What changed in this filing

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Item 1A. Risk Factors

2026-03-31 compared with 2025-02-28 · 113 added, 88 removed, 655 unchanged (23% of the section changed)

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Our future success will depend in part on the

continued service of key personnel, particularly, Desheng Wang, our Chief Executive Officer, and Edward Lee, the Chairman of our Board.

continued service of key personnel, particularly, Desheng Wang, our Chief Executive Officer and Irving Kau, our Chief Financial Officer.

If any of our directors and officers choose to

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production rates.

We outsource the manufacturing of key elements

of our quantum light meters and air filters to a single manufacturing partner, with whom we do not have a formal contractual relationship.

We outsource the manufacture of our quantum light

meter and air filtration devices to a single contract manufacturer, Tianjin Guanglee Technologies Ltd.

(“Tianjin Guanglee”).

If Tianjin Guanglee’s operations are interrupted or if Tianjin Guanglee is unable to meet our delivery requirements due to capacity

limitations or other constraints, we may be limited in our ability to fulfill new customer orders, and we may be required to seek new

manufacturing partners in the future.

Tianjin Guanglee has limited manufacturing capacity, is itself dependent upon third-party suppliers

and is dependent on trained technical labor to effectively create components making up our devices or to repair special tooling.

as of the date of this report, we do not have a formal development and manufacturing agreement that regulates our business relationship

with Tianjin Guanglee.

Although we continue to operate under the terms of an oral agreement, and we believe there are a multitude of manufacturers

that could quickly replace Tianjin Guanglee, our manufacturing operations could be adversely impacted if we are unable to enforce Tianjin

Guanglee’s performance.

Our potential inability to adequately protect

our intellectual property during the outsource manufacturing of our quantum light meters and filtration products in China could negatively

impact our performance.

our intellectual property during the outsource manufacturing of n products in China could negatively impact our performance.

In connection with our manufacturing outsourcing

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business may fluctuate or vanish.

Our air filtration business segment could

experience price fluctuations in raw materials, availability problems, and volatile demand.

The principal raw materials that we use are filter

media, activated charcoal, perforated metal sheet, and certain other petroleum-based products, like plastics, rubber, and adhesives.

cost of filter media can experience price fluctuations.

Larger competitors can enter selective supply arrangements with major suppliers

that reduce medium-to-long-term volatility in costs.

We cannot guarantee purchases in the volume that justifies such selective supply

arrangements.

Thus, we could be subject to price volatility.

Prices and availability for the electronic

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We currently source products from manufacturers

in China, including digital, analog, and quantum light meters, filtration products and certain components for our Ubiquitor device.

the prices we offer to Hydrofarm are FOB (Free on Board) China.

Only the cost of delivering the goods to the nearest port is included

and Hydrofarm is responsible for the shipping from China and responsible for all other fees, including tariffs, associated with delivering

in China, including digital, analog, and quantum light meters and certain components for our Ubiquitor device.

Currently, the prices we

offer to our U.S.

customers are FOB (Free on Board) China.

Only the cost of delivering the goods to the nearest port is included and the

customer is responsible for the shipping from China and responsible for all other fees, including tariffs, associated with delivering

the goods to the ultimate destination.

If Hydrofarm changes the term to CIF (Cost, Insurance, and Freight) United States, then we would

be responsible for the shipping costs and the tariff costs, which may reduce our gross margin, specially now that new tariffs may be imposed

on goods imported from China.

Thus, we may incur increases in costs due to changes in tariffs, import or export restrictions, other trade

barriers, or unexpected changes in regulatory requirements, any of which could reduce our gross margins.

Moreover, volatile economic conditions

may impact the ability of our suppliers to make timely deliveries;

and if a supplier fails to make a delivery, there is no guarantee that

we will be able to timely locate an alternative supplier of comparable quality at an acceptable price.

If our customers changes the term to CIF (Cost, Insurance, and Freight) United States, then we

would be responsible for the shipping costs and the tariff costs, which may reduce our gross margin, specially now that new tariffs may

be imposed on goods imported from China.

Thus, we may incur increases in costs due to changes in tariffs, import or export restrictions,

other trade barriers, or unexpected changes in regulatory requirements, any of which could reduce our gross margins.

Moreover, volatile

economic conditions may impact the ability of our suppliers to make timely deliveries;

and if a supplier fails to make a delivery, there

is no guarantee that we will be able to timely locate an alternative supplier of comparable quality at an acceptable price.

Since the beginning of 2025, the U.S.

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refusal to purchase our products and services;

perception by end-users with respect to the quality of our wireless

sensors in an industry historically dominated by wired sensors;

perception by end-users with respect to the quality of our wireless sensors in an industry historically dominated by wired sensors;

inadequate development of smartphone infrastructure to keep pace with increased levels of use;

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could impair our reputation and adversely affect the demand for our products, our ability to generate sales and our profitability.

the products we sell through Hydrofarm, we also do not carry product liability insurance.

