for example,fluorescent tube lights,drills,hair dryers,mi
95、crowave ovens,computers,switch-mode power supply,cellphone chargers,dimmers,refrigerators,televisions,washing machines,and vacuum cleaners.The result is that previous attempts at implementing PLC technology resulted in power companies andinternet service providers deciding that the technology is not
96、 a viable means of delivering data or broadband internet access.These technological challenges have impeded oreven halted progress in PLC technologys development.We have successfully developed ultra-narrowband PLC technology that can transfer data through the power grid.According to our internal tes
97、ting,our ultra-narrowband PLCtechnology can send and receive data without the customary interference that occurs in standard office and residential environments,achieving speeds of 4 Mbps at a bandwidthof less than 1000 Hz.To test noise interference and disturbance,we utilized six industrial blowers
98、 simultaneously when testing,and no significant interference was found.Bycomparison,a single hair dryer will render our competitors legacy PLC technology completely useless.We have completed the development of our 4Mbps PLC modules andthe printed circuit board layout.These modules will be used for I
99、oT 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 commercial network systems,such as Zigbee and Z-Wave.While Zigbee and Z-Wave will need new infrastructure to be installed,our PLC technology coul
100、d operate by itself or complement existing wideband communicationtools like Wi-Fi,Zigbee,or Z-Wave.Penetrating physical barriers like walls within a single floor or reaching out to different floors in a single building is a challenge for thewireless technology that current IoT systems are using.More
101、over,wireless networks often face performance issues due to radio-frequency interference caused by microwaveovens,cordless telephones,or even Bluetooth devices at home.However,our PLC technology can reach every node connected via the power lines.Our technology convertsvirtually every standard wall s
102、ocket 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 sensitive operations.Our ultra-narrowband PLC technologys ability to reach long distances via power lines becomes especially useful in com
103、mercialnetworks that require the ability to avoid physical barriers like walls,underground structures,and hills,such as those networks used in industrial facilities,undergroundstructures,golf course irrigation systems,and campuses.Moreover,our technology can be an integral part of any smart city,com
104、munity,or campus.7 4.Developing a natural integrated programming language(“NIPL”)applied to software development,which generates a user interface through machine auto generationtechnology.We have developed a proprietary and patented“user interface machine auto generation platform”(“UIMAGP”)to replac
105、e 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 developed is like the language humans use to communicate witheach other,which makes it is easy for humans to learn,while still being underst
106、ood 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 module.When that sensor module is plugged into a USIP,the user interface specification codes savedto the sensor module is sent to the platform
107、 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 within milliseconds instead of requiring months or years of software development work.An embedded coding hardware engineer candesign sensor m
108、odule hardware and provide the user interface specification code.Thus,the hardware-defining software is achieved.UIMAGP is similar to low code or no code programming because it reduces the amount of traditional hand-coding,enabling accelerated delivery of business applications.However,low code and n
109、o code programming suffer from integration restrictions,absence of customization,and security risks issues,making them unsuitable for large-scaleand mission-critical enterprise applications such as IoT applications.UIMAGP has overcome these challenges while requiring only a minimum amount of coding.
