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EX-5.1 - FOX LAW OPINION - ScripsAmerica, Inc.scrips_s1-ex0501.htm
EX-10.1 - SERIES A PREFERRED STOCK PURCHASE AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1001.htm
EX-10.11 - FACTORING AND SECURITY AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1011.htm
EX-10.2 - INVESTORS' RIGHTS AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1002.htm
EX-14.1 - CODE OF CONDUCT - ScripsAmerica, Inc.scrips_s1-ex1401.htm
EX-10.4 - INDEMNIFICATION AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1004.htm
EX-23.1 - COMSENT - ScripsAmerica, Inc.scrips_s1-ex2301.htm
EX-3.1 - AMENDED AND RESTATED CERTIFICATE OF INCORPORATION - ScripsAmerica, Inc.scrips_s1-ex0301.htm
EX-10.8 - PROMISSORY NOTE - ScripsAmerica, Inc.scrips_s1-ex1008.htm
EX-10.5 - RESTRICTIVE COVENANTS AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1005.htm
EX-10.6 - PRODUCT DEVELOPMENT, MANUFACTURING AND SUPPLY - ScripsAmerica, Inc.scrips_s1-ex1006.htm
EX-10.7 - PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1007.htm
EX-10.13 - FORM OF SUBSCRIPTION AGR - ScripsAmerica, Inc.scrips_s1-ex1013.htm
EX-10.12 - FORM OF SUBSCRIPTION AGR - ScripsAmerica, Inc.scrips_s1-ex1012.htm
EX-3.2 - BYLAWS - ScripsAmerica, Inc.scrips_s1-ex0302.htm
EX-10.10 - SERVICES AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1010.htm
EX-10.3 - RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT - ScripsAmerica, Inc.scrips_s1-ex1003.htm
As filed with the Securities and Exchange Commission on June 10, 2011
  
Registration Statement No. 333-______


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 
SCRIPSAMERICA, INC.
(Exact Name of Small Business Issuer in its Charter)

Delaware
5122
26-2598594
(State of Incorporation)
(Primary Standard Classification Code)
(IRS Employer ID No.)
 
77 McCullough Drive, Suite 7
New Castle, Delaware 19720
(800) 957-7622
 (Address and Telephone Number of Registrant’s Principal
Executive Offices and Principal Place of Business)
 
Robert Schneiderman, CEO
ScripsAmerica, Inc.
77 McCullough Drive, Suite 7
New Castle, Delaware 19720
(800) 957-7622
 (Name, Address and Telephone Number of Agent for Service)
 
Copies of communications to:
Fox Law Offices, P.A.
61 Knickerbocker Lane
Peaks Island, ME 04108
(207) 766-0944
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
  
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x
  
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o
  
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
   
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer   o (do not check if a smaller reporting company)
 
Smaller reporting company x
  
 
 

 
  
CALCULATION OF REGISTRATION FEE

Title of Each Class Of Securities to be Registered
 
Amount to be
Registered (1)
   
Proposed Maximum
Aggregate
Offering Price
per share (2)
   
Proposed Maximum
Aggregate
Offering Price
   
Amount of
Registration fee
 
                         
Common Stock, par value $.001
   
5,229,000
   
$
0.20
   
$
1,045,800
   
$
121.42
 

(1) In the event of a stock split, stock dividend, or similar transaction involving the common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act.  The amount of shares to be registered represents the Company’s good faith estimate of the number of shares that the registrant may issue pursuant to a Letter Agreement with the selling security holder.

(2) The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o).  Our common stock is not currently trading on any national exchange. Therefore, in accordance with Rule 457, the offering price of $0.20 was determined by the price shares of common stock that we sold in a Regulation S offering that closed in May 2011. The price of $0.20 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board at which time the shares may be sold at prevailing market prices or privately negotiated prices.
  
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine.


 
 
 
 
  
 
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and no offer to buy these securities is being solicited in any state where the offer or sale is not permitted.
 
PRELIMINARY SUBJECT TO COMPLETION, DATED JUNE 10, 2011
 
PROSPECTUS
 
SCRIPSAMERICA, INC.
5,229,000 shares of Common Stock
 
This prospectus covers the offer and sale of up to 5,229,200 shares of our common stock from time to time by the selling security holders named in this prospectus.  The shares of common stock covered by this prospectus are shares that are held, beneficially and of record, by the selling security holders.  We are not offering any shares of common stock.  The selling security holders will receive all of the net proceeds from sales of the common stock covered by this prospectus.
 
Our common stock is presently not traded on any national market or securities exchange or in the over-the-counter market.  The sales price to the public of the shares of our common stock offered by the selling security holders under this prospectus is fixed at $0.20 per share until such time as our common stock is quoted on the Over-The-Counter (OTC) Bulletin Board and/or the OTCQB or OTC Pink markets.  Although we intend to request a registered broker-dealer to apply with the Financial Industry Regulatory Authority to have our common stock eligible for quotation on the OTC Bulletin Board, public trading of our common stock may never materialize or, even if materialized, trading may not be sustained. If our common stock is quoted on the OTC Bulletin Board, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the selling security holders.  To the best of our knowledge, none of the selling security holders are broker-dealers, underwriters or affiliates thereof.
 
As of May 30, 2011 we had 51,218,680 shares of common stock issued and outstanding and 2,990,252 shares of Series A Preferred Stock issued and outstanding.  The Series A Preferred Stock is convertible into shares of our common stock but issuance and/or resale of such conversion shares are not covered by this prospectus.
 
INVESTING IN OUR COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.   PLEASE REFER TO “RISK FACTORS” BEGINNING ON PAGE 4.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
Our offices are located at 77 McCullough Drive, New Castle< Delaware  19720.  Our telephone number is (800) 957-7622.  Our website can be found at www.scripsamerica.com.
 
 
 
 
 
The Date of This Prospectus Is:  _______ __, 2011
 
 
 
 
    
 
 

 
 
TABLE OF CONTENTS
 
 
PAGE
Prospectus Summary
1
Summary Financial Data
2
Risk Factors
3
Use of Proceeds
7
Determination of Offering Price
7
Selling Shareholders
7
Plan of Distribution
12
Description of Securities to be Registered
15
Interest of Named Experts and Counsel
15
Description of Business
15
Description of Property
25
Legal Proceedings
25
Market for Common Equity and Related Stockholder Matters
25
Where You Can Find More Information
26
Financial Statements
27
Management’s Discussion and Analysis of Financial Condition and Results of Operations
28
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
37
Directors, Executive Officers, Promoters and Control Persons
38
Executive Compensation
41
Security Ownership of Certain Beneficial Owners and Management
41
Certain Relationships and Related Transactions
41
Disclosure of Commission Position of Indemnification for Securities Act Liabilities
42
 
You should rely only on the information contained in this prospectus.  We have not, and the selling security holder has not, authorized anyone to provide you with different information.  If anyone provides you with different information, you should not rely on it.  We are not, and the selling security holder is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.  You should assume that the information contained in this prospectus is accurate only as of the date on the front cover of this prospectus.  Our business, financial condition, results of operations and prospects may have changed since that date. In this prospectus, “ScripsAmerica”, “the Company”, “we”, “us” and “our” refer to ScripsAmerica, Inc., a Delaware corporation, unless the context otherwise requires.
  
 
  i

 
  
PROSPECTUS SUMMARY
 
This summary highlights selected information contained elsewhere in this prospectus.  This summary does not contain all the information that you should consider before investing in the common stock.  You should carefully read the entire prospectus, including “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements, before making an investment decision   .
 
About ScripsAmerica, Inc.
   
We are ScripsAmerica, Inc., a Delaware corporation that was formed on May 12, 2008.  We are a distributor of prescription and over the counter (OTC) pharmaceuticals.
  
We implement efficient supply chain management on behalf of our clients, from strategic sourcing to delivering niche generic pharmaceuticals to market.  Positioned in the center of the pharmaceutical value chain, we receive purchase orders from pharmaceutical distributors, contract with pharmaceutical packagers and their manufacturers to process orders to the end user’s specifications, and deliver product to a wide range of customers across the health care industry.
  
Our primary value lies in our growing portfolio of end users to whom we market our services.  For end users such as hospitals and home care agencies, custom packaging such as unit of use can save staff time and cost, as well as eliminate dispensing errors at the pharmacist level.  Further, we maintain a strategic relationship with the largest pharmaceutical distributor in North America.
  
In addition to purchase order fulfillment, ScripsAmerica seeks to diversify the Company’s revenue sources by securing FDA approval for and bringing to market so-called DESI drugs, while minimizing clinical risk, and by developing rapid melt formulations of vitamins, OTC drugs and certain generic products.  We also plan to acquire pharmaceutical packagers and pharmaceutical manufacturers for a vertical expansion of our business as well.
   
Principal Executive Offices
 
Our principal executive offices are located at 77 McCullough Drive, New Castle, Delaware 19720.  Our telephone number is (800) 957-7622 and our fax number is (215) 405-2650.  Our website address is www.scripsamerica.com.  The information on our website is not incorporated by reference into this prospectus and should not be relied upon with respect to this offering.
 
Recent Developments

On April 1, 2011 we closed on the sale of 2,990,252 shares of our Series A Preferred Stock to a single accredited investor for a purchase price of $1,043,000.  The sale of shares was exempt under Section 4(2) of the Securities Act as an offer and sale not involving a public offering.  Each share of Series A Preferred Stock is convertible into one share of our common stock.  The Series A Preferred Stock is paid a dividend at annual rate of 8% of the purchase price, which dividend is paid at the end of each fiscal quarter.  Of the seven members of our board of directors, the holder of the Series A Preferred Stock, as a single class, gets to elect one (1) director to the board and will vote with the common stockholders to four (4) directors (the common stockholders will elect, as a single class, two (2) directors).  The Series A Preferred Stockholder will have approval right over certain corporate actions, namely our liquidation or dissolution, any merger, share exchange or asset sale that results in a change of control, the payment of any dividends or the redemption of stock (except for stock dividends, change of control transaction and termination of employment or service).  The Series A Preferred Stock is convertible into 5,989,680 shares of our common stock (based on a conversion price of $0.1744, which was adjusted as a result of the forward stock split (as described below).  The conversion price of the Series A Preferred Stock will be adjusted for any issuances of stock by us at a price per share less than $0.1744 (subject to certain exemptions such as securities issued under an employee stock option plan or securities issued in business transactions approved by our board).  The Series A Preferred Stock has priority to assets over the common stockholders in the event of a liquidation, dissolution or any merger, share exchange or consolidation in which we are not the surviving entity or there is a change in control of us).  These rights of the Series A Preferred Stockholder continue until all of the shares of Series A Preferred Stock are converted into our common stock.
  
On April 15, 2011, we had a forward two-for-one stock split.  In addition, as a result of the forward stock split, we adjusted the conversion price of the Series A Preferred Stock to $0.1744 (reduced from $0.3488).
 
In April 2011, we sold 5,200,000 shares of our common stock to four purchasers for an aggregate purchase price of $176,000.  Each of the purchasers was a corporation formed outside of the United States with a business address located outside of the United States. This transaction was exempt from the registration provisions of the Securities Act pursuant to Regulation S as an offshore transaction with non-U.S. persons (as such term is defined in Rule 902 of Regulation S).
 
In May 2011, we sold 29,000 shares of our common stock to 58 purchasers for an aggregate purchase price of $5,800.  Each of the purchasers was a non-U.S. citizen with a residence address located outside of the United States. This transaction was exempt from the registration provisions of the Securities Act pursuant to Regulation S as an offshore transaction with non-U.S. persons (as such term is defined in Rule 902 of Regulation S).
 
 
1

 
   
SUMMARY FINANCIAL DATA
 
The following tables summarize the financial data for our business. You should read this summary financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, all included elsewhere in this prospectus.
  
We derived the statements of income data for the years ended December 31, 2009 and 2010 and the balance sheet data as of December 31, 2009 and 2010, from our audited financial statements included elsewhere in this prospectus.  Our historical results are not necessarily indicative of the results that may be expected in the future.

