Reverse Split

By: Robert Grosshandler | July 8, 2020

This is not a gymnastics move – no impossible physical contortions required. It is something iConsumer is in the early stages of considering. It would make each share of stock more valuable, without actually changing the value of the entire company.

The goal would be to remove the label “penny stock” from our shares. Reverse splits don’t change the economics of iConsumer at all, but it may change perception amongst investors and more importantly, in the brokerage community. The latter would hopefully make it easier for shareholders to deposit their stock into a brokerage account.

When a company splits its stock, it ends up with more shares, each at a lower price. When a company reverse splits it stock, it ends up with fewer shares, each at a higher price (immediately after the reverse split). After that, the price can change up or down, depending on the market’s whims.

For instance, if we did a 1 for 10 reverse split, if today you own 100 shares, you’d own 10 shares after a reverse split. If those 100 shares were worth $10 pre-split, the 10 shares would be worth $10 post split. You’d still own the same percentage of iConsumer that you own today. If 100 shares represented ownership of 5% of iConsumer before the reverse split, 10 shares would represent 5% of iConsumer after the reverse split.

If we did a 1 for 100 reverse split, and you had started by owning 100 shares, you’d end up owning 1 share (but again, you’d own the same percentage of iConsumer as before the split).

We’re gathering information now. Here’s an article we came across that is well-written and right on point.



Kyle, July 9, 2020 at 11:29 am

Please correct me if I’m wrong, but historically, reverse splits occur when a company is trying to stave off bankruptcy or to keep from being de-listed on an exchange (recent example is Chesepeake Energy). Why is the company considering a reverse split and how could it ultimately benefit shareholders?

    Robert Grosshandler, July 9, 2020 at 12:49 pm

    We have the opposite problem. Our stock price is too low (we’re told) to be acceptable for deposit into a brokerage account (or to be listed on an exchange). While we don’t know what price is high enough for making deposits easier (or if that will be sufficient to make it easier), our guess is $2 – $3 per share. Getting to that price (and way better) eventually is the goal. But if we can accelerate our growth because our stock is easier to deposit into a brokerage account for a little bit of cost, why not? We’re looking for the “why not” scenarios now, and haven’t found anything particularly worrisome.

Jeremy Zung, July 9, 2020 at 4:17 pm

A reverse split only works if you can keep price from being shorted which means having institutional support.. There are professionals who automatically short any stock which goes through a reverse split . It’s Almost impossible to find a company that maintained their value after a reverse split.

    Robert Grosshandler, July 9, 2020 at 6:42 pm

    Thanks for the thoughts, Jeremy. Almost all stocks that do a reverse split do it on the way down, to keep from being delisted. So, the reverse keeps them listed, but the factors that caused the pressure in the first place haven’t been solved.

    For us, if our stock price makes it easier for people to actually do something with the stock they earn, the thinking is that they’ll want more of it. And that should help the stock price to go up.

    Shorting our stock is always a danger. But there is so little of it in the market that getting it to borrow must be a challenge.

    But doing a reverse split isn’t a challenge. It’s ridiculously easy to do.

Michael Embry, July 9, 2020 at 4:24 pm

Well said. Thanks for update and info.

Reece Mak, July 9, 2020 at 4:26 pm

My suggestion is to focus on grow the business instead of growing the stock price. When the business is running well, the stock will go up. There is no need to do reversed split.

    Robert Grosshandler, July 9, 2020 at 6:51 pm

    So true – generally. But unlike most businesses, our reward is stock, and if you can’t easily sell that stock, your desire to get that stock is reduced.

    The stock has to go up in price probably twenty times (to over $2/share) for the possibility that brokers will want to accept it for deposit. Unfortunately, we don’t know even if that will do it.

    If it does go up twenty times, that will make iConsumer’s market cap around $250,000,000. I think we’ll get there, but it won’t happen overnight.

A. Dah, July 9, 2020 at 4:56 pm

Reserse split is a way for a company to dilute more shares by sacrificing the share holder money. I LOST TRUST to companies which make a Reversed Split. It is similar to a Scam.

    Robert Grosshandler, July 9, 2020 at 7:19 pm

    You have the dilution issue wrong. There is zero dilution that comes from a reverse split. I’m not saying doing the split has no market repercussions, but dilution isn’t one of them.

Dustin, July 9, 2020 at 4:59 pm

I don’t like this idea. A reverse split will only add a ton of selling pressure by owners who sense weakness, short sellers, and owners who have previously found it too difficult to move their shares to a broker.

