Replies to post #17295 on ScripsAmerica Inc. (SCRCQ)

[Snizzle]

"if the selling was not done by shareholders that did not like the 10-K one would have to believe it could be the last of the toxic paper or close to it. "


No, no "one" would not "have to believe" that's the case. If "one" actually reads the filings "one" would know the selling could be coming from sooooooooo many different places.

[coolerheadsprevail]

Kudos to Bob S and now we should be positioned to not have to make toxic deals moving forward as he has smartly paid off the notes to avoid the toxic paper from hitting.

All capital raises have elements of toxicity to them, even new stock issuances (both free trading AND restricted). The degree of toxicity depends upon the nature, timing, and magnitude of the dilution that it creates -- as well as whether these capital transactions include a "kill switch" that enables Mgmt to render impotent the ability of the financier to dilute the stock.

And therein lies the rub. Given the stage where SCRC is curently in its growth -- and I will use the projections of SEAN FITZGIBBONS himself in that SCRC will be cashflow positive in MAY -- most CFO's in America would avoid issuing restricted stock and would prefer to ink new convert notes. Why? Because if the company truly believed the sp was going to rise and that revenues would be exploding enough to become cash flow positive and profitable -- then the company would fully expect to be in a position to prepay said notes and AVOID dilution altogether, effectively nullifying the toxicity element of the notes.

But with issuances of stock, there is no going back. Even if SCRC has the cash to pay back the money to the financiers, it CAN'T. These 20M shares are permanently dilutive shares. And the salt being poured into shareholders' wounds is that as the sp increases, the magnitude of dilution would have DECREASED exponentially had SCRC simply inked more convert notes in lieu of fixed .05 shares the way it did.

In my opinion the longs will be rewarded with a nice move in the share price

The question isn't whether longs want to see a move up in the sp. The question is whether the retail investors-turned-financiers who now wield a 20M share hammer will crush the sp when it reaches .15 or .20 or .25 or .30 by cashing in what will be 3-4-5-and-6-baggers for themselves while many of the true loyal longs who did not become financiers will only be able to break even or enjoy a meager gain due to high levels that they were lured into buying into at.

That is what has essentially occurred here: A large number of retail investors became financiers. And they and their 20M shares are to be viewed no differently by "regular" retail investors than we would view any other financiers. The problem is that SCRC's other financiers aren't posing as retail investors actively hyping every little thing to embarrassing proportions and soliciting bid support and looking for sheeple to eventually hold their bags for them when the sp rises.

And this is what makes these 20M shares so dangerous. Because we are blind as to the breakdown of these share issuances (remember, all we know is that collectively they were issued between JAN-APR), we have no idea exactly when and how much will hit the float the way we did when tranches of restricted stock unlocked during Q4'13 and Q1'14 (aside from the fact that the first tranches of this 20M will unlock and dilute the float on JULY 1, 2014). And what makes this situation even more dangerous is that it won't be professional financiers whose liquidation procedures are fairly predictable -- rather we will be dealing with amateur financiers who think and behave unpredictably like retail investors.