   
For the Year
Ended
   
For the Year
Ended
    For the Three Months Ended   
   
December 31, 2010
(Audited)
   
December 31, 2009
(Audited)
   
March 31,
2011
(Unaudited)
   
March 31,
2010
(Unaudited)
 
                         
Net Sales
  $ 3,221,320     $ --     $ 1,641,233     $ 310,227  
                                 
Gross Profit
  $ 677,399     $ --     $ 465,844     $ 51,850  
                                 
Total Operating Expenses
  $ 360,900     $ (25,599 )   $ 382,428     $ 142  
                                 
Net Income
  $ 127,072     $ 16,090     $ 12,056     $ 34,128  
                                 
Earnings Per Common Share – Basic and Diluted
  $ --     $ --     $ --     $  --  
 
  
BALANCE SHEET DATA:
 
As of
December 31, 2010
(Audited)
   
As of 
December 31, 2009
(Audited)
   
As of 
March 31, 2011
(Unaudited)
 
                     
Cash
 
$
171,898
   
$
503
     532,540  
                         
Working Capital
 
$
55,895
   
$
56,503
    $ 100,451  
                         
Notes payable – related parties
 
$
60,000
   
$
--
    $ 80,000  
                         
Total Current Liabilities
 
$
428,310
   
$
--
    $ 629,375  
                         
Stockholders’ equity
 
$
264,895
   
$
63,803
    $ 309,451  

The Offering

Shares of common stock being registered
 
5,229,000 shares of our common stock offered by selling security holders
     
Total shares of common stock outstanding as of the date of this prospectus
 
51,218,680
     
Total proceeds raised by us from the disposition of the common stock by the selling security holders or their transferees
 
We will not receive any proceeds from the sale of shares by the selling security holders
   
 
2

 
  
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, the development of the market for our products and the acceptance of our products in these markets, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
  
This prospectus contains industry data and other statistical information regarding packaging, distribution and sales and marketing services for the pharmaceutical industry that we obtained from independent publications, government publications, press releases, reports by market research firms or other published independent sources. Although we believe these sources are reliable, we have not independently verified their data.


RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this prospectus before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. Please note that throughout this prospectus, the words “we”, “our” or “us” refer to the Company and its subsidiary not to the selling stockholders.
 
Risk Related to Our Company
   
Disruptions in our supply chain or among other companies providing services to us could adversely affect our ability to fill purchase orders, which would have a negative impact on our financial performance.   The failure of a single source in the supply chain would cause only minor delays in our ability to fill purchase orders.  In the event of a supply gap, we would either procure product in the market, if available at a reasonable cost, or work with other sources to formulate the drug in question.  Such fixes to the supply gap would cause delay of shipment and increase costs, both of which would have negative impact on our profitability and our results of operations.

We have significant credit and sales concentration as we only have one main customer.  Substantial defaults in payments by such customer, a material reduction in purchases or the loss of such customer as a customer could have a material adverse impact on ScripsAmerica’s financial condition, results of operations, and liquidity.  For the year ended December 31, 2010, McKesson accounted for 100% of our sales.  At present, McKesson is our only customer and they provide us access to the end users of our products and services.  As a result, our sales and credit concentration is significant.  In the event that McKesson experiences difficulties that would result in its default on payments due to us, a material reduction in purchase orders, or a termination of the relationship, our operations would come to a halt until we established an equivalent relationship with another large distributor.  Development of additional distributor relationships for risk diversification purposes will be a focus for us as we expand our operations.
    
Competition from horizontal and vertical markets involved in pharmaceutical distribution business may erode our profit.  Our distribution arm faces competition, both in price and service, from national, regional, and local full-line, short-line, and specialty wholesalers, service merchandisers, self-warehousing chains, manufacturers engaged in direct distribution, and large payor organizations. In addition, competition exists from various other service providers and from pharmaceutical and other healthcare manufacturers (as well as other potential customers) which may from time to time decide to develop, for their own internal needs, supply management capabilities that would otherwise be provided by us. Price, quality of service, and in some cases convenience to the customer are generally the principal competitive elements in this segment.
  
 
3

 
  
Any acquisitions of technologies, products and businesses that we may acquire to expand or complement our business may be difficult to integrate, could adversely affect our relationships with key customers, and/or could result in significant charges to earnings as well potential dilution to existing stockholders. One element of our business strategy is to identify, pursue and consummate acquisitions that either expand or complement our business.  Integration of acquisitions entails a number of risks including the diversion of management’s attention to the assimilation of the operations of acquired businesses; difficulties in the integration of operations and systems; the realization of potential operating synergies; the retention of the personnel of the acquired companies; accounting, regulatory or compliance issues that could arise; challenges in retaining the customers of the combined businesses; and a potential material adverse impact on operating results.  If we are not able to successfully integrate our acquisitions, we may not obtain the advantages and synergies that the acquisitions were intended to create, which may have a material adverse effect on our business, results of operations, financial condition and cash flows, our ability to develop and introduce new products and the market price of our stock. In addition, in connection with acquisitions, we could experience disruption in our business, technology and information systems, customer or employee base, including diversion of management’s attention from our continuing operations. There is also a risk that key employees of companies that we acquire or key employees necessary to successfully commercialize technologies and products that we acquire may seek employment elsewhere, including with our competitors. Furthermore, In addition, we will require additional financing in order to fund future acquisitions, which may or may not be attainable.  In addition, if we acquire businesses or products, or enter into other significant transactions, we expect to experience significant charges to earnings for merger and related expenses. These costs may include substantial fees for investment bankers, attorneys, accountants and financial printing costs and severance and other closure costs associated with the elimination of duplicate or discontinued products, operations and facilities. Charges that we may incur in connection with acquisitions could adversely affect our results of operations for particular quarterly or annual periods.  Finally, we may use shares of our common stock to finance some or all of the purchase price of an acquisition, which may result in a downward trend in our stock price, especially if our results of operations are negatively impacted by such acquisition(s).
   
We could suffer reputational and financial damage in the event of product recalls.  We may be held liable if any product we develop or market causes illness or injury or is found otherwise unsuitable.  In addition to any reputational damage we would suffer, we cannot guarantee that our supplier’s product liability insurance would fully cover potential liabilities.  However, we are named as an additional insured on the product liability insurance policies of our suppliers.  Although our management believes that coverage limits specified by these policies are sufficient.  In the event of litigation, any adverse judgments against us would have a material adverse effect on our financial condition, including our cash balances, and results of operations.
    
Our ability to operate effectively could be impaired if we were to lose the services of our key personnel, or if it were unable to recruit key personnel in the future.  Our near-term success will depend to a significant extent on the skills and efforts of Robert Schneiderman and Jeffrey Andrews.  While the Company plans to enter into employment agreements with Messrs. Schneiderman, and Andrews in the coming months, such agreements do not assure the services of such personnel as employees may voluntarily terminate their employment with us at any time.  The loss of one or more current key employees could have a material adverse effect on our business even if replacements were hired.  Our success also depends on its ability to attract and retain additional qualified employees in the future.  Competition for such personnel is intense, and we will compete for qualified personnel with numerous other employers, many of whom have greater financial and other resources than the Company does.  Our plans to incentivize employees to engage in a long-term relationship with the Company through awarding equity as part of overall compensation.

We may not successfully manage any growth that we may experience through the potential acquisitions we are evaluating, which may result in poor results of operations and may harm our growth.  Our future success will depend upon not only product development but also on the expansion of our pharmaceutical supply chain management service business and the effective management of any such growth, which will place a significant strain on our management and on our administrative, operational, and financial resources.  To manage any such growth, we will need to integrate into our existing new facilities, employees and operational, financial and management systems.  For such integration to be done successfully, our management will need to devote its resources and time to the process.  That focus may draw management’s attention from other aspects of the business, such as revenue trends, expense management and/or strategic decisions.  If we are unable to manage our growth effectively, our business and results of operations would be harmed as our growth could be adversely affected by such mismanagement.
       
 
4

 
   
Risks Related to Our Industry
 
Changes in the U.S. healthcare environment could have a material adverse impact on our results of operations.  In recent years, the U.S. healthcare industry has changed significantly in an effort to reduce costs. These changes include increased use of managed care, cuts in Medicare and Medicaid reimbursement levels, consolidation of pharmaceutical and medical-surgical supply distributors, and the development of large, sophisticated purchasing groups. Some of these changes, such as adverse changes in government funding of healthcare services, legislation or regulations governing the delivery or pricing of pharmaceuticals and healthcare services or mandated benefits, may cause healthcare industry participants to reduce the amount of our products and services they purchase or the price they are willing to pay for our products and services. Changes in the healthcare industry’s or our pharmaceutical suppliers’ pricing, selling, inventory, distribution or supply policies or practices could also significantly reduce our revenues and net income.  Healthcare and public policy trends indicate that the number of generic drugs will increase over the next few years as a result of the expiration of certain drug patents. While this is expected to be a positive development for us, changes in pricing of certain generic drugs could have a material adverse impact on our revenues and our results of operations.

Regulation of our distribution business could impose increased costs, delay the introduction of new products, which could negatively impact our business.  The healthcare industry is highly regulated. As a result, we and our suppliers and distributor are subject to various local, state and federal laws and regulations, which include the operating and security standards of the Drug Enforcement Administration (DEA), the FDA, various state boards of pharmacy, state health departments, the HHS, CMS, and other comparable agencies. The process and costs of maintaining compliance with such operating and security standards could impose increased costs, delay the introduction of new products and negatively impact our business.  For example, there have been increasing efforts by various levels of government agencies, including state boards of pharmacy and comparable government agencies, to regulate the pharmaceutical distribution system in order to prevent the introduction of counterfeit, adulterated and/or mislabeled drugs into the pharmaceutical distribution system. Certain states have adopted or are considering laws and regulations that are intended to protect the integrity of the pharmaceutical distribution system, while other government agencies are currently evaluating their recommendations.  In addition, the U.S. Food and Drug Administration (“FDA”) Amendments Act of 2007, which went into effect on October 1, 2007, requires the FDA to establish standards and identify and validate effective technologies for the purpose of securing the pharmaceutical supply chain against counterfeit drugs. These standards may include any track-and-trace or authentication technologies, such as radio frequency identification devices and other similar technologies. These pedigree tracking laws and regulations could increase the overall regulatory burden and costs associated with our pharmaceutical distribution business, and would have a material adverse impact on our operating expenses and our results of operations.

Risks Related to Our Stock
 
We may need to raise additional capital by sales of our common stock, which may adversely affect the market price of our common stock and your rights in us may be reduced.
 
We expect to continue to incur product development and selling, general and administrative costs, and as well as funding for potential acquisitions.  In order to satisfy our funding requirements we may consider issuing additional debt or equity securities.  If we issue equity or convertible debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we incur additional debt, it may increase our leverage relative to our earnings or to our equity capitalization, requiring us to pay additional interest expenses and potentially lower our credit ratings. We may not be able to market such issuances on favorable terms, or at all, in which case, we may not be able to develop or enhance our products, execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements.

There is currently no public market for our shares and if such a market materializes, our stockholders may still not be able to resell their shares at or above the price at which they purchased their shares.

There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained. We intend to apply for admission to quotation of our securities on the OTC Bulletin Board, as well as the OTCQB and OTCPink, after this prospectus is declared effective by the SEC.  If for any reason our common stock is not quoted on the OTC Bulletin Board (or the OTCQB and OTC Pink) or a public trading market does not otherwise develop, purchasers of the shares may have difficulty selling their common stock should they desire to do so.  No market makers have committed to becoming market makers for our common stock and none may do so.

State securities laws may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this prospectus.

Secondary trading in common stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state.  If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted thus causing you to realize a loss on your investment.
   
 
5

 
   
Our board of directors has the power to designate a series of preferred stock without shareholder approval that could contain conversion or voting rights that adversely affect the voting power of holders of our common stock and may have an adverse effect on our stock price.
 