110、TheUIMAGP and user interface specification codes work collectively to perform the function of traditional customized software,enabling UIMAGP to be shared by the estimated20 billion IoT devices worldwide,1516 a feat that current manual software designs could not achieve.5.Developing a universal smar
111、t instrumentation platform(“USIP”)Instrumentation is a vast industry that covers a variety of fields,including medical,healthcare,scientific,commercial,industrial,military,and daily life.Lack ofinstrumentation universality results in every instrument design starting from scratch.Moreover,each instru
112、ment can only carry out a determined measurement or control aspecific operation.Integrating existing instruments that lack interoperability and compatibility into a platform can be difficult and expensive.This integration is impeded by theinability of instruments to easily communicate with devices a
113、nd 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 connected in one square kilometer.If each IoT device requires unique hardware and software developed from scratch,implementation in dense urban a
114、reas 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 instrumentation platform with a large-scale modular design approach.USIP integrates many technologies,includingcloud technology,wired and
115、wireless communication technology,software programming,instrumentation technology,artificial intelligence,PLC,sensor networking,and IoTtechnology into a single platform.This results in circuit designs that we believe are vastly cheaper and faster than those constructed of discrete integrated circuit
116、 componentsdesigned from scratch.USIP has primary functionalities and an open architecture capable of incorporating a variety of individual instruments,functions,sensors,and probes from different industriesand vendors into a single unit.Instruments,sensors,or probes ranging from a few to several hun
117、dred or even thousands in any combination from various industries and vendorscan share or reuse the same platform.Adding,removing,or changing instruments or sensors is all the platform requires to switch from one type of device to another withoutrevising the software and redesigning the hardware.Com
118、pared to traditional stand-alone instruments,USIP exploits the processing power of a computer or a mobile device.Productivity,display,and connectivity capabilities toprovide a more powerful,flexible,and cost-effective measurement solution.Traditional hardware-centered instrumentation systems are mad
119、e up of multiple stand-aloneinstruments interconnected to carry out a determined measurement or control an operation.They have fixed vendor-defined functionality,and the components that comprise theinstruments are also fixed and permanently associated with each other.Different instruments provided b
120、y different vendors cannot be interoperated and interchanged.Forexample,we simply cannot use a traditional blood pressure meter to measure temperature or vice versa.USIP is designated to be compatible with all instruments,sensors,orprobes on the market and capable of monitoring and controlling any c
121、ombination of instruments or sensors.We believe our USIP will revolutionize the field of instrumentation,measurement,control,and automation._15Environmental Health Trust,https:/ehtrust.org/science/reports-on-power-consumption-and-increasing-energy-use-of-wireless-systems-and-digital-ecosystem/,(last
122、accessed March 7,2023)16Gartner Insights“Leading the IoT,”available at:https:/ accessed March 7,2023).8 USIP is a versatile platform,able to perform and combine different measurements and controls,to substitute some instruments for others,and to integrate existing instrumentsinto it.The development
123、of USIP is closely associated with the development and proliferation of computers and mobile devices that provide the foundation and technicalsupport to the universal smart instrument such as an attractive graphical user touch screen interface,data processing and analysis capabilities,video and audi
124、o,cameras,GPS,ubiquitous wireless connectivity,artificial intelligence,cloud-based communications and a diverse number of functions and software available to users that are not contained intraditional instruments.These features embody the advantages of USIP,which are lacking stand-alone instrument s
125、ystems.When compared with traditional instrument systems,USIPs biggest advantage is cost savings.Other distinctive features include universality,interoperability,flexibility,compatibility,upgradeability,expandability,scalability,security,modularity,fast prototyping,reducing inventory,plug-and-play o
126、peration,remote accessibility,simplification,standardization,and cloud instrumentation.We have been dedicated to solving instrumentation interoperability for over a decade.We subdivide instruments into a reusable foundation component to the maximum extentpossible,architecture-specific components,and
127、 sensor modules,which perform traditional instruments functions at a fraction of their cost.For most instruments,90%of thedesign,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 s
128、ensors,instruments,probes,or controllers manufactured by differentvendors in a manner that requires the user to have little 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 int
129、erface specification code saved on the bloodpressure sensor is sent to the universal device,and a computer or smartphone will 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 o
130、ur universal device,which we call the Ubiquitor,and changes our device into a blood pressure measurement instrument.9 Similarly,if we remove the blood pressure sensor and connect our universal device to both a pH sensor and a CO2 sensor,the universal device changes to a two-sensor devicecapable of m
131、easuring pH and CO2 concentration.Each sensor has its own user interface automatically generated based on the user interface specification code saved in eachsensor.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 o
132、r smartphone can also beused for display.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
133、 device changes into a three-sensor device.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 chang
