0001019687-14-001413.txt : 20140415 0001019687-14-001413.hdr.sgml : 20140415 20140415160502 ACCESSION NUMBER: 0001019687-14-001413 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20131231 FILED AS OF DATE: 20140415 DATE AS OF CHANGE: 20140415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ScripsAmerica, Inc. CENTRAL INDEX KEY: 0001521476 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 262598594 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-54550 FILM NUMBER: 14765075 BUSINESS ADDRESS: STREET 1: CORPORATE OFFICE CENTRE TYSONS II STREET 2: 1650 TYSONS BOULEVARD, SUITE 1580 CITY: TYSONS CORNER STATE: VA ZIP: 22102 BUSINESS PHONE: 800-957-7622 MAIL ADDRESS: STREET 1: CORPORATE OFFICE CENTRE TYSONS II STREET 2: 1650 TYSONS BOULEVARD, SUITE 1580 CITY: TYSONS CORNER STATE: VA ZIP: 22102 10-K 1 scrips_10k-123113.htm SCRIPSAMERICA, INC.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-54550

SCRIPSAMERICA, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-2598594
(State of Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

Corporate Office Centre Tysons II, 1650 Tysons Boulevard, Suite 1580, Tysons Corner, VA 22102

(Address of Principal Executive Offices and Zip Code)

(800) 957-7622

(Registrant’s telephone number, including area code)

Securities registered under Section 12 (b) of the Act: None

Securities registered under Section 12 (g) of the Act:

Common Stock, $0.001 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a small 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 smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of June 30, 2013, the aggregate market value of voting common stock held by non-affiliates of the Registrant (40,719,809 shares) was approximately $17,916,716. The aggregate market value was computed by reference to the last sale price of such common equity as of that date.

As of April 8, 2014, the issuer had 125,610,436 shares of Common Stock issued and outstanding and 2,990,252 shares of Series A Preferred Stock issued and outstanding.

Documents Incorporated by Reference: None

INDEX

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk factors	15
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Mine Safety Disclosures	19

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 8.	Consolidated Financial Statements and Supplementary Data	41
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	42
Item 9A.	Controls and Procedures	42
Item 9B.	Other Information	43

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	43
Item 11.	Executive Compensation	46
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	48
Item 13.	Certain Relationships and Related Transactions, and Director Independence	49
Item 14.	Principal Accounting fees and Services	49

PART IV
Item 15.	Exhibits, Financial Statement Schedules	50

SIGNATURES		53
CERTIFICATIONS

PART I

This Form 10-K contains forward-looking statements. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “could,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of these similar terms. In evaluating these forward-looking statements, you should consider various factors, including those listed in the “Risk Factors” section of this annual report on Form 10-K. The Company’s actual results may differ significantly from the results projected in the forward-looking statements. The Company assumes no obligation to update forward-looking statements.

As used in this Form 10-K, references to the “Company,” the “Registrant,” “we,” “our,” or “us” refer to ScripsAmerica, Inc. unless the context otherwise indicates.

ITEM 1.

BUSINESS

Overview

ScripsAmerica, Inc. (www.ScripsAmerica.com) is a Delaware corporation that was formed in May 2008. Currently, ScripsAmerica’s primary focus is on the (1) development, branding and distribution of rapidly disintegrating drug formulations for Over the Counter (OTC) drugs, vitamins and supplements, (2) supporting and financing efficient pharmaceutical supply chain management services to the Independent Pharmacy market and (3) management of specialty pharmacy businesses. We developed a branded rapidly dissolving tablet OTC product called “RapiMed®” (www.RapiMeds.com), which is a children’s pain reliever and fever reducer recently launched in China through our joint venture entity Global Pharma Hub in February 2014. We have also entered into agreements with third parties pursuant to which we receive fees based on a formula tied to the gross profit on sales of pharmaceutical products to independent pharmacies by such third parties. Lastly, on February 20, 2014 we entered into an agreement with a New Jersey specialty pharmacy that specializes in topical creams, pursuant to which we manage their business operations in exchange for a percentage of the pharmacy’s operating profit, as defined in the agreement.

Recent Developments

On February 3, 2014, we entered into a joint venture with Global Pharma Hub, an international pharmaceutical marketing and distribution company, to license, market and distribute our RapiMed® children’s acetaminophen (a pain reliever and fever reducer). Under this agreement, Global Pharma Hub has an exclusive license to market and distribute RapiMed® children’s acetaminophen worldwide with the exception of the United States. Additionally, Global Pharma Hub, which has the right to sublicense RapiMed® children’s acetaminophen, entered into a sublicense agreement to NYJJ, a Hong Kong-based company, to generate initial and ongoing orders for our RapiMed® children’s acetaminophen, subject to and upon the registration approval of RapiMed® children’s acetaminophen by the Hong Kong government. On February 5, 2014, we received such registration approval for our RapiMed® children’s acetaminophen. With the registration process complete, we are now free to distribute RapiMed® children’s acetaminophen throughout Hong Kong. Because RapiMed® children’s acetaminophen is an over-the-counter (OTC) medication, it does not require FDA approval in order to be sold in Hong Kong due to the fact that our manufacturer is CGMP (Current Good Manufacturing Practices) certified. On March 17, 2014, we received a $200,000 purchase order for RapiMed® children’s acetaminophen from Global Pharma Hub for the Hong Kong market.

Our joint venture partner, Global Pharma Hub, entered into a sublicense agreement with Jetsaw Pharmaceutical, Inc. in Canada, giving Jetsaw exclusive sublicensing right to market and distribute RapiMed® Children's acetaminophen in Canada for a term of three years.

On February 20, 2014, we entered into a business management agreement with Main Avenue Pharmacy, a New Jersey specialty pharmacy. The agreement provides that we will manage all business operations of the pharmacy, which specializes in topical creams, in exchange for a percentage of the pharmacy’s total revenue. These creams are experiencing growing demand because they provide an effective alternative to pills that can be more easily ingested in higher doses than originally prescribed. From February 14, 2014 through March 31, 2014, Main Avenue Pharmacy had sales revenue of approximately $642,000, and under our management agreement with them, we earned fees of approximately $125,000. The calculation of our management fee under this agreement is described on page 13 of this Annual Report.

On March 24, 2014, we announced that our equity venture, Wholesale Rx, received and processed for itself $313,904 in orders during the month of February 2014. Since we formed this equity joint venture six months ago, our monthly revenue has increased by 398%. WholesaleRx has experienced 17% growth from January 2014. Additionally, February 2014 marked the third consecutive month that WholesaleRx has increased its revenues from the prior month. For the period of January 1, 2014 to March 31, 2014, WholesaleRx has generated for itself $792,627 in revenue. As described in more detail on page 7 of this Annual Report, we are entitled to a monthly fee of 20% of WholesaleRx’s gross profit for the prior month.

Evolving Business Model

Since our inception, ScripsAmerica’s business model has evolved significantly. Initially, we primarily provided pharmaceutical distribution services to a wide range of end users across the health care industry through major pharmaceutical distributors in North America, such as McKesson Corporation. These end users included retail, hospitals, long-term care facilities and government and home care agencies. The majority of our revenue from this model came from orders facilitated by McKesson, the largest pharmaceutical distributor in North America, and a few other clients.

However, we had no exclusive contract with McKesson and our other pharmaceutical distributors to utilize our services and our margins began to shrink. As a result, in 2013 we moved away from providing these pharmaceutical distribution services as our main source of income, and we focused on generating revenue through (1) the marketing, sale and distribution of our RapiMed® products, (2) our independent pharmacy distribution model and (3) our entry into the specialty pharmacy market.

On September 6, 2013, the Company and Marlex Pharmaceuticals, Inc., its former Contract Packager, entered into an agreement pursuant to which the Company and its former Contract Packager resolved various disagreements that had arisen between the parties on various projects covered by written agreements between the Company and its former Contract Packager, namely (i) the Contract Packager’s agreement with the U.S. government, (ii) the parties agreement with respect to the production and packaging of the Company’s RapiMed® products and (iii) shares of the Company’s stock issued to the principals of the Contract Packager for consulting services. The Company’s agreement with Marlex also contained mutual releases.

This September 6^th agreement provided that the Company will provide Marlex with financing through a related party, Development 72 LLC, for the continuance of Marlex’s pharmaceutical distribution contract with the U.S. government and for the Contract Packager to make 15 equal monthly payments of $27,210 to the Company with respect to amounts its owed the Company for prior shipments from McKesson and under the U.S. government contract (which stopped in May 2013 due to a dispute but have resumed in September 2013) for a total of $408,154. For net revenue generated after the September 6th agreement, the Company’s percentage of the profits under the U.S. government contract had been revised in terms of the rate and the number of bottles of product sold to the U.S. government for which the Company would receive payments. As a result of which, the Company will receive monthly payments from Marlex equal to the actual amount of interest incurred by the Company from the financing arranged through Development 72, royalty payments on the next 30,300 bottles sold by Marlex under the U.S. government agreement and a monthly interest payment of $1,480 with each such royalty payments.

To protect our position with respect to the RapiMed® product, the September 6^th agreement also terminated the Product Development, Manufacturing and Supply Agreement with the Contract Packager, which agreement was in regard to the Company’s RapiMed® products. All development costs through the date of the cancellation of the Product Development Agreement have previously been expensed and paid by the Company, which expects to enter into a manufacturing and supply contract directly with a manufacturer that owns a quick melt technology used for the RapiMed® products to be sold outside of the United States. We expect to enter into this agreement with the new manufacturer during the second quarter of 2014.

Pursuant to the September 6^th agreement, the principals of the Contract Packager returned 500,000 shares of common stock of the Company which they had received under consulting agreements. Another 400,000 shares issued to them under consulting agreements is being held as security for the payments due to the Company under the September 6^th agreement. Each month an equal portion of the 400,000 shares would be released as free trading shares to the principals of the Contract Packager. In September 2013, the Company retired the 500,000 shares and reversed the consulting expense previously incurred through additional paid in capital.

Market Opportunity

Independent Pharmacy Distribution

According to the National Community Pharmacist Association (“NCPA”), as of 2011, there were 23,106 independent pharmacies in the United States, which population has changed very little in recent years, according to a 2013 Hamacher Resource Group, Inc. (“HRG”) report entitled Independent Pharmacy Shoppers. This number of independent pharmacies includes independent, pharmacist-owned regional chain operations, franchise stores, specialty pharmacies and long-term care pharmacies. The NCPA notes that over 25% of independent pharmacy owners have ownership in two or more locations and that 38% of all retail pharmacies are independent, and represent $80.7 billion in annual sales of prescription medicines. According to a Chicago Tribune article on independent pharmacies published on September 2, 2013, independent pharmacies hold approximately 30% of the overall drug store market. The NCPA reports that the average independent pharmacy dispenses 201 prescriptions per day and that annual prescription sales account for approximately 91% of annual revenues among independent pharmacies. The HRG 2013 reports indicates that with the rapidly aging population, influx of new prescription patients as a result of the Affordable Care Act, increased use of generic drugs and a dramatic rise in chronic conditions, independent pharmacies could find themselves ideally positioned to become a consumer’s first choice for care. The NCPA reports that independent pharmacies provide a range of patient services, including delivery, patient charge accounts, compounding, durable medical goods and immunizations; and 77% of drugs dispensed by independent pharmacies are generics. A March 15, 2014 S&P Capital IQ report states that U.S. drug sales are expected to rise modestly in 2014, lifted in part by volume gains in specialty and generic drug sales.

With approximately half of the states expanding Medicaid under the Affordable Care Act, pharmacies, small and large, can expect to see an increase in prescription customers as a result of the expanded Medicaid coverage (which includes a prescription benefit).

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 use our broad connections to wholesale providers of prescription and generic medicines to source and provide our customers the best prices for their independent pharmacy customers.

During 2013, we derived approximately $69,902, or approximately 12.5% of our revenue, from commissions on gross margins of prescription and non-prescription medicines we sourced for our one customer, WholesaleRx. In 2014, we consolidated P.I.M.D. as a variable interest entity which distributes prescription and non-prescription pharmaceuticals to independent pharmacies.

Our independent pharmacy distribution business competes against large and medium sized pharmaceutical distributors such as McKesson, AmerisourceBergen Corporation, Anda Pharmaceuticals, Inc., Cardinal Health, Harvard Drug Group, Capital Wholesale Drug Company, Henry Schein, Inc. and Matrix Distributors, Inc., Medsource Corporation, Sunrise Wholesalers, Inc. and Top Rx. All of these competitors have more financial resources than we do and are better positioned to offer lower prices for pharmaceutical products with better payment terms.

We believe that independent pharmacies will continue to represent a significant market opportunity given the expansion of prescription patients under the Affordable Care Act and the niche markets drawn to the patient services that large chain drug stores do not typically provide (such as compounding, delivery and patient charge accounts). We believe that our ability to source low cost prescription and non-prescription medicines will allow our clients to offer competitive wholesale prices for pharmaceutical products to independent pharmacies. We will use our effective pharmaceutical sourcing abilities to expand the number of wholesale clients we have.

Rapid Oral Disintegrating Drug Formulations

During 2012 and 2013, many large pharmaceutical companies will lose patent protection of some of their best-selling products. One of the ways that these large pharmaceutical companies protect and expand the market for the brand name drugs is through new methods of delivery – a new dosage form. According to IMS Health Incorporated, 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 the 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 indication to use previous clinical testing results for the purpose of FDA approval.

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 FDA 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 combined US, EU and Japanese ODT market has doubled in size over the past four years to surpass $6.4 billion in 2009, according to Technology Catalysts International’s report on Orally Disintegrating Tablet and Film Technologies (sixth edition), which is available for purchase from TCI.

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. Sustained 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) common to pediatric and geriatric patients, 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.

As a result, the combined US, EU and Japanese ODT market has doubled in size between 2005 to 2009, surpassing $6.4 billion in 2009, according to Technology Catalysts International’s report on Orally Disintegrating Tablet and Film Technologies (sixth edition), which report is available for purchase from TCI. 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. Aprecia Pharmaceutical Company reports on its web site that the global ODT market reached revenues of $8.4 billion in 2011 and this segment grew by $1.4 billion (+20%) from 2010 and by $2 billion from 2009.

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, according to an article appearing on Pharmatech.com entitled “ODT Market to Exceed $13 Billion by 2015” by Stephanie Sutton (available at http://pharmtech.findpharma.com/pharmtech/Formulation/ODT-Market-to-Exceed-13-Billion-by- 2015/ArticleStandard/Article/detail/694820). Growth is fueled by patient demand, with recent market studies indicating that more than half of the patients prefer ODTs to other dosage forms, according to Kaushik Deepak’s article “ Orally disintegrating tablets: An overview of melt-in-mouth technologies and techniques”, which appeared in the July 2004 edition of Tablets and Capsules magazine (pp. 30 – 35), and most consumers would ask their doctors for ODTs (70%), purchase ODTs (70%), or prefer ODTs to regular tablets or liquids (80%), according to Dave Brown’s article “Orally Disintegrating Tablets: Taste Over Speed” which appeared in September 2003 edition of Drug Delivery Technology magazine (and can be found at http://www.drugdeliverytech.com/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=AF1FFE004FD14F3C9645BBE33360F7A9).

The ODT market for both the prescription ODT and over the counter ODT is highly fragmented, with many companies putting out ODT products (either OTC, prescription or both) into the market place. Aprecia reports that more than 900 branded and generic products have now been commercialized in ODT formulations throughout the United States, European Union and Japan.

Patient demand is driven by the fact that as many as 40% of Americans experience difficulty swallowing traditional tablets (especially among pediatric and geriatric patients), 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, according to a January 2004 PR Newswire article entitled “40% of American Adults Report Experiencing Difficulty Swallowing Pills” (available at http://www.spraynswallow.com/links&Articles.html).

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.

Our Target Niche

In light of the fact that rapid melt technology provides pharmaceutical companies with the much-needed opportunity for product line extensions for a wide variety of drugs, we see a significant opportunity as a contract developer of orally disintegrating tablet (ODT), especially in prescription pharmaceuticals.

Our target market for RapiMed® is 2-11 year olds and we anticipate that the formula for our orally disintegrating tablets will be more effective than existing products due to its ability to melt faster, taste better and provide more accurate dosing. Unlike other products available, ScripsAmerica’s is much smaller and dissolves in the child’s mouth in 25 seconds, therefore entering their system faster. RapiMed® contains Acetaminophen (main ingredient in Tylenol); however the bitter taste of this active ingredient is masked by a patented technology. The cherry and wild grape flavors that our product will come in are most appealing to children. Additionally, the dosage of RapiMed® is controlled, not like the syringe based competing products and we offer the 80 mg for 2-6 year olds, and 160 mg for the 6-11 year olds. The 80mg and 160mg dosing strengths will be particularly applicable to children to solve common overdosing or under dosing issues that 2-11 year olds tend to experience when taking pain relievers or fever reducers in doses intended for adults.