Our Certificate of Incorporation provide for the authorization of 10,000,000 shares of “blank check” preferred stock.  Pursuant to our Certificate of Incorporation, our Board of Directors is authorized to issue such “blank check” preferred stock with rights that are superior to the rights of stockholders of our common stock, at a purchase price then approved by our Board of Directors, which purchase price may be substantially lower than the market price of shares of our common stock, without stockholder approval.  In March 2011, our Board of Directors authorized 2,990,252 shares of Series A Preferred Stock for a private placement of such shares for an aggregate purchase price of $1,043,000.  Though we currently do not have any plans to issue any additional shares of preferred stock, such issuance could give the holders of such preferred stock voting control of the Company which would have a negative effect on the voting power of the holders of our common stock and may cause our stock price to decline.

The sale of shares of common stock issuable upon the conversion of our outstanding shares of our Series A Preferred Stock could have a negative impact on the market price of our stock if sold.  We have 2,990,252 shares of Series A Preferred Stock that are convertible into 5,980,504 shares of common stock (representing approximately 10.5% of the outstanding stock on a fully diluted basis).  On October 1, 2011, the shares of common stock may issuable upon the conversion of the Series A Preferred Stock may be sold to the public under Rule 144 (subject only to the volume limitations of Rule 144(d)).  If our common stock does not trade with large enough share volume, the sales of the common stock issued upon the conversion of the Series A Preferred Stock may cause the price of our stock to drop significantly.  Additionally, the holder of the Series A Preferred Stock has registration rights for the shares of common stock issuable upon the conversion of the Series A Preferred Stock.  If the Series A Preferred stockholder exercises such registration rights, such stockholder could sell a large number of shares of our common stock which could cause significant drop in our stock price.

The outstanding shares of our Series A Preferred Stock are entitled to rights and privileges in regard to distribution of assets and protective provisions which may result in actions adverse to the holders of our common stock.  So long as there are shares of Series A Preferred Stock outstanding, the holders of such security are entitled to an annual dividend of 8% of the original purchase price, as well as priorities to our distribution of cash and other assets.  The holder Series A Preferred Stockholder also has veto power over certain corporate matters, such as redeeming or repurchasing capital stock or any merger, consolidation or share exchange that would result in a change of control.  The rights of the Series A Preferred Stockholder will continue until all of the shares are converted into our common stock (either voluntarily or upon an underwritten IPO in which we have gross proceeds of at least $25 million and a price per share of at least $0.872).  The holder of such rights of the Series A Preferred Stock may have interests adverse to the common stockholders and the exercise of such rights may have a negative impact on the value of our common stock or the amount of cash or other assets our common stockholders may receive in connection with a distribution or merger, consolidation or share exchange.

Our principal shareholders have significant voting power and may take actions that may not be in the best interest of our other shareholders, who will have no influence over shareholder decisions.  Robert Schneiderman, our Chief Executive Officer and a director, and Steve Urbanski, our Executive Vice President and a director, each own 19,980,000, which is approximately 39% of the outstanding shares of our common stock.  Messrs. Schneiderman and Urbanski have the ability to exert virtual control over all matters requiring approval of our shareholders, including the election and removal of directors and the approval of mergers or other business combinations (in each case subject to the rights of the Series A Preferred Stockholder as long as there are any such shares outstanding).  This concentration of control could be disadvantageous to other shareholders whose interests are different from those of Messrs. Schneiderman and Urbanski.  Although there is no voting arrangement between Messrs. Schneiderman and Urbanksi, this concentration of ownership, nonetheless, may have the effect of delaying, deferring, or preventing a change in control, impeding a merger, consolidation, takeover, or other business combination involving us, or discouraging a potential acquirer from making a tender offer, or otherwise attempting to obtain control of us or our business, even if such a transaction would benefit other shareholders. 

We do not intend to pay dividends for the foreseeable future except to the Series A Preferred Stockholder.
 
We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future.  Except for any dividends owed to the holder of our Series A Preferred Stock, we anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
   
 
6

 
        
Our common stock is expected to be considered “a penny stock” and, as a result, it may be difficult to trade a significant number of shares of our common stock.
 
The Securities and Exchange Commission (“SEC”) has adopted regulations that generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions.  When our common stock becomes eligible for quotation on the OTC markets (such as the bulletin board or OTCQB), we expect the market price of our common stock to be less than $5.00 per share.  As a result of our prior private placements and our forward stock split, we have increased the number of shares outstanding by almost three-fold.  Consequently, when our common stock becomes eligible for quotation on the OTC markets it is likely that the market price for our common stock will remain less than $5.00 per share for the foreseeable future and, therefore, may be a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors hereunder to sell their shares. In addition, because we are seeking to have our common stock trade on the OTC markets, investors may find it difficult to obtain accurate quotations of the stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price.
   
USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares by the selling stockholders.

  
DETERMINATION OF OFFERING PRICE

Our common stock is presently not traded on any national market or securities exchange or in the over-the-counter market.  As there is no existing public market for our securities, the shares offered for resale hereunder by the selling security holders must initially be offered at a fixed price.

The sales price to the public of the shares of our common stock offered by the selling security holders under this prospectus is fixed at $0.20 per share until such time as our common stock is quoted on the Over-The-Counter (OTC) Bulletin Board, the OTCQX and/or the OTCQB and a public market exists for our common stock.   This fixed sales price was determined by using the most recent price paid in cash that we received for our stock, which was the price in our Regulation S offering to the selling security holders as described below in the “Selling Security Holders” section. We expect that the selling security holders will offer their stock in lots of at least 100 shares at the fixed price set forth in the Amendment.   It is uncertain, however, how much demand there will be for these shares prior to the commencement of the public trading market.
  

SELLING SHAREHOLDERS

The following table sets forth the name of the selling shareholders, the number of shares of common stock owned, the number of shares of common stock registered by this prospectus and the number and percent of outstanding shares that the selling shareholder will own after the sale of the registered shares, assuming all of the shares are sold.  The information provided in the table and discussions below has been obtained from the selling shareholder.  As used in this prospectus, “selling shareholder” includes donees, pledges, transferees or other successors in interest selling shares of our common stock received from the named selling shareholder as a gift, pledge, distribution or other non-sale related transfer.  Within the past three years, none of the selling security holders has held any position, office, or other material relationship with us or any of our predecessors or affiliates.
  
Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the Securities and Exchange Commission under the Exchange Act.  Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable.  As of May 30, 2011, there were 51,218,680 shares of our common stock issued and outstanding.
  
Beneficial Ownership of Common Stock
Prior to this Offering
Number of Shares
to  be Sold
Beneficial Ownership of Common Stock
after this Offering
Selling Shareholder
Number
of Shares
Percent
of Class
Under this
Prospectus (1)
Number of
Shares (2)
Percent of
Class (3)
Baypointe Investments Ltd. (4)
1,300,000
2.5%
1,300,000
0
--
Burnt Rock Investments Ltd. (5)
1,300,000
2.5%
1,300,000
0
--
Blue Shade Inc. (6)
1,300,000
2.5%
1,300,000
0
--
Harvest Enterprises Limited (8)
1,300,000
2.5%
1,300,000
0
--
  
 
7

 
   
Beneficial Ownership of Common Stock
Prior to this Offering
Number of Shares
to  be Sold
Beneficial Ownership of Common Stock
after this Offering
Selling Shareholder
Number
of Shares
Percent
of Class
Under this
Prospectus (1)
Number of
Shares (2)
Percent of
Class (3)
Zahid Abdullatif
Apt. 33
7030 Ch. De La Cote-Saint Luc
Montreal, Quebec H4V 1J3
Canada
500
*
500
0
--
Marc Aboaf
21 Har Rotem Street
44539 Kear Saba
Israel
500
*
500
0
--
Claude N. Allard
2 Willow Cresc
Orangeville, Ontario L9V 1A5
Canada
500
*
500
0
--
Lori Dawn Allard
2 Willow Crescent
Orangeville, Ontario L9V 1A5
Canada
500
*
500
0
--
Arnel Asube
30 Halldorson Avenue
Aurora, Ontario L4G 7Z1
Canada
500
*
500
0
--
Rachelle Bat-Amy
55 Russell Avenue
Ottawa, Ontario K1N TW9
Canada
500
*
500
0
--
Karen Bell
1614 Avonmore Square
Pickering, Ontario
Canada L1V 7H4
500
*
500
0
--
Charles Benedek
5659 Av Jellico
Cote Saint-Luc, Quebec
H4W 1Z5
Canada
500
*
500
0
--
Naomi Berkowitz
5755 Leger
Cote-Saint-Luc, Quebec
H4W 2E8
Canada
500
*
500
0
--
Robert Biancolin
77 Castlewood Road
Toronto, Ontario M5N 2L3
Canada
500
*
500
0
--
Iola Biancolin
77 Castlewood Road
Toronto, Ontario M5N 2L3
Canada
500
*
500
0
--
Layla Biancolin
Apt. 804
135 George St. South, Toronto, Ontario M5A 4E8 Canada
500
*
500
0
--
   
 
8

 
 
Beneficial Ownership of Common Stock
Prior to this Offering
Number of Shares
to  be Sold
Beneficial Ownership of Common Stock
after this Offering
Selling Shareholder
Number
of Shares
Percent
of Class
Under this
Prospectus (1)
Number of
Shares (2)
Percent of
Class (3)
Maurice Biancolin
Apt. 804
135 George St. South, Toronto, Ontario M5A 4E8 Canada
500
*
500
0
--
Dimitrios Catsiliras
241 Westwood Avenue
Toronto, Ontario M4J 2H3
Canada
500
*
500
0
--
Morris Chaikelson
4950 Ponsard Avenue
Montreal, Quebec H4W 2A5
Canada
500
*
500
0
--
Roberto Ciancibello
50 Old Mill Road, GLA-6, Oakville, Ontario, L6J 7W1
Canada
500
*
500
0
--
Louise Clement
2293 Avenue D'Oxford
Montreal, Quebec H4A 2X7
Canada
500
*
500
0
--
Leonard Cohen
Apt. 29
7030 Ch. De La Cote-Saint-Luc
Montreal, Quebec H4V 1J3
Canada
500
*
500
0
--
Rosario Cojuangco
30 Halldorson Avenue
Aurora, Ontario L4G 7Z1
Canada
500
*
500
0
--
Lucinda Daly
900 - 150 Ferrand Drive
Toronto, Ontario M3C 3E5
Canada
500
*
500
0
--
Avraham Einhoren
750 Bay Street
Toronto, Ontario M5G 1N6
Canada
500
*
500
0
--
Oher Einhoren
6 Joe Amar Street
Kefar-Saba, Israel
500
*
500
0
--
Menahem Einhoren
Am Bergfried 1
Langen Germany 63225
500
*
500
0
--
Naama Einhoren
750 Bay Street
Toronto, Ontario M5G 1N6
Canada
500
*
500
0
--
Robert Gold
900 - 150 Ferrand Drive
Toronto, Ontario M3C 3E5
Canada
500
*
500
0
--
Alpha Huynh
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
Linh Tu Huynh
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
   
 
9

 
 
Beneficial Ownership of Common Stock
Prior to this Offering
Number of Shares
to  be Sold
Beneficial Ownership of Common Stock
after this Offering
Selling Shareholder
Number
of Shares
Percent
of Class
Under this
Prospectus (1)
Number of
Shares (2)
Percent of
Class (3)
Mai Huynh
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
Sinh Huynh
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
Van Tu Huynh
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
Xuan Thi Huynh
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
Yome Huynh
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
Gerald Issenman
225 Stanstead Avenue
Montreal, Quebec H3R 1X4
Canada
500
*
500
0
--
Elisa Maguolo
Via Chiarin 101b
Campalto, Venezia
Italy
500
*
500
0
--
Shari McMaster
601 - 130 Bloor Street West
Toronto, Ontario M5S 1N5
Canada
500
*
500
0
--
Jodi Parnass
32 Stephenson
Dollard des Ormeaux, Quebec
H9A 2V9 Canada
500
*
500
0
--
Paul Rubin
402-3495 Du Musee
Montreal, Quebec H3G 2C8
Canada
500
*
500
0
--
Binh Quach
1568 Princelea Place
Mississauga, Ontario L5M 3P2
Canada
500
*
500
0
--
Cuc Quach
1568 Princelea Place
Mississauga, Ontario L5M 3P2
Canada
500
*
500
0
--
Pat Rubin
402-3495 Du Musee
Montreal, Quebec H3G 2C8
Canada
500
*
500
0
--
   
