New Ironridge Litigation
On July 21, 2016, ScripsAmerica, Inc. was served with a complaint filed in the United States District Court for the Central District of California (“Ironridge 2016 Complaint”) by Ironridge Global IV, LTD., Ironridge Global Partners, LLC, John Kirkland and Brendan O’Neil (collectively, the “Ironridge Parties”) against ScripsAmerica, Inc., Needham Law Firm, A.P.C. and Carlos Needham (ScripsAmerica’s former law firm and attorney in California). The Ironridge 2016 Complaint alleges that the Ironridge Parties were damaged by ScripsAmerica’s filing of a complaint in May, 2014 in the United States District Court for the Central District of California against the Ironridge Parties for securities fraud, breach of contract and tortious bad faith (“ScripsAmerica 2014 Complaint”) and that such filing by ScripsAmerica was done with “malice, oppression and fraud[.]”
The ScripsAmerica 2014 Complaint was filed at the direction of its then chief executive officer, Robert Schneiderman, based upon a Stipulation signed by Mr. Schneiderman in November, 2013 without the approval of the ScripsAmerica Board of Directors. However, the Ironridge 2016 Complaint does not name Mr. Schneiderman as a defendant. The ScripsAmerica 2014 Complaint was dismissed by the Court in August, 2015 and the Court ordered ScripsAmerica to pay certain legal fees of the Ironridge Parties (adjusted by the Court), together with interest and costs, as required by the Stipulation signed by Mr. Schneiderman. ScripsAmerica complied with the order and paid the Ironridge Parties.
The Ironridge 2016 Complaint alleges that the Ironridge Parties were not fully compensated for all of their legal fees by the Court’s August, 2015 order in the ScripsAmerica 2014 Complaint case. It further alleges that, as a result of the ScripsAmerica 2014 Complaint, the CFA Institute commenced an investigation of one of the Ironridge Parties, Brendan O’Neil, as a certified financial analyst charterholder of the CFA Institute. The Ironridge 2016 Complaint seeks unspecified general, special, exemplary and punitive damages, and interest and attorneys’ fees.
ScripsAmerica believes that the Complaint is without merit and intends to vigorously defend against the action.
Ironridge Litigation Update
ScripsAmerica has previously provided, in its several Form 8-Ks filed during 2016, information regarding the Ironridge Litigation that is ongoing in the California State Court. A hearing was held by that Court on July 26, 2016 to consider (i) ScripsAmerica’s motion to enforce its global settlement with Ironridge, (ii) Ironridge’s motion to require ScripsAmerica to post a bond, and (iii) a stipulation by Ironridge and Mr. Schneiderman to release him from the Court’s earlier order prohibiting him from selling or transferring the shares he holds in ScripsAmerica. Following that hearing, the Court issued its ruling denying without prejudice ScripsAmerica’s motion to enforce its global settlement with Ironridge by means of a new, separate action. The Court also ruled that ScripsAmerica must post a bond in the amount of $300,000 in order to maintain the current stays of the Court’s previous order requiring ScripsAmerica to issue more than 87 million shares of its common stock to Ironridge and address the attorneys’ fees previously awarded by the California Superior Court. Finally, the Court denied Mr. Schneiderman’s request that he be allowed to sell or transfer his shares of ScripsAmerica stock.