[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[_]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
26-2598594
|
|||
(State or other jurisdiction of
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(I.R.S. Employer
|
|||
incorporation or organization)
|
Identification No.)
|
Large accelerated filer
|
[_]
|
Accelerated filer
|
[_]
|
|
Non-accelerated filer
|
[_]
|
Smaller reporting company
|
[X]
|
Item 1 -
|
Financial Statements (unaudited)
|
|
Balance Sheets as of September 30, 2011 (Unaudited) and December 31, 2010
|
1
|
|
Statements of Operations (Unaudited) for the three months and nine months ended September 30, 2011 and 2010
|
2
|
|
Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2011
|
3
|
|
Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2011 and 2010
|
4
|
|
Notes to Unaudited Condensed Consolidated Financial Statements
|
5
|
|
Item 2 -
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
11
|
Item 4 -
|
Controls and Procedures
|
21
|
Item 1 -
|
Legal Proceedings
|
21
|
Item 2 -
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
22
|
Item 3 -
|
Defaults Upon Senior Securities
|
22
|
Item 4 -
|
Removed and Reserved
|
22
|
Item 5 -
|
Other Information
|
22
|
Item 6 -
|
Exhibits
|
22
|
SIGNATURES
|
23
|
|
CERTIFICATIONS
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 587,663 | $ | 171,898 | ||||
Receivable due from factor
|
460,633 | 91,341 | ||||||
Loan receivable - vendor
|
613,284 | - | ||||||
Prepaid expenses and other current assets
|
109,565 | 220,966 | ||||||
1,771,145 | 484,205 | |||||||
Other Assets
|
||||||||
Notes receivable - related party - net
|
7,319 | 9,000 | ||||||
Deposits
|
200,000 | 200,000 | ||||||
207,319 | 209,000 | |||||||
TOTAL ASSETS
|
$ | 1,978,464 | $ | 693,205 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts payable and accrued expenses
|
$ | 95,403 | $ | 82,930 | ||||
Preferred Stock dividends payable
|
20,860 | - | ||||||
Convertible notes payable - net of discount of $9,636 and $14,620, respectively
|
590,364 | 285,380 | ||||||
Convertible notes payable - related parties
|
80,000 | 60,000 | ||||||
786,627 | 428,310 | |||||||
Commitments and contingencies
|
- | - | ||||||
Convertible preferred stock - 2,990,252 issued and outstanding as of September 30, 2011
|
1,043,000 | - | ||||||
Stockholders' Equity
|
||||||||
Preferred stock - $0.001 par value; 10,000,000 shares
authorized; 2,990,252 issued and outstanding |
- | - | ||||||
Common stock - $0.001 par value; 150,000,000 shares authorized; 52,012,680 and 45,859,680 shares issued and
outstanding as of September 30, 2011 and December 31, 2010, respectively |
52,012 | 45,860 | ||||||
Subscription Receivable
|
(170,800 | ) | ||||||
Additional paid-in capital
|
429,096 | 201,770 | ||||||
Retained earnings (deficit)
|
(161,471 | ) | 17,265 | |||||
148,837 | 264,895 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 1,978,464 | $ | 693,205 |
For the three months ended, September 30,
|
For the nine months ended, September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Product Sales - net
|
$ | 1,525,928 | $ | 1,060,186 | $ | 4,942,255 | $ | 1,927,023 | ||||||||
Cost of Goods Sold
|
1,186,425 | 755,072 | 3,663,938 | 1,500,343 | ||||||||||||
Gross Profit
|
339,503 | 305,114 | 1,278,317 | 426,680 | ||||||||||||
General and Administrative Expenses
|
293,019 | 5,529 | 663,578 | 11,779 | ||||||||||||
Research and Development
|
99,797 | - | 541,291 | - | ||||||||||||
392,816 | 5,529 | 1,204,869 | 11,779 | |||||||||||||
Income (Loss) Before Other Income (Expenses)
|
(53,313 | ) | 299,585 | 73,448 | 414,901 | |||||||||||
Other Income (Expenses)
|
||||||||||||||||
Interest expense
|
(54,501 | ) | (36,540 | ) | (204,964 | ) | (49,594 | ) | ||||||||
(54,501 | ) | (36,540 | ) | (204,964 | ) | (49,594 | ) | |||||||||
Income Before Provision for Income taxes
|
(107,814 | ) | 263,045 | (131,516 | ) | 365,307 | ||||||||||
Provision for Income Taxes
|
1,000 | 89,435 | 5,500 | 124,204 | ||||||||||||
Net (Loss) Income
