What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-02-28 · 116 added, 74 removed, 191 unchanged (50% of the section changed)

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(1) device on a chip;

(2) universal smart instrumentation platform (“USIP”);

(2) universal smart instrumentation

platform (“USIP”);

(3) 5G ultra-narrowband technology;

(4) ultra-narrowband power line

communication (“PLC”) technology;

(4) ultra-narrowband power line communication (“PLC”)

and (5) our financial reporting software.

Our main sources of revenue are derived from our

sales of sensor devices and our wholesaling of various digital, analog, and quantum light meters and filtration products, including fan

speed adjusters, carbon filters and HEPA filtration systems.

We source these products from manufacturers in China and then sell them to

distributor, Hydrofarm, which resells our products directly to consumers through its established retail distribution channels

and, in some cases, places its own branding on our products.

Hydrofarm was not our primary source of revenue for the years ended December

31, 2024 and 2023.

In an effort to continually develop our product

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believe that our sensors are much more cost effective.

Our software machine auto design team has also

made significant progress during 2024.

Having the mathematical and graphical environments created, our team is focused on developing the

3D-user interface machine auto design.

Our public reporting automation software is completed and currently undergoing extensive testing.

We have developed a Microsoft®-based add-on software that aims to streamline and automate the financial reporting preparation process.

We believe the software will significantly simplify the Form 10-Q and Form 10-K preparation processes and make creating, editing and managing

documents both simple and accurate.

We are planning to commercialize this software in the first quarter of 2025.

A cloud-based version

of this software is currently under the development.

Our financial software design team has also made

significant progress during 2025 to our One Touch Financial software product.

Having the mathematical and graphical environments created,

our team is focused on developing an automated 3D user interface design.

Our public reporting automation software is completed and currently

undergoing extensive testing.

We have developed a Microsoft®-based add-on software that aims to streamline and automate the financial

reporting preparation process.

We believe the software will significantly simplify the Form 10-Q and Form 10-K preparation processes and

make creating, editing and managing documents both simple and accurate.

We believe our financial software is ready to commercialize.

cloud-based version of this software is currently under the development.

We have completed an initial production run of

prototype Ubiquitor devices and intend to proceed into full-scale production during 2025.

During 2024, we presented the Ubiquitor several

During 2025, we presented the Ubiquitor at several

trade shows including CES 2024 and 2025.

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Two of our products are ready for commercialization.

These are our financial reporting software and universal smart technology for smart meters and automation.

We are currently looking for

distribution partners for both products.

These are our financial reporting software, One Touch Financial, and universal smart technology for smart meters and automation.

currently looking for distribution partners for both products.

On January 21, 2026, the Company entered into

a purchase, sale, and escrow agreement with 901 Corporate Center, LP to acquire a 100,743 sq.

office and commercial building, along

with a four-level parking structure, located in Monterey Park, California.

While investment in a building is not a core business activity

for the Company, the planned acquisition of a new office building does present the Company with a very low real estate expense, in addition

to a conservative 9-10% cap rate with a desirable location and market, based on industry professional analysis.

The additional cash flow

shall be used to offset corporate and general costs while the company continues to expect the IoT and financial software divisions to

be able to generate revenues soon to bear those associated expenses.

While currently, we do not believe that inflation

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and a single large customer, we also believe that our exposure to market volatility in that sector will be diminished significantly.

believe this should have a stabilizing effect on revenues.

However, as our new products begin to reach maturity and completion, we do

believe our exposure to our supply chain risk will increase with our need for consistently procuring inputs and raw materials.

supply chain disruption is the largest risk factor for our cash flow as production increases.

For a greater description of our technologies,

our business segments and the products we are currently selling, see “Part I – Item 1.

Business ” above.

We believe this should have a stabilizing effect on revenues.

However, as our new products begin to reach maturity and completion, we

do believe our exposure to our supply chain risk will increase with our need for consistently procuring inputs and raw materials.

believe supply chain disruption is the largest risk factor for our cash flow as production increases.

For a greater description of our

technologies, our business segments and the products we are currently selling, see “Part I – Item 1.

Results of Operations

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Cost of revenue

Gross Profit (Loss)

A summary of our revenue by product type for the

fiscal years ended December 31, 2025 and 2024 is as follows:

December 31, 2024

December 31, 2023

IoT Project Construction and Installation Services

Our consolidated gross revenue for the years ended

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Revenue for the year ended December 31, 2025 decreased $143,114 due

to a sales decrease from construction contracts.

to a lower number of sales in the current year.

Cost of revenue for the year ended December 31, 2025 was $290,275, compared to $387,936

for the year ended December 31, 2024.

The overall increase in the cost of revenue was due to inventory reserve for the base LED panel

products sold in the current year.

This, combined with a decrease in gross profit, brought the total to $10,201 for the year ended December

31, 2024, compared to $59,659 for the year ended December 31, 2023.

The decrease in cost of revenue was due to higher cost of the LED materials for installation during

this time period, though increases were somewhat nominal.

This, combined with a decrease in gross profit (loss), brought the total to

$(35,252) for the year ended December 31, 2025, compared to $10,201 for the year ended December 31, 2024.

Operating Expenses

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Total operating expenses

$ (1,352,439 )

Selling expense for the year ended December

31, 2025 was $60,289, compared to $100,189 for the year ended December 31, 2024.

Selling expense incurred was mainly from third party advertising

Selling expense incurred was mainly from third

party advertising fees.

The decrease of selling expense was due to a decrease in advertising fees and trade show expenses.

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$499,852 and $951,845 for the years ended December 31, 2025 and 2024, respectively.

The decrease was attributed to a decline in stock

prices during the current year.

Research and development costs were $1,381,937

and $1,324,438 for the years ended December 31, 2024 and 2023, respectively.

The increase was due to an increase in total number of research

and development employee headcount in the Ontario, California headquarters and the Shenzhen, China subsidiary.

The decrease in cost was a result in the decrease

in the share price, resulting in a larger stock-based compensation for the directors associated.

Research and development costs were $919,965 and

$1,381,937 for the years ended December 31, 2025 and 2024, respectively.

The decrease was due to software costs being capitalized in the

current year.

Professional fees were $1,302,800 during the year

ended December 31, 2025 compared to $1,660,590 during the year ended December 31, 2024.

The increase in these professional fees compared

to the prior period was due to an increase in legal fees for employment litigation defense.

The decrease in these professional fees compared

to the prior period was due to a decrease in legal fees for employment litigation defense.

General and administrative expenses for the year

ended December 31, 2025 was $2,075,107, compared to $2,115,891 for the year ended December 31, 2024.

The increase of general and administrative

expenses was primarily due to an increase in the number of office employees and rent expenses in 2024.

Other income of $3,278,375 incurred during the

year ended December 31, 2024, primarily consisted of gain on sale of property of $3,181,706, interest income of $40,852, interest expense

– related party of $89,098, unrealized loss on marketable equity securities of $12,075, rental income of $96,541 and other income

Other income of $241,551 incurred during the year ended December 31, 2023, primarily consisted of interest income of $38,339,

interest expense – related party of $38,333, unrealized gain on marketable equity securities of $8,033, realized loss on marketable

Overall, general and administrative

expenses did not vary significantly between 2025 and 2024.

Other income of $105,496 incurred during the year

ended December 31, 2025, primarily consisted of interest income of $70,024, unrealized loss on marketable equity securities of $1,773,

and other income of $37,245.

Other income of $3,278,376 incurred during the year ended December 31, 2024, primarily consisted of gain

on sale of property of $3,181,706, interest income of $40,853, interest expense – related party of $89,098, unrealized loss on marketable

equity securities of $12,075, rental income of $96,541 and other income of $60,449.

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was $0 during the year ended December 31,2025, compared to $278,263 during the year ended December 31,2024.

The decrease was due to

the discontinued operations of AT Tech Systems LLC in August 2024.

The decrease was due to the

discontinued operations of AT Tech Systems LLC in August 2024.

During the years ended December 31, 2025 and

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$ (4,656,754 )

Net cash provided by investing activities

Net cash provided by (used in) financing activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Effect of exchange rate

Net change in cash

$ (3,915,172 )

Cash Flows from Operating Activities

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For the year ended December 31, 2025, we had cash

inflow from investing activities of $7,127,121.

That was primarily the result from the purchase of property and equipment of $18,687,

and proceeds from sales of property of $7,145,808.

For the year ended December 31, 2023, we had cash inflow from investing activities

That was primarily the result from the purchase of property and equipment of $20,620, purchase of marketable securities of

$43,644 and proceeds from sales of marketable securities of $118,410.

outflow from investing activities of $185,760.

That was primarily the result from the purchase of property and equipment of $28,106, and

capitalized software costs of $157,654.

For the year ended December 31, 2024, we had cash inflow from investing activities of $7,127,121.

That was primarily the result from the purchase of property and equipment of $18,687 and proceeds from sales of property of $7,145,808.

Cash Flows from Financing Activities

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from financing activities of $9,648,113.

That was primarily the result proceeds from sales of Series B Preferred Stock, net of $6,320,000,

sales of Series A Preferred Stock issued for cash of $3,000,000, stock issued for placement agent $822,502, and purchases of treasury

stock of $494,389.

For the year ended December 31, 2024, cash inflows

from financing activities of $706,094.

That was primarily the result proceeds from third party loan of $350,000, proceeds from related

party loan of $1,101,000, repayment on related party loan of $2,101,000, repayment on third party loan of $350,000, stock issued for placement

agent 1,086,000, stock issued for private placement of $1,290,000 and purchases of treasury stock of $669,906.

For the year ended December

31, 2023, cash outflows from financing activities of $434,048.

That was primarily the result from related party loan of $1,000,000, and

purchases of treasury stock of $1,434,048.

party loan of $1,101,000, repayment on related party loan of $2,101,000, repayment on third party loan of $350,000, common stock issued

for placement agent $1,086,000, common stock issued for private placement of $1,290,000 and purchases of treasury stock of $669,906.

Going Concern

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arrangements, as defined in Item 303(a)(4)(ii) of Regulation SK.

On January 21, 2026, the Company entered into

a purchase, sale, and escrow agreement with 901 Corporate Center, LP to acquire a 100,743 sq.

office and commercial building, along

with a four-level parking structure, located in Monterey Park, California.

The purchase price is $17,700,000, with an escrow deposit of

The escrow was initially scheduled to close within sixty days of opening escrow.

The $525,000 deposit was placed into the escrow

account on January 26, 2026.

Both parties have executed several amendments to extend the closing date from February to March 2026.

Subsequently,

on March 20, 2026, the parties entered into a fifth amendment extending the contingency period to April 10, 2026.

At this point in time,

the Company has made significant progress towards financing, however there is no assurance that the financing will be completed or that

it will be on terms acceptable to the Company.

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 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 investors and management attempted to negotiate a settlement.

On March 17, 2026, after the parties could not

successfully negotiate a settlement, the Series B holders renewed their redemption requests by emailing Company management a notice of

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.

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 7. Management’s Discussion and Analysis