134、ed it into a multiple sensor device.A computer 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 contro
135、ls 27 light sensors,21 pH sensors,and 23 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 turnin
136、g thelights on or off(including on a schedule)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 fr
137、om different vendors for various measurement 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 re
138、lated industries(including agriculture and 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.All household measurement and control de
139、vices,such as air conditioner controls,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 hous
140、ehold control devices.12 Internet of Things Overview IoT refers to the overarching network created by billions of internet-compatible devices and machines that share data and information worldwide.According to a Gartner report,by the end of 2020,there were an estimated 20 billion IoT-connected devic
141、es in use around the world.As the sophistication 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 I
142、oT devices will be in use worldwide,creating a massive web of interconnected devices spanning everything from smartphones to kitchenappliances.17 The IoT will significantly impact the economy by transforming many enterprises into digital businesses,facilitating new business models,improving efficien
143、cy,and increasing employee and customer engagement.It is foreseeable that the explosive growth in IoT will rapidly deplete natural and human labor resources.We believe thatIoT will soon reach a critical limit;we do not have enough human labor and natural resources to support IoT growth.Twenty billio
144、n IoT devices challenge existing resources.We have overcome the current massive IoT production challenges by developing a shared distributed universal IoT.Billions of internet-compatible devices and machines sharedata and information around the world and share a large section of hardware and softwar
145、e(up to 90%).Billions of IoT devices are 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
146、in near real-time.In fact,not even those instruments builton the same platform are necessarily interoperable because they are often highly customized to an organizations unique workflow and preferences.Wireless networks are far from perfect for IoT.They are typically slower,expensive,and highly susc
147、eptible 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 the network(including encrypted data).Walls and floorscan seriously limit the range of the wireless network.Ou
148、r proprietary ultra-narrowband PLC technology offers a promising alternative to wireless networks.Integrating USIPwith our ultra-narrowband PLC technology results in significant simplification and cost savings in implementing IoT,as illustrated in Figure 13.Using these technologies,wehave designed I
149、oT 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 universal IoT,which depicts a USIP and sensors forming a local networkthrough PLC technology.The platform communi
150、cates with the cloud to form a remote cloud-based system._17Statista Report“Number of internet of things(IoT)connected devices worldwide in 2018,2025 and 2030”available athttps:/ accessed March 7,2023).13 Figure 14.Comparison between(a)a traditional wireless network and(b)Focus Universal Inc.s PLC n
151、etwork.How we will implement our business plan We currently operate in the scientific instruments industry and the smart home installations industry and plan to apply several of our new technologies to the IoT marketplace.Four divisions have been established within our Company to develop and promote
152、 our technologies.We believe that our 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-n
153、arrowband PLC technology has achieved 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 wi
154、reless technology.Thecurrent 4Mbps PLC 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
155、development,promoting and marketing ultra-narrowband PLC,ICs and finished products.We also intend to promote and market ICs,licensing,and contract designing.14 Given that the power grid is an already established,ubiquitous network,connectivity via PLC technology may be the most cost-effective and sc
156、alable interconnectivityapproach for the 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.Fig
157、ure 15.Markets and Markets Updated date 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 e
158、lectrical noise and interference.The major vendors of PLC technology include ABB,General Electric,Siemens,AMETEK,Schneider Electric,Texas Instruments,Maxim Integrated,Devolo,Cypress Semiconductor,ST Microelectronics,Panasonic,Microchip,Qualcomm Atheros,TP-Link Technologies,NETGEAR,D-Link,NXP Semicon
159、ductor NV,Landis+Gyr,Sigma Designs,Zyxel Communications,Nyx Hemera Technologies,and Renesas Electronics Corporation.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 sizewill increase
160、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 costs can be re
161、duced.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-narrowband PLC t
162、echnology,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 subcarrier waves,which
163、 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._18GlobalNewswire,December 19,2022,https:/ 7,2023)15 Our current research and development efforts are focused on a
164、n operating frequency of 64 megahertz(MHz),which is about 100 times lower than 4G networks(6 gigahertz(GHz)and 5,000 times lower than 5G networks(up to 300 GHz).Our technologys 1,000 Hz bandwidth is approximately 20,000 times narrower than 4G networks and100,000 times narrower than 5G networks.The n
165、arrower the bandwidth,the less energy consumption.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 p
166、ush the wireless frontier well beyond 5G.We finalized our ultra-narrowband technology research with data transfer speeds of 64-256 Mbps in the fourth quarter 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
167、.We have designed the devices andwe should receive the finished circuit boards in the next few weeks and hope that such device will be completed by the end of 2023.Markets and Markets projects that the 5G infrastructure market will reach USD 47,775 million by 2027,at a CAGR of 67.1%.The major player