Currently, users are getting cashback at a rate of $0.18 per share. That award is immediately worth 33% less while the share is trading at $0.12. Why would anyone use iConsumer if the cashback rate is close to the same on another site, but they’re not getting a 33% haircut. Now imagine driving the price even lower. It may be good for the company to convert cashback to shares at a higher price but individual users will not see it that way.

This is not a liquid stock. It is a penny stock. And that is just fine. Don’t try to force it to be something it isn’t before it’s ready.

    Robert Grosshandler, July 9, 2020 at 7:17 pm

    Dustin – you highlight a whole bunch of issues that are very possible.

    More shareholders being able to deposit their shares may lead to downward pressure on the stock. Of course, if we’re doing well, that will reduce the desire to sell.

    The price of the stock in the market is not closely connected to the number of shares you get. We control the number of shares you get per $1 of commission we earn. If the price per share is $5, then you’ll get fewer shares. If the price per share is $.05, you’ll get more shares. In other words, the stock price in the market doesn’t affect the conversion math. The numbers change, but the percentage of iConsumer you end up owning will be about the same.

    We’re not liquid, so very painfully true. Since new stock can’t come into the market, there is very, very little to create a liquid market.

    If we do a reverse split, the only reason will be because we believe it will make it easier for shareholders to be able to sell their stock.

Jeremy zung, July 9, 2020 at 9:37 pm

Respectively completely disagree with your perspective about reverse split on the way up, Check out one called xftb, formerly throw down . They did a reverse 1 for 5 and within months value was less by more than a factor of 5 of total value, there is no positive spin you can out on a reverse split and anyone trying to, is mis informing.

Does not matter if stock is going down or up, reverse split is easy target and almost 100 percent guarantee to lose overall value. The short rules are So darn unfair, there are many many ways to find shares to short. Brokers will offer 25 , 50 percent of current shareholders just to allow shares to then be shorted cause the shirts know they can easily make more than the 25 or 50 percent,

I have been involved for a long time but a reverse split would send me packing in a heartbeat, current shares as well as future shopping, just being honest. Clearly my 100,000 shares are small but I hVe suffered through a few reverse splits and won’t do it again.

I would be shocked beyond belief if any independents reputable investment firm agrees with the reverse split assuming they are nit given a financial interest for their advice .


    Robert Grosshandler, July 10, 2020 at 7:20 am

    Great reply. Deserves more than a too quick answer. More later.

A. Dah, July 10, 2020 at 1:40 pm

Robert Grosshandler, July 9, 2020 at 7:19 pm. You misunderstood. Reversed Split will reduce the numbers of shares. Then the company will have more room to sell more shares which I call dilute more shares. It will lower the share price after Reverse splits. For example at current price of $0.12 with 100 to 1, it will theoretically will bring the price to $12.00. Then, most likely the share price will go down again quickly. “a reverse stock split nothing more than a distraction to assuage investors during times of corporate uncertainty.”
I strongly agree with jeremy zung, July 9, 2020 at 9:37 pm.

    Robert Grosshandler, July 10, 2020 at 2:33 pm

    We already are selling more shares. Every time somebody is awarded stock as a reward, that’s a sale, and that increases the number of shares outstanding. So a reverse split may have issues, but this isn’t one of them.

Sherry, July 10, 2020 at 2:02 pm

I also disagree with the reverse split. I actually would sell all my stock for a loss if a company that is not profitable or that is not growing the business announces a reverse split. The majority of the time, after the split, the stock price decreases drastically over time, with some following below $1 again back to penny land, and then the company reverse splits again and again….Experienced this many times and would rather sell at a loss early on rather than getting almost nothing back in the end.

    Robert Grosshandler, July 10, 2020 at 2:39 pm

    Sherry – thanks for the reply. If you can’t transfer your shares into a brokerage account, how would you go about selling them?

    That’s the challenge a reverse split would help to overcome (at least, in theory). And if it is easier to sell, perhaps more people would use iConsumer. Making us more successful, making the stock price go up (again, in theory).

    Of course, nobody is guaranteeing us that a reverse split WOULD make it easier to get the stock into a brokerage account. We’re still working on this.

