We’re getting lots of great, well thought out comments on the post about our considering doing a reverse split. Keep them coming, please. This blog post tries to address the concerns many of you raised (making it a bit choppy). Some of you are seeking ways to help, which is also great. Nothing is decided yet.
Here’s what I clearly failed to explain: A reverse split is almost certainly on the roadmap as part of uplisting.
Uplisting (getting listed on an exchange like the NASDAQ or NYSE) won’t happen with low priced shares. Our share price probably has to be more than $5 to make it work.
I’m calling this a slow motion uplist. Can we get some of the benefits of uplisting sooner by doing a reverse split unusually early in the process? Can we manage the dangers of a reverse split?
Framing the considerations
The future of iConsumer is dependent on attracting more shoppers, more shopping, and new capital to fund that growth.
Growing the business is dependent on customers’ perception of how easy it is to enjoy the rewards of receiving publicly tradeable stock as the incentive for shopping.
Being a “penny stock” is now making it harder for customers to enjoy those rewards.
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?
Low priced shares are an accident of history. That choice worked initially, but being a “penny stock” is now hurting our growth.
Does a reverse split without a concurrent uplisting help solve the transfer challenge? Are the potential consequences acceptable without the additional benefits and greater certainty of uplisting?
We created iConsumer to do something never done before – take ordinary people on the startup company / public company journey. Make every customer an owner, and every owner a customer, by rewarding customers with stock (ownership) for doing cool things (like making the company money).
The comments on our blog posts are one example of how this is so powerful. Stakeholders are actively involved in guiding this business. It make us stronger and more likely to succeed.
This is a fundamental business issue
To those folks who advised me to stick to our knitting and focus on the business: I agree completely. Our basic business model – using publicly-traded stock as an incentive, is less attractive than it was initially because it’s gotten harder to trade the stock you’re awarded.
Being a “penny stock” is now getting in the way of growing the business.
Stock price didn’t matter initially. It was easy to transfer iConsumer stock into a brokerage account, even though we were a penny stock. That changed. Now shoppers & prospective shoppers are complaining. That’s the basic business challenge driving this conversation.
It’s more than shoppers who are affected
Our ability to raise capital to support faster growth is reduced. Potential investors (especially the smaller investors) want to invest, put the stock they just bought into their brokerage accounts, and then wait for a really big payday and be able to sell easily. Not easy? Not interested.
Looking at alternatives
Accelerating the reverse listing portion of the uplisting process is not the only path we’re exploring to address this challenge. If we can solve the transfer issue without a reverse split, a big hooray. Most of the time, being a penny stock also means that somebody played games with the corporate structure along the way. Reverse mergers, shell companies, and other questionable practices. We’re squeaky clean, so maybe we can get a compliance department at a big broker to look beyond mere stock price. It just takes one big broker to easily accept deposits to make shoppers and investors happy. But so far, no progress there.
Chicken and egg
I’m told (by paid and unpaid advisers with more experience in this field than all of us combined AND who have a stake in a positive outcome in their advice) that uplisting (including raising our stock price) might make a difference. Stop being a penny stock, get on an exchange, and life gets better. To stop being a penny stock, we need to get bigger and better.
Some things to worry about
Our commenters talked about all the companies that did a reverse split because the company was in trouble. The reverse split didn’t help, and might have hurt. Those examples certainly are making me think harder about this. A reverse split may not solve the transfer issue, and has risks.
I’m thinking the better comparisons to use to analyze risk are companies like Relmada, AudioEye, Duos Technologies, or eSports, who did reverse splits in conjunction with an uplist.
Being a penny stock was mostly an accident
As we thought through using stock as a reward / incentive, we asked ourselves (and anybody who would listen) “how should we price our stock? How many shares should we give somebody for signing up? How many shares for telling a friend who becomes a shopper?”. It was perhaps the most fun thing we had to decide. We decided we wanted to give lots and lots of shares as a reward. Getting 100 shares sounds so much better than getting 1 share for doing something. Even if the total worth of those 100 shares is exactly the same as the worth of 1 share. So, we started out with a share being priced at $.045.
