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It is quite apparent that Bob "BS" Schneiderman maintains a "preferred" list of PIPE-holders that he will respond to. But that makes sense as even mother nature teaches us that once a parasite has burrowed in too deeply for too long, a host cannot survive without the parasite and the distinction between puppet and puppetmaster becomes blurred.
It is clear from the price action over the past couple of weeks that those PIPE-holders whose first tranches of .05 stock did not unlock until the days following the P&D 3 weeks ago are methodically liquidating in order to ensure that the sp remains at least .09, as each day that passes in this range with the consistent volume we have been seeing in the low 6-figures further supports the scenario that they want to ensure that they get at least 80-90% profit from their .05 PIPE shares.
How can you tell? Sure, no one can say with 100% certainty, but educated, informed, and well-reasoned speculation is what the market is about as we retail investors attempt to stay ahead of the curve.
So in this vein, just look thru SCRC's SEC filings over the past few quarters and you will see that of the tens of millions of shares that unlocked during Q2, hardly any were priced below .12, with most being priced near the mid-teens, with even one block of 600k shares being priced at .2765. Clearly, these are not getting dumped under .15 as the financiers will want their profit as they always do.
Now let's move forward and look at the 15M+ shares that have unlocked so far during Q3 as of today: The ONLY shares that are priced to move are:
* Approx 900k shares related to Seaside priced at .0744
* Approx 4.8M shares related to the uber-toxic PIPE shares priced at .05
ALL THE OTHER SHARES THAT HIT THE FLOAT ARE PRICED SO HIGH THAT THEY ARE CLEARLY NOT THE SHARES GETTING DUMPED.
In addition, I would venture to say that it would be safe to presume that Seaside's shares (which unlocked well before the P&D) got liquidated during the P&D and that they are no longer in the picture.
AS SUCH, THE ONLY SHARES THAT ARE LOGICALLY AVAILABLE FOR AGGRESSIVE BID-HITTING IN OUR CURRET PRICE RANGE ARE THE .05 PIPE SHARES THAT CONTINUE TO HAVE ENDLESS WAVES OF TRANCHES UNLOCKING ON A ROLLING BASIS INTO THE INDEFINITE FUTURE (hopefully this "indefinite" future will become "finite" once the 10Q comes out and we can hopefully see that Bob "BS" Schneiderman ceases this unholy incestuous relationship with JOSEPH ZAMPETTI and his ring of criminal con artists).
For those who continue to attempt to divert attention away from JOSEPH ZAMPETTI and his fellow PIPE-holders by once again pointing the finger at the toxic convert noteholders, this is laughable. There have been no new convert notes issued of substance for a long time now. Almost all of them have converted already, so to suggest that there is "financier manipulation" to get the sp lower in order to convert for more shares has ZERO MERIT to it. The ONLY impact that the financiers have at this point is in relation to the shares that have already been issued but which are either waiting to unlock OR have already unlocked but are lurking in the overhang because they are priced in the mid-teens and so they are waiting like everyone else for the next pop so that they can sell and get their 35-45% profit.
Now, looking forward to the timeframe of "present day thru the next few months", the SEC filings tell us that there are 20M+ more shares locked and loaded ready to unlock and hit the float. Approx 75% of these shares (~16M) are more .05 PIPE shares. EVERY SINGLE REMAINING SHARE IS PRICED SO AS TO MAKE SELLING NON-SENSICAL UNTIL THE SP REACHES THE MID-TEENS AT A MINIMUM. So again, the ONLY sellers of substance that could logically exist at the current price levels are the .05 PIPE holders.
Here is a detailed schedule of PIPE shares:
4.8M unlocked in JUL
5.2M have/will unlock in AUG
6.8M will unlock in SEP
2.8M will unlock between OCT 1 and NOV 20
The problem with the above info is that good ol' Bob went out of his way to intentionally protect JOSEPH ZAMPETTI, SEAN FITZGIBBONS, and the other PIPE holders by breaking from his norm and refusing to disclose any of the same specific details in the SEC filings as he has ALWAYS done with other financiers.
