Focus Universal Announces Reverse Stock Split

Rhea-AI Summary

Focus Universal (Nasdaq: FCUV), an IoT and 5G technology provider, has announced a 1-for-10 reverse stock split of its common stock, effective January 31, 2025. The split was approved by the board of directors on August 7, 2024.

Following the split, every 10 shares of issued and outstanding common stock will be combined into one share. The company will continue trading under the symbol 'FCUV' on Nasdaq but with a new CUSIP Number (34417J 203). The par value per share will remain unchanged.

Proportional adjustments will be made to equity awards, securities, warrants, and shares reserved for equity incentive plans. VStock Transfer, will serve as the exchange agent. Stockholders holding shares electronically or in brokerage accounts will have their positions automatically adjusted.

Positive

• None.

Negative

• Implementation of 1-for-10 reverse stock split, typically indicating share price concerns
• Potential market perception issues as reverse splits are often viewed negatively by investors
• Possible indication of compliance issues with Nasdaq listing requirements

Insights

Financial Markets Analyst

The announcement of Focus Universal's 1-for-10 reverse stock split signals significant challenges for the company, particularly given its current $41 million market cap and sub-$1 share price. This corporate action typically indicates underlying business pressures and is often a last-resort measure to maintain Nasdaq listing compliance, which requires a minimum $1 bid price.

Historical data shows reverse splits frequently carry negative market implications. While the mathematical adjustment will temporarily boost the share price, studies indicate that approximately 70% of companies executing reverse splits experience negative returns within the first year. This occurs because the fundamental business challenges often remain unaddressed.

Several critical implications warrant investor attention:

• Market perception typically deteriorates as reverse splits are associated with struggling companies
• Trading liquidity may decrease as the float reduces, potentially widening bid-ask spreads
• Institutional investors often view reverse splits skeptically, which could impact future capital raising abilities
• Short-term volatility typically increases post-split as the market reprices risk

The effectiveness of this corporate action will ultimately depend on Focus Universal's ability to demonstrate fundamental business improvements in its IoT and 5G technologies. Without meaningful operational progress, the higher post-split share price may prove unsustainable, potentially leading to continued downward pressure.

ONTARIO, CA / ACCESS Newswire / January 29, 2025 / Focus Universal inc. (Nasdaq:FCUV) ("Focus" or the "Company"), a provider of patented hardware and software design technologies for Internet of Things (IoT) and 5G, announces that its board of directors has approved a 1-for-10 reverse stock split of the Company's common stock. The Board of Directors approved the reverse stock split proposal at the Company's Board Meeting held on August 7, 2024.

The Reverse Split will be effective at 12:01 a.m. Eastern Standard Time on January 31, 2025, and will be reflected with the Nasdaq Capital Market ("Nasdaq") and in the marketplace at the open of business on January 31, 2025 (the "Effective Date"), whereupon the common shares will begin trading on a split-adjusted basis. In connection with the Reverse Split, the Company's common shares will continue to trade on Nasdaq under the symbol "FCUV" but will trade under a new CUSIP Number, 34417J 203.

As of the Effective Date, every 10 shares of the Company's issued and outstanding common stock will be combined into one share of common stock. The par value per share of the Company's common stock will remain unchanged. Proportional adjustments will be made to the number of shares of common stock issuable upon the exercise of the Company's equity awards, securities and warrants, if any, as well as the applicable exercise price, and the number of shares authorized and reserved for issuance pursuant to the Company's equity incentive plans.

The Company's transfer agent, VStock Transfer, LLC, will serve as the exchange agent for the reverse stock split. Registered stockholders holding pre-reverse stock split shares of common stock electronically in book-entry form are not required to take any action to receive post-reverse stock split shares. Those stockholders who hold their shares in brokerage accounts or in "street name" will have their positions automatically adjusted to reflect the reverse stock split, subject to each broker's particular processes, and will not be required to take any action in connection with the reverse stock split.

Additional information about the reverse stock split will be found in the Company's 8-K filed with the Securities and Exchange Commission on January 29, 2025 a copy of which will be available at www.sec.gov.

About Focus Universal:
Focus Universal Inc. (NASDAQ:FCUV) is a provider of patented hardware and software design technologies for Internet of Things (IoT) and 5G. The company has developed five disruptive patented technology platforms with 26 patents and patents pending in various phases and 8 trademarks pending in various phases to solve the major problems facing hardware and software design and production within the industry today. These technologies combined to have the potential to reduce costs, product development timelines and energy usage while increasing range, speed, efficiency, and security. Focus currently trades on the Nasdaq Capital Markets.

Forward-Looking Statements:
Statements in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions and the completion of the public offering on the anticipated terms or at all, and other factors discussed in the "Risk Factors" section of the preliminary prospectus filed with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof and Focus Universal specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

For company inquiries, please contact:
Investor Relations
626-272-3883
ir@focusuniversal.com

SOURCE: Focus Universal Inc.

View the original press release on ACCESS Newswire

FAQ

When will Focus Universal (FCUV) reverse stock split take effect?

The 1-for-10 reverse stock split will take effect at 12:01 a.m. Eastern Standard Time on January 31, 2025, with split-adjusted trading beginning that same day on Nasdaq.

What is the new CUSIP number for FCUV after the reverse split?

Following the reverse stock split, FCUV will trade under the new CUSIP Number 34417J 203.

How will FCUV's reverse split affect existing shareholders?

Every 10 shares of common stock will be combined into one share. Shareholders in brokerage accounts or 'street name' will have positions automatically adjusted, requiring no action.

Will FCUV's stock symbol change after the reverse split?

No, Focus Universal will continue trading under the symbol 'FCUV' on Nasdaq, despite the reverse split.

How will FCUV's reverse split affect equity awards and warrants?

Proportional adjustments will be made to the number of shares issuable upon exercise of equity awards, securities, and warrants, as well as their exercise prices.