Jonathan Crawford, July 10, 2020 at 10:16 pm

How many shares are currently outstanding? how many shares does the company have authorized? I really don’t understand the issue here I have traded “penny stocks in my brokerage” Lost every time on it. I know that this business is growing but the way to appear legitimate is not to Reverse split a stock. How about releasing some monthly, Quarterly Statistics to the shareholders? Sales commissions stock outstanding etc. If you had 200 million shares authorized that’s at issue price last I saw of .15c per share 30 million in commissions. your currently listed on the otc why not work on getting the perceived value of the share higher by growing the business not playing corporate financial games “reverse split”

    Robert Grosshandler, July 11, 2020 at 9:20 am

    Thanks for the comment. You can always see the shares outstanding, as well as the shares that have been earned but not issued. The place I like to point to for quotes (and shares outstanding) these days is LD Micro. I’ll post an image in another blog post I’m creating now.

    You can also see the number of shares earned but not yet issued on the bottom of just about every page on our site. Here’s what that says right now: “We’ve issued and transferred 5,861,853 shares to members, and members have earned another 16,800,130 shares.”

    We have lots of shares authorized, but for iConsumer, it’s the number issued or promised to be issued that I believe is important to the discussion. More importantly for this discussion, is the number that are still held at Issuer Direct, vs. the number that have been transferred to a broker. In my next blog post I hope to have that number for you.

    The heart of the issue is that, unlike in the early days of iConsumer, right now it is hard for people who earn shares of iConsumer stock because they’re customers to transfer the shares of stock they earn into a stock brokerage account. And that reduces the interest of people to earn iConsumer stock. In other words, it is putting a damper on our sales.

Jonathan Crawford, July 10, 2020 at 10:21 pm

sorry I forgot to add this if someone was having problems transferring the stock to there brokerage ie current price 12c per share couldn’t they just buy it in there brokerage, and than Iconsumer buy it from them “shares on record at Iconsumer” once proof is given that they have purchased in there brokerage?

    Robert Grosshandler, July 11, 2020 at 9:23 am

    People are buying and selling our stock all the time. I’m not aware of a stock broker that isn’t supporting that function. But the unique selling proposition of iConsumer is that you earn stock for shopping. If you can’t sell the stock you earn whenever you want, you are less likely to want to earn it.

    For many people, they know they want to hold our stock for the long term, so it’s not a factor. For but for some people, it IS a factor.

Sherry, July 11, 2020 at 5:47 am

@Robert Grosshandler, I do have a big chunk of stock at xxxxxxxx that I can sell if a reverse split goes through. May I remind you that the majority of stocks I hold was through investing directly in the company and not from shopping. I was probably one of the bigger spenders who invested. I really cannot see how people who invested money in the company would be happy with a reverse split. I would rather keep my remaining shares at Issuer Direct and wait for the possibility of the company to do better and let the stock price increase that way, rather than try to artificially make the company look better to brokerages through a reverse split. At least with holding on to it in Issuer Direct, if the company’s prospects improve, the stock will rise and I can come out ahead. With a reverse split, I’m guaranteed to lose money that I invested and after I sell at a loss, I would not use or support iConsumer as my go to shopping portal anymore. Even as a shopper, why would I want to earn stock as a rebate knowing that the price will be in a gradual decline after the reverse split. I will probably not be able to transfer any stocks out for a long time if it is not worth much and losing value constantly. Seems to be more trouble than it is worth when I can use other rebate sites to earn without losing value and to earn faster. I agree with Reece Mak’s comment to not focus on reverse splits right now, but to focus on growing the company. There is so much more that iConsumer can do still to grow/promote the business and more urgency should be placed on that instead. Additionally, I am optimistic that I will be able to transfer the rest of my shares out of Issuer Direct. Schwab may be a viable option it seems and I’m a long time client with a sizable account, so maybe they will be more accommodating. Fidelity definitely is allowing transfers even though their phone reps say that they do not. Seems like behind the scenes, some employees are being flexible and allowing the transfer. As Jeremy had posted on FB, people just need to have patience to work through the process and I will keep pursuing the brokerages when I am able to.

    Robert Grosshandler, July 11, 2020 at 9:09 am

    Sherry – Thanks for your considered response. Rather than try to reply in this context, I’m attempting to write another blog post. Should be easier to navigate.

Kevin Callaway, July 11, 2020 at 10:29 am

This statement is exactly what penny stock CEOs say EVERY time the RS, and believe me, after the 1st there will be other for this reason and “logic”

“”But doing a reverse split isn’t a challenge. It’s ridiculously easy to do.””

Wring reason to screw with a stock.