 
10

 
 
Beneficial Ownership of Common Stock
Prior to this Offering
Number of Shares
to  be Sold
Beneficial Ownership of Common Stock
after this Offering
Selling Shareholder
Number
of Shares
Percent
of Class
Under this
Prospectus (1)
Number of
Shares (2)
Percent of
Class (3)
Stephen Smith
755 Leger
Cote-Saint-Luc, Quebec
H4W 2E8
Canada
500
*
500
0
--
Cheryl Stoyanovski
1673 Pepperwood Gate
Pickering, Ontario L1X 2G1
Canada
500
*
500
0
--
Tom Stoyanovski
1673 Pepperwood Gate
Pickering, Ontario L1X 2G1
Canada
500
*
500
0
--
Jeff Suissa
32 Stephenson
Dollard des Ormeaux, Quebec H9A 2V9
Canada
500
*
500
0
--
Chu Thai
4118 Sunset Valley Court
Mississauga, Ontario L4W 3L5
Canada
500
*
500
0
--
Andrew Thomas
2559 Burnford Trail
Mississauga, Ontario L5M 5E3
Canada
500
*
500
0
--
Paul Thomas
24 Wellesley St. W.
Suite 2110
Toronto, Ontario M4Y 2X6
Canada
500
*
500
0
--
Ronald Thomas
350 Doon Valley Drive
Unit 7B
Kitchener, Ontario L5M 3P2
Canada
500
*
500
0
--
Shirley Thomas
350 Doon Valley Drive
Unit 7B
Kitchener, Ontario L5M 3P2
Canada
500
*
500
0
--
Shizuka Thomas
2559 Burnford Trail
Mississauga, Ontario L5M 5E3
Canada
500
*
500
0
--
Sherri Trager
225 Stanstead Avenue
Montreal, Quebec H3R 1X4
Canada
500
*
500
0
--
Lorne Wolf
2567 Bedford
Montreal, Quebec H35 1E8
Canada
500
*
500
0
--
 
 
11

 
  
Beneficial Ownership of Common Stock
Prior to this Offering
Number of Shares
to  be Sold
Beneficial Ownership of Common Stock
after this Offering
Selling Shareholder
Number
of Shares
Percent
of Class
Under this
Prospectus (1)
Number of
Shares (2)
Percent of
Class (3)
Gayle Wolf
2567 Bedford
Montreal, Quebec H35 1E8
Canada
500
*
500
0
--
Paul Zammit
601 - 130 Bloor Street West
Toronto, Ontario M5S 1N5
Canada
500
 
500
0
--
Peggy Zammit
601 - 130 Bloor Street West
Toronto, Ontario M5S 1N5
Canada
500
 
500
0
--
Rosana Zammit
33 Rosehill Avenue
Apt. 2908
Toronto, Ontario M4T 1G4
500
 
500
0
--
Sondra Zammit
5795 Yonge Street
Apt. 1108
Toronto, Ontario M2m 4J3
Canada
500
 
500
0
--
Robert Zirbi
55 Russell Avenue
Ottawa, Ontario K1N TW9
Canada
500
 
500
0
--

*Less than one percent (1%)

(1)
The number of shares set forth in the table represents an estimate of the number of common shares to be offered by the selling shareholder.  We have assumed the sale of all of the common shares offered under this prospectus will be sold. However, as the selling shareholder can offer all, some or none of its common stock, no definitive estimate can be given as to the number of shares that the selling shareholder will offer or sell under this prospectus.
(2)
These numbers assume the selling shareholder sells all of its shares after the completion of the offering.
(3)
Based on 45,989,680 shares of common stock outstanding after the completion of the offering.
(4)
Chang Yong You, the owner of Baypointe Investments Ltd., has the power to vote and dispose of the Company’s securities held by Baypointe Investments Ltd.  Baypointe Investments Ltd. has a business address at P.O. Box CR 56766, Suite 1252, #33 Harbour Bay Plaza, East Bay Street, Nassau, Bahamas
(5)
Young Hae Shin, the owner of Burnt Rock Investments Ltd., has the power to vote and dispose of the Company’s securities held by Burnt Rock Investments Ltd.  Burnt Rock Investments Ltd. has a business address at PO Box AP 59205, Suite 321, Norfork House, Frederick Street, Nassau Bahamas.
(6)
Wilfred Gatambia Kamau, the owner of Blue Shade Inc., has the power to vote and dispose of the Company’s securities held by Blue Shade Inc.  Blue Shade Inc. has a business address at PO Box 14, Clarkes Estate, Cades Bay, Nevis, West Indies.
(7)
Hyo Ki Lim, the owner and Chief Executive Officer of Harvest Enterprises Limited, has the power to vote and dispose of the Company’s securities held by Harvest Enterprises Limited.  Harvest Investments Ltd. has a business address at PO Box 14, Clarkes Estate, Cades Bay, Nevis, West Indies.

  
PLAN OF DISTRIBUTION
 
As of the date of this prospectus, there is no market for our securities.  After the date of this prospectus, we expect to have an application filed with the Financial Industry Regulatory Authority for our common stock to be eligible for trading on the OTC Bulletin Board as well as the OTCQB and the OTC Pink.  Until our common stock becomes eligible for trading on the OTC Bulletin Board or the OTCQB or the OTC Pink, the selling shareholders will be offering our shares of common stock at a fixed price of $0.20 per share of common stock.  After our common stock becomes eligible for trading on the OTC Bulletin Board, the OTCQB or the OTC Pink, the selling shareholders may, from time to time, sell all or a portion of the shares of common stock on OTC Bulletin Board, the OTCQB and/or the OTC Pink or any market upon which the shares of common stock may be listed or quoted currently the OTC Bulletin Board, the OTCQB and/or the OTC Pink in the United States, in privately negotiated transactions or otherwise. After our common stock becomes eligible for trading on the OTC Bulletin Board, the OTCQB and/or the OTC Pink, such sales may be at fixed prices prevailing at the time of sale, at prices related to the market prices or at negotiated prices.
   
 
12

 
  
After our common stock becomes eligible for trading on the OTC Bulletin Board, the OTCQB or the OTC Pink, the shares of common stock being offered for resale by this prospectus may be sold by the selling shareholders by one or more of the following methods, without limitation:
 
 
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
     
 
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
     
 
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
     
 
an exchange distribution in accordance with the rules of the applicable market or exchange;
     
 
privately negotiated transactions;
     
 
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
     
 
broker-dealers may agree with the selling shareholders to sell a specified number of shares at a stipulated price per share;
     
 
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
     
 
a combination of any of these methods of sale; or
     
 
any other method permitted pursuant to applicable law.
  
The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
 
Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA/NASD Rule 2440 in the FINRA Manual; and in the case of a principal transaction a markup or markdown in compliance with FINRA/NASD IM-2440.   Before our common stock becomes eligible for trading on the OTC Bulletin Board, broker-dealers may agree with a selling shareholder to sell a specified number of the shares of common stock at a price per share of $0.00533.  After our common stock becomes eligible for trading on the OTC Bulletin Board, broker-dealers may agree with a selling shareholder to sell a specified number of the shares of common stock at a stipulated price per share.
 
In connection with the sale of shares, the selling shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares in the course of hedging the positions they assume. The selling shareholders may also sell shares short and deliver these shares to close out their short positions, or loan or pledge shares to broker-dealers that in turn may sell these shares. The selling shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to that broker-dealer or other financial institution of shares offered by this prospectus, which shares that broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect that transaction).
 
We will be paying certain fees and expenses incurred by us incident to the registration of the shares.
 
We will keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the selling shareholders without registration and without regard to any volume limitations by reason of Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws.  In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
  
 
13

 
 
Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any person engaged in the distribution of the shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.  In addition, the selling shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations there under, including Regulation M, which may limit the timing of purchases and sales of the shares by the selling shareholders or any other person.  We will make copies of this prospectus available to the selling shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale or provide adequate notice of this prospectus (in each case in compliance with Rule 172 under the Securities Act).
 
Blue Sky Restrictions on Resale

When a selling shareholder wants to sell shares of common stock under this registration statement, the selling shareholders will also need to comply with state securities laws, also known as "Blue Sky laws," with regard to secondary sales.  All states offer a variety of exemption from registration for secondary sales.  Many states, for example, have an exemption for secondary trading of securities registered under Section 12(g) of the Securities Exchange Act of 1934 or for securities of issuers that publish continuous disclosure of financial and non-financial information in a recognized securities manual, such as Standard & Poor's. The broker for a selling shareholder will be able to advise a selling shareholder which states our shares of common stock is exempt from registration with that state for secondary sales.
  
Any person who purchases shares of common stock from a selling shareholder under this registration statement who then wants to sell such shares will also have to comply with Blue Sky laws regarding secondary sales.  When the registration statement becomes effective, and a selling shareholder indicates in which state(s) he desires to sell his shares, we will be able to identify whether it will need to register or will rely on an exemption there from.

Penny Stock Regulations

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
 
 
That a broker or dealer approve a person’s account for transactions in penny stocks; and
     
 
That the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
    
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
 
 
Obtain financial information and investment experience objectives of the person; and
     
 
Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
   
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market, which, in highlight form:
 
 
Sets forth the basis on which the broker or dealer made the suitability determination; and
     
 
Specifies that the broker or dealer received a signed, written agreement.
        
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
    
 
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DESCRIPTION OF SECURITIES TO BE REGISTERED

Under our Certificate of Incorporation, as amended, we are authorized to issue up to 150,000,000 shares of Common Stock, and 10,000,000 shares of Preferred Stock.  As of May 30, 2011 there were 51,218,680 shares of common stock issued and outstanding and 2,990,252 shares of Series A Preferred Stock issued and outstanding.  The Series A Preferred Stock is convertible into shares of our common stock but issuance and/or resale of such conversion shares are not covered by this prospectus
 
Common Stock

The holders of Common Stock are entitled to one vote for each share of such stock held of record by them.  The holders of record of the shares of common stock, exclusively and as a separate class, shall be entitled to elect two (2) of our directors, who may only be removed by the affirmative vote of the holders of the shares of common stock.  Although the holder of the Series A Preferred Stock has the right to elect one (1) of our director, the holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Series A Preferred Stock), exclusively and voting together as a single class, are entitled to elect the balance of the total number of our directors (subject to the rights of any additional series of Preferred Stock that may be established from time to time).

Subject to the preferences of the outstanding shares of Series A Preferred Stock, the holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefore, subject to the prior rights of the holders of outstanding shares of Preferred Stock.  Upon our liquidation or dissolution, and Subject to the preferences of the outstanding shares of Series A Preferred Stock, holders of Common Stock are entitled to receive all assets available for distribution to security holders, after payment of creditors and preferential liquidation distributions to preferred security holders, if any exist at the time of such liquidation.  The Common Stock has no preemptive or other subscription rights or redemption or sinking fund provisions with respect to such shares.  All outstanding shares of Common Stock are fully paid and non-assessable.


INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
   
The financial statements of ScripsAmerica, Inc. as of December 31, 2010 and 2009 and for each of the years then ended has been included herein and in the Registration Statement in reliance upon the report of Raich Ende Malter & Co. LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
  
Certain legal matters in connection with this offering and Registration Statement are being passed upon by Fox Law Offices, P.A., Peaks Island, Maine.


DESCRIPTION OF BUSINESS
 
Overview
   
We are ScripsAmerica, Inc., a Delaware corporation, and we were formed in May 2008.  We currently provide distribution of pharmaceutical products.  We are in the process of expanding our operations to two new areas:  (i) developing of a line of rapidly dissolving drug formulations for vitamins, Over The Counter (OTC) drugs and certain generic products and (ii) securing approval of the United States Drug and Food Administration (the “FDA”) and developing drugs under the Drug Efficacy Study Implementation (DESI) Program.
    