|
$ | (108,814 | ) | $ | 173,610 | $ | (137,016 | ) | $ | 241,103 | ||||||
Earnings Per Common Share
|
||||||||||||||||
Basic
|
$ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | ||||||
Diluted
|
$ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | ||||||
Weighted Average Number of Common Shares
|
||||||||||||||||
Basic
|
51,970,789 | 80,771,600 | 49,265,066 | 80,771,600 | ||||||||||||
Diluted
|
51,970,789 | 80,771,600 | 49,265,066 | 80,771,600 |
Common Stock
|
Subscription
|
Additional
|
Retained | Stockholders' | ||||||||||||||||||||
Shares
|
Amount
|
Receivable
|
Paid-In Capital
|
Earnings |
Equity
|
|||||||||||||||||||
Balance - January 1, 2011
|
45,859,680 | $ | 45,860 | $ | 201,770 | $ | 17,265 | $ | 264,895 | |||||||||||||||
Common stock issued for cash
|
29,000 | 28 | 5,772 | - | 5,800 | |||||||||||||||||||
Common stock subscription
|
5,200,000 | 5,200 | (176,000 | ) | 170,800 | - | ||||||||||||||||||
Common stock issued for services - BOD
|
540,000 | 540 | 53,460 | 54,000 | ||||||||||||||||||||
Common stock issued for services
|
284,000 | 284 | 48,216 | 48,500 | ||||||||||||||||||||
Common stock issued for interest
|
100,000 | 100 | 24,900 | 25,000 | ||||||||||||||||||||
Convertible Preferred stock costs & fees
|
(130,631 | ) | (130,631 | ) | ||||||||||||||||||||
Dividends for convertible preferred stock
|
(41,720 | ) | (41,720 | ) | ||||||||||||||||||||
Common stock warrants issue to non-employee for services
|
54,809 | 54,809 | ||||||||||||||||||||||
Payment received for stock subscription
|
5,200 | 5,200 | ||||||||||||||||||||||
Net (Loss) income
|
- | - | - | - | (137,016 | ) | (137,016 | ) | ||||||||||||||||
Balance - September 30, 2011
|
52,012,680 | $ | 52,012 | $ | (170,800 | ) | $ | 429,096 | $ | (161,471 | ) | $ | 148,837 |
For the nine months ended, September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net (Loss) income
|
$ | (137,016 | ) | $ | 241,103 | |||
Adjustments to reconcile net income to net cash (used) by operating activities:
|
||||||||
Amortization of discount on convertible notes payable
|
29,984 | - | ||||||
Common stock issued for services
|
102,500 | - | ||||||
Common stock warrants issued for services
|
54,809 | |||||||
Deferred Income tax
|
56,000 | |||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) decrease in:
|
||||||||
Receivable due from factor
|
(369,292 | ) | (464,279 | ) | ||||
Prepaid expenses and other current assets
|
111,401 | - | ||||||
Increase (decrease) in:
|
- | |||||||
Accounts payable and accrued expenses
|
12,473 | 136,855 | ||||||
(195,141 | ) | (30,321 | ) | |||||
Cash Flows from Investing Activities
|
||||||||
Payment received from note payable
|
1,681 | |||||||
Issuance of loan to vendor
|
(613,284 | ) | (1,700 | ) | ||||
(611,603 | ) | (1,700 | ) | |||||
Cash Flows from Financing Activities
|
||||||||
Proceeds from Issuance of common stock
|
5,800 | - | ||||||
Proceeds from Issuance of convertible preferred stock - net
|
912,369 | - | ||||||
Proceeds from convertible notes payable
|
414,000 | - | ||||||
Payment for convertible notes payable
|
(114,000 | ) | - | |||||
Payment for dividends
|
(20,860 | ) | ||||||
Proceeds from stock subscription receivable
|
5,200 | |||||||
Proceeds from notes payable - related parties
|
20,000 | 40,000 | ||||||
1,222,509 | 40,000 | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
415,765 | 7,979 | ||||||
Cash and Cash Equivalents - beginning
|
171,898 | 503 | ||||||
Cash and Cash Equivalents - end
|
$ | 587,663 | $ | 8,482 | ||||
Supplemental Disclosures of Cash Flow Information
|
- | |||||||
Cash Paid:
|
||||||||
Income Taxes
|
$ | 4,200 | - | |||||
Interest
|
$ | 120,881 | $ | 13,054 | ||||
Noncash financing and investing activities:
|
||||||||
Common stock subscription
|
$ | 176,000 | $ | - | ||||
Discount on convertible note payable
|
$ | 25,000 | $ | - | ||||
Accrued Preferred Dividend payable
|
$ | 20,860 | $ | - |
Notes to Financial Statements
|
For the Nine Months Ended September 30, 2011
|
|
a.