    Robert Grosshandler, July 11, 2020 at 10:39 am

    I agree completely. While the cost of doing this does matter, it has to be done for underlying reasons that make business sense. And other options need to be explored and compared. For us, the goal is making it more attractive for potential customers and investors to participate. Is our problem of it being hard / impossible for potential customers / investors to transfer their stock a real problem? Is there some other practical way to solve that problem if it is real?

    Thanks for the comment, Kevin.

    Rob “no stone unturned” Grosshandler

Christie, July 24, 2020 at 7:36 pm

Are you aware of any other reasons besides stock price why brokerages would trade RWRDP, but decline to accept deposits or transfers? My question is based on the following statements from a client services agent for TD Ameritrade:

“Regrettably, we are not able to accept the deposit of iConsumer shares at this time. This is based on a rigorous review and the stock failing to meet our criteria for deposit.”

“While TD Ameritrade does allow for trading of this security and other low priced stocks we do not accept deposits or transfers of these shares at this time.”

“Based on TD Ameritrade’s understanding of guidance from industry regulators, we are unable to accept the deposit. TD Ameritrade does not disclose the criteria used in the review . . . .”

I know this is just the representation of one employee at one firm; however, it makes me wonder if raising the stock price, alone, will be sufficient for brokerages to start accepting deposits of shares.

I apologize if you’ve answered this question and I missed it. Do you plan on making any other moves in conjunction with, or to supplement the effects of the reverse split as far as brokerages are concerned?

    Robert Grosshandler, July 24, 2020 at 8:36 pm

    We’ve addressed this question a bit more in this post. That’s the big question, does getting the stock price up above $5 (that’s the number we’re hearing) truly solve the transfer problem? It’s certainly necessary, but is it sufficient? We’re led to believe it would do the trick at the brokerages that cater to heavy hitters. We are, so far, unable to confirm that it would at Ameritrade or Fidelity.

    Making it even harder, it seems to matter who you are at those brokerages. So, the answer isn’t the same for each person who seeks to transfer our stock.

Christie, July 25, 2020 at 10:48 am

Hi Robert. Thanks for the link to that post. Forgive my lack of sufficient knowledge on these matters, which likely is apparent by the questions I’m asking. And, if I’m asking stuff that you can’t answer for whatever FTC/SEC rule or whatever, my apologies. just ignore those questions i guess, or if it’s a general type of question I can’t ask or you can’t answer, just let me know so I don’t keep asking the wrong stuff. Thanks in advance for your patience with all my questions.

This excerpt of your post was very helpful – thank you:
Uplisting (moving to an exchange like the NASDAQ or NYSE and losing the penny stock label) makes iConsumer shares a better, easier-to-use reward.
Uplisting will require a reverse split, significant additional capital, and is very expensive on an ongoing basis. (We’re not there yet).
Does doing a reverse split (just losing the penny stock label) much earlier than uplisting get us sufficient business benefits more quickly? In other words, can we do a slow motion uplisting?

My reading of this and the rest of the post is that our goal is liquidity for shareholders (i.e., by meeting brokerages’ requirements foraccepting share deposits), whether that means uplisting, or doing the reverse-split. You also mentioned that uplisting requires a considerable amount of additional capital and will be expensive on an ongoing basis.
Suppose you do the reverse-split – do you think the liquidity will result in a large number of deposits and sales by shareholders who previously were unable to deposit and sell their shares? Or do you think more people buying and/or more shares bought once that liquidity issue is removed? Assuming that both things happen (which is probably likely), do you think that the share deposit-&-sell will drive the stock price low enough to put us back to where we are now, or at whatever level would make brokerages stop accepting share deposits?
On the other hand, is it theoretically (or realistically) possible for the reverse-split to lead to enough buys (and revenues) to raise the capital needed to uplist?

I know we’re “not there” yet – and you probably have this in another post, but what was our estimated timeline for uplisting before any talk of reverse-splits? Do you think the reverse-split will cut down on that time?

On the other hand, if people are buying and business keeps improving after a reverse-split, is it worth rushing into uplisting? Would you still want to uplist? If so, would you want to adjust the timeline to a later date? Or ride the momentum and move it up earlier?

Are there certain goals/criteria that you are looking for in terms of the brokerages that you want to accept share deposits? (e.g., a specific number or range of brokerages, retail/institutional, wirehouse/independent, full-service/discount/fintech, a certain amount of assets under management? ) Or would it be sufficient for now if just a couple small brokerages allow share deposits and trades?
(Currently, I’m not aware of anyone that will deposit my shares, but I’m probably asking the wrong firms).