It is our management’s position that these

handheld battery-operated products do not carry substantial product liability risk and to the extent there are any product liability risks,

such risks are born by Hydrofarm, who does carry product liability insurance coverage for the products we provide to them, and they sell

the products we sell in the U.S., we also do not carry product liability insurance.

It is our management’s position that these handheld

battery-operated products do not carry substantial product liability risk and to the extent there are any product liability risks, such

risks are born by the distributor, who does carry product liability insurance coverage for the products we provide to them, and they sell

to their customers.

However, it is possible that we could face liability in a products liability lawsuit for manufacturing defects or

defective design since we design or manufacture the products sold by Hydrofarm.

defective design since we design or manufacture the products sold by certain U.S.

distributors.

Some of the agreements that we may enter with

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warranty or otherwise), particularly in a product recall situation, we could be faced with significant expenses in replacing or repairing

For example, our filtration products or Ubiquitor devices obtain raw materials, machined parts and other product components

from suppliers who provide certifications of quality which we rely on.

Should these product components be defective and pass undetected

into finished products, or should a finished product contain a defect, we could incur significant costs for repairs, re-work and/or removal

and replacement of the defective product.

In addition, if a dispute over product claims cannot be settled, arbitration or litigation may

result, requiring us to incur attorneys’ fees and exposing us to the potential of damage awards against us.

For example, our Ubiquitor devices obtain raw materials, machined parts and other product components from suppliers who provide

certifications of quality which we rely on.

Should these product components be defective and pass undetected into finished products, or

should a finished product contain a defect, we could incur significant costs for repairs, re-work and/or removal and replacement of the

defective product.

In addition, if a dispute over product claims cannot be settled, arbitration or litigation may result, requiring us

to incur attorneys’ fees and exposing us to the potential of damage awards against us.

Only two officers have public company experience

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stockholders of the Company.

Our CEO and one of our directors, Dr.

Wang, owns 32% of the outstanding shares of our common stock as of the date of this report.

Two of our directors together own over 50%

of the outstanding shares of our common stock.

Accordingly, our directors have a significant influence in determining the outcome of all

corporate transactions or other matters, including mergers, consolidations, and the sale of all or substantially all of our assets.

also have the power to prevent or cause a change in control.

The interests of our directors may differ from the interests of the other

stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.

Desheng Wang, owns approximately

22% of the outstanding shares of our common stock as of the date of this report.

Our executive officers, directors, and 5% stockholders

together own 39.7% of the outstanding shares of our common stock.

Accordingly, our directors have a significant influence in determining

the outcome of all corporate transactions or other matters, including mergers, consolidations, and the sale of all or substantially all

of our assets.

They also have the power to prevent or cause a change in control.

The interests of our directors may differ from the interests

of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.

Management currently beneficially owns most of

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Risks Related to the Ownership of our Common

Our common stock is subordinated to our

preferred stock.

As described in the Certificate of Designations,

Preferences and Rights of the Series A Preferred Stock and Series B Preferred Stock, shares of Series A and Series B Preferred Stock rank

senior to shares of Common Stock, with respect to rights on the distribution of assets in any voluntary or involuntary liquidation, dissolutions

or winding up of the affairs of the Company.

Starting on January 19, 2026, the outstanding

shares of Series B Preferred Stock will be redeemable at the holder of such shares option.

Beginning on January 19, 2026, the outstanding

shares of Series B Preferred Stock is redeemable at the Series B holder’s option during certain periods over two (2) years.

of the Series B Preferred Stock would result in the Company to meet such redemption obligations in cash or by finding a third party to

purchase such shares of Series B Preferred Stock.

No assurances can be given that we will have the funds available in the event a holder

of Series B Preferred Stock elects to exercise the redemption rights nor that any third party will be willing to purchase such shares

of Series B Preferred Stock.

Our ability to meet such redemption obligations will depend on our earnings and cash flow.

Furthermore, in

the event of a redemption, the Company’s requirement to meet such redemption obligations could reduce funds available to further

our business and business strategy.

On January 19, 2026, the holders of the Series B Preferred Stock provided the Company with Redemption

Notices requesting the Company to redeem all of their outstanding shares of Series B Preferred Stock.

While the allotted time period for

redemption (20 days), has passed, the Company and the Series B Holders remain engaged in negotiations to find an amicable solution.

February 19,2026, the Series B investors sent a redemption demand letter for 3,716 outstanding Series B Preferred shares, totaling $3,158,600.

This demand letter was subsequently rescinded by the Series B holders while the Series B holders and management attempted to negotiate

a settlement.

On March 17, 2026, after the parties could not negotiate a successful settlement, the Series B investors renewed their redemption

requests by emailing Company management a notice of default.

The Company has engaged external advisors to assist in discussions

with the holders of the Series B Preferred Stock and is currently engaged in ongoing negotiations to determine the most appropriate resolution

that maximizes value for all stockholders, including the Series B shareholders.

