FOCUS UNIVERSAL INC. Material Event - Investor Update

What's happening at FOCUS UNIVERSAL INC. and what does it mean for your investment? Let's break down the recent developments in a clear, concise way.

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1. Event Description (What Happened)

FOCUS UNIVERSAL INC. announced a 1-for-10 reverse stock split. This means that for every ten shares of FOCUS UNIVERSAL INC. common stock you owned before the split, you will now own one share. While your share count decreases, the price per share will theoretically increase by ten times, aiming to keep the total value of your investment unchanged immediately after the split. For example, if you owned 1,000 shares at $0.20 each (total value $200), you would now own 100 shares at a theoretical price of $2.00 each (total value $200). This action will also significantly reduce the total number of outstanding shares.

The company initiated this reverse stock split primarily to meet Nasdaq's minimum bid price requirement. Nasdaq mandates that listed companies maintain a share price of at least $1.00. Trading consistently below this threshold can lead to delisting, which would severely hinder the company's ability to attract investors and raise capital. While the reverse split addresses this immediate compliance issue, a persistently low stock price often points to underlying operational or financial challenges within the company.

2. Event Date/Timeline

FOCUS UNIVERSAL INC. officially announced this reverse stock split on February 5, 2026. The split will become effective, and the common stock will begin trading on a split-adjusted basis at the open of business on February 9, 2026.

The Board of Directors approved the specific 1-for-10 ratio on January 27, 2026. This followed prior authorization from stockholders on October 10, 2025, which allowed the company to implement a reverse split up to a 200-for-1 ratio.

3. Impact Assessment (Who/What is Affected)

This event carries various implications for the company, its stock, and its stakeholders:

• For the Company: Maintaining its Nasdaq listing is vital for credibility, visibility, and liquidity. Delisting could relegate the stock to over-the-counter (OTC) markets, making it less attractive to institutional investors and harder for retail investors to trade. However, the market often views reverse splits as a "red flag," signaling past struggles and potentially continued challenges.
• For the Stock Price: While the per-share price will jump, the market's reaction post-split is critical. Stocks that undergo reverse splits often continue to face downward pressure if the underlying business issues remain unresolved. The new, higher price needs sustained support from improved financial performance and investor confidence.
• For Shareholders (Investors):
  • Your share count will decrease by a factor of 10.
  • If your share count is not perfectly divisible by 10, you will receive cash for any fractional shares. The company will calculate this cash payment based on the closing price on the effective date.
  • Your percentage ownership and voting power in the company remain unchanged (aside from minor adjustments for fractional shares). Each share simply represents a larger slice of the same company.
  • The company will proportionally adjust all outstanding stock options, warrants, and convertible securities in terms of the number of shares and their exercise/conversion prices.
• For Employees & Customers: This event typically has no direct impact on day-to-day operations or relationships with employees and customers.
• For Competitors: While an internal move, the split might signal that FOCUS UNIVERSAL INC. is addressing its financial standing. This could potentially impact its competitive position if the company resolves underlying issues.
• Immediate Implications: On February 9, 2026, the company's stock will trade on Nasdaq under the same ticker symbol "FCUV" but with a new CUSIP number (a unique identification number for securities). Your brokerage account will reflect the adjusted share count and price.
• Future Implications: The critical question for investors is whether FOCUS UNIVERSAL INC. can sustain its stock price above the $1.00 Nasdaq minimum. This will depend entirely on the company's ability to demonstrate tangible improvements in its business fundamentals. Investors should closely monitor future financial performance, strategic initiatives, and market perception.

4. Financial Impact

The reverse stock split primarily affects the company's capital structure and per-share metrics, rather than its overall financial health or assets and liabilities.

• Share Capital: The number of outstanding common shares will decrease by a factor of 10.
• Par Value: The company will proportionally adjust the par value per share (a nominal value assigned to shares for accounting purposes). The specific new par value wasn't detailed in their filing, but this is primarily an accounting adjustment and doesn't directly impact the market value of your shares.
• Authorized Shares: The number of authorized shares may be proportionally adjusted or remain unchanged, depending on the company's charter and the specific resolution. The company didn't provide specific details on the new authorized share count in their announcement.
• Market Capitalization: Immediately after the split, the company's theoretical market capitalization is expected to remain unchanged. The increase in share price should offset the decrease in the number of outstanding shares.
• Fractional Shares: Shareholders who would otherwise hold fractional shares will receive cash instead. The company will base this payment on the common stock's closing price on the reverse stock split's effective date.
• Equity Awards and Convertible Securities: The company will proportionally adjust all outstanding stock options, warrants, restricted stock units, other equity awards, and convertible securities. This includes reducing the number of shares underlying these instruments and correspondingly increasing their exercise or conversion prices.
• No Direct Change to Fundamentals: The reverse split itself does not alter the company's assets, liabilities, revenues, expenses, or overall equity value. Its primary financial impact is on per-share metrics (e.g., earnings per share, book value per share) and compliance with listing standards.

5. Key Takeaways for Investors

A reverse stock split is primarily a cosmetic change to meet listing requirements; it does not inherently improve the company's value or financial health.

• Key Risks:
  • Unresolved Underlying Issues: The split doesn't fix the core problems that led to the low stock price. If these issues persist, the stock may continue to decline, potentially falling below $1.00 again.
  • Negative Market Perception: The market often views reverse splits negatively, sometimes leading to further selling pressure.
  • Liquidity Concerns: A higher share price with fewer shares outstanding might, in some cases, reduce trading volume and liquidity.
• Potential Opportunities:
  • Nasdaq Listing Maintained: Staying on Nasdaq provides access to a broader investor base and better liquidity compared to OTC markets.
  • Attracting New Investors: A higher share price might make the stock more appealing to institutional investors or funds that have policies against investing in "penny stocks."
  • Foundation for Turnaround: If the company successfully addresses its underlying business challenges, the reverse split could be a necessary step in a broader turnaround strategy.

Your Due Diligence: Before making any investment decisions, it is crucial to conduct thorough research beyond this event. Investigate FOCUS UNIVERSAL INC.'s recent financial statements (income statements, balance sheets, cash flow statements), management's strategic plans, competitive landscape, and any specific risks outlined in their SEC filings. Understand why the stock price was low and what concrete steps the company is taking to improve its long-term prospects.