The RapiMed® packaging is convenient, portable, child resistant and easy to use as well as eye-catching. The product will be labeled in both English and Spanish to serve the expanding Hispanic markets in America. The contents are aspirin free, ibuprofen free, sugar free and gluten free as well. Since the numerous Tylenol recalls in the recent past, there is a clear need for a better controlled, more efficient product to fill the void. We believe our RapiMed is that product.

ScripsAmerica presented RapiMed® to retail buyers in February of 2013 at the ECRM Cough and Cold show in Florida and we received very positive feedback. We have engaged Davison Product Group, LLC to roll out the product to retailers nationwide once we secure adequate funding. Depending on the retailer, the product will be promoted through in-store temporary price reductions, coupons, store-circulars, buy-two-and save packs, as a clip-strip program, radio and print advertising. As noted below, in March 2014, we began selling our RapiMed® pediatric acetaminophen in the People’s Republic of China through our joint venture entity, Global Pharma Hub, Inc.

In January 2014, we entered into a joint venture entity, Global Pharma Hub, Inc., with Forbes Investments, Ltd. and Sterling, LLC and their respective assigns. The purpose of this joint venture is to license, market and distribute U.S. manufactured over-the-counter medications in foreign markets. We own 37% of Global Pharma Hub. In January 2014, we entered into a Worldwide Licensing Agreement with Global Pharma Hub under which we granted to Global Pharma an exclusive worldwide license, excluding the United States of America, to market, distribute and sell our RapiMed® children’s pain reliever and fever reducer. The license is for the use of our registered trademarks and includes online marketing, distribution and sales so long as such online outlets do not sell in the United States. We do not own the formula for the RapiMed® products sold outside of the United States, which is owned by the manufacturer we will be using to supply RapiMed® products for Global Pharma Hub. In March 2014, we secured a $200,000 order from Global Pharma Hub for our RapiMed® pediatric acetaminophen for the Hong Kong market.

Our acetaminophen orally disintegrating rapid dissolve tablets will compete with other children’s analgesic products, such as Johnson & Johnson’s Children’s Tylenol Suspension Liquid and Children’s Tylenol Meltaways, Novartis’ Triaminic Fever Reducer Pain Reliever, and Perrigo’s Junior Strength Non-Aspirin Suspension Liquids & Drugs. According to Euromonitor International’s research, J&J’s Children’s Tylenol sales represented 23% of global and 76% of U.S. retail value sales in child-specific acetaminophen. Global sales were valued at $695 million in 2009. While the strength of J&J’s Tylenol brand seemed virtually bulletproof in the U.S. until recently, a multitude of product recalls over the past three years have weakened its reputation and opened a window for competitors to capture market share, especially in the children’s analgesics market where pediatricians’ support of the Tylenol brand has seen some erosion.

When analyzing the advantage of the ODTs dosage form over liquids, it is imperative to consider that safely administering liquids such as Children’s Tylenol suspension to children requires precise dosage measurement in increments of half a teaspoon, depending on the child’s weight or age. Inadvertent overdosing – whether by an adult’s error or perhaps a child’s self-administration - may lead to severe liver damage and requires immediate medical attention even in the absence of signs or symptoms. Conversely, ODTs such as our acetaminophen orally disintegrating rapid dissolve tablets represent a precise, standardized dose in the form of discrete, easy-to-count, individually blister-packaged tablets, thereby reducing the probability of human error while the drug is being administered. Finally, the taste of ODTs can easily be tailored to appeal to children, using a variety of flavored coatings.

Specialty Pharmacies

Specialty pharmacies, prepare medications for humans (and animals) that are not commercially available for individual patients. A specialty pharmacy will mix or alter various drug ingredients to create a customized medication for an individual patient in response to a doctor’s prescription. These custom doses may be in the form of an alternate strength of the medication, flavoring of medication and/or preparation of the medication for patients with allergies or other sensitivities. For example, a patient may be allergic to an additive to a pill, such as a certain dye color, or the patient needs less of an inert (non-active) ingredient or needs a stronger dose than is commercially available.

According to a report from the research firm IBISWorld, during the past five year period ended 2012, the specialty pharmacy industry has largely grown as a result of increased awareness of compounding pharmacies and pharmaceutical applications, shortages of mass-produced drugs and growth in the number of senior citizens. During such time, the number of prescription drug shortages has increased, rising from 61 in 2005 to more than 280 in 2012. Further, a December 2012 article by the American Journal of Managed Care cites that pharmacies specializing in compounding have become more prevalent, citing the primary reason as drug shortages which have become more frequent over recent years. The American Society of Health-System Pharmacists currently lists a shortage of 235 products on its website. Another factor for expected growth in the market for compounding pharmacies is the increasing number of Americans aged 65 and over, supporting demand for medications from the compounding industry that cannot be met by conventional medications. In the five years to 2017, IBISWorld estimates that revenue will increase. During that time, a growing number of doctors and patients will likely turn to compounding pharmacies to prepare medications with alternate doses and strengths. Rising demand will ultimately bring more operators into the industry. IBISWorld projects that the number of firms operating in this industry will increase at an average of 2.3% annually to 178 in the five years to 2017.

Independent Pharmacy Distribution

Wholesale Rx

As of November 1, 2013, we entered into a written agreement with WholesaleRx, Inc., which represents over 700 such independent pharmacies. WholesaleRx is DEA and State-licensed to store and distribute controlled substances (which are drugs that have the potential for abuse or dependence and are regulated under the federal Controlled Substances Act). WholesaleRx is in possession of the proper facility, the critical state licenses, DEA approval, and the network of customers to add to ScripsAmerica’s current revenue stream. We anticipate adding available state licenses from additional states, thereby expanding WholesaleRx’s reach while increasing the products available for distribution into their network. WholesaleRx orders the goods from the manufacturers and has them shipped to its warehouse facility. WholesaleRx then ships the goods to the pharmacies in the bottles as received by the manufacturer. When WholesaleRx receives orders from the independent pharmacies, they send the goods to them COD, which will eliminate any accounts receivable issues. We would provide financing and administer the process of providing financing to WholesaleRx.

Prior to November 1, 2013, we had an oral agreement with WholesaleRx pursuant to which we secured third party financing to fund WholesaleRx’s purchase orders in consideration for which we received 12.5% of the WholesaleRx’s “gross profit” for the prior month (which gross profit would be (i) sales to all customers minus (ii) cost of goods sold, freight in (to WholesaleRx), credits and allowances).

Under our November 2013 written agreement with WholesaleRx, we agreed to provide purchase order financing to WholesaleRx under new terms and purchased a 20% equity stake in WholesaleRx. In consideration for providing the purchase order financing, and to cover our costs in administering such financing, WholesaleRx has agreed to pay us on or before the 15^th calendar day of each month 20% of the gross profit (as described in the preceding paragraph) for the prior calendar month. If WholesaleRx is late in paying such 20% fee, then the amount owed to us will accrue interest at the rate of 18% per annum until paid.

Under this financing arrangement, when WholesaleRx needs to fund the purchase of product to fill an order, we will secure advances financing from a third party financing source (with which we have a pre-existing business relationship) and then turn around and lend the money directly to WholesaleRx. WholesaleRx must repay the advance from us within 24 calendar days (which is six days before we must repay the third party financing source). The loans we make to WholesaleRx are secured by certain assets of WholesaleRx (including any proceeds from such assets), and WholesaleRx has agreed to indemnify and hold us harmless for any claims, charges and demands resulting from or arising out of any purchase order financing with the third party financing source.

During 2013, we borrowed from related third parties to provide WholesaleRx’s with purchase financing. These related third parties were Development 72, LLC, which is an affiliate of one of directors, and the wife of our Chief Executive Officer. We borrowed an from Development 72 to provide WholesaleRx purchase order financing in August and September 2013, and we borrowed from the wife of our Chief Executive Officer to provide WholesaleRx purchase order financing from September to December 2013. Since January 1, 2014, we have provided purchase order financing to WholesaleRx from our cash flow from operations without borrowing any funds.

In addition to providing purchase order financing to WholesaleRx, we also agreed in the November 2013 written agreement to make an equity investment in WholesaleRx in the amount of $400,000 for 12,000 shares, which represents a 20% interest in WholesaleRx. We paid the subscription amount in three installments ($150,000 was paid upon execution of the agreement, $125,000 was paid in January 2014 and $125,000 was due on February 15, 2014 but we have not yet paid this amount). A proportionate number of the shares of WholesaleRx were released to us from an escrow agent upon each payment. As of April 9, 2014, we have received 8,250 shares from the escrow agent (representing a 14% interest in WholesaleRx). Under the November 2013 written agreement we also have a right of first refusal for (i) any proposed transfer of shares by the current owners of WholesaleRx and (ii) any financing (debt or equity) by WholesaleRx.

If either of the other two shareholders have a desire to sell some or all of their shares of WholesaleRx stock, they are required to notify us immediately of that intent of that intent and offer us that opportunity to both the shares to be sold. If the selling shareholder and we cannot agree on terms for the purchase of the shares, then the selling shareholder may try to sell his stock to a third party. However, if the either of the other two shareholders of WholesaleRx receive a bona fide offer for the purchase of some or all of their WholesaleRx from a third party, we have a right of first of first refusal to purchase such WholesaleRx stock on the terms and conditions of such bona fide offer. The selling shareholder must provide us with a written copy of the bona fide offer, and we have then fifteen calendars after the receipt of the notice to exercise our right of first refusal.

We also have a right of first refusal with respect to any proposed investment in WholesaleRx.

PIMD Sourcing and Marketing Agreement

On October 18, 2013, we entered into an agreement to acquire 90% of the Membership Units in P.I.M.D. International, LLC (“PIMD”), a start-up limited liability company based in, and proposing to do business in, Florida. Florida is a most desirable state to be a base of operations and distribution due to the current needs of its diverse population. The operation will be guided by our full time pharmacist who will ensure both DEA and Florida compliance. This additional revenue stream will certainly enhance shareholder value. Although founded approximately 4 years ago, PIMD has had no sales, but has the necessary licenses for operation of a drug wholesale operation. The purchase of the Membership Units in PIMD was subject to certain conditions precedent, of which the most important was that we obtain the necessary licenses from Florida (and the DEA) for the ownership of a drug distribution company like PIMD. At that time we entered into the agreement, we believed that the licensing could be accomplished within about 12 weeks.

However, it was determined that securing the licenses was going to require a substantially longer period of time than the parties had anticipated. Consequently, in order to preserve the business opportunity, it was necessary to change the structure of the relationship. Accordingly, the original purchase agreement was cancelled and voided. The funds already advanced by us to PIMD were converted to a loan and the relationship between PIMD and us became a Sourcing and Marketing Agreement

Under this Sourcing and Marketing Agreement, which we entered into with PIMD in December 2013, we will assist PIMD by helping PIMD to (1) secure advantageous sources of drugs and (2) secure marketing and sales assistance in selling the drugs. For these services, we will receive a “Sourcing and Marketing Fee” which is 45% of the “Calculated Basis” to be calculated under a formula in the Sourcing and Marketing Agreement. PIMD has no material sales in fiscal 2013 and no sales as of the three months ended March 31, 2014, but should be operational by the end of June 2014. Under the terms of the revised agreement with PIMD, we have no authority or control with respect to PIMD’s business - the purchase of the drugs and the sale of the drugs. Additionally, we do not have any authority to bind PIMD for any transaction relating to the purchase, sale or transfer of pharmaceutical products.

In the meantime, Implex Corporation, owned by our legal counsel, Richard Fox, who is a Florida resident, has stepped in to assist with any licensing issues. We believe that if licensing is required it will be that of Implex, based in Florida and with a Florida owner. Implex borrowed $272,000 from ScripsAmerica at an interest rate of 2% and has re-loaned the funds to PIMD at an interest rate of 5%. Implex will keep the 3% differential. Our loan to Implex and Implex’s loan to PIMD are both for a 5-year period. Implex will be entering into a “Business Development and Retention Agreement” with PIMD to assist PIMD with the development of its business.

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, according to ONdrugDelivery Ltd.’s 2007 white paper entitled “Oral Drug Delivery: When You Find the Holy Grail” (available at http://www.ondrugdelivery.com/publications/Oral_Drug_Delivery_07.pdf). 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 combined US, EU and Japanese ODT market has doubled in size over the past four years to surpass $6.4 billion in 2009, according to Technology Catalysts International’s report on Orally Disintegrating Tablet and Film Technologies (sixth edition), which is available for purchase from TCI.

On February 5, 2014, we received registration approval for our RapiMed® children’s acetaminophen in Hong Kong. With the registration process complete, we are now free to distribute RapiMed® children’s acetaminophen throughout Hong Kong. On March 17, 2014, we received a $200,000 purchase order for RapiMed® children’s acetaminophen from Global Pharma Hub, our joint venture entity, for the Hong Kong market.

Although not planned for the next 12 months, we do plan to develop and launch additional products as quickly as cash flows allow. Vitamins and OTC products 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. We do not need to obtain FDA approval to market and sell orally disintegrating rapid dissolve tablets for vitamins and OTC products. We only need to be sure that the contract manufacturers we use for making our orally disintegrating rapid dissolve tablets for vitamins and OTC products have quality control and manufacturing procedures that conform to the FDA's good manufacturing practices (“GMP”) regulations, which must be followed at all times. In complying with standards set forth in these regulations, manufacturers must continue to expend time, monies and effort in the area of production and quality control to ensure full technical compliance. We expect it would take us nine (9) months to purchase the raw materials, manufacture the product using a contract manufacturer, complete the packaging, ship the finished product and conduct the marketing/advertising for the product. Launch of generics as a rapidly dissolving drug formulation requires filing of an Abbreviated New Drug Application or New Drug Application 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 million - $2 million investment in safety and efficacy studies.

Except for the 80 mg and 160 mg pediatric orally disintegrating rapid dissolve tablets, we currently do not have any other marketable rapid dissolve products. We may not successfully develop any of the potential rapid dissolve products for vitamins and OTC products, or we may require more funding than we expect to develop such potential orally disintegrating products.

We do not have exclusive use for this material for our rapid dissolve products. The remainder of our formulation to develop these potential rapid dissolve products, such as particle size, coating agents, flavors, binders, manufacturing lubricants, package design, manufacturing process, packaging materials and packaging process, are treated as our trade secrets. Although any competitor or potential competitor may use the same patented material to make a rapidly dissolving product, we rely on the trade secret aspect for our competitive edge in the market for rapid dissolve products. As of March 31, 2014 we are not aware of any patent that would block our use of our “trade secrets” for the development of rapid dissolve vitamins and OTC products.

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
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

Global Pharma Hub Joint Venture

In January 2014, we formed Global Pharma Hub, Inc. with Forbes Investments, Ltd. (and its assigns) and Sterling, LLC (and its assigns) for the purpose of marketing, supplying and distributing OTC products as RapiMed® orally dissolving tablets in foreign markets. The initial market is in China, where Global Pharma Hub began marketing and distributing our RapiMed® children’s acetaminophen in China.

The ownership of Global Pharma Hub, Inc. is as follows: (a) we own 37%, (b) Forbes Investments, Ltd. owns 37% and (c) Sterling, LLC owns 26%. Forbes Investment, Ltd. is based in Shenzhen, China. The parties have a written understanding of this joint venture although a final, binding contract is in process of being prepared for signature.

Global Pharma Hub will seek out and identify companies that have market ready OTC products and then structure a licensing agreement with that company for the international distribution of such OTC Product reformulated and marketed as a RapiMed® orally dissolving tablet. The process of identifying companies with OTC products that Global Pharma Hub would be interested in distributing will involve Global Pharma Hub’s management leveraging their network of business associates they have developed over several years, and then using those connections to arrange introductions for Global Pharma Hub with the potential target companies with the targeted OTC products.

Global Pharma Hub will source from the US the OTC products for licensing to be formulated, marketed and sold as a RapiMed® products and then based upon market due-diligence, determines which foreign markets present the highest demand for said OTC product. Once Global Pharma Hub determines which countries present the highest demand for the RapiMed® version of the OTC product, it will structure a license agreement with the OTC product company for the exclusive licensing, marketing and distribution rights for a particular country or countries. Global Pharma Hub seeks to have exclusive foreign territory rights for the RapiMed® version of a particular OTC product to prevent third party competition from other potential licensees of the same OTC product.