Our shares may be affected by short selling

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common stock could result in substantial sales of common stock on the open market which could cause our stock price to fall substantially.

As of January 31, 2025, we had 3,378,104 freely

trading shares, after the Company’s Board of Directors approved a 10 to 1 reverse stock split.

Any increase in freely trading shares,

or the perception that such shares will or could come onto the market could have an adverse effect on the trading price of the stock.

No prediction can be made as to the effect, if any, that sales of these shares, or the availability of such shares for sale, will have

on the market prices prevailing from time to time.

Nevertheless, the possibility that substantial amounts of common stock may be sold

in the public market may adversely affect prevailing market prices for our common stock and could impair our ability to raise capital

through the sale of our equity securities or impair our shareholders’ ability to sell on the open market.

As of March 25, 2026, we had 561,765 freely trading

shares, after the Company’s Board of Directors approved a 10 to 1 reverse stock split.

Any increase in freely trading shares, or

the perception that such shares will or could come onto the market could have an adverse effect on the trading price of the stock.

prediction can be made as to the effect, if any, that sales of these shares, or the availability of such shares for sale, will have on

the market prices prevailing from time to time.

Nevertheless, the possibility that substantial amounts of common stock may be sold in

the public market may adversely affect prevailing market prices for our common stock and could impair our ability to raise capital through

the sale of our equity securities or impair our shareholders’ ability to sell on the open market.

You could be diluted from our future issuance

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As of December 31, 2025, we had 915,097 shares

of common stock outstanding and no shares of preferred stock outstanding.

We are authorized to issue up to 15,000,000 shares of common

stock and no shares of preferred stock.

To the extent of such authorization, our Board of Directors will have the ability, without seeking

stockholder approval, to issue additional shares of common stock or preferred stock in the future for such consideration as the Board

of Directors may consider sufficient.

The issuance of additional common stock or preferred stock in the future may reduce a shareholder’s

proportionate ownership and voting power.

of common stock outstanding and 7,263 shares of Series B Preferred Stock outstanding.

We are authorized to issue up to 1,000,000,000 shares

of common stock and 100,000,000 shares of preferred stock.

To the extent of such authorization, our Board of Directors will have the ability,

without seeking stockholder approval, to issue additional shares of common stock or preferred stock in the future for such consideration

as the Board of Directors may consider sufficient.

The issuance of additional common stock or preferred stock in the future may reduce

a shareholder’s proportionate ownership and voting power.

Substantial future sales of our common stock, or the perception

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matter should be closed with respect to the Bid Price Rule.

In an effort to regain

compliance with Nasdaq’s Bid Price Rule, on January 31, 2025, the Company effected a 1 for 10 reverse stock split pursuant to Nevada

Revised Statutes (“NRS”) Section 78.207 which also caused a decrease of the Company’s authorized shares of common stock

by the same ratio from 150,000,000 to 15,000,000.

On February 9, 2026, the Company effected a reverse stock split of its outstanding common

stock on a 1-for-10 basis.

No adjustment was made to the Company’s authorized shares of capital stock.

We may not be able to maintain the continued

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their common stock.

As previously disclosed, on June 30, 2025, we

received a letter from Nasdaq’s Listing Qualifications Department (the “Staff”) that said our Market Value

of Listed Securities had fallen below $35,000,000, and therefore, we no longer satisfy the requirements under Nasdaq Listing Rule 5550(b)(2)

(the “MVLS Rule”).

The Company has been provided an initial period of 180 calendar days, or until December 29, 2025 (the “Compliance

Date”), to regain compliance with the MVLS Rule.

If at any time before the Compliance Date, the Company’s MVLS closes at $35,000,000

or more for a minimum of ten consecutive business days, then this matter will be closed.

If the Company does not regain compliance with

the MVLS Rule prior to the expiration of the Compliance Date, the Company will receive notification from the Staff that its securities

are subject to delisting.

As previously disclosed, on December 22, 2025,

the Company received a conditional compliance letter from the Staff of the Nasdaq Stock Market (“ Nasdaq ”)

notifying the Company that based on the Company’s disclosure on Form 8-K filed with the SEC on December 17, 2025, through which

the Company discloses its belief of meeting the requirement of maintaining the minimum $2,500,000 in Stockholders’ equity, the

Staff has determined that the Company complies with the MVLS Rule.

However, the Staff provides that if the Company fails to provide evidence

of compliance upon filing its next periodic report, the Company may be subject to delisting.

If the shares of our common stock were to be delisted

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If we are unable to integrate the Ubiquitor device into smart home installations, we will not

be able to achieve the competitive price and performance we anticipate achieving success in AVX’s future smart home installations.

Alternatively, we may not be able to achieve a smart home installation at a cost-effective price that is sufficient to distinguish us

from amongst the competition in this market segment.

be able to achieve the competitive price and performance we anticipate achieving success.

Alternatively, we may not be able to achieve

a smart home installation at a cost-effective price that is sufficient to distinguish us from amongst the competition in this market segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors