ScripsAmerica Inc. (SCRCQ)

[coolerheadsprevail]

Here is SeeThruEquity's actual report for those who are interested:

http://www.snl.com/interactive/lookandfeel/4578348/SCRC_Equity_Update_Note.pdf

Remember folks, publicity is publicity so take advantage of this while it is here and drumming up buying interest. HOWEVER, before deciding how long you want to hold SCRC stock for and whether this $1.20 price target is attainable within the next 12 months, understand first and foremost that SeeThruEquity (STE) is a paid promoter. SCRC used their services before and you can see from STE's own website the suite of promotional services they provide for paying customers, including analyst coverage and issuing analyst reports.

For those who remember STE's prior "analyst report", you will easily see that they simply re-iterate SCRC's PR's w/little independent analysis to verify/validate/evaluate the veracity and sensibility of Mgmt's projections and other forward-looking statements.

Here are some noteworthy excerpts:

Although it is in the early stages, PIMD has experienced rapid growth from a small initial base, with revenues increasing from 135,000 in January to $554,000 in February.

MAR-2015 revenues for PIMD were most certainly available to STE by now as it has been public info for quite some time now. So I wonder why STE elected to NOT mention it if it is giving such glowing reviews about how PIMD is experiencing such "rapid growth"?

Perhaps it may be because after doing $554k in FEB, PIMD's revenues fell over 60% to $220k in MAR...

...it is clear that STE is trying to hide this fact and spin the tale to make it appear that PIMD's growth is continuing unabated beyond FEB's $554k...

Specialty orders came in at $3.4mn in January and $3.8mn in February, which management attributed to seasonal factors.

Again, MAR's orders has also been public info for quite some time now, but STE elected to NOT mention them. Why???

Perhaps it may be because even after the "seasonal factors" went away, MAR's approved orders came out to only $1.45M...

...it is clear that STE is trying to hide this fact as well and is spinning the decrease from the $5M monthly run rate experienced in Q4'14 to make it appear as if $3.4-$3.8M is as low as it went and that after the "seasonal factors" go away, Main Ave should be back to $5M/month...

Main can file for arbitration to adjudicate the ending of the contract, and ScripsAmerica noted that despite this development it still expects to be able to grow revenues

Even after half of MAR-2015 included CVS/Caremark and still only brought in $1.45M, STE is dispensing the kool-aid that Main Ave will grow its monthly revenues beyond $5M/month (because that is exactly what is being implied here by STE not only excluding MAR numbers but suggesting that the dip in JAN/FEB to $3.xM was solely due to "seasonal factors"), and that it will do so imminently enough to bring full year 2015 revenues to $46.5M...

We all know that there is absolutely NOTHING within SCRC's fundamentals that would come close to remotely even suggesting that Main Ave will get its monthly revenues back up to these levels anytime soon. Not saying that unexpected good news can't hit at anytime, but there is certainly NOTHING to justify an alleged "independent" analyst from concluding that this is likely and using it as a basis to come up with a $1.20 price target...

On March 6, 2015, ScripsAmerica announced that it had entered into letters of intent to acquire equity interests in two pharmacies, expanding its specialty pharmacy operations into an additional 30 states.

As stated here previously, purchases of small businesses do not take this long to close escrow.

In addition, there has been zero information available in the public space that tells ANYONE how much of an equity interest SCRC intends to acquire in any pharmacies. After all, 5-10% ownership is an entirely different conversation than 75-100% ownership.

And, also, the bottom line is the bottom line, and neither we nor STE have zero clue how profitable these pharmacies are. After all, having $100M in new revenues come in means nothing if their selling expenses and other operating expenses are so high that they are either losing money or generating meager profits (such as the measly $400k that SCRC stated Q1'15 would net) that it would take a sp multiple in the hundreds to push the sp up to anything close to .25 or .50...

The company also secured a $4mn working capital line of credit from Triumph Healthcare Finance, adding additional financial flexibility from an experienced strategic partner.

Once again, this LOC is functionally impotent due to the fact that SCRC has not only drawn down on it already to paydown higher cost debt, but the amount of the LOC that SCRC is even permitted to drawdown is capped in relation to the amount of Main Ave's A/R balance. And as Main Ave's orders plummet, so does its A/R, so 85% of a rapidly shrinking A/R balance translates to almost nothing being available for SCRC to even drawdown on...

We maintain our price target of $1.20 for ScripsAmerica If achieved this would represent 1100% potential upside from the recent market price of $0.10 on April 22, 2015. We see the next twelve months as a key period for the company, as we expect ScripsAmerica to demonstrate growth in its specialty pharmacy business, form a baseline of business at PIMD, and provide an update on the launch of its RapiMed product in Hong Kong.

This one is a real doozy, LOL... ...look at the assumptions they are making:

...They are assuming that PIMD will grow and develop a meaningful baseline -- but yet we aleady know that PIMD revenues fell 60% to only $220k per month, which extrapolates out to only $2.6M per annum...

...They are assuming that Main Ave will somehow bring in over $40M per year and even be able to maintain the $10M/qtr they reported for Q1'15 -- even though we already know that MAR only brought in $1.45M (and that was INCLUDING half a month WITH CVS/Caremark)...

...And my personal favorite: RapiMed launch... ...it is even more egregious when folks look back on their initial analyst price target from last year when they also set a 12 month price target of $1.20 and based it on RapiMed launching in Hong Kong by Q4'14, launching in mainland China by Q1'15, and then launching all over the rest of the known universe by the end of 2015... ...so even though NONE of this has happened, STE somehow is STILL setting a price target of $1.20??? And with the loss of CVS/Caremark to boot??? Can you say "paid shill" anyone???

...And for those who still don't get it, look at it this way: If Q1'15 revenues are approx $10M and yet net income is only $400k, then bringing in $46.5M in revenue for the entire 2015 (which is what STE is forecasting in arriving at their $1.20 price target) would translate to full year 2015 net income of only $1.86M. Great, right? We made a profit! Woo-hoo!!! Oh but how many mouths are there to feed? 138M (168M fully-diluted). And this is using a stale O/S count from last year, and we know that this number is higher now. So 2015 EPS comes out to .0135/share (.0111 fully-diluted). So... ...to arrive at a $1.20 price target, STE is essentially saying that the Street will award SCRC's stock price with a forward P/E multiple of 89 (108 on a fully-diluted basis). Just think about that...