ScripsAmerica Inc. (SCRCQ)

[coolerheadsprevail]

the interview in my opinion on radio as per the stock legend link was an awesome interview in that Alleyba thought CEO was quite candid and clearly laid out his game plan for the company.

It was nothing more than an audio version of a forward-looking statement. No more, no less. Don't believe me? Let's all take yet another trip inside the Way Back Machine and re-visit the interview SCRC did with TheStockRadio.com (another 3rd party paid marketing and promotional firm) back in NOV-2013:

http://thestockradio.com/scrc-scripsamerica-ceo-robert-schneiderman/

In this interview, 5 items were touted, of which only 1 has come to fruition:

(1)
Imminent RapiMeds launch in US -- 7 months later, this is a FAIL.

(2)
Imminent RapiMeds launch in mainland China -- 7 months later, this is a FAIL.

(3)
WRx launch in Tennessee -- 7 months later, this has become stagnated with immaterial net revenues.

(4)
Imminent acquisition of PIMD -- 7 months later, this is a FAIL.

(5)
Exploration of specialty compounding pharmacy -- 7 months later, this is a bona fide SUCCESS.

He pointed to the numerous revenue streams that are being generated and said company will look to expand into the south american market.

(1)
The only meaningful revenue stream that SCRC has is Main Ave. WRx pales in comparison, but the commission revenues are at least pure profit. The "mini McKesson" segment has been a consistent money loser. Shareholders should remember that companies that have profitable product lines and business segments tout their respective contributions to the bottom line (i.e. earnings). Companies that have money-losing product lines and segments tout margins -- hoping you will forget about factoring in the other expenses beyond simply COGS.

Unfortunately, investors cannot invest simply in the top-line of a company; our investment thesis MUST take into consideration ALL of a company's expenses and cash outflows. And to this end, SCRC has been spending money like a giddy college student in a liquor store at midnight on his 21st birthday.

Prior to Main Ave, SCRC's existing business segments were woefully insufficient in generating enough cash flows to cover the mountain of SG&A and Other Expenses that it incurred, let alone simply cash burn.

Main Ave is the only reason that SCRC sees a light at the end of the tunnel that isn't an oncoming freight train.

And considering that Main Ave came out of left field unexpectedly as a complete shock to everyone back in FEB-2014, it sure makes one wonder what in the world the investment thesis was behind why JOSEPH ZAMPETTI, SEAN FITZGIBBONS, and all those other Section 17(b)-violating non-disclosing compensated "investor relations related consultants" that SCRC disclosed in its SEC filings were urging everyone to "BUY NOW!!!" and "DON'T SELL OR TRADE, ONLY HOLD AND ADD!!!" back during the Q4'13 and Q1'14 period when 6M restricted shares belonging to -- guess who? Yup, them -- just so happened to be unlocking and becoming free trading.

(2)
W/respect to South America, this is as foolish to tout as it is to tout that SCRC is on the verge of uplisting to the Nasdaq exchange.

Remember my very first point at the top of this post: This interview was nothing more than an "audio forward looking statment". Is it interesting to know what the company is planning? Of course it is. But there is a difference between forward looking statements issued by solid reputable large cap companies vs forward looking statements issued by penny companies who have a history of failing to deliver on them.

I'm sure every single continent on this planet is a potential market for any pharma product. That's a given. But as we see with China, it takes time, time, and more time, plus the patience of Job. And from an investment-thesis perspective, this time decay -- absent any other material or substantive developments -- must be factored in.

SCRC hasn't even received regulatory approval from mainland China yet for crying out loud even though it even went so far as to TWICE issue PR's touting a sales trip to China (last JUL-2013 and again in OCT-2013), which we now know either never occurred or yielded nothing.

And SCRC's grand vision for launching RapiMeds in the US that was also highly touted? Well that was supposed to have been launched last year, and still we have nada.

But we do have continuous further looking statements trumpeting SCRC's plans to go into Canada and now South America? What's next? A PR announcing the launch of RapiMeds into Bangladesh? Antarctica? You see how this forward-looking statement game can go on in perpetuity, right?

For heaven's sake, just let SCRC launch RapiMeds successfully in one domicile first.