In the past, Bob has itemized each financing transaction and provided not only the name of the financier but also the share and the date of the transaction. Why is this important to REAL and LEGITIMATE shareholders? Because it provides a roadmap as to when and how much expected dilution will hit the float.
But yet, for these PIPE criminals, Bob simply disclosed one lump meaningless disclosure that only stated that "X.X million shares were issued during the month of [insert month here]". So shareholders have ZERO idea of what days and in how much quantities the dilution will hit and we end up getting blindsided like we did during the P&D.
And if anyone is still naive enough to not believe that Bob "BS" Schneiderman is in cahoots with JOSEPH ZAMPETTI, SEAN FITZGIBBONS, and the rest of their criminal hanger-ons (as if the non-stop "coincidental" timing of super-fluffy PR's being issued to coincide almost exactly with when various multiple tranches of 0.00 and 0.05 shares belonging to these criminals unlocked over the past year isn't enough corroborative evidence), consider the following:
Bob had the audacity to claim that "legally" he did not "have to" issue an 8K back in JAN or FEB or MAR or at anytime during Q1'14 to inform shareholders that SCRC had just issued 20M+ shares of freshly minted stock at the ridiculous price of .05 because if you look at EACH individual PIPE transaction, they were "each" immaterial. He glosses over the fact that there were a large number of IDENTICAL and HOMOGENOUS transactions that collectively is VERY material (and, BTW, a well-governed company who truly has shareholder interests in mind do not simply issue bare-minimum 8K's when they become "forced to do so legally"; rather they are proactive and voluntarily issue 8K's for all sorts of reasons if they believe that it is something that is IMPORTANT to shareholders)... ...but then when it is time to file the 10Q, he now uses the forked tongue that JOSEPH ZAMPETTI and SEAN FITZGIBBONS lent him and speaks out of the other side of his mouth and says that the reason he is not disclosing each PIPE transacion separately is because they are all homogenous and identical in nature so it made sense to lump them all into one uber-broad useless disclosure.
To be clear, as I have stated many, many times, until SCRC rids itself of these gutless parasites, SCRC will continue to see a divergence between company success and shareholder success. Dilution is the number one killer of penny stock appreciation, and SCRC is no exception. Until all their shares unlock and flush thru (and assuming Bob does not continue to find a way to issue them more shares) and these criminals move on to their next scam, there remains NO long-term buy-and-hold-only "investment" thesis for SCRC; there is ONLY a "trading" thesis. And there is tons of money to be made trading SCRC -- there always has been -- for those who have the eyes to see the facts thru the fiction.
GLTA...
In response to the PM’s I have received re: how I arrived at the .07 eps (inclusive of a 20x earnings multiple), let me walk thru the math so that there is no mis-understanding:
First, understand that my premise is very high-level and, as I stated in my previous posts on the topic, that any earnings projections were based solely on limited data – in essence, simply extrapolating the expense numbers from the only quarter we have data on thus far, which is from the Q1 10Q. As I also stated, the caveat to this methodology is that SCRC’s expense run rates during Q1’14 will actually be representative of what the rest of the year will look like. Clearly, if the subsequent Q2, Q3, and Q4 expenses are higher or lower than Q1, then earnings will be lower or higher, respectively, as well in concert with this inverse relationship between expenses and earnings.