We are focused on efficient pharmaceutical supply chain management services, from strategic sourcing to delivering niche generic pharmaceuticals to market.  Through the largest pharmaceutical distributors in North America, we deliver pharmaceutical products to a wide range of customers across the health care industry, including physicians’ offices, retail pharmacies, long-term care sites, hospitals, and Government and home care agencies.  Current therapeutic categories include pain, arthritis, prenatal, urinary, and hormonal replacement drugs.
  
 
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We offer fulfillment of prescription and over the counter (OTC) products.  To fulfill purchase orders from customers, we entered into distribution agreements with an FDA-approved suppliers, which process orders to the end user’s desired specifications.  Capabilities range from unit of use packaging for in-patient nursing homes and hospitals to bulk packaging for government and internatioanal organizations.
  
Our value lies in our growing portfolio of end user relationships.  We market directly to these customers.  For the end user, custom packaging such as unit of use can save staff time and cost, as well as eliminate dispensing errors at the pharmacist level.
  
In March 2010, we entered into a product development, manufacturing and supply agreement with a pharmaceutical company, which develops and manufactures generic drug products.  Under this agreement with this pharmaceutical company, we are developing a pain relief orally disintegrating rapidly dissolving 80 mg and 160 mg tablets.  This pain relief formulation is for a widely-used OTC drugs.
  
We have identified Compound SA 1022, a non-steroidal anti-inflammatory drug, as our initial drug candidate for the DESI program approval.  We will need to raise approximately $2,000,000 -$3,000,000 in additional funding to obtain FDA approval of Compound SA-1022 under the DESI program.

Market Opportunity

Pharmaceutical Supply Chain Management Services

The United States constitutes the largest market in the world for generic pharmaceuticals, with and its aging population represents a key driver for the growth of the global pharmaceuticals and domestic consumer products markets.  Competitive pressures among U.S. generics providers are continuing to increase as a result of the number of new market entrants growing faster than the generics market as a whole, leading to cost competition on the manufacturing side and squeezed profit margins.  On the sales side, generics prices are eroding due to low-cost suppliers from India and China capturing market share, as well as the success of health insurers and health maintenance organizations in negotiating lower reimbursement rates.  Finally, large direct purchase customers such as chain drugstores demand product variety and reliability of supply that allows them to lower their inventory levels.
  
Current trends force generics players to focus on growth of their distribution networks, customer retention, and cost minimization.
  
We are ideally suited to compete in the current environment by providing a low cost system of broad-based marketing, sales, and distribution capabilities for generics, branded pharmaceuticals, over the counter medicines, vitamins, and nutraceuticals.  We have built strong relationships with local customers through a detailed understanding of and demonstrated ability to serve customer needs.  These qualities have allowed us to post exceptional growth since commencing operations in February 2010.
  
We cater to a large and growing customer base while enforcing strict inventory control and pursuing fast turn-around times on every order.  The final component of our lean and efficient organizational structure is a workforce minimized in size to essential business functions.

DESI Program

DESI was a program begun by the FDA in the 1960s based on the requirement of the Kefauver-Harris Drug Control Act that all drugs be efficacious as well as safe. The DESI program was intended to classify all pre-1962 drugs that were already on the market as either effective, ineffective, or needing further study. To date, DESI has evaluated over 3,000 separate products and over 16,000 therapeutic claims. By 1984, final action had been completed on 3,443 products; of these, 2,225 (64.6%) were found to be effective, 1,051 (30.5%) were found not effective, and 167 (4.9%) were pending.
 
Once a DESI drug has been FDA approved and granted market exclusivity, the applicant will have the right to be the single source producer of the drug and control market supply and pricing.
 
Based on market exclusivity, pricing power and extent of use, DESI drugs represent revenue potential to the manufacturer, on average, of approximately $60 million per drug.  Financing is currently the rate-limiting variable to our ability to develop Compound SA 1022 and other DESI drug targets
  
 
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We estimate that there are approximately 200 drugs that have yet to be evaluated under the DESI program.  If the prior trends of efficacy for DESI drugs continues (meaning approximately 65% of the DESI drugs will be effective), the potential market size for manufacturing the remaining DESI drugs is approximately $7.8 billion.

Rapidly Dissolving Drug Formulations

During 2011 and 2012, many large pharmaceutical companies will lose patent protection of some of their best-selling products.  One of the ways that these large pharmaceutical companies to protect and expand the market for the brand name drugs is through new methods of delivery – a new dosage form.  According to IMS Health, a health care information and consulting company, drugs representing approximately $89.5 billion in sales during 2010 will be losing patent protection during the five year period ending December 31, 2014.  The pharmaceutical industry’s collective drug pipeline is simultaneously in decline.  One of approaches that drug companies may consider for offsetting loss of patent protection and weak drug pipeline is updating old drugs with reformulations, which secures revenues for extended time periods and have a higher likelihood of success as compared to new drug development.  Reformulation refers to the process of altering a drug’s characteristics just enough to qualify for a new patent, while keeping the same to use previous clinical testing results for the purpose of FDA approval.
 
Intellectual property protection for new deliveries includes patents based on the new components added to the drug (“composition of matter patents”), and patents based on the way a medical condition is treated using the new delivery system (“method patents”). If an NDA sponsor of a new delivery drug declares bioequivalence to a previously approved drug, the NDA sponsor, like an ANDA (abbreviated new drug application) filer, may incorporate efficacy and safety data previously submitted to the FDA for the bioequivalent drug.  Consequently, reformulation by new delivery, particularly when incorporating a patentable delivery system, is an attractive method of life cycle enhancement.
 
Drug delivery technology can be an effective defensive strategy when a company adds a relevant therapeutic benefit to a marketed drug, such as improved efficacy or dosing frequency, or new therapeutic indications or target user groups.  Additional benefits include boosting a drug’s value, reviving its marketplace position, or rejuvenating products that are in their mature life-cycle stage.  Drug delivery technology can also enable or accelerate market entry by overcoming issues such as insolubility, formulation difficulties or high dosing frequency.
 
Rapid melt technology is an example of a reformulation technique aimed at advanced drug delivery and product differentiation. The FDA’s Center for Drug Evaluation and Research (CDER) Data Standards Manual defines orally disintegrating tablets (ODTs) as “a solid dosage form containing medical substances which disintegrates rapidly, usually within a matter of seconds, when placed upon the tongue.”  The Agency recommends that,  in addition to the original definition, ODTs be considered solid oral preparations that disintegrate rapidly in the oral cavity, with an in-vitro disintegration time of approximately 30 seconds or less, without the need for chewing or liquids.  Rapid melt tablets are generally characterized by a hydrophilic matrix, which allows prompt disintegration of tablets as they come into contact with saliva. Disintegration releases the active drug moiety trapped in the matrix, permitting the patient to swallow the product in the form of a liquid, or a suspension in the case of non-soluble components. The rapid disintegration tablet excipient offers extremely fast dissolution from tablets with good hardness made with standard techniques.  The current market for oral fast-melt drugs in the U.S. is $1.5 billion.
 
Clinically, rapid melts improve the pharmacoeconomics of drugs by providing faster onset of action as the dosage form is disintegrated prior to reaching the stomach. This is particularly applicable for acute diseases and to manage breakthrough symptoms.  Other potential benefits include superior bioavailability, improved therapy through sustained release and high active dose capabilities, safety, efficacy, convenience, and compliance.  With medications for chronic diseases that display time-dependent symptoms, such as ulcers or asthma, drug delivery systems can control the formulation release according to the timing of symptoms. For instance, they could enable a drug to release when asthma attacks occur, generally in the middle of the night. This capability can provide valuable and clinically proven therapeutic benefits, as well as a means for marketers to differentiate their product. ustained release action also reduces dosing frequency, which in turn can serve to decrease the frequency of caregiver interactions. Fewer visits from doctors and nurses save administration costs and time and increase convenience for both patients and caregivers.
 
Orally disintegrating and fast-dissolving dosage forms have continued to expand as they address a combination of issues traditionally associated with pharmaceuticals administered as oral solid dosages. These include dysphagia (difficulty swallowing), lack of patient compliance and lack of consumer convenience. In addition, the market for rapidly dissolving formulations maintains its strength as an innovative concept for either brand or generic companies with access to dissolving technology.
  
 
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As a result, the combined US, EU and Japanese ODT market has doubled in size over the past four years to surpass $6.4 billion in 2009. Increased generic competition has further expanded the ODT market volume. The number of commercial over-the-counter and prescription ODT products has ballooned to over 450, which is attributable to the rapid genericization of multiple products by a large number of generics companies.
 
The ODT market is one of the fastest growing sectors of the drug delivery market, with industry experts projecting a 12-15% annual growth rate for the next several years. Based on upward global growth trends of the past decade, the ODT market could produce revenues of $13 billion by 2015. Growth is fueled by patient demand, with recent market studies indicating that more than half of the patients prefer ODTs to other dosage forms and most consumers would ask their doctors for ODTs (70%), purchase ODTs (70%), or prefer ODTs to regular tablets or liquids (80%).
 
Patient demand is driven by the fact that as many as 40% of Americans experience difficulty swallowing traditional tablets, even though most have no problems swallowing food or liquid. Results from a 2003 nationwide survey of 679 adults on pill-swallowing difficulties, conducted by Harris Interactive, indicated that of those who experienced difficulty swallowing pills, 14% had delayed taking doses of their medication, 8% had skipped a dose, and 4% had discontinued their medication.
 
Orally dissolving tablets have emerged as a patient-friendly, convenient method of administering medications. In addition to adults, the fast dissolving tablet market will prove particularly applicable to children and the elderly and anyone else who has trouble swallowing regular pills, tablets, or capsules; for example patients whose swallowing is compromised as a clinical symptom of disease. Other groups who benefit from this dosing form include the mentally ill, developmentally disabled, and uncooperative patients. ODTs can also be used in the field, for example in combat zones or for relief efforts following natural disasters, where clean sources of water may be unavailable and rapid onset of action is desirable.

Pharmaceutical Supply Chain Management Services
    
We currently provide efficient supply chain management on behalf of our clients, from strategic sourcing to delivering niche generic pharmaceuticals to market.  Positioned in the center of the pharmaceutical value chain, we receive purchase orders from large pharmaceutical distributors to process orders to the end user’s specifications, and deliver products to a wide range of customers across the health care industry.
 
Our primary value lies in our growing portfolio of end users to whom ScripsAmerica markets its services.  For end users such as hospitals and home care agencies, custom packaging such as unit of use can save staff time and cost, as well as eliminate dispensing errors at the pharmacist level.  Further, we maintain a strategic relationship with the largest pharmaceutical distributor in North America, which acts as intermediary between us and our end customers.
   
Potential Acquisitions
  
We are currently exploring acquisitions to expand our supply chain management business and improve revenue and profitability.  We believe that these potential acquisitions would eliminate fees we currently pay to our suppliers.  We expect that the resulting cost savings will flow through to our bottom line as well accelerate our revenue growth.  Our management expects each of the two acquisitions to improve our gross profit margin by at least 10%.  While we expect that if we go ahead with these acquisitions, such transactions will be done after the date of this prospectus.  However, we believe the acquisitions will improve our valuation as a public company and provide us with greater control of the manufacturing, research & development, prescription development and consumer product markets.
 
We also believe our acquisition will great expand our customers from Compound SA 1022 because it enables in-house manufacturing of Compound SA 1022 and afford us both first priority and exclusive rights on our other manufacturing orders.  In addition, we will gain access to such manufacturer’s full customer list as well as the manufacturer’s state-of-the-art R&D facilities.
   
