A Reverse Split (RS) by example: You bought 1 mil

A Reverse Split (RS) by example:

You bought 1 million shares at 0.0001 = $100

The company decides to split 1:1000

The new PPS is 0.1 and you have a 1000 shares = $100

This doesn't cost you a penny but companies do a RS so they can start raising money (diluting again) from 0.1 in this example. And from that point on you start to lose money as the share price decreases.

Hope this helps you out a bit... if not, read it again ;-)