|
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
|
|
b.
|
Revenue Recognition - Revenue is recognized when product is shipped from our contract packager (Marlex Pharmaceuticals Inc.) to our customers’ warehouses, mainly McKesson, and is adjusted for any charge backs received from our customers which include inventory credits, discounts or volume incentives. These charge back costs are received monthly from our customers’ and the sales revenue for the corresponding period is reduced accordingly.
|
|
Purchase orders from our customer generate our shipments, provide persuasive evidence that an arrangement exists and that the pricing is determinable. The credit worthiness of our customer assures that collectability is reasonable assured.
|
|
c.
|
Research and Development - Expenditures for research and development associated with contract research and development provided by third parties are expensed as operating expenses, as incurred. The Company had charges of $541,291 and $0 for research and development expenses for the nine months ended September 30, 2011 and 2010, respectively.
|
|
d.
|
Stock-Based Compensation – The Company adopted FASB ASC No. 718 “Share-Based Payment,” requiring the expense recognition of the fair value of all share-based payments issued to employees. Stock grants to employees were valued using the fair value to the stock as determined by the board of directors since our stock is not publicly traded and the volume is immaterial. As of September 30, 2011 the Company has not issued any employee stock options that would require calculating the fair value using a pricing model such as the Black-Scholes pricing model.
|
Notes to Financial Statements
|
For the Nine Months Ended September 30, 2011
|
|
·
|
the stock option or warrant exercise price,
|
|
·
|
the expected term of the option or warrant,
|
|
·
|
the grant date fair value of our common stock, which is issuable upon exercise of the option or warrant,
|
|
·
|
the expected volatility of our common stock,
|
|
·
|
expected dividends on our common stock (we do not anticipate paying dividends for the foreseeable future),
|
|
·
|
the risk free interest rate for the expected option or warrant term, and
|
|
·
|
the expected forfeiture rate.
|
|
e.
|
Recent Accounting Pronouncements - Management does not believe that any recently issued, but not yet effective accounting pronouncements, if currently adopted, would have a material effect on the accompanying condensed financial statements.
|
Notes to Financial Statements
|
For the Nine Months Ended September 30, 2011
|
|
During the nine months ended September 30, 2011, the Company issued two one year $100,000 promissory notes payable, aggregating $200,000, one one year $200,000 promissory note and one one year $14,000 promissory note. The notes are to be used exclusively for the Company’s purchase orders. The notes provide for interest only payments of 2%, payable monthly in cash, or common stock of the Company at $0.25 per share, at the option of the lender. There is no required principal payment on the note until maturity. The principal portion of the notes can be converted into common stock at any time during the one year term at the rate of $.25 per share at the option of the lender. The notes can be extended by mutual consent of the lender and the Company. In June of 2011, the Company paid in full the $14,000 note.
