What changed in this filing

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Item 3. Legal Proceedings

2026-03-31 compared with 2025-02-28 · 48 added, 32 removed, 29 unchanged (73% of the section changed)

8 unchanged sentences

The complaint seeks unspecified economic and non-economic losses, as well as attorneys’ fees.

We have conducted written discovery,

depositions, and expert discovery.

We have a motion for summary judgment set to be heard on June 17, 2025.

Trial for this matter is set

for August 6, 2025.

AVX intends to vigorously contest this matter.

Further, AVX disputes that the other defendants are proper parties

to the litigation.

However, litigation and investigations are inherently uncertain, but the outcome could have a material impact on the

On August 29, 2025, the Company and

Former COO entered into a confidential settlement agreement which concluded this matter and releases all claims against the Company.

settlement has been accounted for in these financial statements and is scheduled to be executed and concluded in early August.

Similarly, on or about April 14, 2020, Devesa

4 unchanged sentences

other provisions of the California Labor Code, and various other claims under California state law.

The complaint seeks unspecified economic

and non-economic losses, as well as attorneys’ fees.

We have conducted written discovery, depositions, and expert discovery.

for this matter is set for August 13, 2025.

AVX intends to vigorously contest this matter.

Further, AVX disputes that the other defendants

are proper parties to the litigation.

However, litigation and investigations are inherently uncertain, but the outcome could have a material

impact on the Company.

On August 29, 2025, the Company and

Former Sales and Marketing Director entered into a confidential settlement agreement which concluded this matter and releases all claims

against the Company.

This settlement has been accounted for in these financial statements and this is scheduled to be executed and concluded

in early August as well.

The conclusion on these two related matters would mark the conclusion of all legal matters with respect to Focus

Universal Inc.

On August 26, 2024, a former software engineer

1 unchanged sentence

State of California alleging wrongful termination and other violations of the California Labor Code.

The complaint seeks unspecified economic

and non-economic losses, as well as attorneys’ fees.

The Company is investigating and intends to vigorously defend itself in the

foregoing matters.

The case has currently been stayed until a status conference on September 17, 2025, which is when the expected trial

date will be set.

However, litigation and investigations are inherently uncertain.

The Company does possess EPLI insurance, and the legal

team as selected by the insurance company is currently handling the matter.

The Company vigorously disputes these allegations.

This case was settled for $130,000

plus legal fees, and its impact recorded in the accompanying financial statements.

The Company has EPLI insurance with a deductible amount

During the quarter, Focus Universal settled and this matter was finally executed and concluded on April 25, 2025.

On October 28, 2024, MGR Real Estate, Inc.

7 unchanged sentences

interest at a rate of 10% per annum.

The Company is negotiating a resolution and if such resolution falls through then the Company intends

to contest this matter.

However, since litigation and investigations are inherently uncertain, the outcome may have a material impact

on the Company.

On April 10, 2025, the Company, Mr.

Kau, and MGR Real Estate, Inc.

entered into a confidential settlement

agreement which concluded this matter and releases all claims against the Company.

This reduced impact has been accounted for in these

financial statements.

On January 19, 2026, the Company received requests

for redemption (the “Redemption Notices”) from the holders of the outstanding shares of Series B Convertible Preferred Stock

(“Series B Preferred Stock”).

Pursuant to the Certificate of Designation of Series B Preferred Stock, as amended, the holders

of the outstanding shares of Series B Preferred Stock have the option to require the Company, to redeem all or less than all of the outstanding

shares of Series B Preferred Stock.

From the date the Company receives the Redemption Notice, the Company had 20 trading days (the “Time

Period”) to redeem the shares of Series B Preferred Stock set forth in the notice for a price equal to the Purchase Price multiplied

by the number of shares of Series B Preferred Stock subject to such redemption.

Since the Company has received the Redemption Notice,

the Time Period the Company had to redeem the shares of Series B Preferred Stock has since lapsed.

As provided in the Certificate of Designation,

with respect to redemption, the Company must comply with Nevada state law which prohibits certain distributions or redemptions.

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.

As of March 16, 2026, a total of 6,447 shares

of Series B Preferred Stock or an aggregate of $5,479,950 remain subject to redemption.

On 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 successfully negotiate

a 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.

In addition, management is actively working to identify

potential buyers to purchase the Series B Preferred Stock from holders seeking redemption on mutually acceptable terms.

MINE SAFETY DISCLOSURES

1 unchanged sentence

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 3. Legal Proceedings