10-K: Focus Universal Reports Wider 2025 Loss, Faces Redemption Demands

Focus Universal Inc. reported a significant net loss increase in 2025, alongside ongoing liquidity concerns and redemption demands for its Series B Preferred Stock, despite advancements in IoT and AI software.

Summary

• Focus Universal Inc. reported a net loss of $4,787,769 for the year ended December 31, 2025, a significant increase from $3,200,138 in 2024.
• Revenue decreased by $143,114 to $255,023 in 2025 from $398,137 in 2024, primarily due to lower sales.
• The company continues to operate with an accumulated deficit of $31,023,411 as of December 31, 2025, and negative cash flow from operating activities of $5,102,771.
• Substantial doubt exists about the company's ability to continue as a going concern.
• The company is developing universal smart technology for smart meters and automation systems, including the Ubiquitor device, and an AI-enabled financial reporting software called One Touch Financial.
• Research and development expenses decreased to $919,965 in 2025 from $1,381,937 in 2024, partly due to software costs being capitalized.
• The company faces redemption demands for 6,447 shares of Series B Preferred Stock totaling $5,479,950 as of March 16, 2026, and is in negotiations with holders.
• An agreement was made on January 21, 2026, to acquire a 100,743 sq. ft. office and commercial building for $17,700,000, with closing extended to April 10, 2026, pending financing.
• The company effected a 1-for-10 reverse stock split on February 9, 2026, and another on January 31, 2025.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a highly concerning report due to significantly increased net losses, declining revenue, negative gross profit, and persistent going concern issues, compounded by substantial Series B Preferred Stock redemption demands and internal control weaknesses.

Positives

• Successful development of an innovative Device on a Chip (DoC) technology, aiming to simplify manufacturing and lower costs for IoT devices.
• Advancements in 5G Ultra-narrowband (UNB) wireless communication technology, showing potential for 4 Mbps speeds at <1kHz bandwidth and spectral efficiency of 4000 bits/sec/Hz, with development underway for 64 Mbps.
• Development of Ultra-narrowband Power Line Communication (PLC) technology, capable of 4 Mbps data transfer over existing power lines with significant noise rejection.
• Completion of the SEC financial reporting software, One Touch Financial, in Microsoft Word format, with a cloud-based version under development, aiming for commercialization in 2026.
• Successful initial production run of prototype Ubiquitor devices and presentation at CES 2024 and 2025, attracting significant interest.
• Development of a full line of products for the gardening industry by integrating the Ubiquitor device with various sensors, offering comprehensive features at a fraction of the cost of standalone instruments.
• Strategic acquisition of a 100,743 sq. ft. office and commercial building in Monterey Park, California, expected to provide low real estate expense and a conservative 9-10% cap rate, offsetting corporate costs.
• Settlement of several legal proceedings, including those with a former COO, Sales and Marketing Director, and a former software engineer, concluding these matters.
• Appointment of Michael Pope as Chairman of the Board and Irving Kau as a director on March 27, 2026.

Negatives

• Net loss increased significantly to $4,787,769 in 2025 from $3,200,138 in 2024.
• Revenue decreased by $143,114 to $255,023 in 2025 from $398,137 in 2024.
• Gross profit turned into a loss of $(35,252) in 2025 from a profit of $10,201 in 2024.
• Accumulated deficit grew to $31,023,411 as of December 31, 2025.
• Negative cash flow from operating activities increased to $5,102,771 in 2025 from $4,656,754 in 2024.
• Substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative cash flows.
• Series B Preferred Stock holders have issued redemption demands totaling $5,479,950 as of March 16, 2026, which the company is currently negotiating.
• The company has not maintained effective internal control over financial reporting for the years ended December 31, 2025, and 2024, citing limited segregation of duties, inexperienced staff, and difficulties in timely analyzing transactions.
• A former engineer filed a claim against Focus Shenzhen in China, resulting in a freeze of approximately $23,703 (RMB 165,802) in the subsidiary's bank account.
• The company requires significant funding, up to $20 million, to develop, manufacture, and market its Ubiquitor wireless sensor, with no guarantee of obtaining it on favorable terms.
• Only two officers (CEO and CFO) have public company experience, which could impact compliance with U.S. securities laws.
• The unexpected death of Chairman Edward Lee on February 26, 2026.

Risks

• History of operating losses and going concern basis, with no guarantee of sustained profitability.
• Failure to obtain adequate financing on a timely basis and on acceptable terms, requiring up to $20 million for Ubiquitor development and marketing.
• Dependence on key personnel (Desheng Wang, CEO, and Irving Kau, CFO), with difficulties in attracting replacements if they leave.
• Regulatory actions could limit the ability to market and sell products, especially concerning power line grid regulations.
• Outsourcing product manufacturing increases susceptibility to procurement problems, decreasing quality, reliability, and intellectual property protection, particularly in China.
• Business operations in China may negatively affect intellectual property protection and financial position due to differing legal frameworks and increased exposure to international taxation.
• Uncertainty in the size and future growth of the market for Ubiquitor and PLC technology, potentially smaller than estimated.
• Inability to properly forecast future demand could lead to production levels not meeting demands or excess inventory.
• Demand for Ubiquitor may be affected by new entrants copying products or infringing intellectual property, leading to costly litigation.
• Internal system or service failures, including cyber or other security incidents, could disrupt operations, result in loss of confidential information, and damage reputation.
• Risks associated with diversifying the sensor segment away from a single dominant customer, requiring new marketing efforts and customer relationships.
• Fluctuations in prices and availability of electronic parts and plastics for Ubiquitor assembly, with potential for larger competitors to receive purchasing priority.
• Changes in tariffs, import/export restrictions, Chinese regulations, or other trade barriers may reduce gross margins.
• Failure to respond to rapid technological changes in the market could lead to loss of revenue and harm competitive position.
• Dependence on keeping manufacturing costs low and potential lack of expertise to negotiate favorable terms with vendors.
• Wireless network limitations (cost, range, interference, security, speed) may reduce the competitive advantage of Ubiquitor and USIP platform.
• Uncertain demand for products and reliance on unproven ability to create and maintain superior performance in a competitive, low-margin industry.
• Ubiquitor device could fail to gain market traction due to lack of market acceptance, supplier issues, manufacturing delays, competition, or intellectual property claims.
• Reliance on the growth and adoption of the IoT market and next-generation internet/smartphone applications, which may not prove viable commercial marketplaces.
• Risk that the market will not adapt to using smartphones as a substitute platform for sensor devices, leading to incompatibility issues and increased costs.
• Security risks associated with wireless transmission technologies (Wi-Fi, Bluetooth) used by the smartphone platform.
• Product liability associated with production, marketing, and sale of products, and the expense of defending against claims, potentially depleting assets and generating negative publicity.
• Inability to identify suitable acquisition targets or successfully implement a growth strategy reliant on mergers and acquisitions.
• Risk that a technology licensee could become a competitor, especially after IP expiration or license termination.
• Product defects could result in costly fixes, litigation, and damages.
• Limited public company experience among management (only CEO and CFO) could adversely impact compliance with U.S. securities laws.
• Conflicts of interest due to officers, directors, consultants, and advisors being involved in other businesses.
• Ineffective internal control over financial reporting due to limited segregation of duties, inexperienced staff, and difficulties in timely analyzing transactions.
• Executive officers and directors collectively have significant control over management and operations (CEO owns 22%, officers/directors/5% stockholders own 39.7%), potentially leading to decisions disadvantageous to other shareholders.
• Requirements of being a public company may strain resources and distract management, increasing compliance costs.
• Common stock is subordinated to preferred stock (Series A and Series B).
• Series B Preferred Stock is redeemable at the holder's option starting January 19, 2026, posing a significant cash obligation ($5,479,950 as of March 16, 2026).
• Shares may be affected by short selling practices, potentially decreasing stock price.
• Increase of free trading shares could result in substantial sales and depress stock price.
• Future issuance of capital stock and derivative securities could dilute existing shareholders.
• No intention to pay dividends, limiting ways for investors to gain from investment.
• Inability to maintain an active trading market for common stock on Nasdaq Capital Market, with delisting risk due to MVLS Rule ($35,000,000) and Bid Price Rule ($1.00 minimum).
• Increasing competition within the IoT industry could impact business prospects and profit margins.
• Success of smart home installation business depends on AVX management, with risks if key members depart.
• Inability to integrate Ubiquitor device into smart home installations could hinder competitive pricing and performance.