168、s in the 5G infrastructuremarket are Huawei(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 infra
169、structure market.Limited coverage,high 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-narrowban
170、d technology.We believe that adopting ourultra-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 aut
171、o generation technology division has developed 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 a
172、dopted and used in the IoT industry.Standard 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
173、 DoC ICsand other industries where the software can be applied.UIMAGP can be used in IoT software design and can be applied to other industry sectors.This division is planning to expand to other industries as well.Figure 16.Software market size.Today,some of the biggest companies within the software
174、 industry,including Microsoft,IBM,Oracle,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
175、 the complexities of applying the code 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 finalp
176、rogramming much more efficient,as it needs relatively few lines of code to program a complicated application.16 d)Universal smart instrument division This division will focus on developing and marketing end-user universal smart instruments and shared distributed universal IoT devices for the commerc
177、ial and residentialmarkets.The development 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
178、 between them.USIP,a cost-effective and 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
179、 floor controls,motorized curtain controls,pool filtration and algae controls,smoke detector controls,carbon monoxide measurement,motion detectors,and doorbells,have been designed and tested.This division will also develop and market end-user universal smart instruments and shared distributed univer
180、sal IoT devices in the horticulture,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 opti
181、mal outcomes.According to Markets and 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
182、 of IoT and AI technologies by farmers 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(
183、Finland),Komatsu Forest AB(Sweden),Caterpillar(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,temp
184、erature controls,humidity controls,carbon 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 ele
185、ctronic device manufacturers for use 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
186、 market are Intel Corporation,Texas 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,
187、easy-to-useaudio/video,home theater,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
188、low voltage premise cabling.All of our 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 an
189、d Markets,May 2021,Agriculture IoT 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)17 Products we are currently selling We are a wholesaler of various digital,analog,and quan
190、tum light meters and filtration products,including fan speed adjusters,carbon filters and HEPA filtration systems.Wesource these products from various manufacturers in China and then sell them to a major U.S.distributor,Hydrofarm,who resells our products directly to consumers throughretail distribut
191、ion channels and,in some cases,places its own branding on our products.In an effort to continually develop our product lines,we plan to phase out the traditional,lower-margin products and are preparing to launch a new line of products that havebeen in development for several years.These newer techno
192、logy products will be released in phases,and we intend that increasing amounts of technology will be layered uponthese products.Additionally,we plan to continue to increase our efforts in protecting more intellectual property rights.We have developed products in both the controlledagriculture indust
193、ry and home automation industries,taking advantage of our existing relationships in both sectors.We are building a U.S.sales team to market our product lines.We have already begun marketing our current Smart AVX-branded large format multimedia touch screens,surveillance camera system(cameras and net
194、work video recorders(NVRs),indoor and outdoor LED screens,and Focus Universal-branded VOIP phone service systems,bothvia our sales staff and the Internet.Universal Smart Device(Ubiquitor)The initial,simplified version of universal smart IoT technology is our universal smart device(Ubiquitor).Theoret
195、ically,a single Ubiquitor can connect many sensors,including a vast number of independent sensors.When a moderate number of sensors are connected,the cost of the universal Ubiquitor,averaged over the number of sensors,becomes negligible.The Ubiquitors efficient and cost-effective approach to the cos
196、t of connected sensors is illustrated by the fact that development under Focus platformsystem is a fraction of traditional device development cost.This one-of-a-kind Ubiquitor was first showcased at the Consumer Technology Associations CES 2024 trade show,which attracted significant interest from po
197、tential customers.18 Smart Home Installation Through AVX Design and Integration,Inc.(“AVX”),an IoT installation and management company based in southern California,and a subsidiary of the Company,we offerresidential customers an entire smart home product line.We have finished designing smart devices
198、 for lighting control,air conditioner control,sprinkler control,garden lightcontrol,garage door control,and heating control and are in the process of developing a swimming pool control device,smoke detector,and carbon monoxide monitor.We believe smart installation based on the USIP,and our Ubiquitor
199、 together will include more functionalities 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 woul
200、d be reduced.Once successfully integrated,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 fo
201、r installation of our smart systems and 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 ot
202、her purposes in the different industries 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 in thatindustry,the core technologies of u
