American Green Inc (ERBB)

[iSmellCrickets]

Reverse stock splits increase the share price. For example, a company with 100,000 outstanding shares at $4 each executes a 1-for-2 reverse split. It ends up with 50,000 outstanding shares at a share price of $8.

Sounds great I know, however in pennies this means several things, mostly the company has raised the authorized to the point the stock is no longer relevant or desirable to trade one way or another.

Second it's generally done to dilute more, ie: raise liquid via selling shares to market makers for shorting, reduce or nullify shareholders by bilking the financial power the shareholder has on the ticker symbol, and or hand out more preferred shares to new officers as reconciliation for working at no pay.

So looking at this on paper might appear nice, but a reverse split does little more for the existing shareholder than put them in a position where they cannot sell, if they do it is a loss (this is the trap used to milk the rest of the value the shareholder initially loaned the company) for the next reverse split. Hence opening up a plethora of now free and open shares in the treasury, for debentures and or simply dumping into the market on the next press release, for cash.

Top these few details of the many reasons, with the fact the valuation after the RS almost always goes down to where it was before the split, intentionally.