|
6 -
|
Convertible Notes Payable - Related Parties
|
Notes to Financial Statements
|
For the Nine Months Ended September 30, 2011
|
September 30, 2011
|
September 30, 2010
|
|||||||
Current
|
||||||||
Federal
|
$ | 5,500 | $ | 124,204 | ||||
State
|
- | - | ||||||
Deferred
|
||||||||
Federal
|
- | - | ||||||
Income Tax Expense
|
$ | 5,500 | $ | 124,204 |
2011
|
2010
|
|||||||||||||||
Effective
|
Effective
|
|||||||||||||||
Amount
|
Tax Rate
Percentage
|
Amount
|
Tax Rate
Percentage
|
|||||||||||||
Federal income tax liability (benefit)
|
$ | (44,715 | ) | 34.0% | $ | 124,204 | 34.%0 | |||||||||
State taxes, net of federal benefit
|
1,452 | -1.1% | ||||||||||||||
Effect of graduated rates
|
(4,722 | ) | 3.4% | - | - | |||||||||||
Non-deductible expenses
|
53,485 | -40.7% | ||||||||||||||
$ | 5,500 | -4.4% | $ | 124,204 | 34.0% |
Notes to Financial Statements
|
For the Nine Months Ended September 30, 2011
|
Notes to Financial Statements
|
For the Nine Months Ended September 30, 2011
|
2011
|
2010
|
|||||||||||||||
Total Revenue
|
1,526,000 | 100% | 1,060,000 | 100% | ||||||||||||
Cost of Goods Sold
|
1,186,000 | 78% | 755,000 | 71% | ||||||||||||
Gross Profit
|
340,000 | 22% | 305,000 | 29% | ||||||||||||
Operating Costs and Expenses:
|
||||||||||||||||
General and Administrative
|
293,000 | 19% | 6,000 | 1% | ||||||||||||
Research and Development
|
100,000 | 7% | 0 | 0% | ||||||||||||
Total Operating expenses
|
393,000 | 26% | 6,000 | 1% | ||||||||||||
Total Other Income / (expenses)
|
(55,000 | ) | 4% | (36,000 | ) | 3% | ||||||||||
Income (Loss) before taxes
|
(108,000 | ) | -7% | 263,000 | 24% | |||||||||||
Tax Expense
|
1,000 | 0% | 89,000 | 8% | ||||||||||||
Net (Loss) Income
|
(109,000 | ) | -7% | 174,000 | 16% |
Products sold
|
2011
|
% to total
|
2010
|
% to total
|
||||||||||||
Prescription drug products
|
$ | 1,345,000 | 80% | $ | 934,,000 | 80% | ||||||||||
OTC & non prescription products
|
336,000 | 20% | 234,000 | 20% | ||||||||||||
Gross Sales
|
1,681,000 | 100% | 1,168,000 | 100% | ||||||||||||
Discounts / Charge backs
|
(155,000 | ) | 6% | (108,000 | ) | 9% | ||||||||||
Net Sales
|
$ | 1,526,000 | 100% | $ | 1,060,000 | 100% |
2011
|
2010
|
|||||||||||||||
Total Revenue
|
4,942,000 | 100% | 1,927,000 | 100% | ||||||||||||
Cost of Goods Sold
|
3,664,000 | 74% | 1,500,000 | 78% | ||||||||||||
Gross Profit
|
1,278,000 | 26% | 427,000 | 22% | ||||||||||||
Operating Costs and Expenses:
|
||||||||||||||||
General and Administrative
|
664,000 | 14% | 12,000 | 1% | ||||||||||||
Research and Development
|
541,000 | 11% | 0 | 0% | ||||||||||||
Total Operating expenses
|
1,205,000 | 25% | 12,000 | 1% | ||||||||||||
Total Other Income / (expenses)
|
(205,000 | ) | 4% | (50,000 | ) | 2% | ||||||||||
Income (Loss) before taxes
|
(132,000 | ) | -3% | 365,000 | 19% | |||||||||||
Tax Expense
|
5,000 | 1% | 124,000 | 6% | ||||||||||||
Net (Loss) Income
|
(137,000 | ) | -3% | 241,000 | 13% |
Products sold
|
2011
|
% to total
|
2010
|
% to total
|
||||||||||||
Prescription drug products
|
$ | 4,397,000 | 83 | % | $ | 1,781,000 | 80 | % | ||||||||
OTC & non prescription products
|
874,000 | 17 | % | 445,000 | 20 | % | ||||||||||
Gross Sales
|
5,271,000 | 100 | % | 2,226,000 | 100 | % | ||||||||||
Discounts / Charge backs
|
(329,000 | ) | 6 | % | (299,000 | ) | 14 | % | ||||||||
Net Sales
|
$ | 4,942,000 | 100 | % | $ | 1,927,000 | 100 | % |
|
·
|
the stock option or warrant exercise price,
|
|
·
|
the expected term of the option or warrant,
|
|
·
|
the grant date fair value of our common stock, which is issuable upon exercise of the option or warrant,
|
|
·
|
the expected volatility of our common stock,
|
|
·
|
expected dividends on our common stock (we do not anticipate paying dividends for the foreseeable future),
|
|
·
|
the risk free interest rate for the expected option or warrant term, and
|
|
·
|
the expected forfeiture rate.
