2021 1-K Filed – Annual Report

By: Robert Grosshandler | May 2, 2022

We’ve published our 2021 year-end financial statements – our SEC mandated 1-K. In the traditional public company world (if we were a “fully-reporting” company), this filing would be called a 10-K. The important difference between the two is the depth that we’re required to go into creating the statements, plus the level of audit required. We’re still held to a “public-company” standard, but if you’re really curious about yet another set of acronyms, Google “PCAOB”. For a company the size of iConsumer, I don’t believe there’s a substantial qualitative difference between the 1-K and the 10-K. There would be definitively a cost difference. Our 1-K cost about $50,000. A 10-K would be about $150,000 – 250,000. We’ll stick with the 1-K as long as we can.

woman at desk with mountain of paperwork behind her

For a pandemic year, not so bad

Our top line (revenue) growth felt good and our gross profit growth felt great. It generated some nice cash but it’s a bittersweet story. Much of the growth came from two experimental efforts that ended almost as soon as they started. One of the challenges for 2022 is repeating those successes.

We focus on cash gross profit

Just a reminder, cash gross profit is NOT a real accounting term. In a business that is vitally dependent on the cash it generates for survival and ultimately growth, it’s my shorthand way of getting to the most fundamental measure. The fact that we reward our members with our stock is very, very important (it’s what makes us unique), but it’s not cash, and in fact, can disguise the cash that we generate. At this stage of our growth, it’s still all about the cash.

The cash flow statement gives a great look at how we’re doing, but it’s just a start. By focusing on the cash generated just from “sales” less the cash costs of generating those sales, we can better compare the results of our efforts.

As you can see above, our total revenue (“sales”) for 2021 was $234,501. For the purpose of “cash gross profit”, we’re going to add back the Member Stock Back Rebate ($192,622) – because that’s not cash – to the Cost of Revenue. Giving us a cash gross profit for 2021 of $183,410. And to compare that to 2020, when our comparable cash gross profit was $86,502. Giving us growth of 112% in the cash generated by sales.

That’s good. But it’s not the whole story.

More about the cost of revenue

You’ll note that we have Traffic Partner Fees in our cost of revenue for 2021 when we didn’t in 2020. These resulted from some experiments we ran last year. We used a partner to bring us traffic that was NOT related to earning rebates. Perhaps they would become members, perhaps not. And perhaps they would make a purchase at one of our 2,200 retailers.

A small number of them became members, and a larger number made purchases. That was good. It was a profitable experiment for us. Unfortunately, our partner didn’t make enough money from the experiment to want to continue it.

Amazon and the cost of revenue

Secondly, as we’ve discussed before, the revenue generated by our members shopping at Amazon had no cost of revenue, because we weren’t allowed, nor even given the information that would make it possible, to give rebates.

Even so, we decided that we could convince more members to shop at Amazon. We were quite successful. We were so successful that Amazon took notice of us, and didn’t like it. Amazon decided that, even though we don’t give rebates, they didn’t like our business model. Which meant that they ended their relationship with us. We discuss the impact and size of the Amazon business in our 1-K in more detail. But their leaving us wasn’t good.

Other notable observations

We went through the entire year without really varying from our business model, other than the Amazon and traffic partner experiments highlighted above. The 1-K does a good job of discussing the ins and outs of our business. We actually got a compliment from our attorneys on the Trend section.

The coming year

It feels a bit funny to write about the coming year, given that it’s a third over already. Here are some of the things on my mind that we must address in the balance of the year:

  • Inflation
  • the war in Ukraine
  • continued member growth
  • a pandemic that we hope is mostly in our rear view mirror
  • replacing and growing beyond Amazon
  • stock price

A word on our stock price

Obviously, we don’t control it. Some things would be a lot easier if we did. I believe that an increasing stock price will also increase the interest of people in using and talking about iConsumer.

We’re aware that our offering price (the price we’re required to use when offering our stock as an incentive for rebates, etc.) is currently a bit more than double the current market price. Changing the offering price frequently, or by more than 20% up or down, isn’t feasible.

The way we address that is with the stock back percentage. If the offering price is way out of line (above) the market price, we’ve been changing the stock back percentage so that you get more stock. That drops the effective price of the stock you earn.

If and when (and I certainly hope it’s when) our market price begins to exceed our offering price, we’ll have a different problem to contend with. To keep the math working, we’d reduce the stock back percentage. I look forward to figuring out how to explain that!