 
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Pharmaceutical Packager.  We are currently evaluating under a non-binding letter of intent the purchase of a pharmaceutical packager, which would add to our order processing capacity and profitability.  We anticipate that this acquisition would provide us with the processing capacity to reach up to 4,000,000 doses per day, which is a 100% increase over current levels.  The targeted pharmaceutical packager has a facility which consists of a temperature-controlled warehouse and a 12,000 square foot area dedicated to pharmaceutical packaging, contract packaging and private labeling, which is also fully temperature-controlled.  There are five packaging lines suitable for high and low speed packaging, semi-automatic custom packaging, folding, gluing, assembly, and kitting.  This facility has passed inspection by the FDA, DEA and the State Board of Pharmacy.  We believe that this planned acquisition will be completed during 2011, pending satisfactory results from an audit of the pharmaceutical packager’s operations and our raising adequate funding for the acquisition.
 
Pharmaceutical Manufacturer, Laboratory, and R&D Operations.  The company is an FDA-registered developer and manufacturer of prescription, over the counter and generic pharmaceutical products in various dosage forms, all of which meet current manufacturing standards.  It operates a 30,000 square foot cGMP facility with bulk supplies and contract manufacturing capabilities.  It also performs in-house drug product development and accelerated and long-term stability testing.  The facilities include state of the art tablet compression machines, blenders, coaters, various sizes of process tanks, as well as a temperature controlled finished goods warehouse.
   
Strategic Relationship with Our Customer.

Our sole customer is a billion dollar company offering distribution and technology solutions to the health care industry.  As the largest pharmaceutical distributor in North America, our customer distributes approximately half of the medicines used every day and supplies more than 40,000 U.S. pharmacy locations, from Wal-Mart to the Department of Veterans Affairs to community pharmacies and hospitals.  On the technology side, our customer develops and installs health care information technology systems that eliminate the need for paper prescriptions and paper medical records.  Our customer’s software and hardware solutions are used in more than 70% of the nation’s hospitals with more than 200 beds.
 
In filling purchase orders for our customer (which distributes to hospitals, nursing homes, pharmacy chains, and government agencies, among others), we embody part of the bridge from drug manufacturers and pharmaceutical packaging companies to end users.  Despite our customer’s position as intermediary, we market directly to the end users to secure continuing demand for its products.
 
Our interactions with our suppliers on the one hand, and intermediaries such as our customer and various health care facilities on the other hand, are shown in the charts below.
   
  
We plan to create alliances with other major health care organizations for mutual benefit.
   
 
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Purchase Order Processing

Order Flow:


 
Day
 
Event
0
 
Healthcare Facility places order with intermediary (e.g. McKesson, AmeriSource Bergen and Cardinal Health)
1
 
ScripsAmerica receives purchase order from intermediary
2
 
ScripsAmerica commissions packaging distributor to coordinate all activities
3
 
Packaging distributor orders bulk materials from manufacturer
12
 
Packaging distributor receives bulk materials
13-21
 
Packaging distributor packages product to order specifications
22
 
Packaging distributor distributes product to intermediary
26
 
Upon receipt of product, intermediary issues proof of delivery to ScripsAmerica
26
 
Intermediary delivers product to healthcare facility
     
 
20

 
   
Dollar Flow:
  
  
Day
 
Event
1
 
ScripsAmerica secures purchase order financing
2
 
ScripsAmerica pays Packaging Distributor negotiated amount to fill purchase order
27
 
With proof of delivery from intermediary, ScripsAmerica secures funding from Accounts Receivable Factor
29
 
Factor settles ScripsAmerica account with  Purchase Order Financer
56
 
Intermediary pays Factor for Product received on Day 26
57
 
Factor pays ScripsAmerica any balance due
  
Drug Efficacy Study Implementation (DESI) Program.
  
In addition to providing its core pharmaceutical packaging, distribution, and sales and marketing services, we seek to secure FDA approval and worldwide market exclusivity for a number of DESI drug candidates.
  
The FDA encourages manufacturers to submit ANDAs (Abbreviated New Drug Applications) for the DESI drugs that are still being produced and marketed today, and, post approval, provides manufacturers with worldwide market exclusivity ranging from a minimum of three to a maximum of five years.
  
Preparing for a DESI drug ANDA filing requires an assessment study, which entails a review of the information on the drug of choice, as it exists in the public domain, often from a period of dozens of years.  The goal of such a study is to find data that can be used in lieu of sponsor studies.  Most DESI drugs have a proven history of safety and efficacy.
  
Available information is categorized into toxicology, safety, and efficacy data and analyzed with respect to completeness and ANDA requirements.  Taking into account known information on similar compounds, the applicant then identifies any gaps in the data and decides what additional studies may be necessary, along with their cost and duration.  If additional clinical trials need to be conducted, they will be designed to close existing gaps in the data required for ANDA submission.
  
The applicant presents his analysis during a pre-IND (“Investigational New Drug”) meeting with the FDA.  Upon IND clearance, enrollment of patients into clinical trials can begin.  Data from such trials, together with data existing in the public domain will be compiled for the final ANDA submission.
  
 
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We initially seek to gain FDA approval for Compound SA 1022, a non-steroidal anti-inflammatory drug (NSAID).  Compound SA 1022 has been in use for decades and is currently being used by thousands of people in the United States.  The estimated cost of gaining FDA approval for Compound SA 1022 is $2-3 million, with an anticipated time to approval of two to three years (see chart below).  We have retained a reputable firm, which is a provider of medical and regulatory consulting services to pharmaceutical, biotechnology, and device companies, to advise us on our interaction with regulators, clinical program design, and future FDA submissions.
   
A typical DESI drug development timeline is depicted below:

   
In addition to existing palliative indications for Compound SA 1022, trials are being conducted by various agencies investigating the anti-inflammatory effects of Compound SA 1022 either as monotherapy or in combination with other drugs for use in cardiovascular disease and Type 2 diabetes.
 
With hundreds of other DESI drugs still awaiting FDA approval, we have identified additional drug candidates for development and regulatory review.  Based on market exclusivity, pricing power and extent of use, DESI drugs represent revenue potential to the manufacturer, on average, of approximately $60 million per drug.  Financing is currently the rate-limiting variable to our ability to develop Compound SA 1022 and other DESI drug targets.

Rapidly Dissolving Drug Formulations

Rapidly dissolving drug formulation refers to an oral drug delivery formulation, which entails drugs in tablet form that can be taken without water and will dissolve in the mouth in less than 30 seconds.  Rapidly dissolving drug formulations represent a convenient dosing form for patients who have difficulty swallowing – a widespread phenomenon among the elderly - or have sustained injuries to the esophagus.  Other groups who benefit from this dosing form include the mentally ill, developmentally disabled, and uncooperative patients.  Rapidly dissolving drug formulations can also be used in the field, where a clean source of water may be unavailable.
 
Rapidly dissolving drug formulations’ primary advantages over other oral dosage forms include patient friendliness, sustained release and high active dose capabilities, low manufacturing cost, manufacture using conventional equipment and blister packaging, and low moisture sensitivity.  Rapidly dissolving drug formulations for children can be customized to solve common overdosing or under dosing issues that 2-11-year-olds frequently experience when taking pain relievers or fever reducers in doses intended for adults.
 
Oral drug delivery remains the preferred dosing method among patients and physicians, with more than 80% of all drugs administered in this manner.  Rapidly dissolving drug technology provides pharmaceutical companies with the opportunity for product line extensions for a wide variety of drugs, and we believe there is a significant opportunity as a contract developer of rapidly dissolving drug formulation for specialty prescription pharmaceuticals.  The current market for oral fast-melt drugs in the U.S. is $1.5 billion.
  
 
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In March 2010, we entered into a product development, manufacturing, and supply agreement with a pharmaceutical company for a pain relief 80mg orally disintegrating rapid dissolve tablets under which the pharmaceutical company will develop and supply the product, while we will fund all development costs and retain all ownership rights in the pain relief  rapidly dissolving drug formulation (including any patent and trademark rights).  Current therapeutic categories available as a rapidly dissolving drug formulation through our pharmaceutical partner are allergy, anti-inflammatory, and sleep.
 
We anticipate project completion and ANDA approval in approximately nine months, with market rollout scheduled for 2012.  Revenue projections for our pain relief 80mg orally disintegrating rapid dissolve tablets amount to $1.4 million in 2012 and approximately $6 million in 2013.
 
After launching pain relief 80mg orally disintegrating rapid dissolve tablets, we plan to develop and launch additional products as quickly as cash flows allow.  Vitamins, OTC products, and generics are among the product categories currently under consideration.  The rapidly dissolving drug formulation for vitamins can be developed within one to two months, as no regulatory approval is required to bring such products to market, and can be distributed through the existing network.  OTC rapidly dissolving drug formulations can be launched with a five- to six-month lead time, including three months of accelerated studies and one month of process validation.  Launch of generics as a rapidly dissolving drug formulation requires filing of an ANDA or NDA under Section 505(b)(2) of the Federal Food, Drug and Cosmetics Act, which covers new pharmaceutical products with innovative dosage forms or delivery routes.  Generics will require at least two years of time to approval as well as a $1-$2 million investment in safety and efficacy studies.
   
An overview of potential rapidly dissolving drug formulation products is shown below for each of the three categories:

Vitamin
Chemical Name
Function
B1
Thiamine Mononitrate
Breakdown of sugars in the diet
B2
Riboflavin
Energy metabolism; metabolism of fats, ketone bodies, carbohydrates, and proteins
B3
Niacinamide
Anti-inflammatory
B6
Pyridoxine HCl
Balancing of sodium and potassium, promotion of red blood cell production
B12
Cobalamin
Key role in the normal functioning of the brain and nervous system, and for the formation of blood
C
Ascorbic Acid
Antioxidant used for treatment and prevention of scurvy
D2
Ergocalciferol
Promotion of the active absorption of calcium and phosphorus by the small intestine to permit bone mineralization
D3
Cholecalciferol
Treatment of Vitamin D deficiency

OTC Product
Function
Aspirin
Analgesic for minor aches and pains, fever reducer, anti-inflammatory medication
Ibuprofen
Non-steroidal anti-inflammatory drug for relief of symptoms of arthritis, menstrual pain, fever, and as an analgesic
Tylenol
Analgesic for relieving pain, reducing fever, and relieving the symptoms of allergies, cold, cough, and flu
Guaifenesin
Expectorant used to relieve chest congestion
Dextromethophan
Cough suppressant
Chlorpheniramine
Control of symptoms of cold or allergies
Claritin (Loratidine)
Antihistamine for treatment of allergies
Benadryl (Diphenhydramine)
Antihistamine for treatment of allergies
Potassium Chloride
Treatment for low potassium blood levels
Ferrous Sulfate
Treatment for iron deficiency anemia
Glucosamine
Treatment for osteoarthritis; non-vitamin, non-mineral dietary supplement; an amino acid sugar and a prominent precursor in the biochemical synthesis of glycosylated proteins and lipids
   
 
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OTC Product
Function
Chondroitin Sulfate
Treatment for osteoarthritis; structural component of cartilage that provides much of its resistance to compression
Zantac (Ranitdine)
Histamine H2-receptor antagonist that inhibits stomach acid production
Bisacodyl
Stimulant laxative for relief of constipation and for the management neurogenic bowel dysfunction; part of bowel preparation before medical examinations such as colonoscopy
Caffeine
Central nervous system stimulant
     
Generic Product
Function
Fazaclo (Clozapine)
Antipsychotic drug for treatment of the symptoms of schizophrenia
Remeron SolTab
Antidepressant for treatment of major depressive disorders in adults
Zomig (Zolmitriptan Oral)
Serotonin receptor agonist for treatment of the symptoms of migraine headache
Tempra Firstab Pediatric
Non-salicylate analgesic-antipyretic for the temporary relief of pain from headache, muscle strain, bursitis, sprains, and menstrual cramps; fever reducer
Triaminic Soft Chews
Pain reliever, fever reducer, and cough suppressant
Parcopa
Treatment of Parkinson's disease and syndrome
Zofran (Ondansetron)
5-HT3 receptor antagonist used to prevent nausea and vomiting caused by cancer chemotherapy, radiation therapy, and surgery

Development Agreement/Intellectual Property

We own the Website www.scripsamerica.com.  We do not have any other intellectual property except as described below.
  