    Robert Grosshandler, July 25, 2020 at 11:32 am

    Let’s see if I can’t get to all the points you raise.

    The governing bodies in this world are first the SEC, and then FINRA. Both are trying to protect smaller investors, so they issue guidance to brokers. Very few hard and fast rules. The brokers, through their compliance departments, try to protect themeselves, and then maybe customers (iConsumer’s shareholders), based on this guidance.

    In the past several years, there has been guidance from the SEC and FINRA about how to treat “penny stocks”. Lots of bad things happen in the penny stock world.
    There is no legal definition of penny stock, each brokerage creates its own rules. At one brokerage that actually talked to me, a penny stock is anything that trades for less than $5 AND is OTC AND the brokerage doesn’t provide research. If a stock is NOT one of those three things, then it isn’t a penny stock. So for that brokerage, if our price is greater than $5, they’d easily accept deposits.

    Problem with that brokerage firm is that you have to have millions of dollars (literally) to be a customer.

    If we do a reverse split ahead of an uplisting it will be because we think the benefit will be worth the risks. You’ve highlighted some of the risks, and I’m sure there are risks we haven’t identified yet.

    Timing is also completely up in the air. I can outline ultimate goals, but there are too many variables right now (the pandemic being just one) to do more than talk in broad strokes.

    The effect of easing transfers on liquidity and stock price is also guess work. Generally, more liquidity helps stock price. Will that be the case for iConsumer? I don’t know. Will people, once we succeed at making it easier to transfer, actually want to transfer? I don’t know. Will making it easier to transfer actually make people want to shop more? I don’t know. I believe that an increasing stock will make price will make us more attractive as a shopping destination, and I believe that will translate into a higher stock price.

    But as we become bigger, our stock price will be more influenced by market pressure and macro events than it is today.

    We don’t care what brokerage our shareholders use. More is better, but just one retail oriented broker is probably sufficient.

    You ask great questions, I wish we had a clearer crystal ball. Given sufficient capital, here’s what we can control that should affect stock price. The number of people shopping, and how much money we make when they shop. More of each is better.

Christie, July 27, 2020 at 3:03 am

Thanks so much for all of your thoughtful answers and feedback. I appreciate your transparency about what you know and don’t know when it comes to risks/rewards. From all the stuff you just said, I feel very comfortable with your approach.
When i read your comment to the effect that it’d be sufficient if even one retailer would take our deposits even if we’re not millionaires–to me, it really showed me how much of a priority it is to you that iConsumer customers/shareholders have an easier way to profit from their contributions to the growth and success of the company.
And the potential downside of uplisting that you mentioned – should’ve but didn’t occur to me for some reason, but the more I think about it, the more I think I’d prefer a stock with a price that’s mostly based on the condition of the business, and projections that are based on factors that are as directly related to the business and its immediate competition.

I don’t think I’d feel too confident about deciding whether to buy or sell iConsumer stock if the price was primarily driven by factors like current events, politics, and macroeconomics. And my head hurts just thinking about trying to learn how to trade based on charts and formulas. I’d never have the time to do the kind of research that I’d need to make a trade with any hope of success.

But if I know that the stock price reflects what I know about the company, and I have experience doing business with the company as a customer, and I’ve communicated with some of the people that run the company, and I read the shareholder academy posts and other information they share about the company, then – absent something really out-of-the-ordinary, oh, say, like a pandemic or something – I’d feel more confident that I could make a well-informed trade, that would give me a reasonable chance of making a profit at some point.

Once the stock is uplisted, and the price starts being affected by those other factors, I wonder if that would increase volatility. And would that lead to decreased activity from long-term investors, and an increase in speculation and day-trading……And is there any benefit to that – like is “any” movement/activity good, even if it’s constant fluctuation? or does it just increase the volatility even further and scare more people away?

So – if that’s the case, then I think I’m on board with just doing the reverse split if it will get us a commitment from some brokerage to accept shares with a minimum that I can meet. And since all the “macro” things in the world right now are so weird, maybe it would be better to wait to uplist until after things “get back to normal,” whatever that is.

Ok – I’m babbling at this point. I’ll stop. 🙂

    Robert Grosshandler, July 27, 2020 at 8:55 am

    The interesting thing about volatility is that some people like it (big ups and downs are opportunities to make trading profits) and some people hate it (they can’t sleep at night with big ups and downs).

    I’m not a stock trader, so I don’t have insight into what kinds of stocks are more likely to be volatile vs. non volatile.

    Thanks for your comments.

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