Comments welcomed

I’ve tried to keep the post a bit shorter this year, so that our shareholders and others are motivated to ask more questions, and create more interaction. Thanks for reading, and please share a comment.



Eugene Loroch, May 4, 2022 at 2:56 pm

I don’t think the mention of inflation and the war in Ukraine factors has had or will have any impact on the price of RWRDP. I understand these concerns as they relate to the entire economy (consumer spending, slowdown, etc,) and the stock market, but inflation rates were very low (2.4% in 2018,1.23% in 2019, 1.2% in 2020), the market was awash in stimulus money (especially when and after the pandemic hit) but the stock did very little beyond the initial “excitement.” of a new public offering.

    Robert Grosshandler, May 4, 2022 at 3:12 pm

    My understanding of the 1-K is that it is supposed to address the fundamentals of the business and the factors affecting those fundamentals. It is NOT supposed to speak to stock price (at least not the direction that stock price might take). Like for our offerings, our accountants and lawyers urge us to be very, very complete in listing all the negatives that might affect us.

    It is great that Eugene and others provide analysis and opinions as to the real impact of the events and forces outlined in the 1-K. Or that we may have missed. We’d be better off if more people did that.

    On a semi funny note, our printer wants us to be very, very complete, as well. Of course, their motivation is that they charge by the word. And yes, in this modern age, the completely electronic filing of our SEC documents is handled by something called a printer. Left over from when all these things were actually printed out, and the very youngest of the lawyers (a rite of passage) had to go down to the printer and read printed drafts before the physical copy was delivered to the SEC.

Robert Grosshandler, May 4, 2022 at 2:59 pm

Eugene Loroch commented in the shareholder only Facebook Group. Thanks for that, I’ve asked him to post here so that even prospective shareholders can see our comments.

He did mention in his comment about our initial public offering. I just want to say that we have not yet had a traditional initial public offering. We have publicly quoted stock because we wanted to have more shareholders than the SEC would allow for a purely private company. In other words, a traditional IPO with institutional investors, underwriters, and the raising of capital and the associated excitement is still a possible future.

Robert Grosshandler, May 5, 2022 at 7:46 pm

Jeff asked in an email to support a great question. So that we can make sure others see the question and the answer, here it is:

I am a stockholder having acquired “earned” shares from the company. My position is negligible.
Now my question for you is simple. Why should I or anyone buy the preferred stock in the secondary market if such securities lack voting rights… have no right to dividends or liquidation value. It would appear that the shares bought in the secondary market are without value.
Please advise.
Thank You

    Robert Grosshandler, May 5, 2022 at 8:01 pm

    In response to Jeff: For iConsumer, the secondary market is the OTC market. For other companies, the secondary market might be the NASDAQ or the NYSE.

    As of today, if you bought RWRDP directly from us (paying cash), you’d pay $.25/share. If you bought on the OTC, you’d pay $.11 or thereabouts. If you earn RWRDP from us because you shopped, the number of shares you’d get comes close to being calculated at $.11/share.

    RWRDP is the only class of stock that iConsumer has ever offered to the public. RWRDP has a dividend preference i.e. it gets dividends BEFORE or at the same time the common stock can get dividends. That’s what the “P” in RWRDP stands for. The common stock cannot get dividends unless RWRDP got dividends.

    It has liquidation rights that are equal to the liquidation rights of the common stock.

    Having two or more classes of stock with differing voting rights is much like many of the big tech companies, and even Ford Motor (so there’s nothing new about it). Elon Musk and Mark Zuckerberg and the founders of Google have most, if not all, of the effective voting rights in their companies.

    To summarize: RWRDP is a preferred stock, traded on the OTC and issued directly by iConsumer. It has a preference to the common stock in regards to dividends. It is equal to the common stock when it comes to liquidation rights. It does not have voting rights.

Ryan, May 6, 2022 at 7:32 am

I’ve never been fully aware what benefits the partnership with Amazon gave us. I’m curious what we lost with their exit?

    Robert Grosshandler, May 6, 2022 at 10:04 am

    Partnership is overstating the relationship. They said jump, we’d say “how high?”. Mostly, we lost profitable revenue. People like to shop Amazon, and so they no longer think of using iConsumer in the same thought process as using Amazon. That makes it less likely (how much we can’t quantify) they’ll use iConsumer at all.

    We also lost having to explain to users, over and over and over, why shopping at Amazon benefited iConsumer even though the member was not earning stock.

Steve Fullmer, May 7, 2022 at 9:13 am

How much is my stock worth

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