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
|
None.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
|
Not applicable.
|
ITEM 4.
|
REMOVED AND RESERVED
|
|
Not applicable.
|
ITEM 5.
|
OTHER INFORMATION
|
|
None.
|
ITEM 6.
|
EXHIBITS
|
Number
|
Description
|
10.1
|
Promissory Note made as of October 19, 2011 by ScripsAmerica, Inc. in favor of Leon Hurst and Jim and Joanne Speers
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Schema Document
|
101.CAL
|
XBRL Calculation Linkbase Document
|
101.DEF
|
XBRL Definition Linkbase Document
|
101.LAB
|
XBRL Label Linkbase Document
|
101.PRE
|
XBRL Presentation Linkbase Document
|
SCRIPSAMERICA, INC.
|
|
LTD.
|
|
Dated: November 17, 2011
|
|
By: /s/ Robert Schneiderman
|
|
Chief Executive Officer
|
|
(Duly Authorized Officer)
|
|
By: /s/ Jeffrey Andrews
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Jeffrey Andrews
|
|
Jeffrey Andrews, Chief Financial Officer
|
|
November 17, 2011
|
Balance Sheets (Parentheticals) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Discount on convertible notes payable (in Dollars) | $ 9,636 | $ 14,620 |
Convertible preferred stock shares issued | 2,990,252 | 0 |
Preferred stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 2,990,252 | 2,990,252 |
Preferred stock, shares outstanding | 2,990,252 | 2,990,252 |
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized | 150,000,000 | 150,000,000 |
Common stock shares issued | 52,012,680 | 45,859,680 |
Common stock shares outstanding | 52,012,680 | 45,859,680 |
Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Product Sales - net | $ 1,525,928 | $ 1,060,186 | $ 4,942,255 | $ 1,927,023 |
Cost of Goods Sold | 1,186,425 | 755,072 | 3,663,938 | 1,500,343 |
Gross Profit | 339,503 | 305,114 | 1,278,317 | 426,680 |
General and Administrative Expenses | 293,019 | 5,529 | 663,578 | 11,779 |
Research and Development | 99,797 | 541,291 | ||
[OperatingCostsAndExpenses] | 392,816 | 5,529 | 1,204,869 | 11,779 |
Income (Loss) Before Other Income (Expenses) | (53,313) | 299,585 | 73,448 | 414,901 |
Other Income (Expenses) | ||||
Interest expense | (54,501) | (36,540) | (204,964) | (49,594) |
[OtherExpenses] | (54,501) | (36,540) | (204,964) | (49,594) |
Income Before Provision for Income taxes | (107,814) | 263,045 | (131,516) | 365,307 |
Provision for Income Taxes | 1,000 | 89,435 | 5,500 | 124,204 |
Net (Loss) Income | $ (108,814) | $ 173,610 | $ (137,016) | $ 241,103 |
Earnings Per Common Share | ||||
Basic (in Dollars per share) | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 |
Diluted (in Dollars per share) | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 |
Weighted Average Number of Common Shares | ||||
Basic (in Shares) | 51,970,789 | 80,771,600 | 49,265,066 | 80,771,600 |
Diluted (in Shares) | 51,970,789 | 80,771,600 | 49,265,066 | 80,771,600 |
Document And Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Nov. 16, 2011 | Nov. 14, 2011 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | ScripsAmerica, Inc. | ||
Document Type | 10-Q | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 52,012,680 | ||
Entity Public Float | $ 5,116,000 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001521476 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Sep. 30, 2011 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 |
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6 - Convertible Notes Payable - Related Parties | 9 Months Ended | ||
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Sep. 30, 2011 | |||
Related Party Transactions Disclosure [Text Block] |
On
September 9, 2011 the Company agreed to a one year extension
for notes that were previously issued during the nine month
period ended September 30, 2011, and issued two one year
promissory notes aggregating $20,000. The notes consist of
$10,000 issued to the Company’s president and CEO and
$10,000 issued to a company owned by the Company’s
president and CEO. These notes provide
for interest only payments of 2%, payable monthly
in cash, or common stock of the Company at $0.25 per share,
at the option of the lender. There is no required principal
payment on the notes until maturity. The principal
portion of the notes can be converted into common stock at
any time during the one year term at the rate of $.25 per
share at the option of the lender. Interest
expense associated with these notes for the nine months ended
September 30, 2011 was approximately $2,460.
On
September 9, 2011, the Company agreed to a one year extension
for the remaining notes that were previously issued during
2010. The Company had issued six one year promissory notes
aggregating $60,000. As of September 31, 2011 the notes
consist of $40,000 issued to the Company’s president
and CEO and $20,000 issued to a company owned by the
Company’s president and CEO. These notes
provide for interest only payments of 2%, payable monthly in
cash, or common stock of the Company at $0.25 per share, at
the option of the lender. There is no required principal
payment on the notes until maturity. The principal
portion of the notes can be converted into common stock at
any time during the one year term at the rate of $.25 per
share at the option of the lender. The notes can be extended
by mutual consent of the lender and the Company. Interest
expense associated with these notes for the nine months ended
September 30, 2011 and 2010 was $10,800 and $4,400,
respectively.
