It is definitely the convert note holders. The shares are converted at a large discount to the current price (likely .15). The holder doubles his money in a short amount of time and goes back to SCRC and offers cash for a new round of convertible notes.
They have been running this game for 2 years with shady financiers. Nothing has changed.
They still need to raise $1.5M to launch Rapimeds:
In March 2010, we entered into a product development, manufacturing and supply agreement with our contract supplier/packager, which develops generic and over the counter (OTC) drug products. Under this agreement, we have developed a children’s pain relief orally disintegrating rapidly dissolving 80 mg and 160 mg tablets for OTC products. We completed the development of these rapid dissolving products in the first quarter of 2012, with production and sales pending manufacturing and process qualification and marketing execution. However, we estimate that we will need approximately $1.5 million of incremental funding for expenses required to launch these products. The funding for launching the rapid dissolving products is to come from the sale of equity securities, preferred and/or common stock securities and debt financing.
Per the 1Q 10Q product won't be shipped until 4th quarter 2013:
We were incorporated in the State of Delaware on May 12, 2008, and primarily engage in the sale of generic pharmaceutical drugs through our main customer, McKesson Corporation (“McKesson”), to various end users, including physicians’ offices, retail pharmacies, long-term care sites, hospitals and home care agencies, located throughout the United States. We use a single vendor, Marlex Pharmaceuticals, Inc. (“Marlex” or “Contract Packager”), for our packaging, distribution, warehouse and customer service needs. The Company has developed a branded OTC product that is currently expected to be shipped to retail drug stores in the fourth quarter of 2013.
SCRC also needs to raise $5.2M to purchase Marlex:
On September 11, 2012, the Company entered into a letter of intent with Marlex Pharmaceuticals, Inc. and its principals to acquire all of the outstanding shares of Marlex in a reverse triangular merger. The purchase price for Marlex is approximately $10.9 million, consisting of $4.5 million is cash, $743,500 for the Contract Packager loan which will be converted into a capital contribution and $5 million, which will be paid by the issuance of restricted shares of the Company’s common stock. The number of shares of the Company’s common stock to be issued to the shareholders of Marlex will be based on the purchase price divided by the lesser of (i) $0.338, which is the average closing price of the registrant’s common stock on the OTC Bulletin Board for the five day period ended September 11, 2012 and (ii) the average closing price of the Company’s common stock on the OTC Bulletin Board for the five day period ending on the date of the closing of the merger (but in no event less than $0.1744 per share). The Company’s board of directors approved the acquisition of Marlex under the letter of intent based upon an appraisal from Corporate Valuation Advisors, Inc., which valued Marlex’s business at $12.5 million. However, due to the unavailability of audited financial statements from Marlex at the closing deadline of February 28, 2013, the closing of the transaction has been postponed on a day-to-day basis until Marlex’s audit financial statements are delivered. The Company is uncertain when, or if, the acquisition of Marlex will close. For additional details about the Company’s acquisition of Marlex, see page 8 of this annual report.
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