In March 2010, we entered into a product development, manufacturing, and supply agreement with a pharmaceutical company for the development of pain relief 80mg orally disintegrating rapid dissolve tablets under which the pharmaceutical company will develop and supply the pain relief rapidly dissolving drug formulation, while we will fund all development costs and own all rights to the pain relief rapidly dissolving drug formulation, including any patent and trademark rights.  Current therapeutic categories available as rapidly dissolving drug formulation through our pharmaceutical partner are allergy, anti-inflammatory, and sleep.
  
Under our arrangement with our pharmaceutical partner, we will be the exclusive distributor of the pain relief rapidly dissolving drug formulations that are developed under the agreement.  Our pharmaceutical partner has agreed not to develop or manufacture any pain relief rapidly dissolving drug formulations with anyone else, and we agreed not to have any pain relief rapidly dissolving drug formulation, or a generic drug product that would compete with such pain relief rapidly dissolving drug formulation, with any other party other than our pharmaceutical partner.  During the development of the pain relief rapidly dissolving drug formulation, we may terminate the development agreement on thirty (30) days prior written notice, however, we would be responsible for any development costs incurred by our pharmaceutical partner through the date of notice of termination.  After the pain relief rapidly dissolving drug formulation has been developed, either party may terminate the development agreement on 12 months prior written notice.
  
In the next 12 months, we expect to file a develop and file a trademark application, for a trade mark to use for our rapidly dissolving drug formulation products prior to the sales of the pain relief rapidly dissolving drug formulation we are developing with our pharmaceutical partner.

Competitors

Large, vertically integrated industry players engaged in the development, manufacture, marketing, sale and distribution of generic and/or branded specialty pharmaceuticals in various therapeutic categories include Actavis Group, Apotex, Dr. Reddy’s, Glenmark Pharmaceuticals, Jubilant Life Sciences, Mylan, Par Pharmaceutical Companies, Ranbaxy Laboratories, Sandoz (a division of Novartis), Sun Pharmaceutical Industries, Teva Pharmaceutical Industries, Barr Laboratories (a division of Teva), and Watson Pharmaceuticals.
   
The group of small and middle market companies within which we compete for market share consists of Adams Laboratories, Blu Pharmaceuticals, Boca Pharmacal, Caraco, Hi-Tech Pharmacal, Impax Laboratories, Lanett Company, Missionpharma, Pharmaceutical Laboratories, Purepac Pharmaceutical, Qualitest Pharmaceuticals, and URL Pharma.
     
 
24

 
  
What sets ScripsAmerica apart from the latter group is risk diversification and significant return potential through its R&D focus on DESI drugs and rapidly dissolving drug formulation technology.

Employees

As of May 30, 2011, we have three (3) full time employees and five (5) consultants.  We plan to hire more persons on as-needed basis.  


DESCRIPTION OF PROPERTY

We have rent-free use of 1,500 square feet office space at 77 McCullough Drive, New Castle, Delaware 19720, which is our principal place of business.  This space is being made available to us by our contract packager. There is no term for our use of the space, which can be terminated at any time.
 
   
LEGAL PROCEEDINGS

There are no legal proceedings pending or threatened against us or our officers and directors.
 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Admission to Quotation on the OTC Bulletin Board

We intend to have our common stock be quoted on the OTC Bulletin Board, the OTCQB and the OTC Pink. If our securities are not quoted on the OTC Bulletin Board, the OTCQB and/or the OTC Pink a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The OTC Bulletin Board and the OCTQB differ from national and regional stock exchanges in that they:
  
(1) are not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers, and
  
(2) securities admitted to quotation are offered by one or more Broker-dealers rather than the "specialist" common to stock exchanges.
  
The OTC Bulletin Board is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equity securities. An OTC Bulletin Board equity security generally is any equity that is not listed or traded on NASDAQ or a national securities exchange. 
  
The OTCQB is the middle tier of the OTC market. OTCQB companies are reporting with the SEC or a U.S. banking regulator, making it easy for investors to identify companies that are current in their reporting obligations. There are no financial or qualitative standards to be in this tier.  Issuers with securities within OTCQB Market Tier must be SEC, Bank or Insurance reporting, and they must be current in their disclosure.
  
OTC Pink is the third tier of the OTC market. OTC Pink is the speculative trading marketplace that has no financial standards or reporting requirements. OTC Pink companies choose the level of information they provide to investors and may have current, limited or no public disclosure.  We will provide the same disclosure for the OTC Pink as we do for the OTCQB.
  
To qualify for quotation on the OTC Bulletin Board, the OTCQB and the OTC Pink an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. We expect to have an agreement with Westminster Securities, a registered broker-dealer, as the market maker, willing to list bid or sale quotations and to sponsor the Company listing. If it meets the qualifications for trading securities on the OTC Bulletin Board, the OTCQB and the OTCPink, our securities will trade on the OTC Bulletin Board, the OTCQB and the OTCPink until a future time, if at all, that we apply and qualify for admission to quotation on the NASDAQ Global Market.  We may not now and it may never qualify for quotation on the OTC Bulletin Board or be accepted for listing of our securities on the NASDAQ Global Market.

Our Transfer Agent

We have appointed Olde Monmouth Stock Transfer Company, with offices at 200 Memorial Parkway, Atlantic Highlands, New Jersey 07716, phone number 732-872-2727, as transfer agent for our shares of common stock. The transfer agent is responsible for all record-keeping and administrative functions in connection with our shares of common stock.
   
 
25

 
  
Dividend Policy

We have never declared or paid any cash dividends on our shares of common stock nor do we anticipate paying any in the foreseeable future.  Except for any dividends owed to the holder of our Series A Preferred Stock, we anticipate that we will retain all of our future earnings to finance our operations and expansion.  The payment of cash dividends in the future will be at the discretion of our Board of Directors (subject to the approval of the holder of the Series A Preferred Stock) and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.  Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. Furthermore, we expect to retain any future earnings
 
 Holders of Common Stock

As of May 15, 2011, the shareholders' list of our shares of common stock showed 15 registered shareholders and 51,218,680 shares of our common stock issued and outstanding.  We also have 2,990,252 shares of Series A Preferred Stock issued and outstanding, which are convertible into 5,980,504.

Securities authorized for issuance under equity compensation plans

We currently do not have any equity compensation plans. 


WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock to be sold in this offering.  This prospectus, which constitutes part of the registration statement, does not include all of the information contained in the registration statement and the exhibits, schedules and amendments to the registration statement.
  
Some items are omitted in accordance with the rules and regulations of the SEC.  For further information with respect to us and our common stock, we refer you to the registration statement and to the exhibits and schedules to the registration statement filed as part of the registration statement.  Statements contained in this prospectus about the contents of any contract or any other document filed as an exhibit are not necessarily complete and, and in each instance, we refer you to the copy of the contract or other documents filed as an exhibit to the registration statement.  Each of these statements is qualified in all respects by this reference.
  
You may read and copy the registration statement of which this prospectus is a part at the SEC’s public reference room, which is located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549.  You can request copies of the registration statement by writing to the SEC and paying a fee for the copying cost.  Please call the SEC at 1-800-SEC-0330 for more information about the operation of the SEC’s public reference room.  In addition, the SEC maintains an Internet website, located at www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. You may access the registration statement of which this prospectus is a part at the SEC’s Internet website.
  
Upon the effectiveness of the registration statement of which this prospectus is a part, we will become subject to the full informational and periodic reporting requirements of the Exchange Act.  We will fulfill our obligations with respect to such requirements by filing periodic reports and other information with the SEC.  We intend to furnish our stockholders with annual reports containing consolidated financial statements certified by an independent registered public accounting firm. We also maintain a website at www.scripsamerica.com. Our website is not a part of this prospectus.
  
 
26

 
    
FINANCIAL STATEMENTS
   
 
SCRIPSAMERICA, INC.  



   
Table of Contents

 
    Page
   
Financial Statements - March 31, 2011 and 2010  
Balance Sheets F-1
Statements of Income F-2
Statements of Changes in Stockholders’ Equity F-3
Statements of Cash Flows F-4
   
Notes to Financial Statements F-5 - F-9
   
Independent Auditors’ Report F-10
     
Financial Statements - December 31, 2010 and 2009  
     
  Balance Sheets F-11
  Statements of Income
F-12
  Statements of Changes in Stockholders’ Equity F-13
  Statements of Cash Flows F-14
     
Notes to Financial Statements - December 31, 2010 and 2009 F-15 - F-24
 

 
27

 
 
SCRIPSAMERICA, INC.
Balance Sheets

 
   
March 31,
   
December 31,
 
   
2011
   
2010
 
   
(Unaudited)
       
ASSETS
           
Current Assets
           
Cash and cash equivalents
  $ 532,540     $ 171,898  
Receivable due from factor
    131,244       91,341  
Prepaid expenses and other current assets
    66,042       220,966  
Deferred income taxes
    -       -  
                 
      729,826       484,205  
                 
Other Assets
               
Notes receivable - related party - net
    9,000       9,000  
Deposits
    200,000       200,000  
                 
      209,000       209,000  
                 
    $ 938,826     $ 693,205  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current Liabilities
               
Accounts payable and accrued expenses
  $ 81,615     $ 82,930  
Convertible notes payable - net of discount of $32,240 and $14,620, respectively
    467,760       285,380  
Notes payable - related parties
    80,000       60,000  
                 
      629,375       428,310  
                 
                 
Stockholders' Equity
               
Preferred stock - $0.001 par value; 10,000,000 shares authorized; none issued and outstanding
               
Common stock - $0.001 par value; 150,000,000 shares authorized; 45,989,680 and 45,859,680 shares issued and outstanding as of March 31, 2011 and December 31, 2010, respectively
    45,990       45,860  
Additional paid-in capital
    234,140       201,770  
Retained earnings (deficit)
    29,321       17,265  
                 
      309,451       264,895  
                 
    $ 938,826     $ 693,205  
 
 
 
F-1

 
 
SCRIPSAMERICA, INC.
Statements of Income   (Unaudited)

 
   
For the three months ended, March 31,
 
   
2011
   
2010
 
             
Product Sales - net
  $ 1,641,233     $ 310,227  
                 
Cost of Goods Sold
    1,175,389       258,377  
                 
Gross Profit
    465,844       51,850  
                 
General and Administrative Expenses
    98,459       142  
Research  and Development
    283,969       -  
                 
      382,428       142  
                 
Income (Loss) Before Other Income (Expenses)
    83,416       51,708  
                 
Other Income (Expenses)
               
Interest expense
    (68,860 )     -  
                 
      (68,860 )     -  
                 
Income Before Provision for Income taxes
    14,556       51,708  
                 
Provision for  Income Taxes
    2,500       17,580  
                 
Net Income
  $ 12,056     $ 34,128  
                 
Earnings Per Common Share
               
Basic
  $ -     $ -  
                 
Diluted
  $ -     $ -  
                 
Weighted Average Number of Common Shares
               
Basic
    45,940,902       80,771,600  
                 
Diluted
    48,260,902       80,771,600  
 
 
 
F-2

 
 
SCRIPSAMERICA, INC.
Statements of Changes in Stockholders' Equity

 
 
   
For the Three Months ended March 31, 2011 (Unaudited)
 
       
       
       
                               
   
Common Stock
   
Additional
   
Retained Earnings
   
Stockholders'
 
   
Shares
   
Amount
   
Paid-In Capital
   
(Deficit)
   
Equity
 
                               
Balance - January 1, 2011
    45,859,680     $ 45,860     $ 201,770     $ 17,265     $ 264,895  
                                         
Common stock issued for services
    30,000       30       7,470       -       7,500  
Common stock issued for interest
    100,000       100       24,900               25,000  
Net income
    -       -       -       12,056       12,056  
                                         
Balance - March 31, 2011
    45,989,680     $ 45,990     $ 234,140     $ 29,321     $ 309,451  
 
 
 
 
 
 
 
 
 
F-3

 
 
SCRIPSAMERICA, INC.
Statements of Cash Flows   (Unaudited)

 
   
For the three months ended, March 31,
 
   
2011
   
2010
 
             
Cash Flows from Operating Activities
           
Net income
  $ 12,056     $ 34,128  
Adjustments to reconcile net income to net cash (used) by operating activities:
               
                 
Amortization of discount on convertible note payable
    7,380       -  
Common stock issued for services
    7,500       -  
Deferred Income tax
            17,580  
                 
Changes in operating assets and liabilities:
               
(Increase) decrease in:
               
Receivable due from factor
    (39,903 )     (171,979 )
Prepaid expenses
    154,924       -  
Increase (decrease) in:
            -  
Accounts Payable and accrued expenses
    (1,315 )     125,386  
                 
      140,642       5,115  
                 
Cash Flows from Investing Activities
    -       -  
                 
Cash Flows from Financing Activities
               
Proceeds from convertible notes payable
    200,000       -  
Proceeds from notes payable - related parties
    20,000       -  
                 
      220,000       -  
                 
                 
 Net Increase (Decrease) in Cash and Cash Equivalents
    360,642       5,115  
                 
Cash and Cash Equivalents - beginning
    171,898       503  
                 
Cash and Cash Equivalents - end
  $ 532,540     $ 5,618  
                 
Supplemental Disclosures of Cash Flow Information
               
Cash Paid:
               
Interest
  $ 61,480     $ -  
                 
Noncash financing and investing activities:
               
Common stock issued for services
  $ 7,500     $ -  
Discount on convertible note payable
  $ 25,000     $ -  
 
 
 
F-4

 
 
SCRIPSAMERICA, INC.
Notes to Financial Statements For the Three Months Ended March 31, 2011

 
1 - 
Basis of Presentation

The accompanying financial statements reflect financial information of ScripsAmerica, Inc., (the “Company” or “ScripsAmerica” or “we”).