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11 - Earnings (Loss) Per Common Share | 9 Months Ended |
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Sep. 30, 2011 | |
Earnings Per Share [Text Block] |
11
- Earnings (Loss) Per Common
Share
The
basic earnings per share or loss per share are computed using
the weighted average number of common shares outstanding. The
assumed exercise of common stock equivalents were excluded
from the calculation of diluted net loss per common share
because their inclusion would have been anti-dilutive. As of
September 30, 2011, common stock equivalents consisted of
preferred stock convertible into 5,980,504 shares, warrants
convertible into 478,440 shares and notes payable convertible
into 2,720,000 shares of common stock.
|
2 - Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] |
2
- Summary of
Significant Accounting Policies
A summary of
significant accounting policies follows:
For
non-employees, stock grants issued for services are valued at
either the invoiced or contracted value of services provided,
or to be provided, or the fair value of stock at the date the
agreement is reached, whichever is more readily
determinable. For stock options granted to
non-employees the fair value at the grant date is used to
value the expense. In calculating the estimated
fair value of its stock options, the Company used a
Black-Scholes pricing model which requires the consideration
of the following seven variables for purposes of estimating
fair value:
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8 - Convertible Preferred Stock | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Preferred Stock [Text Block] |
8
- Convertible
Preferred Stock
On
April 1, 2011 the Company issued 2,990,252 shares of
convertible preferred stock (“Series A Preferred
stock”) for $1,043,000 to one investor. The
Series A Preferred stock has the following rights,
preferences, powers, privileges, and
restrictions: (a) 8% dividend (appropriately
adjusted to reflect any stock splits), the dividends shall
accrue and be paid on March 31, June 30, September 30 and
December 31. (b) Preferential payments of the assets
available for distribution to its stockholders by reason of
their ownership in an amount equal to the Series A Preferred
stock Original Issue price ($.1744). (c) Voting
rights - one vote for the number equal to the number of whole
shares of common stock and shall be entitled to elect one
director of the Corporation. (d) Rights to Convert –
Each share of Series A Preferred stock shall be convertible,
at the option of the holder at any time and from time to time
without the payment of additional consideration by the holder
into such number of fully paid and non-assessable shares of
common stock as determined by dividing the Original Issue
price by the Conversion price in effect at the time of the
conversion. The conversion price is initially
equal to $.1744 and can be adjusted any time if the Company
issue non-exempted common shares at a price below $.1744. (e)
the owner of the Series A Preferred stock can waive its right
to adjust the conversion price at his
choosing. (f) Exempted securities - for shares
issued to employees, directors or consultants or advisors if
the issuance is approved by the Board.
The
Company has determined that the Series A convertible
preferred stock has the characteristics of a derivative
instrument due to the fact that the conversion prices is
indexed to the Company’s own stock. The Company has
determined that there is no change in the value of the
derivative liability and no income or expense should be
recorded to earnings
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13 - Subsequent Events | 9 Months Ended |
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Sep. 30, 2011 | |
Subsequent Events [Text Block] |
13
- Subsequent Events
On
October 19, 2011, the Company received $250,000 in cash for
one convertible promissory note payable. The note provides
for interest only payments of 1%, payable monthly in cash, or
common stock of the Company at $0.25 per share, at the option
of the lender. There is no required principal payment on the
note until maturity which is October 18, 2014. The
principal portion of the notes can be converted into common
stock at any time during the one year term at the rate of
$.25 per share at the option of the lender. The
note can be extended by mutual consent of the lender and the
Company. In addition, the Company shall pay to the
lender a royalty of 4% on all sales of a pain relief orally
disintegrating rapidly dissolving 80mg and 160mg tablets from
January 1, 2012 on until/unless the product line of these
rapidly dissolving tables are sold to a third party. Payments
are schedule to begin quarterly September 30, 2012.
On
October 19, 2011, the Company was approved for a line of
credit from Wells Fargo Bank. This line of credit will allow
the Company to borrow up to a maximum of $70,000, at an
interest rate of prime plus 1% through June 30, 2012, and
prime plus 6.25% annually after June 30, 2012. The
note is secured by personal guarantee by the Company’s
CEO.