Global Pharma Hub will then distribute the licensed OTC products through arranging agreements with importers in the foreign distribution markets and arranging sub-licensing distribution agreements with distribution partners in the foreign distribution markets. The process of identifying the importers and distributers primarily involves leveraging the business network of Global Pharma’s officers and directors.

The importer’s function is to assist in arranging the shipping logistics for the RapiMed® version of the OTC product to reach the designated port and then appropriately delivered to the distributor. For these services the importer earns a designated fee based upon several variables such as the size of the OTC order and importer’s level of logistical involvement.

The distributors function is to arrange retail distribution of the OTC product. The distributor will hold either the exclusive or non-exclusive sub-licensing rights for the RapiMed® version of the OTC product in the particular foreign market. The distributors earns a percentage of every purchase order it arranges with retailers. This percentage is determined through negotiations between Global Pharma Hub and the distributor.

Sometimes, the importer and distributor in the foreign market may be the same party, or affiliated in some fashion.

Global Pharma Hub does not engage in on the ground solicitation of retail distributors in the foreign markets; those efforts are conducted by the distributors with whom it has agreements.

The process of delivering the RapiMed® version of the OTC product to the foreign distributor involves the distributor submitting purchase orders to Global Pharma Hub and then Global Pharma submitting purchase orders to the U.S. company licensor of the OTC product. Global Pharma earns a percentage on every order through marking up the product price it receives from the U.S. company licensor.

In January 2014, we entered into an exclusive world-wide licensing agreement with Global Pharma Hub, a related party that is a joint venture entity of which we own 37%, for the marketing and distribution of our children’s pain reliever and fever reducer OTC product called RapiMed® in all countries except the United States. The license will allow Global Pharma Hub to market and distribute the children’s acetaminophen orally dissolving tablets under our registered trademark, RapiMed®, as well as our registered trade mark “MELTS IN YOUR CHILD'S MOUTH”.

In order to keep the license agreement, Global Pharma Hub must meet minimum sales quotas terms which are as follows:

$500,000 in purchase orders during first 12 months of License Agreement;

$1,400,000 in purchase orders during second 12 months; and

$2,400,000 in purchase orders during the third 12 months.

Global Pharma Hub signed an exclusive sub-licensing agreement for RapiMed in the territory of Hong Kong on January 28, 2014, with NYJJ Hong Kong Ltd. to generate initial and ongoing orders for the product following its registration approval by the Hong Kong government. The minimum sales quotas terms of the exclusive Hong Kong sub-licensing agreement are as follows:

$550,000 in purchase orders during first 12 months;

$1,500,000 in purchase orders during the second 12 months; and

$2,500,000 in purchase orders during the third 12 months

On February 22, 2014, Global Pharma Hub signed an exclusive sub-licensing agreement with Jetsaw Pharmaceutical, Inc. the marketing and distribution of RapiMed® pediatric acetaminophen in the territory of Canada for an initial term of three years. The minimum sales quotas terms of the exclusive Hong Kong sub-licensing agreement are as follows:

$120,000 in purchase orders during first 12 months;

$220,000 in purchase orders during the second 12 months; and

$320,000 in purchase orders during the third12 months.

Jetsaw Pharmaceutical has over 14 years of experience in the Canadian pharmaceutical and OTC market in providing medication procurement and distribution services to hospitals, clinic chains and both independent and large pharmacy brands. As a result Jetsaw has a wide network of relationships in the Canadian pharmaceutical market. We expect that Jetsaw will be able to leverage these relationships to aggressively introduce RapiMed® pediatric acetaminophen into multiple distribution channels.

Supplier Agreement

We have finalized the terms with a manufacturer for the production of our RapiMed® pediatric acetaminophen for marketing, sale and distribution outside of the United States. We expect to sign a Manufactuing and Supply Agreement with this manufacturer in the second quarter of 2014. This agreement will be a non-exclusive arrangement. This supply agreement will be for a term of one year with automatic renewal for additional, successive one year terms unless either party terminates upon 180 days prior notice. This supply agreement may be terminated for (i) a material breach of the agreement which is not cured within 30 days after notice of the breach from the other party, (ii) a force majeure (causes beyond the reasonable control of a party such as an act of god, natural disaster or governmental act or imposition) that causes a party to be unable to perform for 90 days (consecutively or in the aggregate), (iii) insolvency or bankruptcy of a party, (iv) breach of a confidentiality provision in the supply agreement or (v) if we terminate a RapiMed® product line with 90 days prior notice to the Supplier. Each party under this supply agreement will retain ownership of their respective intellectual property (patents, trademarks, trade secrets) despite use of such intellectual property under this supply agreement. The manufacturer owns the formula that we will be using for our RapiMed® products made by them under this agreement.

Under this agreement, the Supplier will manufacture, package and ship the RapiMed® pediatric acetaminophen in accordance with the specifications and directors we provide to them. The Supplier will bill us within five (5) days of the shipment of product and we will pay the Supplier within 30 days of the receipt of the invoice. We pay for the shipment of the RapiMed® product to our designated carrier.

This supply agreement will have mutual indemnification provisions in the Supplier will indemnify us for any loss or expense directly or indirectly, arising out of, resulting from or in any way connected with (a) any breach by Supplier of the terms of this supply agreement; (b) if the Supplier does not manufacture, package or ship the RapiMed® goods in conformity with our written specifications provided to them, (c) if the Supplier breaches any of their warranties made to us, (d) the Supplier does not comply with any laws that apply to the Supplier’s obligations under this supply agreement, (e) any recall or return of RapiMed® products initiated by Supplier or by us if such recall was a result of the Supplier’s failure to comply with the our written specifications or the Supplier’s warranties; or (f) any claim that the manufacture, use or sale of any of the RapiMed® products infringes upon or violates any intellectual property rights of any third party (so long as such claim is not based on any intellectual property owned by us). We will indemnify the Supplier for any loss or expense arising out of, resulting from or in any way connected with our breach of the supply agreement.

If the use or sale of any RapiMed® product (or a component part of RapiMed®) is enjoined because an infringement claim, and so long as such claim is not based on any intellectual property owned by us, then under this agreement with the manufacturer we will have the option to require the Supplier, at no expense to us, to (a) secure the right to continue using the RapiMed® products or components or parts thereof; (b) replace the infringing items non-infringing item of equal performance and quality; or (c) modify the infringing items so that they become non-infringing.

Specialty Pharmacies

On February 20, 2014, Implex Corporation and Main Avenue Pharmacy, Inc., the specialty pharmacy being acquired by Implex, entered into a Business Management Agreement with ScripsAmerica, effective as of February 7, 2014. Under this agreement, Implex has engaged us to manage the day to day business operations of Main Avenue Pharmacy, subject to the directives of Implex. Our day to day management responsibilities includes financial management but excludes any matters related to licensing and those responsibilities which require Federal or state licensure (“Licensing Matters”). Prior to the final closing, the Licensing Matters will be handled by Main Avenue Pharmacy’s owner and after the final closing Implex will be responsible for managing Licensing Matters. We will also provide funding (as a loan or advance), to the extent necessary, to pay all costs and expenses incurred in the operation of Main Avenue Pharmacy (to the extent not covered by the funds of the pharmacy)

Implex will be entitled to make monthly draws on the first day of each month, as owner of Main Avenue Pharmacy, as follows: (i) commencing on April 1, 2014 and continuing to, and including, March 1, 2015, $47,003 plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month (except that the first such payment shall include prescriptions processed since the initial closing on February 7, 2014); (ii) commencing on April 1, 2015 and continuing to, and including, March 1, 2016, $8,827 plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month; (iii) commencing on April 1, 2016 and continuing thereafter plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month and (iv) commencing on the 10,001 prescription proceeds by Main Avenue Pharmacy the rate will be reduced to $10 for each prescription processed by Main Avenue Pharmacy during the preceding month.

For the management services provided by us under this Business Management Agreement, Implex will pay us a combined month Management and Financing Fee. This combined fee will be equal to 97% of the Calculation Basis (as defined in the agreement), which amounts to receipts from paid invoices less Implex’s monthly draw and various expenses of Main Avenue Pharmacy.

The Business Management Agreement will have an initial term of five (5) years. If at September 30, 2018 we are not in default under this Business Management Agreement, we have the option to extend the term of the agreement for an additional five year period. The Business Management Agreement can be terminated by either party if (i) the other party (i) breaches the agreement and the breach is not cured within 30 days of notice from the other party or (ii) the liquidation, bankruptcy, insolvency or receivership of the other party.

Development Agreement/Intellectual Property

We own the Websites www.rapimeds.com and www.scripsamerica.com. We do not have any other intellectual property except as described below.

On April 17, 2013 we filed a trademark application for “RAPI-MED” as a trade mark to use for our orally disintegrating drug formulation products prior to the sales of the pain relief rapidly dissolving drug formulation we developed. On March 15, 2013, we filed a trademark application for “MELTS IN YOUR CHILD’S MOUTH” as a trademark for use for our pain relief 80mg and 160 mg orally disintegrating rapid dissolve tablets that we developed. Both of these marks have been successfully registered with the U.S. Patent and Trademark Office. On January 14, 2014, “MELTS IN YOUR CHILD’S MOUTH” was put on the Supplemental Register and March 25, 2014 “RAPIDMED” was placed on the Principal Register.

During 2015, we expect to submit an application for a “process patent” for how we make our 80 mg and 160 mg pain relief orally disintegrating product. A process patent, if granted, would give us an exclusive method to produce not only our 80 mg and 160 mg pain relief orally disintegrating product but any other orally disintegrating tablets we decide to produce, and it would prevent other companies from using our manufacturing process. However, the process patent will not prevent other companies from producing ODTs using any manufacturing process not covered by our process patent (if granted). In addition, our process patent would not allow us to produce an orally disintegrating tablet that is covered by a product patent of another company (as a product patent gives the holder exclusive rights to the product regardless of how it is produced). If our process patent application is denied, we would not be able to seek protection for our manufacturing process under state trade secret law. Trade secret law protects, among other things, non-patentable processes provided certain conditions are met: (i) the process is generally not known, (ii) the process gives an economic benefit to the owner and (iii) the owner takes reasonable steps of keeping the process secret. By filing a process patent our manufacturing process becomes disclosed to the public and we would be unable to meet the condition of secrecy.

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.

In our RapiMed® orally disintegrating tablet business, we compete against small, mid-sized and large pharmaceutical companies. Our major competitors for orally disintegrating tablets for prescription drugs are primarily large pharmaceutical companies such as ALZA Corporation, BTG, Catalent Pharma Solutions, Shire Plc, Watson Pharmaceuticals, Becton Dickinson and Genzyme Corporation. These companies have significantly greater financial resources and marketing abilities than we do. However, we believe that we can compete effectively against these larger companies by targeting niche markets that are ignored or under-served by these larger pharmaceutical companies. We believe the niche prescription drug market offer, in the aggregate, the opportunity to generate significant revenues in the future.

Traditionally, specialty pharmacies tended to be small operations that create special formulations of drugs at the request of doctors. Consequently, there are no dominant competitors in this segment of the specialty pharmacy industry. The specialty pharmacy is, in general, fragmented with primarily single store operations. We do not compete against large-scale drug compounding companies, such as Ameridose and The New England Compounding Center, which are more similar to drug manufacturers than pharmacies.

Our orally disintegrating drug formulation for 80 mg and 160 mg acetaminophen will compete with other children’s analgesic products, such as Johnson & Johnson’s Children’s Tylenol Suspension Liquid and Children’s Tylenol Meltaways, Novartis’ Triaminic Fever Reducer Pain Reliever, and Perrigo’s Junior Strength Non-Aspirin Suspension Liquids& Drugs. While the strength of J&J’s Tylenol brand seemed virtually bulletproof in the U.S. until recently, a multitude of product recalls over the past three years have weakened its reputation and opened a window for competitors to capture market share, especially in the children’s analgesics market where pediatricians’ support of the Tylenol brand has seen some erosion. We will launch our rapidly dissolving drug formulation for 80 mg acetaminophen to try to take advantage of the open window in the analgesics market by promoting the advantages of orally disintegrating tables – accurate dosing, patient-friendly and faster onset to accelerate relief.

Employees

As of April 8, 2014, we had two (2) full time employees and five (5) consultants. We plan to hire more persons on as-needed basis.

ITEM 1A.

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.

Risk Related to Our Company

As a result of our evolving business model, we have a limited operating history in our lines of business and, therefore, we may not be able to correctly estimate our future operating expenses, which could lead to cash shortfalls. Since our inception, our business model has evolved significantly. In 2013, we moved away from providing these pharmaceutical distribution services as our main source of income, and we focused on generating revenue through (1) the marketing, sale and distribution of our RapiMed® products, (2) our independent pharmacy distribution model and (3) our entry into the specialty pharmacy market. As a result of the change in our business model, our revenues have significantly decreased from prior periods. For the year ended December 31, 2013, our revenues decreased approximately 85.7% from 2012. We have a limited operating history in our new lines of business from which to evaluate our business. Our failure to successfully bring our rapid melt formulations to market or successfully execute our business plan for our independent pharmacy distribution and/or specialty pharmacy business would have a material adverse effect on our ability to continue operating. Accordingly, our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in an early stage of development. We may not be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business, operating results and financial condition.

Further, because of the change in our business model, our historical financial data is of limited value in estimating future operating expenses and future cash flow. Our budgeted expense levels are based in part on our expectations concerning future revenues. However, our ability to generate the needed levels of revenues depends largely on our ability to be successful in our rapid melt drug development, independent pharmacy distribution and specialty pharmacy businesses. Moreover, even if we successfully develop and market rapid melt drug formulation, the size of any future revenues from such product sales depends on the market acceptance of such drugs we develop, which is difficult to forecast accurately. After taking into consideration our 2014 interim results to date and current projections for the remainder of 2014, the Company’s management believes that the Company’s cash flow from operations, coupled with recent financing are not sufficient to support the working capital requirements, debt service, applicable debt maturity requirements, and operating expenses through December 31, 2014.

Our quarterly and annual expenses are likely to increase substantially over the next several years depending upon the level of capital spending required to grow our revenues. Our operating results in future quarters may fall below expectations. Any of these events could adversely impact our business prospects and make it more difficult to raise additional equity capital at an acceptable price per share.

Disruptions in our supply chain or among other companies providing services to us could adversely affect our ability to fill purchase orders for our independent pharmacy distribution business, 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 for our independent pharmacy distribution business. 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 do not have any written contracts with our customers. This allows such customers to use other companies instead of us which may negatively impact on our sales. Because we do not have any written contracts with our independent pharmacy customers or with our the customers of specialty pharmacy, those customers are free to forward requests for pharmaceutical products or customize pharmaceutical compounds from other distributors or specialty pharmacies (as the case may be). If a significant number of our customers began to use competing companies instead of us, our sales would decrease significantly.

Competition from horizontal and vertical markets involved in distribution to independent pharmacies may erode our sales. Our independent pharmacy distribution business faces competition, both in price and service, from national, regional, and local full-line, short-line, and specialty wholesalers, service merchandisers, self-warehousing chains and manufacturers engaged in direct distribution, and from 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 and which may cause our customers to use, or end users to request use of, other distributors. Such a shift in distributors would adversely affect our sales.

Any 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 businesses, namely (1) rapidly dissolving drug formulations for Over the Counter (OTC) drugs, vitamins and supplements, (2) the independent pharmacy distribution market and (3) the specialty pharmacy market. 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 the entire 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 currently rely on a third-party contract manufacturing organizations to manufacture and supply our RapiMed® products. If our manufacturer fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find a new manufacturer. We do not own facilities for the manufacturing of our RapiMed® products, and we will rely upon third-party contract manufacturing organizations to manufacture and supply our RapiMed® products. The manufacture of pharmaceutical products in compliance with the FDA's current good manufacturing practices, or cGMPs, requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control, including stability of the product candidate and quality assurance testing, shortages of qualified personnel, as well as compliance with strictly enforced cGMP requirements, other federal and state regulatory requirements and foreign regulations. If our manufacturer was to encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, our ability to fulfill orders for our RapiMed® products would be jeopardized. Any delay or interruption in the supply of RapiMed® products, depending upon the period of delay, may require us to find a new manufacturer and could cause us to lose orders and otherwise have a material adverse effect on our sales of RapiMed® products.