The Company was incorporated in the State of Delaware on May 12, 2008, and primarily engages in the sale of generic pharmaceutical drugs to our customer’s various distribution centers located throughout the United States.  The Company began shipment of products in February 2010.

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 the instructions to regulation S-X and should be read in conjunction with the audited financial statements of ScripsAmerica and related notes thereto contained in the Company’s audited financials for the year ended December 31, 2010 filed within this S-1 document.  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.
 
2 - 
Summary of Significant Accounting Policies

A summary of significant accounting policies follows:

 
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 persuasive evidence of an arrangement exists, when the selling price is fixed or determinable, when shipment or delivery or performance of services has been rendered, and when collectability is reasonably 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 $283,969 and $0 for research and development expenses for the three months ended March 31, 2011 and 2010, respectively.

 
d.
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.


 
F-5

 
 
SCRIPSAMERICA, INC.
Notes to Financial Statements For the Three Months Ended March 31, 2011

 
3 - 
Receivable Due from Factor

In April 2010, the Company entered into a factoring and security agreement.  The Company agreed to sell its qualified accounts receivable with recourse in exchange for advances of funds equivalent to 78% of the value of receivables, leaving 22% 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, cancellable by either party upon one month’s written notice, which provided maximum financing of $500,000. The factoring line was increased to $1,000,000 as of February 20, 2011.  As collateral for the repayment of advances for receivables sold, the purchaser has a priority security interest in all present and future assets and rights of the Company. The purchaser has required that the Company notify all customers that all payments must be made to a lock-box controlled by the purchaser.  The factoring fee is .345% every five days. Factoring fees charged to interest expense for the three months ended March 31, 2011 was $30,480.
 
As of March 31, 2011, $481,185 of accounts receivable that had been sold to the factor remained uncollected.  The factor advanced $349,941 to the Company against the open receivables, leaving $131,244 due from the factor on these 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 March 31, 2011.
 
4 -
Convertible Notes Payable
 
During the three month ended March 31, 2011, the Company issued two one year $100,000 promissory notes payable, aggregating $200,000.  The notes are to be used exclusively for the Company’s purchase orders. The notes provide for monthly interest only payments of 2%, payable 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.

During 2010, the Company issued three one year $100,000 promissory notes payable, aggregating $300,000.  These notes are to be used exclusively for the Company’s purchase orders. These notes provide for monthly interest only payments of 2%, payable 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 three months ended March 31, 2011 and 2010, was $7,380 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 $9,780 has been amortized as interest expense, the unamortized discount on these notes as of March 31, 2011 is $32,240.
 
5 -
Notes Payable - Related Parties

During the three month period ended March 31, 2011, the Company 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 monthly interest only payments of 2%, payable 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 three months ended March 31, 2011 was approximately $60.
 
 
F-6

 
 
SCRIPSAMERICA, INC.
Notes to Financial Statements For the Three Months Ended March 31, 2011

 
During 2010, the Company issued six one year promissory notes aggregating $60,000. 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 monthly interest only payments of 2%, payable 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 three months ended March 31, 2011 and 2010 was $300 and $0, respectively.
 
6 -
Income Taxes

Our provision for income taxes at March 31, 2011 and 2010 consisted of the following
 
    March 31, 2011     March 31, 2010  
             
Current            
Federal   $ 2,500     $ 17,580  
State     -       -  
                 
Deferred
               
Federal     -       -  
                 
Income Tax Expense   $ 2,500     $ 17,580  
 
The effective tax rates differ from the statutory rates for 2011 and 2010 primarily due to the following:

   
2011
   
2010
 
         
Effective
         
Effective
 
   
Amount
   
Tax Rate
Percentage
   
Amount
   
Tax Rate
Percentage
 
                         
Federal income tax liability (benefit)
  $ 4,949       34.0%     $ 17,580       34.0%  
Effect of graduated rates
    (2,449 )     -16.8%       --       -  
                                 
                                 
    $ 2,500       17.2%     $ 17,580       34.0%  
 
7 -
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 three months ended March 31, 2011, the Company issued 30,000 shares in connection with services provided by a non-employee . The Company charged its operations $7,500.
 
During the three month period ended March 31, 2011, the Company issued 100,000 shares for interest related to the issuance of note payable.  The Company accounted for this transaction as a discount on notes payable totaling $25,000, of which $3,125 was amortized to interest expense for the three month period ended March 31, 2011.
 
 
F-7

 
 
SCRIPSAMERICA, INC.
Notes to Financial Statements For the Three Months Ended March 31, 2011

 
8 -
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 March 31, 2011, the Company has paid a total of $732,104, of which $200,000 is considered a stand still fee that has been reflected as a deposit on the balance sheet as of March 31, 2011 and December 31, 2010.  An expense of $264,769 was recorded to operations as research and development costs for the three months period ended March 31, 2011.  No expense was recorded for the three month period ended March 31, 2010. The balance of $202,896 at March 31, 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.
 
The Company utilizes the office space of its product supply vendor at no cost.  There is no agreement on the use of this office space and it may not be available to us in the future.
 
9 -
Earning Per Common Share

The basic earnings per share are computed using the weighted average number of common shares outstanding.  The dilutive effect of potential common shares outstanding is included in the diluted earnings per share, The computations of basic earnings and diluted earnings per share for 2011 and 2010 are as follows:

 
    For the Three Months Ended March 31, 2011  
   
Income
(Numerator)
   
Shares
(Denominator)
   
Per Share
Amount
 
                   
Net Income
  $ 12,055              
                     
Basic earnings per common share
  $ 12,055       45,940,902     $ 0.00  
Effect of dilutive securities - notes payable
    -       2,320,000       -  
                         
Diluted earnings per common share
  $ 12,055       48,260,902     $ 0.00  
 
 
    For the Three Months Ended  March 31, 2010
   
Income
(Numerator)
   
Shares
(Denominator)
   
Per Share
 Amount
 
                   
Net Income
  $ 34,128              
                     
Basic earnings per common share
  $ 34,128       80,771,600     $ 0.00  
Effect of dilutive securities - notes payable
    -       -       -  
                         
Diluted earnings per common share
  $ 34,128       80,771,600     $ 0.00  

 
 
F-8

 
 
SCRIPSAMERICA, INC.
Notes to Financial Statements For the Three Months Ended March 31, 2011

 
10 -
Subsequent Events

In April 2011, the Company issued notes payable aggregating $86,000 with a 24% annual interest rate.
 
In April 2011, the Company issued 2,990,252 shares of voting convertible preferred stock for $1,043,000 with an 8% dividend rate, payable quarterly. The preferred stockholder appointed a director to the board of directors.
 
In April 2011, the Company’s board authorized a two-for-one forward stock split.  All share and per share information for all periods presented have been adjusted to reflect the two-for-one stock split.
 
In April 2011, the Company sold 5,200,000 shares of common stock for an aggregate purchase price of $176,000.
 
In May 2011, the Company sold 29,000 shares of common stock for an aggregate purchase price of $5,800.




 
 
 
 
 
 
 
F-9

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 

 
To the Board of Directors and Stockholders of
ScripsAmerica, Inc.
New Castle, Delaware
 
We have audited the accompanying balance sheets of ScripsAmerica, Inc. (the “Company”) as of December 31, 2010, and 2009, and the related statements of income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2010. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ScripsAmerica, Inc. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
 
 

 
 
/s/ Raich Ende Malter & Co. LLP
 
Raich Ende Malter & Co. LLP
 
New York, New York
 
June 1, 2011
 
   
 
F-10

 

SCRIPSAMERICA, INC.
Balance Sheets


  
  
   
December 31,
 
   
2010
   
2009
 
             
ASSETS
           
Current Assets
           
Cash and cash equivalents
 
$
171,898
   
$
503
 
Receivable due from factor
   
91,341
     
-
 
Prepaid expenses and other current assets
   
220,966
     
-
 
Deferred income taxes
   
-
     
56,000
 
                 
     
484,205
     
56,503
 
                 
Other Assets
               
Notes receivable - related party - net
   
9,000
     
7,300
 
Deposits
   
200,000
     
-
 
                 
     
209,000
     
7,300
 
                 
   
$
693,205
   
$
63,803
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current Liabilities
               
Accounts payable and accrued expenses
 
$
82,930
   
$
-
 
Convertible notes payable - net of discount of $14,620
   
285,380
     
-
 
Notes payable - related parties
   
60,000
     
-
 
                 
     
428,310
     
-
 
                 
    Commitments and Contingencies     -       -  
                 
Stockholders' Equity
               
Preferred stock - $0.001 par value; 10,000,000 shares authorized; none issued and outstanding
   
-
     
-
 
Common stock - $0.001 par value; 150,000,000 shares authorized; 45,859,680 and 80,771,600 shares issued and outstanding as of December 31, 2010 and 2009, respectively; 80,000,000 shares subscribed as of December 31, 2009
   
45,860
     
80,722
 
Subscriptions receivable
   
-
     
(4,000
)
Additional paid-in capital
   
201,770
     
96,838
 
Retained earnings (deficit)
   
17,265
     
(109,807
)
                 
     
264,895
     
63,803
 
                 
   
$
693,205
   
$
63,803
 
    
See accompanying notes to financial statements.
  
 
F-11

 
 
SCRIPSAMERICA, INC.
Statements of Income


 
  
   
For the Year Ended December 31, 2010
   
For the Year Ended December 31, 2009
 
             
Product Sales - net
 
$
3,221,320
   
$
-
 
                 
Cost of Goods Sold
   
2,543,921
     
-
 
                 
Gross Profit
   
677,399
     
-
 
                 
General and Administrative Expenses
   
93,565
     
25,599
 
Research and Development
   
267,335
     
-
 
                 
      360,900      
25,599
 
                 
Income (Loss) Before Other Income (Expenses)
   
316,499
     
(25,599
)
                 
Other Income (Expenses)
               
Forfeited deposits
   
-
     
(14,500
)
Interest expense
   
(130,905
)
   
-
 
Interest income
   
1,693
     
189
 
                 
     
(129,212
)
   
(14,311
)
                 
Income (Loss) Before Provision for (Benefit from) Income Taxes
   
187,287
     
(39,910
)
                 
Provision for (Benefit from) Income Taxes
   
60,215
     
(56,000
)
                 
Net Income
 
$
127,072
   
$
16,090
 
                 
Earnings Per Common Share
               
Basic
 
$