So, that being said, let’s take a look at Q1 expenses that are INDEPENDENT OF SALES (i.e. other than COGS and Selling Expenses as these two are a function of sales, and we will address these separately further down). You can follow along on page 30 of the Q1 10Q if you’d like…
$386k Operating Expenses (remember, excluding Selling Expenses, so this is the $812k minus the $426k of Selling Costs)
$1.044M Other Expenses
So, extrapolating each of these quarterly expense amounts by multiplying by 4 gets us the following annualized projections of these expense categories:
$1.544M Operating Expenses
$4.176M Other Expenses
So, now let’s complete the annual pro forma income statement assuming an annual run rate of $36M in revenues:
$36.000M Revenues from Main Ave
($11.340M) COGS (applying approx rate of 31.5%, which is in the ballpark if you piece together all the clues in both the 10K and 10Q)
-----------------
$24.660M Gross Profit
($18.000M) Selling Expenses (applying the rate of 50% for Main Ave, which is what SCRC disclosed in its SEC filings)
($1.544M) Operating Expenses (per above)
($4.176M) Other Expenses (per above)
-----------------
$00.940M Net Earnings (pre-tax)
*** NOTE ***
As I re-did my calcs, I realized that I inadvertently double-counted the $426k in Selling Expenses that were reported in the Q1 10Q (remember, I had pulled it out to calculate the annualized amount separately because it was a function of revenues, but I forgot to back it out of the total Q1 SG&A number that I used as the Q1 input into my annual number). As such, instead of the approx $500k in net earnings, it comes out to the approx $940k per the calcs displayed above.
So, distributed amongst the approx 150M O/S count, this computes to EPS of .0063/share. Assuming the market will immediately award SCRC an earnings multiple of 20x upon SCRC showing it is no longer operating in the red, the 20x EPS comes out to .1253/share. This is higher than the .07 I had previously posted (so apologies for that), but it is still in the relative ballpark compared to the touts of .60-.90 that are being tossed around.
HOWEVER, keep in mind that as I stated at the onset, this earnings projection is assuming that expenses for Q2 thru Q4 run at the same rate as Q1. Q1 is all we have to go by at this time. This is why I stated that we desperately need to see the Q2 10Q reflect much lower expenses so that we – and the market – can adjust our forecasts for what will hopefully be a much lower expense run rate.
I am cautiously optimistic that we may be able to see lower expenses in Q2, but conservatism mandates that I do not reflect such adjustments until they are actually known (hopefully in a couple weeks when the Q2 10Q is due). The reason I am cautiously optimistic is because virtually all of the Other Expenses relate to financing related transactions (i.e. Interest, Reval of Derivatives, Financing Costs, Amort of Debt Discount, Gain/Loss on Extinguishment of Debt, etc). IF Bob is able to keep his hands out of the financing jar, then it is POSSIBLE that most of these costs should not recur. But we know that he was still issuing new .05 PIPE shares during at least the early part of Q2 (it was disclosed as a subsequent event in the Q1 10Q) and the latest 10Q disclosed that SCRC will still need financing to launch RapiMeds, so it is TBD whether these will trigger any of these Other Expenses to show up in Q2.
BUT, to show the other extreme, if we were to ASSUME that all these financing costs went away and SCRC was truly done with the need to engage 3rd party financing, then this means we can eliminate the $4.176M in Other Expenses from our annual earnings forecast. What this means is that the $940k in annualized earnings increases to $5.116M in positive net earnings. So spreading it amongst 150M shares gives us .0341/share of EPS. And to continue the same comparison, if we assume that the market will immediately award SCRC a 20x earnings multiple, then the 20x EPS comes out to .6821/share. Keep in mind that this .6821 is a hopium-laced best-case scenario.
So the key, obviously, is how much of a premium the market will be willing to award SCRC and bake into its sp. Without it, we are looking at a range from .0063/share up to .0341/share based solely on an annual revenue run rate of $36M. With up to a 20x multiple, we are looking at a range from .1253/share to .6821/share. You can easily interpolate what intermediate “earnings multiple” levels would translate to on your own.
Hope this helps clarify my prior post... ...and as these were simply back-of-the-napkin calcs, please feel free to chime in if anyone sees any flaws in the calcs, the data inputs, or even the underlying logic.
TIA and continued GLTA...