Future Outlook

The company plans to phase out traditional, lower-margin products and launch new technology products in phases, with increasing amounts of technology layered upon them. It intends to continue increasing efforts in protecting intellectual property rights and focus on commercializing universal smart technology for smart meters and automation systems, and financial reporting software under a SaaS model. The goal is to increase the speed of 5G networks while simultaneously reducing the number of subcarriers, with internal testing suggesting 1 Gbps speeds with 4 to 16 kHz bandwidth. The company intends to proceed into full-scale production of prototype Ubiquitor devices during 2025 and expects to showcase the One Touch Financial software to the public in 2026. Strategic goals over the next three years include raising capital for sales and marketing of Ubiquitor, partnering with manufacturers, acquiring market share in sensor devices, continuing R&D on PLC technology, building smart home offerings, filing additional patents, and commercializing financial reporting software. Growth strategy includes mergers and acquisitions to fill business gaps, add key operations, and expand into new markets. The acquisition of the Monterey Park building is expected to provide very low real estate expense and offset corporate and general costs, and diversification away from a single sector and customer is believed to stabilize revenues.

Management Comments

• "We believe this technology has applications in several industries and have completed the development of a system for horticulture applications."
• "We intend to commercialize this product [financial reporting software] under a software as a service (SaaS) model."
• "We believe that IoT will soon reach a critical limit; we do not have enough human labor and natural resources to support its growth. Fifty billion IoT devices will challenge existing resources."
• "Our internal testing shows that our finished ultra-narrowband technology can achieve speeds of 4 Mbps per second at a bandwidth of less than 1000 Hz. The spectral efficiency of our finished technology has reached 4000 bits/sec/Hz."
• "Given anticipated data rates of 64 Mbps, we believe only 4 to 16 5G+ subcarrier waves would be needed to achieve the current 5G speeds, and just 40 to 160 5G+ subcarrier waves would be needed to achieve 6G speeds."
• "We believe hardware cost reductions of up to 90% have been achieved [with universal smart technology applied to existing traditional devices]."
• "We believe supply chain disruption is the largest risk factor for our cash flow as production increases."
• "Management of the Company took the position that under Nevada state law, the Series B Transaction documents do not require the Company to redeem the Series B holders under the specific conditions demanded by the investors."

Industry Context

StockSavvy.ai notes that Focus Universal's focus on IoT and 5G technologies aligns with major industry trends predicting significant growth in connected devices, with forecasts suggesting 50 billion IoT devices by 2030. The company's Device on a Chip (DoC) and Ultra-narrowband (UNB) 5G+ technologies aim to address the scalability and efficiency challenges inherent in this growth, differentiating itself from traditional hardware-focused integration. The move into AI-enabled financial reporting software also taps into the broader trend of automation and AI adoption across various sectors.

Comparison to Industry Standards

• Focus Universal's internal testing suggests its finished ultra-narrowband technology achieves 4 Mbps at <1kHz bandwidth with 4000 bits/sec/Hz spectral efficiency, significantly higher than 4G (6 bits/s/Hz) and 5G (10 bits/s/Hz).
• The company claims its 5G+ technology could achieve current 5G speeds with only 4 to 16 subcarrier waves, compared to 5G's requirement of 3,276 subcarrier waves, implying substantial cost savings and wider coverage.
• Focus Universal's ultra-narrowband PLC technology achieved 4 Mbps speeds without customary interference, even with six industrial blowers, whereas competitors' legacy PLC technology is rendered useless by a single hair dryer.
• In the IoT installation industry, the company aims to distinguish itself from competitors like Crestron ($20,000-$100,000 per installation) and Control4 ($20,000-$40,000) by offering a substantially lower price point, while Vivint Smart Home, a cheaper competitor (<$5,000), focuses only on security systems, lacking the broader smart applications Focus Universal plans to include.
• The company believes its universal smart technology can achieve hardware cost reductions of up to 90% compared to traditional devices.