We currently rely on a single manufacturer for the production of RapiMed® products to be sold outside of the United States; we do not have a manufacturer for such products to be sold in the United States. Further, although we have finalized terms of a manufacturing and supply agreement, we have yet to sign that agreement with our manufacturer. Although there are alternative manufacturers we could use for the production of our RapiMed® products, it could be expensive and take a significant amount of time to arrange for alternative manufacturers, which would adversely affect our business.

We do not own the formula used for the RapiMed® products to be sold outside of the United States, which formula is owned by the manufacturer we will be using. If we are unable to continue to use that manufacturer, our sales of RapiMed® products outside of the United States could be negatively affected. Although we own the registered trademark for RapiMed®, we do not own the formula or other intellectual property with respect to the formula of the RapiMed® products being manufactured for us for sale outside of the United States. Such intellectual property is owned by the manufacturer, although we do expect to own the formula and other intellectual property for the RapiMed® products to be manufactured for sale in the United States. We have finalized terms of our agreement with the manufacturer for the RapiMed® products to be sold outside of the United States and we expect to have this agreement signed in the second quarter of 2014. However, if we fail to get the agreement signed with that manufacturer or if the agreement is subsequently terminated for any reason or the manufacturer is unable to perform its duties under this agreement (such as bankruptcy, regulatory issues or capacity issues), we would have to find a new manufacturer and/or develop or use another formula for the production of RapiMed® products. Not only would we not be able to fill overseas orders for RapiMed® products, which would negatively affect our revenues, but the process to find a new manufacturer and/or develop or use another formula would be costly and time consuming and we may not have the financial resources to find a new manufacturer and/or new formula.

We could suffer reputational and financial damage in the event of product recalls. We may be held liable if any illness or injury caused by any product we distribute to independent pharmacies, any RapiMed® product we develop or market or by any preparation from our specialty pharmacy or if any of the foregoing are found to be unsuitable for use. In addition to any reputational damage we would suffer, we cannot guarantee that our product liability insurance or that of any of our suppliers would fully cover potential liabilities (although we are named as an additional insured on the product liability insurance policies of our suppliers). 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. The Company plans to enter into employment agreements with Messrs. Schneiderman, and Andrews sometime in the future. We expect our cash flow from operations to grow significantly during 2014, primarily from the marketing of our RapiMed® products in China by a third party licensee, our independent pharmacy distribution business and our specialty pharmacy operations. We expect this increased cash flow will be sufficient to pay our executive officer their respective salaries. However, should our quarterly sales not continue to grow as expected and we do not maintain our expenses at current levels, our operational cash flow may not be able to support the payment of the salaries of our executive officers and other sources of funding would be required; and there is no guarantee that funding can be raised. 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 in the future also depends on our 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 we do. We plan to incentivize employees to engage in a long-term relationship with us through awarding equity as part of overall compensation.

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 or 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 U.S. Department of Health and Human Services, the Centers for Medicare and Medicaid Services, 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 Drug Quality and Security Act, signed into law on November 27, 2013, establishes a track-and-trace pedigree system for drugs which will be phased in over a ten year period. These pedigree tracking laws and regulations will increase the overall regulatory burden and costs associated with our independent pharmacy distribution business, and would have a material adverse impact on our operating expenses and our results of operations.

Risks Related to Our Stock

Until our evolving business plan generates sufficient cash flow from operations to cover our expenses, we will need to raise additional capital by sales of our common stock and we may issue shares of our common stock for payment of services, which may adversely affect the market price of our common stock and your rights in us may be reduced. In 2013 we moved away from providing these pharmaceutical distribution services as our main source of income, and we focused on generating revenue through (1) the marketing, sale and distribution of our RapiMed® products, (2) our independent pharmacy distribution model and (3) entry into the specialty pharmacy market. However, we have to use all of our available cash to get these new lines of business up and running. Until our operations generate sufficient cash flow to cover our expenses, need to raise funds by issuing additional debt or equity securities. During 2013, we issued 35,387,867 shares of common stock for the conversion of debt securities and for the payment of services provided. If we must continue to raise funds by the sale of equity or convertible debt securities and/or issue shares of our common stock (or securities convertible, exchangeable or exercisable for common stock), 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.

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 our common stock 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.

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 and outstanding convertible notes 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 and we have outstanding convertible notes that could be converted into 16,241,852 shares of common stock (representing, together, approximately 17% of the outstanding stock on a fully diluted basis). A substantial portion of the shares of common stock issuable upon the conversion of the Series A Preferred Stock and the outstanding convertible notes are eligible to be sold to the public under Rule 144. 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 and the convertible notes 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 a 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 of Series A Preferred Stock 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.

We lack legal funds to pay dividends for the foreseeable future and, as a result, we will not be able to pay any dividends during such period, including dividends owed to the Series A Preferred Stockholder, which we will have to accrue until paid. The Series A Preferred Stock that we issued on April 1, 2011 is reported as a derivative liability. The $1,043,000 invested in such Series A Preferred Stock was not recorded in the Shareholders' Deficit section of our balance sheet, but rather is shown as a liability. Consequently, for the year ended December 31, 2013, we had a stockholders’ deficit of $3,617,393 (rather than stockholders’ deficit of $2,574,393 if we had booked such investment in the Shareholders’ Deficit section of the balance sheet). Additionally, for the fiscal year ended December 31, 2013, we had a net loss available to common stockholders of approximately $11.2 million. Because we had a loss for 2013 and we have - stockholders’ deficit on our balance sheet, under Section 174 of the Delaware General Corporation Law our directors cannot declare a dividend that exceeds our stockholders’ deficit without incurring personal liability. Unless we have a profit in 2013, our board of directors will not be able to declare a dividend nor will we be able to pay the full dividend owed to the Series A Preferred Stockholder which dividends will accrue on our balance sheet. We will not be able to declare any dividends to our common stockholders until the accrued dividends owed to the Series A Preferred Stockholder have been paid. If and when we have net profits, 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.

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), 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.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.

PROPERTIES

In July 2013, we entered into a Virtual Office Rental Agreement under which we have use of office space at Corporate Office Centre Tysons II, 1650 Tysons Boulevard, Suite 1580, Tysons Corner, VA 22102, at which we also have and telecommunications and secretarial and administrative services. This office space is our principal place of business. This space is being leased on a month to month basis at $110 per month. We expect that this space shall be sufficient for the next 36 months.

ITEM 3.

LEGAL PROCEEDINGS

We are not currently a party in any legal proceedings.

ITEM 4.

MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has been traded on the OTC Electronic Bulletin Board since August 2012 under the symbol “SCRC”. Prior to August 2012, our common stock was traded on an exchange or any other established market.

The following table reflects the high and low quarterly bid prices for the fiscal years ended December 31, 2012 and December 31, 2013. This information was provided to us by the Financial Industry Regulatory Authority and the Internet. These quotations reflect inter-dealer prices, without retail mark-up or mark-down or commissions. These quotations may not necessarily reflect actual transactions.

Period	High Bid		Low Bid
1st Qtr 2013		$0.405		$0.17
2nd Qtr 2013		$0.47		$0.111
3rd Qtr 2013		$1.05		$0.123
4th Qtr 2013		$0.42		$0.0811

Period	High Bid		Low Bid
1st Qtr 2012		–		–
2nd Qtr 2012		–		–
3rd Qtr 2012		$0.51		$0.22
4th Qtr 2012		$0.483		$0.25

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.

Dividend Policy

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. Such dividends are cumulative.

The Series A Preferred Stock, which we issued on April 1, 2011 is reported as mezzanine equity because the Series A Preferred Stock has liquidation preferences which are outside the control of the Company. The $1,043,000 invested in such Series A Preferred Stock was not recorded in the Shareholders' Deficit section of our balance sheet, but rather is shown as a liability. Consequently, for the year ended December 31, 2013, we had a stockholders’ deficit of $3,470,827 (rather than stockholders’ deficit of $2,427,827 if we had booked such investment in the Shareholders’ Deficit section of the balance sheet). Additionally, for the fiscal year ended December 31, 2013, we had a net loss of approximately $11.2 million. Because we had a loss for 2013 and we have a retained deficit on our balance sheet, our directors cannot declare dividends under Section 174 of the Delaware General Corporation Law without incurring personal liability. Unless we have a profit in 2014, our board of directors will not be able to declare a dividend nor will we be able to pay the dividend owed to the Series A Preferred Stockholder which dividends will accrue on our balance sheet.

We have never declared or paid any cash dividends on our shares of common stock, and despite the retained deficit on our balance sheet, we do not anticipate paying any dividend on our common stock in the foreseeable future.

Except for any dividends owed to the holder of our Series A Preferred Stock (as described above), 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. 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. Each quarterly payment of such dividend is approximately $20,860.

In addition to the Board approval, we cannot declare or pay any dividends on our common stock (other than in shares of our own common stock) unless we first pay to the Series A Preferred Stockholder a dividend equal to (i) all quarterly dividends on the Series A Preferred Stock that have accrued but that we have not paid to the Series A Preferred Stockholder plus (ii) the amount of the common stock dividend that the Series A Preferred Stockholder would get if he converted all of his shares of Series A Preferred Stock into our common stock. 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.

Holders of Common Stock

As of April 8, 2014, the shareholders' list of our shares of common stock showed 162 registered shareholders and 125,610,436 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 shares of common stock.

Securities authorized for issuance under equity compensation plans

We currently do not have any equity compensation plans.

Recent Sales of Unregistered Securities

From May 2010 through April 2011, we issued promissory notes in the aggregate principal amount of $794,000 to four (4) investors. Of this amount, we issued promissory notes aggregating $50,000 to Robert Schneiderman, our Chief Executive Officer, and notes aggregating $30,000 to Harry James Production DBA R S and Associates a company owned by Mr. Schneiderman. In March 2012, our CEO and president agreed to amend the maturity date and interest rate on his $50,000 promissory notes and the $30,000 promissory notes held by Harry James Production DBA R S and Associates. The maturity date on these notes has been extend from September 30, 2012 until January 30, 2014. The interest rate on the notes has been decreased from 2% monthly to 1% monthly effective on October 1, 2012. The remaining promissory notes in the aggregate amount of $714,000 were issued to Jim and Joanne Speers ($514,000) and Leon Hurst ($200,000). These notes provide for monthly interest only payments of 1% of principal payable, at the lenders’ option, in cash or in shares of our common stock (based on a valuation of $0.50 per share). Upon maturity, outstanding principal is payable and may be converted to common stock of the Company at $0. 25 per share at the option of the lenders. The notes have a one (1) year term and mature at various dates from May 2011 through January 2014. The convertible notes were issued to such investors in reliance on the exemption under Section 4(2) of the Securities Act. The convertible notes qualified for exemption under Section 4(2) of the Securities Act since the issuances by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. The recipients of the convertible notes were accredited investors and acknowledged the restricted nature of the notes they acquired. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

On March 12, 2012, each of Mr. Hurst and Jim and Joanne Speers converted $125,000 in principal of their notes into 1,000,000 shares of our common stock.

In November 2010 and February 2011, we issued an aggregate of 50,000 shares of our common stock to Four Seasons Financial Group as fees for assistance provided to us in capital raising efforts, which assistance has been completed (and is no longer being provided). These shares had a market value of $12,500 at the time of issuance, and they were issued in reliance on the exemption under Section 4(2) of the Securities Act. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

In February 2011, we issued 100,000 shares to Jim and Joanne Speers in connection with the purchase by such investors of $200,000 in convertible notes from us (as described above). The shares of common stock were issued to such investors in reliance on the exemption under Section 4(2) of the Securities Act. The shares of our common stock qualified for exemption under Section 4(2) of the Securities Act since the issuances by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. The recipients of the shares were accredited investors and acknowledged the restricted nature of the shares they acquired. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

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. As of the date of this prospectus, each share of Series A Preferred Stock is convertible into two shares of our common stock. The conversion ratio of the Series A Preferred Stock is subject to adjustment (as described below) 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. Such dividends are cumulative. 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 elect 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 5,980,505 shares of our common stock (based on a conversion price of $0.1744, which was adjusted as a result of the forward stock split effected on April 15, 2011. 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 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. These shares of our Series A Preferred Stock qualified for exemption under Section 4(2) of the Securities Act since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

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). As of March 14, 2012, we have received the remaining balance of the $176,000.

In May 2011, we sold 28,000 shares of its common stock to 56 purchasers for an aggregate purchase price of $5,600. 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).

On June 4, 2011, the Company issued 100,000 shares of restricted common stock to Sarav Patel, an officer, director and major shareholder of Marlex, pursuant to a consulting agreement. The shares were valued at $10,000, which was the value of the services to be performed. Under the consulting agreement, Mr. Patel will assist the Company in developing our supply chain management business by introducing and promoting the Company with private sector out-patient surgery centers, hospitals and other health care facilities. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

On June 6, 2011, the Company issued 50,000 shares of restricted common stock to Lincoln Associates, Inc. pursuant to a consulting agreement. The shares were valued at $5,000, which valuation was determined by our board of directors. Under the consulting agreement, Lincoln Associates will assist the Company in developing our supply chain management business by introducing and promoting the Company with military out-patient surgery centers, military hospital and other health care facilities. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

During the six months ended June 30, 2011, we issued (i) 180,000 shares of our common stock to non-employees for services rendered during the six month period ended June 30, 2011 or to be rendered. These services were valued at $22,500 and (ii) 520,000 shares of our common stock in connection with services provided by members of the board of directors, for which we charged $52,000 to our operations for such period. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

On July 21, 2011, the Company issued 104,000 shares of restricted common stock to Curing Capital, Inc. pursuant to a letter agreement. Under the agreement, Curing Capital Inc. will assist the Company to raise up to $17,000,000 and to provide the Company with financial advisory services. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

On December 30, 2011, we issued (i) an aggregate of 84,000 shares of common stock to our five outside directors for their attendance at board and committee meetings during 2011, which shares were valued at $8,400, (ii) 200,004 shares of common stock to a corporation controlled by our Chief Executive Officer as payment of salary for the fourth quarter in lieu of cash, which shares were valued at $35,000 and (iii) 200,000 shares of common stock to Northern Value Partners, LLC for financial consulting services, which shares were valued at $20,000 and (iv) 25,000 shares to our outside counsel for his work on our registration statement that was declared effective in November 2011, which shares were valued at $2,500. The shares of the Company’s common stock issued to our outside directors, the affiliate of our Chief Executive Officer, our legal counsel and Northern Value Partners qualified for exemption under Section 4(2) of the Securities Act since the issuance of shares by the Company did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, the size of the offering, the manner of the offering and the number of shares offered.

In March 2012, we sold 300,000 shares of our common stock for an aggregate purchase price of $30,000. These share were sold to an existing shareholder who qualifies as an accredited investor under Rule 501 of Regulation D. The sale of the 300,000 shares qualified for exemption under Section 4(2) of the Securities Act since the issuance of shares by the Company did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, the size of the offering, the manner of the offering and the number of shares offered.

During the year ended December 31, 2012, the Company issued 1,345,000 restricted shares of its common stock to non-employees for services rendered during the year or to be rendered. These services were valued at $231,100 and the Company charged its operations $122,906 in fiscal year 2012. The unamortized amount of prepaid services at December 31, 2012 is $108,194. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

During the year ended December 31, 2012, the Company issued 124,000 restricted shares of its common stock in connection with services provided by members of the board of directors during the fiscal year 2012. The Company charged its operations $34,480 in fiscal year 2012. The shares of the Company’s common stock issued to our outside directors qualified for exemption under Section 4(2) of the Securities Act since the issuance of shares by the Company did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, the size of the offering, the manner of the offering and the number of shares offered.

The Company issued 114,288 restricted shares of its common stock to a corporation controlled by the Company’s President and CEO for payment of his salary in lieu of cash compensation payments for services rendered during the twelve months period ended December 31, 2012. These services were valued at $20,000 and the Company charged this amount to operations in fiscal year 2012. The shares of the Company’s common stock issued to the affiliate of our Chief Executive Officer qualified for exemption under Section 4(2) of the Securities Act since the issuance of shares by the Company did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, the size of the offering, the manner of the offering and the number of shares offered.

In October 2012, we issued 150,000 restricted shares of common stock to Olympic Capital Group (“OCG”) for OCG’s services under a consulting agreement. These services were valued at $56,850 and the Company charged such amount to its operations in fiscal 2012. The shares of the Company’s common stock issued to OCG qualified for exemption under Section 4(2) of the Securities Act since the issuance of shares by the Company did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, the size of the offering, the manner of the offering and the number of shares offered.