Had the wind been blowing in a different direction that day, we could have priced our stock at $4.50 a share. And today, we’d be selling stock for $18 a share, and it’d be trading at $12 a share.
This is complicated. Lots to think about. Comments welcomed.
Sherry, July 13, 2020 at 1:30 am
Going to be completely blunt here and not mince words. Whether you do a reverse split or not, I am going to sell my shares whenever possible and not support this company anymore. Mindset doesn’t seem to be looking out for the interest of true investors, like myself. There’s a time to do reverse splits where it doesn’t hurt your supporters and this definitely is not the time. Why even explore something so costly when the company isn’t making money, knowing that this would not be a guarantee that brokerages will make stock transfer any easier or a guarantee that people will use iConsumer more even if they can transfer the stock? I’ve been a staunch supporter and had a lot of patience and kept tight lipped as to the errors this company has made that costs them customers along the way. It really is not just about how easy/hard it is to transfer stock. There are so many other things. Customers still left at a time when stock transfer was not an issue. So no, I don’t see a reverse split to fix other underlying reasons why people are not using iConsumer. Every idea that got implemented for accelerating the growth, I had disagreed with and even voiced on occasion and mentioned to you that you will lose customers but you were OK with losing those customers. Why a company that is not profitable would be OK with losing customers is beyond me. This latest stunt of turning over another rock is the last straw for me. Like, can you just leave the rock alone and not go near it??? From switching to a 100% bitcoin back model (which drove many people away which the company never really fully recovered from), to going to a 100% stock back model, to giving out exorbitant shares to Kevin Harrington (which members complained about and people even contacted me privately to complain…) – I had disagreed with all these acceleration ideas. This latest idea screws the true investors who forked out money to support this company. Why would anyone want to invest their own money in an unprofitable company that entertains the idea of a reverse split, which pretty much guarantees we will not get a return on our investment. Shouldn’t you cater to your true investors, especially if you want repeat investments from you top ambassadors (and may I remind you I invested significantly more than once!). It’s not only about true investors, since the previous blog contained majority negative comments from existing members. iConsumer really needs to listen to their existing customer base. One of the main reasons I invested was because it was a penny stock. I wanted to buy low with the possibility to sell high. We all do! The big picture for all of us is to make much more than pennies on the dollar and if everyone holds and supports the company as the company works to grow the business, the stock price should increase and as the price increases, then that’s the time to bring reverse splits into discussion. The big payday comes when the company works hard to be successful, and if company is successful, brokerages will open up to us and I’m sure if someone would just take the time to keep pursuing, especially with Fidelity, they can make the stock transfer go their way. Don’t take no for an answer if it is working for other members. So for now, it doesn’t matter to me if my remaining shares are not transferable yet and just sits in Issuer Direct while I continue to pursue the brokerages. Talking about growing the business, I am an angel investor in 2 other startups and in comparison, it’s hard for me to see iConsumer be successful when I don’t even know what the company is doing operationally on a day to day basis to grow or improve the company. No plan or roadmap to see, nothing nothing and then suddenly news of reverse split possibility. At least with the other two startups, as an investor, I get lots of metrics/updates on a weekly, monthly and/or quarterly basis. Even another company in similar space shares with me regular metrics on Quick Wins, Critical Issues, Product and Engineering, Finance and Reporting, Customers and Merchants, Engagement and Content, Sales and Acquisition, etc.…Even if it is negative news or negative metrics, they are very apparent about it and report all the numbers. We never even get a simple metrics such as an active user count out of iConsumer without being told some excuse why it cannot be revealed to us. Those other 2 companies work with more sense of urgency, has more of a can do attitude and is way more forward thinking with their product, which iConsumer is lacking. So ultimately for me, it is not just the reverse split that is making me want to leave iConsumer but it sure solidified my decision. I see you put another spin to the reverse split to call it a slow motion uplist. I guess I should say thanks for the heads ups then. Will give me time to prepare my exit.