As
of November 14, 2011, the Company’s securities
registration was declared effective by the Securities and
Exchange Comission.
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9 - Stockholders' Equity | 9 Months Ended |
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Sep. 30, 2011 | |
Stockholders' Equity Note Disclosure [Text Block] |
9
- Stockholders’
Equity
Common
Stock
In
2011, the board of directors authorized a two-for-one
forward stock split and a change in par value. The change
in par value and the forward stock split have been
retroactively applied as of January 1, 2011 in the balance
sheet and the statement of changes in stockholders’
equity.
During
the nine months ended September 30, 2011, the Company
issued 29,000 restricted shares of common stock for cash
proceeds of $5,800.
On
April 29, 2011 the Company agreed to sell 5,200,000
restricted shares of common stock to four purchasers for an
aggregate purchase price of $176,000. The sales
of these common stock shares were recorded as a stock
subscription receivable, contra equity account, to the
equity section of the balance sheet in April
2011. As of November 7, 2011, the Company has
received $5,200 with the balance expected to be received by
December 31, 2011.
During
the nine months ended September 30, 2011, the Company issued
284,000 restricted shares of its common stock to
non-employees for services rendered during the nine month
period ended September 30, 2011 or to be rendered. These
services were valued at $48,500. The unamortized amount of
prepaid services at September 30, 2011 is
$23,000. The Company charged its operations
$25,500.
During
the nine months ended September 30, 2011, the Company issued
540,000 restricted shares of its common stock in connection
with services provided by members of the board of directors.
The Company charged its operations $54,000.
During
the nine month period ended September 30, 2011, the Company
issued 100,000 shares for interest related to the issuance of
a note payable. The Company accounted for this
transaction as a discount on notes payable totaling $25,000,
of which $9,375 was amortized to interest expense for the
nine month period ended September 30, 2011.
Warrants
On
April 1, 2011, the Company issued 478,440 common stock
warrants to a third party vendor as part of payment for
services provided. These warrants have a strike price of
$.1744, are 100% vested and have a contractual life of 5
years, expiring on March 31, 2016. The Company calculated the
fair value of the warrants to be $54,809, using the
Black-Scholes option pricing model and the expense was
recorded to the statement of operations. The assumptions used
in computing the fair value are a closing stock price of
$.1744, expected term was 2.5 years since the stock in not
heavily traded and the strike price and market price were
equal, the “plain vanilla” method was used to
determine the years. Also since the Company does not have a
history of stock prices over 2.5 years the Company used the
expected volatility of four similar entities within our
sector whose share or option price are publicly available,
per Staff Accounting Bulletin topic 14 interpretations and
guidance. The Company used the stock prices of four
comparative companies within our industry, calculated the
volatility for each Company and used the average of the four
comparable companies to determine that the expected
volatility of 120.65 %, the risk free rate was estimated to
be 1.3%.
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7 - Income Taxes | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Text Block] |
7
- Income
Taxes
Our
provision for income taxes at September 30, 2011 and 2010
consisted of the following
The
effective tax rates differ from the statutory rates for 2011
and 2010 primarily due to the following:
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3 - Receivable Due from Factor | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Financing Receivables [Text Block] |
3
- Receivable Due from
Factor
The
Company may at certain times during the year sell qualified
receivables to a factor (United Capital
Funding). This agreement allows the Company to
sell its qualified accounts receivable with recourse in
exchange for advances of funds equivalent to 83% of the value
of receivables, leaving 17% of the receivables as a reserve
by the factor for potential non-payment of the
Company’s receivables. The factoring facility is for a
term of one year, which was renewed in April 2011 and is
cancellable by either party upon one month’s written
notice, which provides a factoring line of up to
$1,000,000. As collateral for the repayment of
advances for receivables sold, the factor has a priority
security interest in all present and future assets and rights
of the Company. The factor has required that the Company
notify all customers that all payments must be made to a
lock-box controlled by the factor. The factoring
fee is 2.2% every thirty days or 26.4% annually. Factoring
fees charged to interest expense for the nine months ended
September 30, 2011 and 2010 were $58,123 and 27,217,
respectively.
As
of September 30, 2011, there were no open receivables sold to
a factor, leaving $460,632 due from the factor on all open
receivables. Management has reviewed the open receivables for
collectability and has determined that an allowance for
doubtful accounts for these receivables is not necessary as
of September 30, 2011.