203、niversality and interoperability through a readily available device,such as a mobile device or smartphone,may be ported to productsspecifically intended for the consumer and residential markets.While industrial markets are large,the consumer and residential markets are even more significant.This two
204、-phase approach will allow for continuous and increasing 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.Once we have successfully entered the industrial sector,we in
205、tend to roll out additional technologies that are 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
206、 devices,such as temperature humidity meters,digital 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
207、 traditional devices and demonstrated significant 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 manufactu
208、rers,will be the central focus of our future business.19 Our goals over the next three years include:Raise capital to move into full sales and marketing team for our Ubiquitor device and growing product lines;Partner with manufacturers and promote the adoption of our Ubiquitor device in a USIP;Acqui
209、re a stable market share of the sensor device market;Continue performing research and development on PLC technology;Focus on building our smart home offerings so that we can reduce the cost of smart home implementation to expand smart home installation and implementationbeyond luxury homes;File addi
210、tional patents to expand our intellectual 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 sens
211、or reading technology;Establish strategic 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&
212、A”)represent a significant part of 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
213、 use M&A to findand secure opportunities 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 exp
214、ertise.The resulting combination of 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
215、additions may include people with vast 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 t
216、o actively compete on a regional or 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 andma
217、ximize investor returns.One of our key strategies to grow through M&A is to acquire smaller businesses that focus on IoT installation technology(industrial or residential)and in the USIP or PLCindustries.20 Original Equipment Manufacturer(“OEM”)Engineering Consulting and Design Services Universal sm
218、art technology is new to most electronic 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
219、 technology can beimplemented in a 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 scal
220、e,flexibility,and speed to their design 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 eng
221、ineers to execute our consulting strategy.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 mark
222、et for our universal smart technology 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
223、technology through licensing agreements.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
224、incentives,to license our IP rather 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 especiall
225、y valuable if we lack theinfrastructure,financial resources,and know-how to bring a product to market independently.Diversification of the Revenue Streams We will continue to diversify our revenue stream through various expansion opportunities and in several other markets and industries.As our platf
226、orms can be applied toseveral sectors effectively to eliminate redundancy and increase effectiveness,we will seek to expand our operations into additional markets and adjacent sectors which webelieve to have the potential to be effective long term.While this diversification may initially contain the
227、 risk during transition and adaption of moving to an adjacent market orsector,we believe the long term benefit of diversification to be net positive as previously,we had been subject to the risk of having one large client within one single sector,which we believe bears greater risk than the initial
228、risk of transition.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 sensor nodes,and to then ship such parts to our Ontario,California
229、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.We have a salesdepartment operating out of our Ontario,Californ
230、ia 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 to market the Ubiquitor to industrial end-users throughdirect b
231、usiness-to-business sales channels and also directly to consumers via e-commerce internet platforms.For our quantum light meters,and air filtration products,while westill continue to anticipate orders from Hydrofarm in 2024,we have begun to diversify away from one single dominant distributor into mo
232、re diversified distribution channels,such as direct wholesale into retail outlets and direct distribution to end-users.We also intend to implement a direct sales method via A and other online retailers.21 Raw Materials The electronic components used in the Ubiquitor are common and can be easily purc
233、hased 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 consider include Analog Devices,Skyworks Solutions,Infineon,STMicroelectronics
234、,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 assembly in our Ontario,California facility.Manufacturing and Assembly We have
235、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 facility.Our air filtration products are manufactured and assembled in China b
236、y 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 procurement expertise and support research and development activities.Focus Univers
237、al(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 and development asengineers are more plentiful in the region.In the future,thi
238、s 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 license in accordance with the local laws.China allows foreignentities to set
239、up 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 approved by the local government in Shenzhen to be qualified as a WFOE entity in Chi
240、na.The entity is100%owned by Focus Universal Inc.Key Competitive Advantages and Opportunities and Strengths Across the world,everyday connected devices are getting incorporated in tandem collectively,including thermostats,water meters,home alarms,kitchen gadgets,medicalequipment,factory machinery an