Management Changes

Corporate Governance

Legal Proceedings

• On August 29, 2025, the company entered into confidential settlement agreements with a former COO and a former Sales and Marketing Director, concluding their respective lawsuits alleging discrimination, wrongful termination, and retaliation.
• On April 25, 2025, a case filed by a former software engineer against Perfecular Inc. (a subsidiary) alleging wrongful termination was settled for $130,000 plus legal fees.
• On April 10, 2025, the company, Mr. Kau, and MGR Real Estate, Inc. entered into a confidential settlement agreement, concluding a breach of contract lawsuit seeking $373,025.
• On October 28, 2025, a former engineer filed a claim against Focus Shenzhen in the Shenzhen Qianhai Cooperation Zone Peoples Court, alleging wrongful termination and China Labor Code violations, resulting in a freeze of approximately $23,703 (RMB 165,802) in Focus Shenzhen's bank account. The company is investigating and intends to defend itself.
• On January 19, 2026, Series B Convertible Preferred Stock holders requested redemption of shares totaling $5,479,950 (as of March 16, 2026). The company's management disputes the obligation under Nevada law, and negotiations are ongoing after a notice of default was issued on March 17, 2026.

Related Party Transactions

• On September 18, 2024, Dr. Desheng Wang (CEO) and Dr. Edward Lee (Chairman) purchased 10,000 shares each of Common Stock for $300,000 in cash, totaling $600,000. The company recorded a stock compensation cost of $340,000 related to this issuance due to the trading price being higher than the purchase price.
• On October 27, 2025, Edward Lee (Chairman) was the lead investor in a private placement of Series A Preferred Stock, purchasing a portion of the aggregate $3,000,000. He subsequently converted his Series A shares into 55,000 shares of restricted Common Stock.
• Irving Kau (CFO) has an employment agreement that includes a salary and certain equity incentives (up to 150 shares of common stock per year).

Stakeholder Impact

• Shareholders face significant dilution risk from future capital raises and stock issuances. The common stock is subordinated to preferred stock. The ongoing Series B Preferred Stock redemption demands and potential delisting from Nasdaq could negatively impact stock price and liquidity. The 1-for-10 reverse stock splits aim to maintain Nasdaq listing but reduce the number of shares.
• Employees: The company's reliance on a small number of employees and inexperienced staff, coupled with limited segregation of duties, impacts internal controls. The company has 37 full-time employees, with 29 in R&D.
• Customers: New product lines, including the Ubiquitor and smart home offerings, aim to provide cost-effective and functionally superior solutions in IoT and controlled agriculture. The financial reporting software targets accounting professionals.
• Creditors: The company's going concern doubt, accumulated deficit, and negative cash flows from operations indicate increased risk for creditors. The Series B Preferred Stock redemption demands represent a significant liability.
• Suppliers: Increased production needs for new products will heighten supply chain risk, including price fluctuations and availability issues for electronic parts and plastics.

Next Steps

• Raise capital to fund full sales and marketing team for Ubiquitor device and growing product lines.
• Partner with manufacturers and promote the adoption of the Ubiquitor device in a USIP.
• Acquire a stable market share of the sensor device market.
• Continue performing research and development on PLC technology.
• Focus on building smart home offerings to reduce implementation costs and expand beyond luxury homes.
• File additional patents to expand intellectual property portfolio related to Ubiquitor.
• Commercialize financial reporting software under a SaaS model.
• File patents to protect PLC technology.
• Proceed into full-scale production of prototype Ubiquitor devices during 2025.
• Showcase One Touch Financial software to the public in 2026.
• Engage external advisors and negotiate with Series B Preferred Stock holders to resolve redemption demands.
• Actively work to identify potential buyers for Series B Preferred Stock from holders seeking redemption.
• Complete financing for the Monterey Park building acquisition by April 10, 2026.
• Remediate deficiencies and material weaknesses in internal control over financial reporting, including hiring additional personnel and implementing ongoing training.

Key Dates

Recommendation

The company's financial performance is deteriorating significantly, marked by a widening net loss, declining revenue, and negative gross profit. The 'going concern' warning, substantial accumulated deficit, and persistent negative operating cash flows indicate severe financial distress. Furthermore, the company faces immediate and material redemption demands from Series B Preferred Stockholders, which it is currently disputing, and has acknowledged material weaknesses in its internal controls. Nasdaq listing compliance issues (MVLS Rule) and the need for significant future capital, coupled with high dilution risk and no dividends, present a highly unfavorable investment profile. The innovative technologies are still in development or early commercialization and do not yet offset the severe financial and operational challenges.

Keywords

IoT, Smart Technology, Financial Reporting Software, Ubiquitor, 5G, Ultra-narrowband, PLC, Device on a Chip, AI, Sensors, Home Automation, Controlled Agriculture, SEC Filings, FCUV, Nasdaq, Technology Licensing, Mergers and Acquisitions