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4 - Loan Receivable - Vendor | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Loans and Leases Receivable, Description |
4
- Loan Receivable -
Vendor
During
the nine months ended September 30, 2011, the Company loaned
$613,284 to Marlex Pharmaceuticals Inc., our contract
packager. The amount is unsecured, non-interest
bearing and has no stipulated repayment terms as the loan was
made on an oral agreement. Although there is no
written contract for this loan, the Company considers this to
be a current asset based on oral assurances from the
management of Marlex Pharmaceuticals that the loan would be
repaid within twelve months and the Company’s judgment
of Marlex’s abilitiy to pay its debt.
|
12 - Concentrations | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Concentration Risk Disclosure [Text Block] |
12
- Concentrations
The
Company purchased 100% of its product from one supplier
during the nine months ended September 30, 2011 and
2010. A disruption in the availability of product
from this supplier could cause a possible loss of sales,
which could affect operating results adversely.
The
Company derived approximately $4,542,000 or 86% and
approximately $1,927,000 or 100%, of its revenue from one
customer during the Nine months ended September 30, 2011
and 2010, respectively.
As
of September 30, 2011, one customer accounted for
approximately $368,000, or 80% of the Company’s
accounts receivable.
|
5 - Convertible Notes Payable | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | |||
Debt Disclosure [Text Block] |
5
- Convertible Notes
Payable
During
2010, the Company issued three one year $100,000 promissory
notes payable, aggregating $300,000. In June of
2011, the Company paid in full $100,000 for one of the three
notes that were issued in 2010. These notes are to be used
exclusively for the Company’s purchase orders. These
notes provide for interest only payments of 2%, payable
monthly in cash, or common stock of the Company at $0.25 per
share, at the option of the lender. There is no required
principal payment on the notes until maturity. The
principal portion of the notes can be converted into common
stock at any time during the one year term at the rate of
$.25 per share at the option of the lender. The
notes can be extended by mutual consent of the lender and the
Company.
Interest
expense associated with these notes for the nine months ended
September 30, 2011 and 2010, was $119,547 and $0,
respectively. Additionally, the Company issued to the note
holder 168,080 shares of common stock. These
shares of common stock are valued at $.25 per share and are
being amortized over the life of the notes. Total
value assigned to these shares was $42,020, of which $32,384
has been amortized as interest expense, the unamortized
discount on these notes as of September 30, 2011 is
$9,636.
|
1 - Basis of Presentation | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Business Description and Basis of Presentation [Text Block] |
1
- Basis of
Presentation
The
accompanying financial statements reflect financial
information of ScripsAmerica, Inc., (the
“Company” or “ScripsAmerica” or
“we”).
We
were incorporated in the State of Delaware on May 12, 2008,
and primarily engage in the sale of generic pharmaceutical
drugs through our main customer, McKesson Corporation
(McKesson”), to various end users, including
physicians’ offices, retail our pharmacies, long-term
care sites, hospitals and home care agencies, located
throughout the United States. We use a single vendor, Marlex
Pharmaceuticals, Inc. for our packaging, distribution,
warehouse and customer service needs.
The
accompanying unaudited interim financial statements of the
Company have been prepared in accordance with accounting
principles generally accepted in the United States of America
and Regulation S-X and should be read in conjunction with the
audited financial statements of ScripsAmerica and related
notes thereto contained in the audited financials for the
year ended December 31, 2010 included in the Company’s
Form S-1. Certain information and note disclosure
required in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted pursuant to regulation S-X. In the
opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the
interim periods presented have been reflected
herein. The results of operations for interim
periods are not necessarily indicative of the results to be
expected for the full year.
|
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10 - Commitments and Contingencies | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Commitments and Contingencies Disclosure [Text Block] |
10
- Commitments and
Contingencies
In
March 2010, the Company signed a “Product,
Manufacturing and Supply Agreement” with a contract
packager and labeler for orally disintegrating
tablets. The total value of this contract is
$935,000. As of September 30, 2011, the
Company has paid a total of $744,222, of which $200,000 is
considered a stand still fee that has been reflected as a
deposit on the balance sheet as of September 30, 2011 and
December 31, 2010. An expense of $276,887 was
recorded to operations as research and development costs for
the nine months period ended September 30,
2011. No expense was recorded for the nine month
period ended September 30, 2010. The balance of $190,778 at
September 30, 2011 is expected to be completed and paid in
2011. Upon the commencement of product shipped, a
7% royalty on the gross profit related to the orally
disintegrating tablet sales will be due on a quarterly
basis. The $200,000 deposit will be applied
towards this royalty payment.
|