241、d even vehicles.Collectively,this ecosystem represents the next frontier in the digital revolution,also known as the Internet of Things or IoT.And unlike the simple automation of machinery,IoT is also mobile and virtual,and features a continuous Internet connection.The Internet of Things(IoT)is the
242、next frontier inthe digital revolution.It can help companies increase productivity,cut costs,offer new products and services,and deploy new business models.However,the costs of producinga single input or output device have become cost prohibitive to the point where a vast majority of the projects in
243、 this innovative field are considered failures.Despite this forward technological momentum,a sector-wide study conducted by Cisco showed that 60 percent of IoT initiatives stalled at the very-early Proof of Concept(PoC)stage and only 26 percent of companies have had an IoT initiative that they consi
244、dered a complete success.Furthermore,a third of all completed projects were notconsidered a failure.Herein lies both the key advantage of the platforms of the company and the opportunities and strengths.Our combined platforms are able to consolidatethe eliminate the redundant work in the early stage
245、 development production costs within the IoT sector,whereby the project developers need not begin from scratch each timein the development of a new IoT product,eliminating upwards of 90%of the redundant,cost-prohibitive workload.22 Competitors Sensor Node Industry There are several competitors we ha
246、ve identified in the sensor node industry,including traditional instruments or devices manufacturers such 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,the
247、ir products arenot compatible with smart phones yet;and we believe their price point is still prohibitive to consumers.Monnit Corporation offers a range of wireless and remote sensors.Many of Monnits products are web-based wireless sensors that usually are not portable because of theirpower consumpt
248、ion.Also,the sensors real-time updates are slow;and we believe security of the web-based sensor data acquisition may be a concern.In addition to purchasingthe device,consumers usually have to pay a monthly fee for using web-based services.IoT Installation Industry There are several companies that co
249、mpete with AVX in smart home installations,including Vivint Smart Home,Crestron and Control4.However,we believe 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
250、,000.The cheapest competitor we can identify in this sector is Vivint Smart Home,which costs less than$5,000 to install;however,we understand that the Vivint SmartHome focuses on security systems only and that users have no other smart applications,which our smart home product line would include.Air
251、 Filtration Systems and Meter Products Industry The air filtration system and meter products industry 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 qual
252、ity across a range of industries.21 Air purification methods are an effective way to controlcontaminants 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 i
253、n this area,which drives demand.We are not trying to compete with traditional instruments or device manufacturers 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 man
254、y potential applications.Our Corporate History 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 went effective onMarch 14,2014.From March 14,2014,through August 30,2021,our securities traded on the
255、OTCQB Market.From August 31,2021,our securities traded on the NasdaqCapital Market.From January 28,2022,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 Co
256、mpany entered the residential and commercial automation installation service industry through the acquisition 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,Automa
257、tion,and Integrationsystems for high-net-worth residential projects._21Fortune,The global air filters market is projected to grow from$14.68 billion in 2022 to$23.83 billion by 2029,exhibiting a CAGR of 7.2%in forecast period,2022-2029,https:/ accessed March 7,2023)23 Additionally,we are performing
258、research 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 furtherenhan
259、ce 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 squar
260、e feet.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
261、 with 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 issu
262、ed 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 cons
263、ulting 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 appl
264、ications 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.”On September 2,2021,the Company announced the closing of an underwritten public offering of 2,300,000 newly issued share
265、s of common stock at a price to the public of$5.00 per share.The closing included the full exercise of 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 disco
266、unts and commissions and offering expenses payable by us.On January 26,2022,the Company announced approval for the uplist of its stock onto the Nasdaq Global Market exchange under the symbol“FCUV.”On June 20,2023,the Company received an industry award during InfoComm 2023 for its flexible transparen
267、t film display receiving Best of Show designation,winning in theAV Technology Category for LED Technology.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 5,2
268、018,we issued 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 res
269、earch and 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.We believe that the small and cost-effective multicolor sensor and its related software protected by the potential patent could ach
270、ieve a spectralresponse that approximates an ideal photo response to measure optical measurement.The patent was issued on February 26,2019.On November 29,2019,the Company filed an international utility patent application through the patent cooperation treaty as application PCT/US2019/63880.In April
271、2020,the Company was notified that it received a favorable international search report from the International Searching Authority regarding this patent application,which patents theCompanys PLC technology.The World International Property Organization report cited only three category“A”documents,indi
