Certain changes to our equity require that we provide notice to all shareholders of those changes.  This is one of those times.

This is highly legalistic, pretty thick, actually.  But, your rights are changing, so I’m going to do my best to explain what’s changed, and why.

Summary

We have eliminated the liquidation preference from our Series A Preferred Non-Voting stock going forward.  These are the shares that people purchased or have been earning from participating in iConsumer.  People who are issued shares from January 12, 2018 and later will not receive a liquidation preference.  People who were issued their shares before January 12, 2018 continue to have a liquidation preference, until they transfer (sell) their shares.  Subsequent holders (buyers) of those shares do not have a liquidation preference.

What’s a liquidation preference and why get rid of it?

It was a feature of our Preferred Series A Non-Voting stock that stated, amongst other things, that IF iConsumer were sold (had a change in control) or we were liquidated for some other reason (most likely because we failed), the holders of the Preferred Series A would get their money back, if there was money, first.  Only if the holders of this class of stock would get their money back (what they paid for it, or the value it had when it was earned), then everybody, common shareholders and preferred shareholders, would split the money received from the sale or liquidation.

It was designed to protect early investors who worried that iConsumer might fail or be sold for very little money.  Many early stage VC type investors get this kind of protection, which normally ceases when a company goes public.  We’re now quoted on the OTCQB, so it was time to end this preference.  The mechanics of this preference don’t work after a shareholder sells their shares.

Who’s affected and how

1. You have issued shares (shares that are on the books of the transfer agent – Issuer Direct – as of January 12, 2018).  So long as you continue to keep those shares on the books of the transfer agent, nothing changes, your shares still have a liquidation preference, equal to what you paid for those shares, or the value we assigned them when you earned them.  If you transfer the shares from the books of the transfer agent, the liquidation preference associated with those shares ends.  For instance, a buyer of those shares does not receive a liquidation preference.
2. You buy shares in our upcoming offering.  You do not get a liquidation preference.
3. You have pending or earned shares from shopping, but they have not yet been issued to you.  You do not receive a liquidation preference.

What are the mechanics of changing the rights of a class of stock?

Since we’re a Delaware registered corporation, the laws of Delaware outline the process.  The board needs to agree, a majority of the common shareholders need to agree, and a majority of the Preferred Series A shareholders need to agree.  We file the change with Delaware’s Secretary of State, and we also file a notice of the change with the SEC, so that anybody who owns or might want to own our stock is fully informed.

What other preferences do the Preferred Series A Shares have?

The big preference is a dividend preference.  That is, IF iConsumer decides to pay a dividend, it must pay a dividend to the Preferred Series A before it can pay a dividend to the common stock shareholders.  Just a reminder, iConsumer is still early stage, and we don’t know if we’ll ever be able to pay a dividend.  No promises.  But, if we’re able and want to pay a dividend, the preferred shareholders come first.