DILUTION UPDATE:
Approx 4.8M of the .05 PIPE shares unlocked in JUL, and it was evident by the tape that the vast majority of these shares got dumped as the CORE PIPE-holders were eager to take some guaranteed profits off the table. So very little still lurking in the float, IMO.
Approx 5.2M of the .05 PIPE shares unlocked in AUG, and based on the tape, I would say that it would be a safe ballpark estimate to surmise that at least 2/3rds of these got dumped as well. Remember, this is NOT one entity holding all the PIPE shares. We have approx 30 distinct individuals who are known penny flippers each making their own decisions. So clearly, some completely cashed out while others only partially cashed out hoping for another runup to reap larger gains. So still quite a bit still lurking in the float.
Approx 6.8M of the .05 PIPE shares were reported to have been issued in MAR-14, so these have unlocked and will continue to unlock thru the end of this current SEP month. In addition, the Q2 Q disclosed that on 4/1/14, 1.6M more .05 PIPE shares were issued; with a 180-day lockup period, these 1.6M shares will become free-trading on 9/28/14. So, what this means is that by the time 9/30/14 rolls around, we will have seen 8.4M total .05 PIPE shares hit the float just in the month of SEP alone. And so far, by looking at the tape, it would appear that less than half of the 6.8M that have unlocked so far in SEP have been dumped. So quite a bit still lurking in the float.
The Q2 10Q provided a little bit more details re: the Q2 PIPE issuances, so here is what we can expect over the next few months. Note that I am ONLY listing those shares that were priced sub-.10 and NOT the total dilution – reason being that for the vast majority of the dilution that is priced at .12+, these are unlikely to get dumped anytime soon, at least not until the sp gets into the high teens, IMO. By my estimation, there is still approx 20M “higher-priced” shares that have either unlocked but are still lurking in the float or have yet to unlock but will enter the float over the course of the next few months.
So, without further ado, here are the sub-.10 shares that will be hitting the float in the near future:
OCT 5, 2014
925k shares held by Seaside priced at .066
OCT 5, 2014
200k PIPE shares priced at .05
OCT 13, 2014
370k PIPE shares priced at .05
NOV 1, 2014
782k shares held by Seaside priced at .0618
DEC 10, 2014
756k shares held by Urbanski (related to the GEM cancellation settlement) priced at .0665
DEC 14, 2014
500k PIPE shares priced at .05
DEC 16, 2014
200k PIPE shares priced at .05
DEC 27, 2014
580k PIPE shares priced at .05
BETWEEN JAN 1, 2015 and FEB 4, 2015
1M PIPE shares priced at .05
So… …the good news is that the amount of deeply-discount dilution entering the float is decreasing; however, the bad news is that there is still too much of this deeply-discounted dilution that has already entered the float that has NOT flushed thru yet. As I’ve been saying, it ain’t easy liquidating 30M+ shares of 0.00 and 0.05 shares when the market will only provide 100k-300k shares worth of liquidity each day, LOL…
BUT, IMO, the most critical news we need to know is actually unrelated to dilution; it is related to the impact the new insurance coverage restrictions on compounded drugs is having on Main Ave (as well as on UA, and JJ’s). Remember, 9/15/14 was the implementation date for most employers (excluding large employers), and 1/1/15 is the implementation date for the large employers, so seeing OCT-2014 and JAN-2015 Main Ave numbers will be extremely important. If SCRC can demonstrate that it can still generate and maintain an annual revenue run rate of at least $30M in the “post-compounding-restriction-era”, then IMO this – combined with what will hopefully be the elimination of any further PIPE issuances -- will remove a lot of risk from the equation.
And the market will recognize this if and when it happens and react accordingly in a favorable manner should it come to fruition and be corroborated by the Q1’15 10Q, IMO…