272、cating that the Companys application metboth the novelty and non-obviousness patentability requirements.Consequently,the Company is optimistic that the patent covering the claims for its PLC technology will beissued in due course and will allow the Company to implement strong protections on the PLC
273、technology worldwide.24 On May 19,2021,we filed thirteen provisional patent applications with the USPTO that we had been researching and developing for years,encompassing a broad spectrum oftechnology areas including sensor technology,wired and wireless communications,power line communications,compu
274、ter security,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 ult
275、ilize the services 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 prov
276、isional patents.In 2021,we filed 14 patents.We filed 18 domestic patents in 2022(plus two international patents in 2022),and 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 Pro
277、ximity of anIEEE 802.11 Protocol Connectable Device.On April 3,2023,the United States Patent and Trademark Office(USPTO)issued an Issue Notification for U.S.Patent No.11580558 entitled Dynamic Anti-CounterfeitSystem and Method.The USPTO also issued an Issue Notification for U.S.Patent Application No
278、.11546017 entitled System and Method of Power Line Communication.Both patents cover patent applications regarding the Companys PLC business.Research and Development Activities For the year ended December 31,2023,we spent a total of$1,386,810 on research and development activities;and for the year en
279、ded December 31,2022,we spent a total of$1,060,385.Focus Universal(Shenzhen)Technology Co.LTD was founded as a mainland China office for manufacturing procurement expertise and non-confidential support research anddevelopment activities.This wholly owned subsidiary is registered to be engaged in IoT
280、 research and development,IoT sales and service,and other related activities.Compliance with Environmental Laws We are not aware of any environmental laws that have been enacted,nor are we aware of any such laws being contemplated for the future,that impact issues specific to ourbusiness.Employees A
281、s of the date of this report we have a total of 46 employees,with 43 full-time employees and 3 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 controlle
282、d agricultural market segment.Wehave eleven full-time senior electrical and computer engineers working on the research and development of our products.We have one full-time sales employee and three full-time employees are working on administrative tasks.We also have a full-time accounting manager/co
283、ntroller.Four employees perform audio/visual home installations for oursubsidiary AVX,with one employee serving as the supervisor and operational head.25 Legal Proceedings On or about April 13,2020,Ian Patterson,the Chief Operations Officer of AVX resigned from his position.On May 5,2020,Mr.Patterso
284、n filed an action in the Superior Courtfor the County of Los Angeles,State of California,against 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
285、 state law.The complaint seeks unspecified economic and non-economiclosses,as well as attorneys fees.In response to the Complaint,defendants filed a motion to compel arbitration asking the court to order Plaintiff to submit his claims to bindingindividual arbitration based on an arbitration agreemen
286、t signed by Plaintiff at the outset of his employment.The motion was unfortunately denied,and in response,defendantsfiled an appeal.The appeal was also denied.Trial for this matter is set for October 30,2024.Discovery is ongoing.AVX intends to vigorously contest this matter and disputesthat the othe
287、r defendants are proper parties to the litigation.However,since litigation and investigations are inherently uncertain,the outcome of this litigation could have amaterial impact on the Company.On or about April 14,2020,Devesa Sarria,the Sales and Marketing Director of the Company,was terminated.On M
288、ay 13,2020,she filed an action in the Superior Court forthe County of Los Angeles,State of California.The Complaint alleges claims including discrimination,wrongful termination,retaliation and various other provisions of theCalifornia Labor Code,and various other claims under California state law.Th
289、e complaint seeks unspecified economic and non-economic losses,as well as attorneys fees.Theparties have completed written discovery and most of the non-expert discovery.Trial is set for May 8,2024.AVX intends to vigorously contest this matter.Further,AVXdisputes that the other defendants are proper
290、 parties to the litigation.However,litigation and investigations are inherently uncertain,but the outcome could have a materialimpact on the Company.Reports to Securities Holders We provide an annual report that includes audited financial information to our shareholders.We make our financial informa
291、tion equally available to any interested parties orinvestors through compliance with the disclosure rules 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 a
292、nd other proxy and information statements from time to time as required.We do not intend tovoluntarily 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 Excha
293、nge Commission at the SECs Public Reference Room at 100 F Street NE,Washington,DC 20549.The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.The SEC maintains an Internet site(http:/www.sec.gov)that contains reports,proxy and informatio
294、n statements,and other information regarding issuers that file electronically with the SEC.Item 1A.RISK FACTORS Risks Related to our Business and Industry Although our financial statements have been prepared on a going concern basis,we must complete the sale of our facility to fund our operations in
295、 order to alleviateas a going concern.Our current liquidity position raises substantial doubt about our ability to continue as a going concern.If we are able to improve our liquidity position by completing the sale ofour facility,we may alleviate our going concern.While we believe the sale of the fa
296、cility and the sale of real estate as a whole to be less speculative as a whole,weacknowledge that the transaction still remains to be completed and the risks remain in completion of that transaction.The accompanying consolidated financial statements donot include any adjustments that might result.W
297、e have a history of operating losses,and we may not be able to sustain profitability.We were incorporated on December 4,2012;and as of December 31,2023,we had an accumulated deficit of$22,582,170.If we are not successful in growing revenues andcontrolling costs,we will not maintain profitable operat
298、ions or positive cash flow,and even if we achieve profitability in the future,we may not be able to sustain profitabilityin subsequent periods.26 Because we have a limiting operating history with positive revenues,you may not be able to accurately evaluate our operations.We were incorporated on Dece
299、mber 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 problems,expenses,difficulties,complications and delaysenc
300、ountered 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 costs and expenses that may exceed current estimates.Howe
301、ver,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 business will most likely fail.We require significant fundi
302、ng 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 to position ourselves in the small device market,estab
303、lishing 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 market share in the high-endmarket.None of this will be
304、 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 personnel,particularly,Desheng Wang,our Chief Executive O
305、fficer,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 financial resources and operating history.Regulatory actions
306、 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 power
307、 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 compe
308、titors 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.We outsource our product manufacturing and are susceptible to problems in connection with procurement,decreasing quality,reliab
309、ility 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 limit o
310、ur ability to quickly increase or decrease production rates.27 We outsource the manufacturing of key elements of our quantum light meters and air filters to a single manufacturing partner,with whom we do not have a formalcontractual relationship.We outsource the manufacture of our quantum light mete
311、r 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 i
312、n 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 u
313、p 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 there
314、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 of
315、 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 with
316、 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 proprietaryinform
317、ation 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 necessary
318、 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 intellectua
319、l 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.Histo
320、rically,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 our
321、 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 ris
322、ks 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.Should
323、 review of our tax filings result in unfavorable adjustments,our operating results,cash flows,and financial position could be materially and adversely affected.The size and future growth in the market for our Ubiquitor device or our PLC technology has not been established with precision and may be s
324、maller 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 studies,r
325、eports 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 too
326、ls in estimating the total market for Ubiquitor device or our PLC technology,these estimates may not be correct and the conditions supporting our estimates may change at any time,thereby reducing the predictive accuracy of these underlying factors.The actual demand for our products or competitive pr
327、oducts,could differ materially from our projections if our assumptions are incorrect.As a result,our estimates of the sizeand future growth in the market for the Ubiquitor device or our PLC technology may prove to be incorrect.If the demand is smaller than we have estimated,it may impair ourprojecte
328、d sales growth and have an adverse impact on our business.28 If we are unable to properly forecast future demand of our products,our production levels may not meet demands,which could negatively impact our operating results.Our ability to manage our inventory levels to meet our customers demand for
329、our products is important for our business.Our production levels and inventory management arebased on demand estimates six to twelve months forward considering supply lead times,production capacity,timing of shipments,and dealer inventory levels.If weoverestimate or underestimate demand for any of o
330、ur products during a given season,we may not maintain appropriate inventory levels,which could negatively impact our netsales or working capital,hinder our ability to meet customer demand,or cause us to incur excess and obsolete inventory charges.Demand for our Ubiquitor product may be affected by n
331、ew entrants who copy our products and/or infringe on our intellectual property.The ability to protect and enforce intellectual property rights varies across jurisdictions.An inability to preserve our intellectual property rights may adversely affect ourfinancial performance.Competitors and others ma
332、y also initiate litigation to challenge the validity of our intellectual property or allege that we infringe their intellectualproperty.We may be required to pay substantial damages if it is determined our products infringe on their intellectual property.We may also be required to develop analternat
333、ive,non-infringing product that could be costly and time-consuming,or acquire a license on terms that are not favorable to us.Protecting or defending against suchclaims could significantly increase our costs,divert managements time and attention away from other business matters,and otherwise adversely affect our results of operationsand financial condition.Internal system or service failures,incl
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