He made a point at end of interview to say that there is no new toxic paper out there

No, he did not. He attempted to allude to this, but he simply spun it to present the new convert notes as being simply a "renewal" and and "extension of debt".

As I stated previously, from an investment-thesis perspective, the Street does not care about any informal distinctions that company execs may make re: debt. Convert notes are convert notes. Bob can describe them as "renewals" all he wants in an unofficial promotional interview, but this interview was simply a PR in audio form (which is fine and serves a purpose). But his spin to call them "extended debt" is quite dizzying.

Anyone who wants to understand exactly what these convert notes are need only look to the SEC filings where the SEC regs do not permit fluff and only permit straight-forward facts. So from the most recent 10Q we see this:

"the Company received $114,750 in cash for several new convertible promissory notes"

It's quite clear. Bob inked several NEW convert notes within weeks of his infamous 2/19/14 PR where he stated that the company had NO INTENTION of issuing any more convert notes:

I can assure our shareholders that the company has not taken on any additional convertible debt since October 22nd of last year. Moving forward we will not add any more of this type of debt to our balance sheet

See link to PR here: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=97486612

In addition, we see an increase in the balance of these notes in the Balance Sheet of SCRC's financial statements.

That's all the Street needs to know.

There is no such thing as "friendly" convert notes. If an entity wanted to be a "friendly" financier, they would simply enter into straight-forward term loans (which SCRC has some of already) that contain no dilutive elements.

It's not that difficult a concept.

For those who believe in the company and wish to invest their money and risk it why should they not be rewarded with RESTRICTED stock at a discount, after all they are taking the risk with their money?

For the umpteenth time, there is as close to ZERO risk as any investor could possibly be exposed to with these .05 PIPE shares.

A shareholder should be rewarded once the company succeeds in the marketplace -- both the consumer marketplace and the investment marketplace. It is the epitome of poor governance to enter into material transactions that dilute the O/S count by 20% for which the sp could stagnate (i.e. NOT achieve any success whatsoever) and these PIPE financiers would still reap a 100% "reward".

Even an insider like Urbanski wouldn't stoop so low. He entered into a financing transaction that sends a BULLISH signal to the market -- a private purchase of close to 1M shares at MARKET RATES. The PIPE financing at .05 sent a vomit-inducing signal to the market.

I have provided the math to you and others here on this board numerous times that proves that these PIPE transactions were very much the MOST TOXIC FINANCING TRANSACTIONS THAT SCRC HAS EVER ENTERED INTO.

Even if the sp stagnates at its current .13 level for the foreseeable future, had SCRC simply entered into more traditional convert notes in lieu of this ridiculous firesale of .05 PIPE stock, then once these notes become eligible for early conversion beginning 6/28/14 (the same time that these PIPE shares unlock), they would have been eligible to convert for ONLY approx 13M shares instead of the 21M shares that the PIPE shares will add to the float. These PIPE shares represent an additional 62% MORE dilution compard to traditional convert notes.

And to boot, remember that the above scenario is ONLY if the sp stagnates at .13. If the sp rises beyond .13, then the PIPE shares become even MORE toxic as the number of shares that would have otherwise been converted under convert note financing would continue to shrink with every uptick in the sp -- and minimizing dilution while the company grows is what intelligent financing is supposed to do for a company and its shareholders. The PIPE financing was the polar opposite of "intelligent" financing -- it was an abuse of the fact that 10 shareholders control the votes and elected to disregard their fiduciary responsibility to the other 49% of their pre-existing loyal shareholders and essentially stab them in the back.

And keep in mind that this is assuming that SCRC doesn't paydown ONE RED CENT on its convert notes. And as we know, SCRC is generating a lot of cash now thanks to Main Ave. In all likeihood, SCRC would have been able to paydown most if not all of the convert notes before they converted -- THEREBY ELIMINATING ANY DILUTION ALTOGETHER.

Each day that passes, it becomes more and more evident that the only retail investors who like the PIPE deal are those who participated in the PIPE deal -- and technically, they aren't even retail investors anymore: They are financiers now. Financiers who not only have a history of flipping penny stocks instead of INVESTING long-term in penny stocks like they claim, but have the gall to encourage/advise those they introduce to the stock to hold/add only but never sell/trade. Which is fine, but I'm just a fan of full-disclosure...