Replies to post #19042 on ScripsAmerica Inc. (SCRCQ)

[coolerheadsprevail]

Cooler, if the rumor "is true" that SCRC will announce they are CFP in August, where do you see the PPS going? Thanks.

@newtoscrc,

With respect to your specific question, if by "rumor" you are simply meaning whether or not SCRC is now CFP, then that is one thing. But if by "rumor" you are referring to SCRC formally announcing this in some way, then you should be advised that this is very much a "rumor" that was started by those who hold the .05 PIPE shares and have a severe conflict of interest here -- and you probably know who these PIPE-holders are but just don't realize that you know them.

Based upon the $4.1M in revenues last month, if this were to be a flat run rate going forward, this should be enough for SCRC to not only be CFP but also be earnings positive -- BUT ONLY IF CEO BOB CUTS BACK ON HIS RECKLESS SPENDING. We should see whether he has been able to do so when the Q2 10Q comes out soon. But I had a relevant post a week ago that may be useful to you. Here is the link as well as an excerpt:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=105016895

Per the 10Q:

$ 117k Royalty Exp
$ 96k HR Exp
$ 81k Professional Fees Exp
$ 10k Consulting Fees Exp
$ 227k IR & Marketing Exp
$ 81k General Exp
$ 214k Share-Based Compensation for Additional G&A Exp
$ 83k Interest Exp
--------
$ 909k TOTAL CASH-BASED EXPENSES FOR Q1
=====

Divided by 3 yields a TRUE cash need of $303k/mo.

And this doesn't even include the $813k in Financing Costs that SCRC incurred during Q1. We have no visibility on how much of this $813k represented costs that would normally have been payable in cash but ended up being paid for via additional shares. Adding this $813k brings the $909k up to potentially $1.722M for Q1, which computes to $574k/mo in cash needs.

The $160k that was disclosed as "monthly cash burn" and is heavily touted as being the low threshhold that SCRC needs to reach in order to be cash flow positive is severely misleading as Bob "BS" Schneiderman knows full well that this amount ONLY represents those payables for which the vendor refused to accept dilutive stock as payment, but instead demanded cash. SCRC incurred much more expenses for which it was able to convince vendors to accept deeply discounted dilutive stock (that is immediately free-trading BTW, so shareholders have NO advance warning when these hit the float) in lieu of cash -- BUT this should NOT be deducted from SCRC's cash burn the way Bob/Jeff are doing since "cash burn" is intended to represent a company's cash needs. The way Bob/Jeff is presenting cash burn is simply a variation of the cash flow statement where they simply pick out those cash flow items related to G&A expenses -- which is by no acceptable measure an appropriate method for computing cash burn.

As of 6/30/14, SCRC was neither CFP nor earnings positive, so I am NOT expecting to see either of these milestones reflected in the 10Q (but I would love to be wrong and be pleasantly surprised if the 10Q reflects SCRC cutting its expenses in Q2 relative to Q1 and that this cost-cutting unexpectedly flipped SCRC from the red to the black).

And I am NOT expecting SCRC to issue any special PR simply to announce that they are CFP. If such an announcement were to be made it would most likely not be made until the end of the month -- most likely during the first couple weeks of SEP as SCRC would need to close its AUG books and be able to actually run the AUG financials and see whether they were in the red or in the black for AUG.

BUT, let me ask you this: How often do you see companies make these types of announcements? I have never seen it with any other company I have followed. Typically, if a company becomes CFP or earnings positive, market participants simply find out about it the next time a Q is filed and they see the financial statements. BUT, as we have seen, Bob loves issuing fluffy PR's, especially if it can help his Section 17(b)-violating PIPE-holders dump their bloated inventory of hideously discounted shares at higher prices. So nothing Bob does surprises me anymore, to be honest w/you.

IMO, if such a PR is issued, I would not be surprised to see the sp rise to at least .15, BUT I also do not expect there to be much liquidity near the upper bands of this range and I do not expect most of the rise to be sustained for no other reason than the fact that the PIPE-holders and other financiers are sitting on TONS of dilutive shares that are currently lurking in the overhang waiting for the next pop.

If SCRC can continue to report increasing revenues from Main Ave of at least 10-20% month-over-month, and can report continually decreasing expenses in Q2 and Q3 as well as Q4, then I believe that the year-end 10K (which is about 9 more months away, which sucks I know) will be the game-changer as not only will SCRC's cash flow and earnings position be stronger, BUT, more importantly, this will be the first time that any Main Ave numbers will be audited and verified.

This is very important to market participants, especially the deep-pocketed investors who can scoop up tons of shares at a time. And up until now, everything SCRC has ever reported re: Main Ave has been un-audited. Main Ave, and also the new PIMD venture, are the first times that SCRC will be adopting the accounting treatment of an entity they have no actual ownership interests in as VIE's (variable interest entities). It is only thru the convoluted related-party nature of SCRC's relationship w/Implex that Main Ave and PIMD have VIE status, and this is why US GAAP allows SCRC to consolidate 100% of Main Ave and PIMD operations into SCRC's own financial statements -- instead of the measly % that SCRC truly gets in the form of Mgmt Fees from Main Ave and PIMD.

Market participants will want to see that the auditors have signed off on not only SCRC's determination that Main Ave and PIMD are VIE's, but that SCRC has properly applied VIE accounting rules -- not to mention the basic auditing function of verifying that Main Ave revenues actually even exist in the amounts that SCRC has been reporting. This may be viewed as being blasphemous by the uber-bulls, but objectively speaking, the market is quite aware of the shenanigans that SCRC has engaged in its short history already, and no serious investors will buy-in w/o seeing audited financials.

Hope this helps. GLTU...