From January 1, 2013 to April 5, 2013 the Company issued 2,443,989 shares of the Company’s common stock, the shares were issued for the following transactions: a) sold 739,641 shares in a private placement for $110,000, b) issued 673,528 shares for the payments of monthly royalty expenses valued at $159,362 and c) issued 1,030,820 shares for services performed and to be performed, valued at $207,624.

On January 21, 2013, the Company received $22,500 in cash for a 10% convertible note payable with a principal amount of $25,000, which note included a 10% discount. The accrued interest and principal are due on the maturity date of January 21, 2014. The Company may repay this note at any time on or before 90 days from the issuance date and at such time the Company shall not owe or pay any interest on the note. After 90 days from issuance there is a pre-payment fee of 150% of the principal amount outstanding and interest due. The conversion price is the lesser of (a) $0.25 or (b) the amount equal to 60% of the lowest trading price of the Company’s common stock at the close of trading during the 20 trading day period prior to the date of the notice of conversion. Collateral for this loan also includes 3,000,000 shares of the Company’s common stock.

On January 31, 2013, the Company entered into a securities purchase agreement with JMJ Financial (“JMJ”) pursuant to which JMJ purchased a 12% convertible note. The Company received $67,500 in cash for a 12% convertible note payable with a principal amount of $82,500, which note included a 10% discount and we paid a $7,500 finder’s fee. The accrued interest and principal are due on the maturity date of January 31, 2014. The Company may repay this note at any time on or before 90 days from the issuance date and at such time the Company shall not owe or pay any interest on the note. The conversion price is the lesser of (a) $0.21 or (b) the amount equal to 60% of the lowest trading price of the Company’s common stock at the close of trading during the 25 trading day period prior to the date of the notice of conversion. Collateral for this loan also includes 9,000,000 shares of the Company’s common stock.

On February 18, 2013, the Company received a net amount $67,500 in cash for an 8% convertible note payable with a principal amount of $92,500. The note included a 10% discount, we paid a $7,500 finder’s fee and we agreed to pay $10,000 to cover the investor’s legal fees. The accrued interest and principal are due on the maturity date of December 18, 2014. The conversion price is equal to 65% of the average of the three lowest trading prices of the Company’s common stock at the close of trading during the 20 trading day period prior to the date of the notice of conversion.

On March 20, 2013, the Company received $35,200 in cash for a 12% annual interest convertible note payable with a principal amount of $40,000. The note did not include a discount, however, we paid $2,000 to cover the investor’s legal fees and $2,800 was paid directly to a third party on the Company’s behalf. Interest is payable monthly in the amount of $400. The unpaid interest and principal are due on the maturity date of March 20, 2014. The principal portion of this convertible note can be converted into the Company’s common stock at any time at the rate of $0.20 per share at the option of the lender.

On March 20, 2013, the Company received $17,600 in cash for a 6% convertible note payable with a principal amount of $20,000. The note did not include a discount, but $2,400 was paid directly to a third party on our behalf. The accrued interest and principal are due on the maturity date of March 20, 2014. There is a prepayment charge of 150% of the principal amount outstanding and interest due. The conversion price is equal to 70% of the lowest trading price of the Company’s common stock at the close of trading during the 5 trading day period prior to the date of the notice of conversion.

In October, November and December 2013, we issued an aggregate of 1,003,571 shares of common stock to Tonaquint, Inc. for the conversion of an aggregate of $207,735 in principal amount of a convertible note held by Tonaquint.

In October and December 2013, we issued an aggregate of 1,366,964 shares of common stock to JMJ Financial for the conversion of an aggregate of $299,457 in principal amount of a convertible note held by JMJ Financial.

In October, November and December 2013, we issued an aggregate of 600,838 restricted shares of common stock to a note holder as payment of royalties due under the note. The royalty payment was in the amount of $102,159.

In October, November and December 2013, we issued an aggregate of 62,250 restricted shares of common stock to a note holder as payment of royalties due under the note. The royalty payment was in the amount of $8,798.

In October, November and December 2013, we issued an aggregate of 1,003,442 restricted shares of common stock to Vista Capital Investments, LLC for the conversion of an aggregate of $163,960 in principal amount of a convertible note held by Vista Capital Investments.

In October, November and December 2013, we issued an aggregate of 827,926 restricted shares of common stock to GEL Properties, LLC for the conversion of an aggregate of $140,717 in principal amount of a convertible note held by GEL Properties.

On October 7, 2013 and November 21, 2013, we issued an aggregate of 24,444 restricted shares of common stock to Nick Torrens under a consulting agreement with regard to public relations services. The shares were valued at $3,289.

On October 15, 2013, we issued an aggregate of 1,000,000 restricted shares of common stock to Black Cat Consulting, Inc. under a consulting agreement with regard to investor relations services. The shares were valued at $140,000.

On October 16, 2013, we issued an aggregate of 32,000 restricted shares of common stock to our directors for their attendance at board and/or committee meetings. We took a charge of $5,440 for the issuance of these shares.

On October 29, 2013 and November 14, 2013, we issued an aggregate of 597,756 restricted shares of common stock to IBC Funds LLC for the conversion of an aggregate of $165,288 in principal amount of a convertible note held by IBC Funds.

On December 4, 2013, we issued 841,426 shares of restricted common stock to Seaside 88, LP pursuant to a Stock Purchase Agreement entered into on November 4, 2013. The purchase price of the shares was $88,374.

On December 16, 2013, we issued 313,479 restricted shares of common stock to Redwood Management LLC for the conversion of $40,752 in principal amount of a convertible note held by Redwood Management.

On December 16, 2013, we issued 250,000 restricted shares of common stock to Sean Fitzgibbons under a consulting agreement with regard to investor relations services. These shares were valued at $32,500.

On December 18, 2013, we issued 738,071 restricted shares of common stock to Caesar Capital Group LLC for the conversion of $88,569 in principal amount of a convertible note held by Caesar Capital Group.

On December 23, 2013, we issued an aggregate of 20,000 restricted shares of common stock to our directors for their attendance at board and/or committee meetings. We took a charge of $2,800 for the issuance of these shares.

On December 27, 2013, we issued 498,647 restricted shares of common stock to Group 10 Holdings, LLC for the conversion of $69,811 in principal amount of a convertible note held by Group 10 Holdings.

The shares of our common stock issued to consultants, upon the conversion of principal of notes, issued in payment of royalties and/or issued to members of our board of directors qualified for exemption under Section 4(2) of the Securities Act since such issuances of shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

ITEM 6.

SELECTED FINANCIAL DATA

Not applicable.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Caution Regarding Forward-Looking Information

This document contains forward-looking statements which may involve known and unknown risks, uncertainties and other factors that may cause ScripsAmerica, Inc. actual results and performance in future periods to be materially different from any future results or performance suggested by these statements. These factors include, but are not necessarily limited to those risks set forth in Item 1A of this form 10-K. Words such as projects, believe, plan, anticipate and expect and similar expressions are intended to qualify as forward-looking statements. ScripsAmerica Inc. cautions investors not to place undue reliance on forward-looking statements, which speak only to management’s expectations on this date. We undertake no obligation to update any forward-looking statements even if actual results may differ from projections.

The following discussion should be read in conjunction with the financial information included elsewhere in this Annual Report on Form 10-K.

Overview

ScripsAmerica, Inc. was incorporated in the State of Delaware on May 12, 2008. Since our inception, ScripsAmerica’s business model has evolved significantly. Through March 2013, and to a lesser extent into early 2014, the Company primarily provided pharmaceutical distribution services to a wide range of end users across the health care industry through major pharmaceutical distributors in North America, such as McKesson Corporation and Cardinal Health. The end users include retail, hospitals, long-term care facilities and government and home care agencies. The majority of the Company’s revenue from this model came from orders facilitated by McKesson, the largest pharmaceutical distributor in North America, and a few other clients.

However, we had no exclusive contract with McKesson and the Company’s other pharmaceutical distributors to utilize our services and our margins became compressed. As a result, in 2013 the business of providing these pharmaceutical distribution services became curtailed and we are now primarily focused on generating revenue through (1) the marketing, sale and distribution of our RapiMed® products, (2) our support arrangements and financing agreements with companies servicing the independent pharmacy distribution business and (3) our entry into the specialty pharmacy market. Specifically, we have developed a branded OTC product called “RapiMed” (www.rapimeds.com), which is a children’s pain reliever and fever reducer currently launched in China though our joint venture entity Global Pharma Hub, and which we hope to launch in retail outlets in North America sometime in 2014. We have also entered into agreements with third parties pursuant to which we receive fees based on a formula tied to the gross profit on sales of pharmaceutical products to independent pharmacies by such third parties. Lastly, on February 20, 2014 we entered into an agreement with a New Jersey specialty pharmacy that specializes in topical pain creams, pursuant to which we manage their business operations in exchange for a percentage of the pharmacy’s total revenue.

Evolving Business Model

Since our inception, ScripsAmerica’s business model has evolved significantly. Initially, the company primarily provided pharmaceutical distribution services to a wide range of end users across the health care industry through the pharmaceutical distributors in North America. End users include retail, hospitals, long-term care facilities and government and home care agencies. The majority of our revenue from this model came from orders facilitated by McKesson, the largest pharmaceutical distributor in North America, and a few other clients.

However, because we had no exclusive contract with McKesson to utilize our services and the margins began to shrink, we have moved away from providing these pharmaceutical distribution services as our main source of income and are now primarily focused on generating revenue through our RapiMed® products and our independent pharmacy distribution model.

On September 6, 2013, the Company and Marlex Pharmaceuticals, Inc., its former Contract Packager, pursuant to which the Company and its former Contract Packager resolved various disagreements that had arisen between the parties on various projects covered by written agreements between the Company and its former Contract Packager, namely (i) the Contract Packager’s agreement with the U.S. government, (ii) the parties agreement with respect to the production and packaging of the Company’s RapiMed® products and (iii) shares of the Company’s stock issued to the principals of the Contract Packager for consulting services, entered into a settlement agreement. The settlement agreement provided mutual releases, continued the U.S. government arrangement under modified terms, as well as a partial reimbursement over fifteen months for previous amounts due the Company.

This new agreement stipulates that the Company will provide financing through a related party, Development 72 LLC, for the continuance of its pharmaceutical distribution contract with the U.S. government and for the Contract Packager to make 15 monthly payments to the Company, totaling $408,154.95, with respect to prior shipments under U.S. government contract (which had had stopped in May 2013 due to a dispute but have resumed in September 2013) which were previously reserved for or written off in 2013. The Company’s percentage of the profits under the U.S. government contract had been revised in terms of the rate and the number of bottles of product sold to the U.S. government for which the Company would receive payments.

To protect our position with respect to the RapiMed® products we also terminated the Rapid Melt tablet agreement with the Contract Packager. All development costs through the date of this cancellation agreement have previously been expensed and paid. The Company subsequently entered into a manufacturing and supply contract directly with the manufacturer of this technology, however, this agreement was subsequently terminated in 2013.

RapiMed Children’s Pain Reliever and Fever Reducer

Unlike other products available, ScripsAmerica’s is much smaller and dissolves in the child’s mouth in 25 seconds, therefore entering their system faster. RapiMed® contains Acetaminophen (main ingredient in Tylenol), however the bitter taste of this active ingredient is masked by a patented technology. The cherry and wild grape flavors that our product will come in are most appealing to children. Additionally, the dosage of RapiMed® is controlled, not like the syringe based competing products and we offer the 80 mg for 2-6 year olds, and 160 mg for the 6-11 year olds.

ScripsAmerica presented RapiMed to retail buyers in February of 2013 at the ECRM Cough and Cold show in Florida and we received very positive feedback. We have engaged DPG to roll out the product to retailers nationwide once we secure adequate funding. Depending on the retailer, the product will be promoted through in-store temporary price reductions, coupons, store circulars, buy-two-and save packs, as a clip-strip program, radio and print advertising.

In January 2014, we entered into an exclusive world-wide licensing agreement with Global Pharma Hub for the marketing and distribution of our children’s pain reliever and fever reducer OTC product called RapiMed® in all countries except the United States. The license will allow Global Pharma Hub to market and distribute the children’s acetaminophen orally dissolving tablets under our registered trademark, RapiMed® as well as our registered trade mark “MELTS IN YOUR CHILD'S MOUTH”. In order to keep the license agreement, Global Pharma Hub must meet minimum sales quotas terms which are as follows:

$500,000 in purchase orders during first 12 months of License Agreement;

$1,400,000 in purchase orders during second 12 months; and

$2,400,000 in purchase orders during the third 12 months.

$550,000 in purchase orders during first 12 months;

$1,500,000 in purchase orders during the second 12 months; and

$2,500,000 in purchase orders during the third12 months.

$120,000 in purchase orders during first 12 months;

$220,000 in purchase orders during the second 12 months; and

$320,000 in purchase orders during the third12 months.

Independent Pharmacy Distribution

In addition to its RapiMed® products, we are also implementing our plan to generate significant revenue by entering the Independent Pharmacy distribution market.

This market will allow us to provide a much-needed solution to a problem experienced by small retail chains and individual pharmacies which is their inability to fill prescriptions for their clients when the prescription calls for controlled substances. The reason for this problem is that in order to secure these controlled substances the manufacturers of these products impose minimum order quantities that are far beyond the size of orders typically made by small, independent pharmacies.

As of November 1, 2013, ScripsAmerica entered into an agreement with WholesaleRx, Inc., which that represents over 700 such independent pharmacy operations and is a DEA and State-licensed to store and distribute controlled substances (which are drugs that have the potential for abuse or dependence and are regulated under the federal Controlled Substances Act). WholesaleRx orders the goods from the manufacturers and has them shipped to its warehouse facility. WholesaleRx then ships the goods to the pharmacies in the bottles as received by the manufacturer. Upon receiving orders from the pharmacies, goods will be sent to them COD which will eliminate any accounts receivable issues. Prior to November 1, 2013, the Company and WholesaleRx had an oral agreement to pursuant to which the Company secured third party financing to fund WholesaleRx’s purchase orders and the Company in consideration of which the Company would receive 12.5% of the WholesaleRx’s “gross profit” for the prior month (which gross profit would consist of (i) sales to all customers minus (ii) cost of goods sold, freight in (to WholesaleRx), credits and allowances). Under the November 1 Agreement, ScripsAmerica agreed to provide purchase order financing to WholesaleRx and purchased a 20% equity stake in WholesaleRx. In consideration for providing financing for WholesaleRx’s purchaser orders, and to cover the Company’s costs in administering the purchase order financing, WholesaleRx has agreed to pay the Company on or before the 15^th calendar day of each month 20% of the gross profit (as described above) for the prior calendar month. If WholesaleRx is late in paying such 20% fee, then the amount owed will accrue interest at the rate of 18% per annum until paid.

In December, 2013, the Company revised an October 2013 purchase agreement to acquire 90% of the Membership Units in P.I.M.D. International, LLC (“PIMD”), a start-up limited liability company based in, and proposing to do business in, Florida. Although founded approximately 4 years ago, PIMD has had no sales, but has the necessary licenses for operation of a drug wholesale operation. The purchase of the Membership Units in PIMD was subject to certain conditions precedent, of which the most important was that the Company obtain the necessary licenses from Florida (and the DEA) for the ownership of a drug distribution company like PIMD. However, it was determined that securing the licenses was going to require a substantially longer period of time than the parties had anticipated. Consequently, in order to preserve the business opportunity, it was necessary to change the structure of the relationship. Accordingly, the original purchase agreement was cancelled and voided. The funds already advanced by ScripsAmerica to PIMD were converted to a loan and the relationship between PIMD and ScripsAmerica became a Sourcing and Marketing Agreement

Under this Sourcing and Marketing Agreement, which the Company entered into with PIMD in December 2013, the Company will assist PIMD by helping PIMD to (1) secure advantageous sources of drugs and (2) secure marketing and sales assistance in selling the drugs. For these services, the Company will receive a “Sourcing and Marketing Fee” which is 45% of the “Calculated Basis” to be calculated under a formula in the Sourcing and Marketing Agreement. PIMD has no material sales in fiscal 2013 and no sales as of the three months ended March 31, 2014, but should be operational by the end of June 2014. Under our agreement with PIMD, we have no authority or control with respect to PIMD’s business - the purchase of the drugs and the sale of the drugs. Additionally, we do not have any authority to bind PIMD for any transaction relating to the purchase, sale or transfer of pharmaceutical products.

On February 20, 2014, Implex Corporation and Main Avenue Pharmacy, Inc., the specialty pharmacy being acquired by Implex, entered into a Business Management Agreement with ScripsAmerica, effective as of February 7, 2014. Under this agreement, Implex has engaged the Company to manage the day to day business operations of Main Avenue Pharmacy, subject to the directives of Implex. The Company’s day to day management responsibilities includes financial management but excludes any matters related to licensing and those responsibilities which require Federal or state licensure (“Licensing Matters”). Prior to the final closing, the Licensing Matters will be handled by Main Avenue Pharmacy’s owner and after the final closing Implex will be responsible for managing Licensing Matters. The Company will also provide funding (as a loan or advance), to the extent not covered by the funds of the pharmacy, to pay all costs and expenses incurred in the operation of Main Avenue Pharmacy.

Implex will be entitled to make monthly draws on the first day of each month, as owner of Main Avenue Pharmacy, as follows: (i) commencing on April 1, 2014 and continuing to, and including, March 1, 2015, $47,003 plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month (except that the first such payment shall include prescriptions processed since the initial closing on February 7, 2014); (ii) commencing on April 1, 2015 and continuing to, and including, March 1, 2016, $8,827 plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month; (iii) commencing on April 1, 2016 and continuing thereafter plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month and (iv) commencing on the 10,001 prescription processed by Main Avenue Pharmacy the rate will be reduced to $10 for each prescription processed by Main Avenue Pharmacy during the preceding month.

For the management services provided by the ScripsAmerica under this Business Management Agreement, Implex will pay us a combined monthly Management and Financing Fee. This combined fee will be equal to 97% of the Calculation Basis (receipts from paid invoices less Implex’s monthly draw and various expenses of Main Avenue Pharmacy). Since ScripsAmerica will have significant controlling interest via related party relationships and will be the primary beneficiary, the Company will consolidate financial activities of Main Avenue Pharmacy.

Description of Revenues

ScripsAmerica offers fulfillment of prescription and over the counter (“OTC”) orders. To fulfill purchase orders from customers, ScripsAmerica processes 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 international organizations.

Product Revenue associated with our curtailed pharmaceutical distribution services is recognized when product is shipped from a contract packager to our customers’ warehouses and is adjusted for anticipated charge backs from our customers which include inventory credits, discounts or volume incentives. These charge back costs are received monthly from our customers’ and the sales revenue and accounts receivables are reduced accordingly based on historical experience, customer contract programs, product pricing trends and the mix of products shipped.

Purchase orders from our customers generate our shipments, provide persuasive evidence that an arrangement exists and that the pricing is determinable. The credit worthiness of our customers assures that collectability is reasonably assured.

We also recognize revenue from our contract packager on a net basis according to ASC 605-45, Revenue Recognition: Principal Agent Considerations. Since we are not deemed to be the principal in these sales transactions we do not report the transaction on a gross basis in our statement of operations. These sales transactions relate to a contract that our Contract Packager has obtained with a government agency. The revenue is reported in a separate line in the statement of operations as Product revenues net from Contract Packager, the gross sales are reduced by the cost of sales fees from our Contract Packager.

In addition, commission fees are recognized when earned on shipments of generic pharmaceutical and OTC products by WholesaleRx, which is a DEA and State-licensed to store and distribute controlled substances, pursuant to an agreement entered into as of November 1, 2013. Under this written agreement with WholesaleRx, the Company will earn a 20% commission fees on the gross margin of products shipped to independent pharmacies by WholesaleRx. From August 2013 to October 31, 2013, the Company had been receiving a 12.5% commission fee on the gross margin of such shipments under an oral agreement with WholesaleRx.

Results of Operations

											( ) = unfavorable Change
	2013					2012					$ change
Product revenue-net of contract adjustments		153,000		28	%		3,763,000		96	%		(3,610,000	)
Revenue net, from contract packager		333,000		60	%		152,000		4	%		181,000
Commission fees - related party		70,000		13	%		–		0	%		70,000
Net Sales		556,000		100	%		3,915,000		100	%		(3,359,000	)
Cost of Goods Sold		496,000		89	%		3,384,000		86	%		(2,888,000	)
Gross Profit		60,000		11	%		531,000		14	%		(471,000	)
Operating Costs and Expenses:
General and Administrative		2,432,000		437	%		1,861,000		48	%		(571,000	)
Share-base Comp issued for payment of services in General and Administrative		3,792,000		682	%		178,000		5	%		(3,614,000	)
Reserve expense for receivable - contract packager		1,129,000		203	%		–		0	%		(1,129,000	)
Research and Development		–		0	%		38,000		1	%		38,000
Total Operating expenses		7,353,000		1322	%		2,077,000		53	%		(5,276,000	)
Operating Loss		(7,293,000	)	1312	%		(1,546,000	)	-39	%		(5,747,000	)
Other Income (expenses) :
Interest expense		(333,000	)	-60	%		(225,000	)	-6	%		(108,000	)
Loss from derivative issued with debt greater carrying value		(1,180,000	)	-212	%		–		0	%		(1,180,000	)
Loss on revaluation of derivatives		(1,289,000	)	-232	%		(7,000	)	0	%		(1,282,000	)
Financing costs		(972,000	)	-175	%		–		0	%		(972,000	)
Amortization of debt discount		(785,000	)	-141	%		(41,000	)	-1	%		(744,000	)
Gain on extinguishment		637,000		115	%		–		0	%		637,000
Income from equity investments		2,000		0	%		–		0	%		2,000
Total Other Income / (expenses)		(3,920,000	)	-705	%		(273,000	)	-7	%		(3,647,000	)
Income (Loss) before taxes		(11,213,000	)	-2017	%		(1,819,000	)	-46	%		(9,394,000	)
Tax Expense		–		0	%		43,000		1	%		(43,000	)
Net loss		(11,213,000	)	-2017	%		(1,862,000	)	-48	%		(9,351,000	)

Revenues, net: The following table sets forth selected statement of operations data as a percentage of total revenue for fiscal years ending December 31, 2013 and 2012.

Products sold	2013			% to total			2012			% to total			Change
Prescription drug products		185,000			3	%		2,949,000			53	%		(2,764,000	)
OTC & non prescription products		117,000			2	%		1,461,000			26	%		(1,344,000	)
Revenue, from contract packager		6,434,000			88	%		1,173,000			21	%		5,261,000
Revenue, from pharmaceutical partner		599,000			8	%		–			0	%		599,000
Gross Revenue		7,335,000			100	%		5,583,000			100	%		1,752,000
Discounts / Charge backs		(150,000	)		-2	%		(647,000	)		-12	%		497,000
Adjustment to sales for contract packager and pharmaceutical partner		(6,629,000	)		-90	%		(1,021,000	)					(5,608,000	)

Net Revenues		556,000						3,915,000						(3,359,000	)

In 2012, the majority of the Company’s revenue was generated from the sales of generic pharmaceutical prescription orders under our pharmaceutical distribution services business. In fiscal year 2013 the Company generated net sales revenue of approximately $556,000 as compared to net sales revenue of approximately $3,915,000 for 2012, a decrease of approximately $3,359,000, or 86%. The decline in sales was mainly a result the Company’s decision to exit sales to McKesson due to increase charge back costs and the discontinued sales to Cutis Pharmaceuticals and MedVet which we had significant sales a year ago. Revenue from the U.S. government contract through our former Contract Packager did not replace the lost sales volume partly because the U.S. government sales are recorded net of costs. The Company sales for fiscal year 2013 would have been approximately $2.2 million higher if the sales for U.S. government were recorded at gross and were not recognized on the net basis for sales associated with the U.S. government contract with our former Contract Packager. In August 2013 we began earning revenue from our arrangements with independent pharmacies pursuant to an oral agreement with WholesaleRx, a pharmaceutical distributor, under which we earn a commission of 12.5% on the gross margin of generic pharmaceutical and OTC product sales shipped to independent pharmacies by WholesaleRx. On November 1, 2013, we entered into a Master Agreement with WholesaleRx which increased the commission to 20%. WholesaleRx sales were approximately $599,000 for five months of shipments in fiscal year 2013, for which we earned a commission of approximately $70,000.

For the twelve months period ended December 31, 2013 U.S. government sales accounted for 60% of our net revenue and McKesson accounted for 27% of our net revenue (versus 4% and 74%, respectively, of net revenue for the same period in 2012). Cutis Pharmaceuticals and MedVet accounted for another 22% of our net revenue in 2012. Commissions of approximately $70,000 in 2013 accounted for the other 12% of our revenue.

Gross Profit: Gross profit for fiscal year 2013 was approximately $60,000, which was 11% of our net sales as compared to a gross profit equal to 14% net sales in 2012. The decline of approximately $471,000, or 88%, in gross profit from fiscal year 2012 was mainly due to the sales decline of approximately $3.4 million due to the Company’s decision not to continue its relationship with McKesson. Sales for prescription drug products and OTC products declined 93% from the prior year. The sales on our U.S. government contract which has only a 7% margin also contributed to the decline in our gross margin. Also impacting our gross margin percentage was the royalty expenses included in cost of goods for 2013 in the amount to approximately $286,000 as compared to approximately $53,000 in 2012.

Operating Expenses

Our 2013 operating expenses consist of Selling, General and Administrative expenses excluding share-based compensation issued for services in the amount of approximately $2.4 million, share-based compensation issued for services in the amount of approximately $3.8 million and provision for receivable for our contract packager receivable in the amount of approximately $1.1 million.

Our principal Selling, General and Administrative costs include the following:

									( ) = unfavorable
Principal operating cost consist of :	2013				2012				$ Change
Human resources		355,000	6	%		364,000	18	%		9,000
Sales Marketing		421,000	7	%		443,000	22	%		22,000
Professional fees: Legal & accounting		351,000	6	%		171,000	8	%		(180,000	)
Consulting		890,000	14	%		187,000	9	%		(703,000	)
Investor relations and Marketing		3,112,000	49	%		59,000	3	%		(3,053,000	)
General expense		1,095,000	17	%		815,000	40	%		(280,000	)
Total Selling, General & Administrative		6,224,000	100	%		2,039,000	100	%		(4,185,000	)
Share-based compensation included in S,G & A above		3,792,000				178,000				(3,614,000	)
Adjusted total Selling, General & Administrative		2,432,000				1,861,000				(571,000	)

Selling, General and Administrative. For the year ended December 31, 2013, selling, general and administrative expenses (“S,G&A”) increased approximately $4.2 million to approximately $6.2 million as compared to approximately $2.0 million for fiscal year 2012, which includes approximately $4.0 million of non-cash expenses resulting from the issuance of our Company’s common stock for payment of services. The changes in S,G&A expenses was mainly a result of (a) an increase in selling costs (see chart above for dollar change versus 2012) mainly due to the distribution of samples associated with our selling efforts to promote the RapiMed® rapidly disintegrating tablet, which also included costs associated for trade shows and advertising, (b) an increase in professional fees, consisting mainly of legal costs, accounting fees and general consulting fees, (c) an increase in consulting costs consisting of costs associated with financing and debt raising costs, as well as expertise advise for potential projects, (d) an increase in investor relations and public relations costs which include costs associated with market awareness of the Company’s stock, press releases, assistance in capital raising and fees for obtaining funding, (e) a small decline in human resource expenses which included salary and benefits and board of directors costs and (f) an increase in general expense which includes D&O insurances, telephone, computer expenses, and general overhead and other office type expenses.

Share-based compensation issued for services: Due our cash flow issues in 2013 and 2012 we issued common stock for payment of service to various vendor. The following table list what area of Selling, General and Administrative we issue our common stock for:

					( ) = unfavorable
	2013		2012		$ Change
Consulting		892,000		143,000		(749,000	)
Investor relations and Marketing		2,900,000		35,000		(2,865,000	)
Total Selling, General & Administrative		3,792,000		178,000		(3,614,000	)

Provision for receivable from our contract packager: In the second quarter of 2013, the Company fully reserved and expensed $1,210,999 for the remaining balance of loans and receivables from its former Contract Packager because they were deemed uncollectable. Under the settlement agreement the Company and its former Contract Packager entered into on September 6, 2013 we have received $81,631 in cash payments as of December 31, 2013. Because collectibility is uncertain, we release the reserve as cash is received. The settlement agreement stipulates repayment of a total of $408,154 over the next 15 months.

Research and Development. The Company’s expenditures for research and development cost declined approximately $38,000, for the year ended December 31, 2013, compared to the same period in 2012. The decline in our research and development costs can mainly be attributed to the completion of our on-going research related to new product development at the end of 2011.

Total Other Expenses. Other expenses for the year ended December 31, 2013 increased by approximately $3.6 million to approximately $3.9 million from approximately $273,000 in 2012.

The dollar changes for fiscal year 2013 versus 2012 for other expenses consist of the following:

					( ) = unfavorable Change
Other expenses :	2013		2012			$ change
Interest expense	(333,000	)	(225,000	)		(108,000	)
Loss from derivative issued with debt greater carrying value	(1,180,000	)	–			(1,180,000	)
Loss on revaluation of derivatives	(1,289,000	)	(7,000	)		(1,282,000	)
Financing costs	(972,000	)	–			(972,000	)
Amortization of debt discount	(785,000	)	(41,000	)		(744,000	)
Gain on extinguishment	637,000		–			637,000
Income from equity investments	2,000		–			2,000
Total Other expenses	(3,920,000	)	(273,000	)		(3,647,000	)

Other expenses consist of interest expense, amortization of debt discount, change in fair value of derivative liabilities and gain on extinguishment of debt. A significant portion, approximately $1.3 million, of the total increase in other expenses was due to the value change in our derivative liabilities from our convertible notes payable. The increase in the revaluation of derivative liabilities at December 31, 2013 relates partially to the Company having sufficient trading activity to utilize the actual volatility of the Company’s stock as an assumption when computing the fair value of derivative liabilities commencing in January 2013. The Company had previously estimated the volatility assumption by averaging the volatility of the equity security of three similar entities which resulted in a lower volatility. The increase in value of the volatility assumption has led to a higher valuation of derivative liabilities associated with the convertible notes payable.

Interest expense in 2013 consist of the following: a) interest on our convertible debts, this amount was approximately $239,000, of this amount we made cash payments of $140,000 in 2013 the balance was an accrued expenses associated with our convertible notes payable, b) interest cost associated with a term loan of $500,001 was approximately $37,000, and approximately $15,000 for fiscal year 2013 and 2012, respectively, c) interest costs associated with the Company’s line of credit with a bank was approximately $4,000 for 2013 as compared to approximately $750 for the same period in 2012, d) Interest cost associated with our purchase order financing was approximately $73,000 for 2013 and approximately $36,000 for 2012, included in the 2013 total is $48,000 from related party. Our total interest expense for 2013 was approximately $333,000 as compared to approximately $225,000 in 2012.

We incurred a loss from derivatives values issued with our variable convertible notes payable because the derivative value was greater than the carrying value of the notes payable this amount of approximately $1,180,000 in 2013.

The loss on derivative liability was approximately $1,289,000 for 2013 compared to $7,000 for the same period in 2012. The change is a result of our stock volatility discussed above.

With an extinguishment of debt from paying off convertible notes early we incurred gains of approximately $637,000.

We also incurred financing fees because we issued common stock greater than the value associate with debt in the amount of approximately $972,000 in 2013.

Income taxes (benefit). Total income taxes expense for fiscal December 31, 2013 was none as compared to a tax expense of $43,000 for 2012. For 2013 and 2012 the Company incurred losses that increased the current deferred tax benefit but since the likelihood of not being able to recover the deferred tax benefit a valuation allowance of 100% of the tax benefit was applied. In 2012 we recorded a valuation allowance to our deferred tax asset of $597,591 offsetting potential tax benefit. Prior to 2012 we did not have a reserve allowance.

Net Loss Applicable to Common Shares. The Company recorded a net loss of approximately $11,213,000 in fiscal year 2013, compared to a net loss of approximately $1,862,000 for 2012, an increase in our net loss of approximately $9,351,000 as compared to prior year. This increase in net loss is mainly due to our significant reduction in our sales resulting in a decline of approximately $3.4 million causing a profit margin decline of approximately $2.9 million in 2013 versus 2012. Also contributing to the loss was an increase in our SG&A expense of approximately $4.2 million, as described above. We also incurred an expense of $1.1 million for write-off of our receivable with our former Contract Packager for possibility on non-collections. Other income/expenses increased approximately $3.6 million in 2013 as compared to 2012 as described above. Research and development cost declined approximately $381,000 from the 2012 spending. The Company accrued a preferred stock dividend of $83,440 in both 2013 and 2012, resulting in a loss of income available to common shareholders of $11,296,000 and $1,945,000 for 2013 and 2012, respectively. Basic and diluted loss per common share were $0.17 and $0.04 for the fiscal years 2013, and 2012, respectively.

Liquidity and Capital Resources

Summary

Since our inception in 2008, we have generated significant losses from operations and we anticipate that we will continue to generate significant losses from operations for the foreseeable future. We have funded our operations primarily through the private placement of equity and debt securities. For the two year period ended December 31, 2013, we received $2,056,000 in net proceeds from the issuance of debt securities, $561,000 in net proceeds from the issuance of shares of our common stock, $1,317,000 in proceeds from purchase order financing from a related party and $500,000 from a 4 year term loan also from a related party. At December 31, 2013, the Company had approximately $47,000 in cash and incurred a loss from operations of approximately $11.2 million, of which approximately $6.9 million of the loss was due to non-cash charges. The Company’s cash expenditures are projected to be approximately $135,000 a month on a continuing operating basis. Included in these cash expenditures are approximately $13,000 a month in interest costs. After taking into consideration our 2014 interim results to date and current projections for the remainder of 2014, management believes that the Company’s cash flow from operations, coupled with recent financings are not sufficient to support the working capital requirements, debt service, applicable debt maturity requirements, and operating expenses through December 31, 2014.

During 2013, and in the first quarter of 2014, the Company only generated net revenue of approximately $200,000 from the establishment of the new distribution model (independent pharmacies), the compounding pharmacy business, and the rapid disintegrating technology products. This raises substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is highly dependent upon (i) management’s ability to equal or exceed its planned operating cash flows, (ii) maintain continued availability on its line of credit and (iii) the ability to obtain alternative financing to fund capital requirements and/or debt obligations coming due and operating expenses. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty. Although the Company has successfully obtained various funding and financing in the past, future financing and funding options may be challenging in the current environment.

We completed the development of a pediatric pain relief rapid orally disintegrating 80 mg and 160 mg tablets for OTC products. In the second quarter of 2014, we expect to sign a supply agreement (the terms of which have already been finalized) with a generic manufacturer for the production of these rapid orally disintegrating products for marketing, sale and distribution outside of the United States. In January 2014, the Company formed a joint venture entity, Global Pharma Hub, Inc., for the licensing, marketing and distribution of our pediatric RapiMed® acetaminophen outside of the United States. Our initial market is in China. On March 10, 2014, we received a $200,000 purchase order for our children’s pain relief rapid orally disintegrating 80mg tablets from Global Pharma Hub for the China market. However, we estimate that we will need approximately $1.5 million of incremental funding to launch RapiMed® products in the United States. The funding for launching the rapid orally disintegrating products in the U.S. is expected to come from the sale of equity securities, or debt financing. However, such financing has not yet been secured.

At December 31, 2013, the Company had total current assets of approximately $1.5 million and total current liabilities of approximately $3.2 million resulting in negative working capital of approximately $1.7 million. The Company's current assets consisted of approximately $47,000 in cash, approximately $1,113,000 in receivables and approximately $330,000 in prepaid expenses. Current liabilities at December 31, 2013 consist of current portion of long term debt from related party of approximately $123,000, convertible notes payable of approximately $290,000, purchase order financing of approximately $1,037,000, accounts payable of approximately $232,000, line of credit payable of approximately $99,000, stock to be issued of approximately $274,000 and a derivative liability of approximately $1,133,000.

During the twelve month period ended December 31, 2013 we supplemented our liquidity needs primarily from financing activities. Our revenue did not cover our operational costs and our debt requirements. The Company raised approximately $2,549,000 in cash through the following: approximately $1,580,000 from proceeds of convertible notes, the sale of common stock which raised approximately $531,000, and borrowing of approximately $438,000 under our PO financing agreement with a related party. Approximately $551,000 of these funds were used for payments on convertible notes payable, payments on our purchase order financing, payments on note payable to a related party, and payments to the factor.

The following table summarizes our cash flows from operating investing and financing activities for the fiscal years ending December 31, 2013 and 2012:

	2013			2012			Change
Total cash provided by (used in):
Operating activities		(1,804,000	)		(2,471,000	)		667,000
Investing activities		(150,000	)		6,000			(156,000	)
Financing activities		1,988,000			2,011,000			(23,000	)
Increase (decrease) in cash and cash equivalents		34,000			(454,000	)		488,000

After taking into consideration our interim results and current projections, management believes that the Company’s cash flow from operations, coupled with recent financings will not be sufficient to support the working capital requirements, debt service and applicable debt maturity requirements for the twelve month period ending December 31, 2014. This raises substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is highly dependent upon (i) management’s ability to achieve its planned operating cash flows, (ii) maintain continued availability on its line of credit and (iii) the ability to obtain alternative financing to fund capital requirements and/or debt obligations coming due. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty. Although the Company has successfully obtained various funding and financing in the past, future financing and funding options may be challenging in the current environment and cannot be expected just based on past results.

Since our inception, ScripsAmerica’s business model has evolved significantly. Initially, the Company primarily provided pharmaceutical distribution services to a wide range of end users across the health care industry through the pharmaceutical distributors in North America. End users included retail, hospitals, long-term care facilities and government and home care agencies. The majority of our revenue from this model came from orders facilitated by McKesson, the largest pharmaceutical distributor in North America, and a few other clients. However, because we had no exclusive contract with McKesson to utilize our services and the margins began to shrink, we have moved away from providing these pharmaceutical distribution services as our main source of income and are now primarily focused on generating revenue through our RapiMed® products and our independent pharmacy distribution model.

ScripsAmerica has already commenced the sales and marketing of its RapiMed® pediatric acetaminophen product in China and, subject to securing financing, we hope to roll out this product in the United States during 2014. Our target market for this RapiMed® product is 2-11 year olds and we anticipate that the formula for our orally disintegrating tablets will be more effective than existing products due to its ability to melt faster, taste better and provide more accurate dosing.

ScripsAmerica presented RapiMed® to retail buyers in February of 2013 at the ECRM Cough and Cold show in Florida and we received very positive feedback. We have engaged DPG Inc. to roll out the product to retailers nationwide once we secure adequate funding. Depending on the retailer, the product will be promoted through in-store temporary price reductions, coupons, store circulars, buy-two-and save packs, as a clip-strip program, radio and print advertising.

We completed the development of these rapid disintegrating table 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 RapiMed® products in the United States. The funding for launching the rapid melt products is to come from the sale of equity securities, preferred and/or common stock securities and debt financing.

In addition to RapiMed®, we are also implementing our plan to generate significant revenue by entering the Independent Pharmacy distribution market. This market will allow us to provide a much-needed solution to a problem experienced by small retail chains and individual pharmacies which is their inability to fill prescriptions for their clients when the Rx calls for controlled substances. The reason for this problem is that in order to secure these controlled substances the manufacturers of these products impose minimum order quantities that are far beyond the need of smaller operations.

ScripsAmerica entered into an oral agreement in August 2013 with a pharmaceutical distributor that represents over 700 such independent operations. and is a DEA and State-licensed to store and distribute controlled substances (which are drugs that have the potential for abuse or dependence and are regulated under the federal Controlled Substances Act). WholesaleRx orders the goods from the manufacturers and has them shipped to its warehouse facility. WholesaleRx then ships the goods to the pharmacies in the bottles as received by the manufacturer. Upon receiving orders from the pharmacies, goods will be sent to them COD which will eliminate any accounts receivable issues. Prior to November 1, 2013, the Company and WholesaleRx had an oral agreement to pursuant to which the Company secured third party financing to fund WholesaleRx’s purchase orders and the Company in consideration of which the Company would receive 12.5% of the WholesaleRx’s “gross profit” for the prior month (which gross profit would consist of (i) sales to all customers minus (ii) cost of goods sold, freight in (to WholesaleRx), credits and allowances). Under the November 1 Agreement, ScripsAmerica agreed to provide purchase order financing to WholesaleRx and purchased a 20% equity stake in WholesaleRx. In consideration for providing financing for WholesaleRx’s purchaser orders, and to cover the Company’s costs in administering the purchase order financing, WholesaleRx has agreed to pay the Company on or before the 15^th calendar day of each month 20% of the gross profit (as described above) for the prior calendar month. If WholesaleRx is late in paying such 20% fee, then the amount owed will accrue interest at the rate of 18% per annum until paid.

On February 20, 2014, Implex Corporation and Main Avenue Pharmacy, Inc., the specialty pharmacy being acquired by Implex, entered into a Business Management Agreement with ScripsAmerica, effective as of February 7, 2014. Under this agreement, Implex has engaged the Company to manage the day to day business operations of Main Avenue Pharmacy, subject to the directives of Implex. The Company’s day to day management responsibilities includes financial management but excludes any matters related to licensing and those responsibilities which require Federal or state licensure (“Licensing Matters”). Prior to the final closing, the Licensing Matters will be handled by Main Avenue Pharmacy’s owner and after the final closing Implex will be responsible for managing Licensing Matters. The Company will also provide funding (as a loan or advance), to the extent not covered by the funds of the pharmacy, to pay all costs and expenses incurred in the operation of Main Avenue Pharmacy.

For the management services provided by the ScripsAmerica under this Business Management Agreement, Implex will pay us a combined monthly Management and Financing Fee. This combined fee will be equal to 97% of the Calculation Basis (receipts from paid invoices less Implex’s monthly draw and various expenses of Main Avenue Pharmacy). ). Since ScripsAmerica will have significant controlling interest via related party relationships and will be the primary beneficiary the company will consolidate financial activities of Main Avenue Pharmacy.

Operating Activities

Net cash used by operating activities was approximately $1.8 million for fiscal year 2013, as compared to cash used by operating activities of approximately $2.5 million for fiscal year 2012, which was a decrease in cash used by operations of approximately $692,000. The use of cash in 2013 and 2012 resulted primarily from our net loss adjusted for non-cash charges and changes in components of working capital. Our use of issuing common stock for services had a significant impact the Company reducing use of cash from operating activities in 2013 compared to 2012.

Investing Activities

In 2013 the Company made two investments:

We loaned $272,000 to Implex Corporation for Implex’s acquisition of the Membership Units in P.I.M.D. International, LLC (“PIMD”), a start-up limited liability company based in, and proposing to do business in, Florida. Although founded approximately 4 years ago, PIMD has had no sales, but has the necessary licenses for operation of a drug wholesale operation. The purchase of the Membership Units in PIMD was subject to certain conditions precedent, of which the most important was that the Company obtain the necessary licenses from Florida (and the DEA) for the ownership of a drug distribution company like PIMD. Since this is considered a variable interest entity we have consolidated this receivable for our loan and PIMD’s loan payable is eliminated in our consolidated balance sheet.

In November and December 2013, we invested $150,000 for a 14% interest in WholesaleRx, Inc., which that represents over 700 independent pharmacy operations and is a DEA and State-licensed to store and distribute controlled substances (which are drugs that have the potential for abuse or dependence and are regulated under the federal Controlled Substances Act). WholesaleRx orders the goods from the manufacturers and has them shipped to its warehouse facility. WholesaleRx then ships the goods to the pharmacies in the bottles as received by the manufacturer. Upon receiving orders from the pharmacies, goods will be sent to them COD which will eliminate any accounts receivable issues. Prior to November 1, 2013, the Company and WholesaleRx had an oral agreement to pursuant to which the Company secured third party financing to fund WholesaleRx’s purchase orders and the Company in consideration of which the Company would receive 12.5% of the WholesaleRx’s “gross profit” for the prior month (which gross profit would consist of (i) sales to all customers minus (ii) cost of goods sold, freight in (to WholesaleRx), credits and allowances). ScripsAmerica agreed to provide purchase order financing to WholesaleRx. In consideration for providing financing for WholesaleRx’s purchaser orders, and to cover the Company’s costs in administering the purchase order financing.

Recent Investing Events

On January 29, 2014, Implex Corporation, which is owned by our legal counsel, Richard C. Fox, entered into a stock purchase agreement with Dmitriy Naydenko to acquire the specialty pharmacy Main Avenue Pharmacy, Inc., located in New Jersey, for $550,000. The purchase price will be paid in installments and the shares will be held by an escrow agent until the final payment is made. Under the purchase agreement, the final agreement is to be made on July 11, 2014 (unless extended by the parties). For the management services provided by the ScripsAmerica under this Business Management Agreement, Implex will pay us a combined monthly Management and Financing Fee. This combined fee will be equal to 97% of the Calculation Basis (receipts from paid invoices less Implex’s monthly draw and various expenses of Main Avenue Pharmacy). Since ScripsAmeica will have controlling interest in Implex, we plan to consolidate activities of Main Ave into our financial statements in first quarter 2014.

Financing Activities

Net cash provided by financing activities was approximately $1,988,000 for fiscal year 2013 compared to approximately $2,011,000 in 2012. Financing activities for fiscal year 2013 consisted of the following: the Company (a) sold shares of common stock for gross proceeds of $531,000, (b) sold convertible notes payables for gross proceeds of $1,580,000, (c) borrowed $438,000 on a Purchase Order agreement with related party, (d) paid down the balance on convertible notes in the amount of $288,000, (e) paid down $112,000 on a four year term loan, (f) made a payment from factor in the amount of $142,000, (g) net proceeds of $59,000 under an existing line of credit, and (h) a distribution of equity in our PIMD subsidiary of approximately $120,000.

Recent Financial Events

From January 1, 2014 until April 10, 2014, we received $1,009,067 in cash in a private subscription sale in which we issued 19,207,420 shares of common stock.

In January and February 2014 we received cash proceeds of $206,621 from Seaside 88, L.P. for the issuance of an aggregate of 2,270,740 restricted shares of common stock.

Commitments

The holders of a $250,000 convertible note which was converted into 2,000,000 shares of our common stock on March 12, 2012 are entitled to a 4% royalty from the sales of our orally disintegrating rapidly dissolving 80mg and 160mg pain relief tablets. The royalty payments associated with this agreement have no minimum guarantee amounts and royalty payments will end only if the product line of Acetaminophen rapidly dissolving 80mg and 160mg tablets is sold to a third party. Shipments for this product are expected to occur in first half of the year 2014.

The holder of a $320,000 note payable are entitled to a to 1.8% royalty payment on the first $10 million of sales of a generic prescription drug under distribution contracts with Federal government agencies and 0.09% on the next $15 million of such sales. Payments for royalties will be paid quarterly and as of December 31, 2012, the Company had accrued $42,000 in royalties. In the first quarter 2013 the Company issued 455,556 shares of its common stock as payment for the royalty expense and in the second quarter of 2013, the Company issued 58,278 shares of its common stock as payment for the royalty expense. In additions a holder of a $50,000 note payable (see note 10), a related party, is entitled to a 0.9% on the first $25 million of sales of a generic prescription drug under distribution contracts with Federal government agencies. The Company had accrued $10,500 in royalties as of December 31, 2012, and in first quarter 2013 the Company issued 130,555 shares of its common stock for payment of royalty expense. In the second quarter the Company issued 29,139 shares of its common stock for payment of royalty expense and the Company has recorded a royalty expense of $30,600 and $213,945 for the three months and nine months period ended September 30, 2013, respectively.

On November 4, 2013, the Company entered into a securities purchase agreement with Seaside 88, L.P. ("Seaside") pursuant to which the Company agreed to sell, and Seaside agreed to purchase, up to seven million (7,000,000) restricted shares of the Company’s common stock in one or more closings. The number of shares to be purchased at each closing will be equal to ten percent (10%) of the aggregate trading volume of shares of the Company’s common stock during normal trading hours for the 20 consecutive trading days prior to each closing. The purchase price for the shares to be purchased by Seaside at each closing will be equal to sixty percent (60%) of the average of “daily average stock price” for the five (5) trading days preceding the date of the closing. The “daily average stock price” for a trading day is equal to the quotient of (a) the sum of the highest and lowest sale price for the trading day divided by (b) two.

The Company had an initial closing under the securities purchase agreement on November 4, 2013, at which the Company sold to Seaside 1,152,514 restricted shares of its common stock for gross proceeds of $200,537, of which $7,500 was used to pay the legal fees for Seaside and $19,303 was paid for a finder’s fee. The Company also had closings on (i) December 4, 2013, at which the Company sold to Seaside 841,426 restricted shares of common stock for gross proceeds of $90,926 of which $2,500 was used to pay the legal fees for Seaside. (ii) January 6, 2014, at which the Company sold to Seaside 928,670 restricted shares of common stock for gross proceeds of $69,093 of which $2,500 was used to pay the legal fees for Seaside and (iii) February 4, 2014, at which the Company sold to Seaside 1,342,070 restricted shares of common stock for gross proceeds of $142,527 and (iv) on February 24, 2014 the Company issued 1,615,550 restricted shares of common stock for financing fees which were accrued and expense in 2013.

In May 2013, the Company signed a “Development, Manufacturing and Supply Agreement” with a pharmaceutical manufacturer to develop and manufacture our 80mg and 160mg Acetaminophen RapiMed® rapid orally disintegrating tablets. The initial term of the agreement is two years with an option to a one five year contract extension. In addition to development and scale up costs, the Company will pay up to $150,000 to license the technology during the first two years. In order to maintain exclusivity rights for the technology the Company must purchase a minimum of 10,000,000 tablets each of the 80mg and 160mg tablets in the first year and 16,500,000 tablets for both 80mg 160mg in the second year. After the second year annual volume requirements need to be achieved for the Company to maintain exclusivity of the license. In 2014, the Company terminated this agreement with the pharmaceutical manufacturer due to the manufacturer’s deteriorating financial condition.

Previously, the Company had entered into a Product Development, Manufacturing and Supply Agreement with Marlex Pharmaceuticals, Inc. (the “Contract Manufacturer” or “Marlex”) in March 2010. The Contract Manufacturer was to develop rapid melt tablets in accordance with the specifications of the agreement with the Company responsible for all associated costs with the proprietary rights owned by the Company. The Company and the Contract Manufacturer agreed upon a projected product cost to be paid to the Contract Manufacturer as well as 7% of gross profits for the term of the agreement. The Company can terminate this agreement and did so in the third quarter 2013 (see note 8). All development costs through the date of notice have previously been expensed and paid.

On October 15, 2013 the Board of Directors approved revise compensation for the CEO, Robert Schneiderman and the CFO, Jeffrey Andrews, contingent on the Company raising $4 million via equity, debt or a combination of both. Contingent on raising the $4 million compensation would be as follows: CEO annual salary $200,000, CFO annual salary $192,000, both would receive 50,000 options quarterly at 120% of market price on the date granted with a one year vesting period.

On October 15, 2013 the Board of Directors approved additional compensation to Board members in the form of issuance of stock options. Board members shall be granted 100,000 stock options for each year served commencing in 2012. The chairman of the Board shall be granted 135,000 for each year served. Effective date is October 7, 2013, options vest immediately and option price will be 110% of the market price on the grant date. Additionally for each board meeting 10,000 options will be granted and for each committee meeting 5,000 options will be granted.

In July of 2013, the Company entered into a memorandum of understanding (“MOU”) with a Forbes Investments Ltd (“Forbes”) to provide future services. Upon the signing of this MOU agreement the Company issued 350,000 shares of our Company’s common stock to two parties of this agreement. The value of the common stock at issuance was $154,000 and this amount was recorded to prepaid and was expensed to selling, general and administrative through balance of 2013. The MOU agreement has a 12 month exclusivity clause, a two-way break-up fee of $50,000 in cash or securities at 50% of market rate upon 30 day running average of termination. Upon successfully completing the goal of this agreement the two parties are entitled to each receive 200,000 shares of ScripsAmerica’s common stock and also shall be entitled to receive 25,000 shares of our common stock per $250,000 financing arranged from any source up to $5 million during the first 12 months of this agreement. In January 2014 licensing agreements were entered into (see note 21 in financial statements Global Pharma Hub) and the 400,000 shares of ScripsAmerica’s common stock was issued at a value of $52,000.

In November our subsidiary PIMD (see note 8) entered into a 25 month operating lease for a distribution facility in Doral Florida. The lease begins January 1, 2014 and expires January 31, 2016, monthly rent is $4,585 for the first thirteen months with the first month free and $4,724 for the last twelve months. The total minimum lease payments are $111,714, and for 2014 they are $50,441, for 2015 they are $56,548, and for 2016 they are $4,724.

In January 2013, the Company entered into consulting agreement with Implex Corporation, a consulting firm owned by the Company’s legal counsel. The initial agreement terms are for six months and the agreement shall automatically be renewed for a successive month period(s) until one party gives written notice to terminate the agreement thirty days prior to the next termination date. Fees are $25,000 per month and such fees shall be paid in shares of the Company’s common stock rather than cash so as to permit the Company to conserve cash. During 2013 the Company issued to Implex Corporation 824,956 shares of common stock at a fair value of $253,996.

During the fiscal year 2013 the Company purchased product from two suppliers, and in 2012 the Company purchased 100% of its product packaging from its Contract Packager. A disruption in the availability of product packaging from the Company’s suppliers could cause a possible loss of sales, which could affect operating results adversely.

During the year ended December 31, 2013, the Company derived approximately $413,000, or 73%, of its revenue from two customers, of this total one customer accounted for 61% and the other accounted for 12%. During the year ended December 31, 2012, the Company derived approximately $3,524,000 or 90% of its revenue from two customers, of this total one customer accounted for 74% and the other accounted for 16%.

Equity investments

WholesaleRx

As of December 31, 2013, the Company has a 14% non-controlling ownership interest in WholesaleRx, Inc., which represents over 700 such independent pharmacy operations and is a DEA and State-licensed to store and distribute controlled substances (which are drugs that have the potential for abuse or dependence and are regulated under the federal Controlled Substances Act). WholesaleRx orders the goods from the manufacturers and has them shipped to its warehouse facility. WholesaleRx then ships the goods to the pharmacies in the bottles as received by the manufacturer. Upon receiving orders from the pharmacies, goods will be sent to them COD which will eliminate any accounts receivable issues. Prior to November 1, 2013, the Company and WholesaleRx had an oral agreement to pursuant to which the Company secured third party financing to fund WholesaleRx’s purchase orders and the Company in consideration of which the Company would receive 12.5% of the WholesaleRx’s “gross profit” for the prior month (which gross profit would consist of (i) sales to all customers minus (ii) cost of goods sold, freight in (to WholesaleRx), credits and allowances). Under the November 1 Agreement, ScripsAmerica agreed to provide purchase order financing to WholesaleRx and purchased a 20% equity stake in WholesaleRx. In consideration for providing financing for WholesaleRx’s purchaser orders, and to cover the Company’s costs in administering the purchase order financing, WholesaleRx has agreed to pay the Company on or before the 15^th calendar day of each month 20% of the gross profit (as described above) for the prior calendar month. If WholesaleRx is late in paying such 20% fee, then the amount owed will accrue interest at the rate of 18% per annum until paid

Per the November 1, 2013 agreement with WholesaleRx the Company agreed to make an equity investment of $400,000 for 12,000 shares, which represents 20% ownership interest in WholesaleRx. The subscription amount to be paid in three installments ($150,000 upon execution of the agreement, $125,000 paid in January 2014 and $125,000 on February 15, 2014, which has not been made as of April 10, 2014).

Variable Interest Entities (VIE)

P.I.M.D International, LLC

The Company is the primary beneficiary of P.I.M.D. International, LLC (“PIMD”), a start-up limited liability company based in, and proposing to do business in, Florida. Our determination PIMD investment is a variable interest entity (VIE) was based on the facts ScripsAmerica receives a majority of its expected profits and losses. We also will provide be the primary financing for inventory purchases through related parties. Our loan receivable of $272,000 and PIMD’s loan payable was eliminated in the accompanying consolidated financial statements. The assets and liabilities and revenues and expenses of PIMD have been included in the accompanying consolidated financial statements. The 10% outside ownership is shown as non-controlling interest. At November 1, 2013, PIMD’s beginning capital was $41,000 and they had accumulated deficit of $49,607. During December 2013 the un-controlling interest made a distributed $104,930 making the total equity attributed to non-controlling interest to be a deficit of $10,622.

Details of the loan agreement are as follows: In December, 2013, the Company revised an September 2013 purchase agreement to acquire 90% of the Membership Units in P.I.M.D. International, LLC (“PIMD”), a start-up limited liability company based in, and proposing to do business in, Florida. Although founded approximately 4 years ago, PIMD has had no sales, but has the necessary licenses for operation of a drug wholesale operation. The purchase of the Membership Units in PIMD was subject to certain conditions precedent, of which the most important was that the Company obtain the necessary licenses from Florida (and the DEA) for the ownership of a drug distribution company like PIMD. However, it was determined that securing the licenses was going to require a substantially longer period of time than the parties had anticipated. Consequently, in order to preserve the business opportunity, it was necessary to change the structure of the relationship. Accordingly, the original purchase agreement was cancelled and voided. The funds already advanced by ScripsAmerica to PIMD were converted to a loan and the relationship between PIMD and ScripsAmerica became a Sourcing and Marketing Agreement. Implex Corporation, owned by the Company’s legal counsel, who is a Florida resident, has stepped in to assist with any licensing issues. The Company believes that if licensing is required it will be that of Implex, based in Florida and with a Florida owner.

The funds already advanced by ScripsAmerica to PIMD were converted to a loan to Implex, a related party, borrowed $272,000 from ScripsAmerica at an interest rate of 2% and it has re-loaned the funds to PIMD at an interest rate of 5%. Implex will keep the 3% differential. The Company’s loan to Implex and Implex’s loan to PIMD are both for a 5-year period. Implex will be entering into a “Business Development and Retention Agreement” with PIMD to assist PIMD with the development of its business.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Critical Accounting Policies and estimates

Principles of Consolidation - The consolidated financial statements include the accounts of the Company and all of its subsidiary in which a controlling interest is maintained. All significant inter-company accounts and transactions have been eliminated in consolidation. Investments in entities in which the Company does not have a controlling financial interest, but over which we have significant influence are accounted for using the equity method. Investments in which we do not have the ability to exercise significant influence are accounted for using the cost method. For those consolidated subsidiaries where Company ownership is less than 100%, the outside stockholders’ interests are shown as non-controlling interest. Our equity investment is classified in Investments on the balance sheet.

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.

Revenue Recognition – Product revenue associated with our pharmaceutical distribution services is recognized when product is shipped from a contract packager to our customers’ warehouses, and is adjusted for anticipated charge backs from our customers which include inventory credits, discounts or volume incentives. These charge back costs are received monthly from our customers’ and the sales revenue and accounts receivables are reduced accordingly based on historical experience, customer contract programs, product pricing trends and the mix of products shipped.

We also recognize revenue from our contract packager on a net basis according to ASC 605-45, Revenue Recognition: Principal Agent Considerations. Since we are not deemed to be the principal in these sales transactions we do not report the transaction on a gross basis in our statement of operations. These sales transactions relate to a contract that a Contract Packager has obtained with a government agency. The revenue is reported in a separate line in the statement of operations as “Product revenues net from Contract Packager”, and the gross sales are reduced by the cost of sales fees from our Contract Packager.

Commission fees are recognized when earned on shipments of generic pharmaceutical and OTC products by our pharmaceutical partner, which is a DEA and State-licensed to store and distribute controlled substances. Per our agreement with our pharmaceutical partner, the Company will earn a 20% commission on the gross profit (sales less cost of goods sold, freight in and credits and allowances) of products shipped to independent pharmacies on or after November 1, 2013 and 12.5% commission on gross profit of products shipped to independent pharmacies prior to November 1, 2013.

Research and Development - Expenditures for research and development (“R & D”) associated with contract research and development provided by third parties are expensed, as incurred. The Company had charges of $0 and $37,524 for research and development expenses for the years ended December 31, 2013 and 2012, respectively.

Accounts Receivable Trade, net - Accounts receivable are stated at estimated net realizable value net of the sales allowance due to charge backs. The Chargeback reserve at December 31, 2013 was zero because we did not have any receivable associated with McKesson and we no longer sell product to McKesson. Management provides for uncollectible amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of individual accounts and historical collection information. Balances that are deemed uncollectible after management has used reasonable collection efforts are written off through a charge to the allowance and a credit to accounts receivable. As of December 31, 2013 and 2012 no allowance for doubtful accounts was deemed necessary.

The Company entered into an accounts receivable factoring facility agreement in June 2012. As of December 31, 2012, gross receivables were $395,974 of which $141,725 was sold to a factor, and has been included in the liabilities section in the balance sheet. Gross accounts receivable was reduced $105,443 to provide for an allowance for charge backs, for a net accounts receivable balance of $290,531.

Receivable – Contract Packager - The Company has receivables from Marlex Pharmaceuticals, Inc. (Contract Packager), in the amount of $1,088,598 and $1,579,051 at December 31, 2013 and 2012, respectively. As of December 31, 2013, this receivable consists of PO financing, revenue earned for U.S. government sales and monthly payments due under the settlement agreement entered into on September 6, 2013 (see Note 10). The 2012 receivable consists of the following: a) receivables relating to sales with a government agency in the amount of $772,809, b) the Company’s payment of $600,000 to a vendor for the product to be manufactured on behalf of our Contract Packager, and c) the Company’s advance of $206,241 to our Contract Packager for the purchase of product inventory. In the second quarter of 2013, the Company fully reserved and expensed $1,210,999 which was the remaining balance. Per the September 6, 2013 settlement agreement, the company is entitle to recover $408,150 consequently the unrecoverable amount have been eliminated and since collectable is still not certain the remaining receivable is fully reserved as of December 31, 2013.

Receivable – related party – WholesaleRx in which we have a 14% investment where we recognized Commission fees when earned on shipments of generic pharmaceutical and OTC products by our pharmaceutical partner, which is a DEA and State-licensed to store and distribute controlled substances. The receivable consists of PO financing, and revenue earned for commission sales agreement entered into in November 1, 2013. No reserve for un-collectability due to short history and no prior bad debts.

Income Taxes - The Company provides for income taxes using the asset and liability based approach for reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and the tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized. The Company had a full valuation allowance of $2,015,200 and $597,591 against deferred tax assets at December 31, 2013 and 2012, respectively.

The Company also complies with the provisions of Accounting for Uncertainty in Income Taxes. The accounting regulation prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. The Company classifies any assessment for interest and/or penalties as other expenses in the financial statements, if applicable. There were no uncertain tax positions at December 31, 2013 and 2012.

Derivative Financial Instruments - Derivative financial instruments consist of financial instruments or other contracts that contain a notional amount and one or more underlying values (e.g. interest rate, security price or other variable) that require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are, initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. The Company generally does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into various types of financing arrangements to fund its business capital requirements, including convertible debt and other financial instruments. These contracts require evaluation to determine whether derivative features embedded in host contracts require bifurcation and fair value measurement or, in the case of freestanding derivatives (principally warrants) whether certain conditions for equity classification have been achieved. In instances where derivative financial instruments require liability classification, the Company is required to initially and subsequently measure such instruments at fair value. Accordingly, the Company adjusts the fair value of these derivative components at each reporting period through a charge to income until such time as the instruments acquire classification in stockholders’ deficit.

Derivative financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period. The Company estimates fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective measuring fair values. In selecting the appropriate technique, management considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, the Company generally uses the Black-Scholes-Merton option valuation technique because it embodies all of the requisite assumptions (including trading volatility, dividend yield, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, our income (loss) will reflect the volatility in these estimate and assumption changes.

Fair Value Measurements - The Company follows the provision of ASC No. 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 clarifies that fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date) and provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Input other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.

Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.

An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Availability of observable inputs can vary and is affected by a variety of factors.

The Company uses judgment in determining the fair value of assets and liabilities, and level 3 assets and liabilities involve greater judgment than level 1 and level 2 assets and liabilities.

Stock-Based Compensation – Compensation expense is recognized for the fair value of all share-based payments issued to employees. As of December 31, 2013, the Company has issued 2,015,000 employee stock options that would require calculating the fair value using a pricing model such as the Black-Scholes pricing model, see note 15 for fair value. As of December 31, 2012, the Company had not issued any employee stock options that would require calculating the fair value using a pricing model such as the Black-Scholes pricing model.

For non-employees, stock grants issued for services are valued at either the invoiced or contracted value of services provided, or the fair value of stock at the date the agreement is reached, whichever is more readily determinable. For stock options and warrants granted to non-employees the fair value at the grant date is used to value the expense. In calculating the estimated fair value of its stock options and warrants, the Company used a Black-Scholes pricing model which requires the consideration of the following seven variables for purposes of estimating fair value:

the stock option or warrant exercise price,

the expected term of the option or warrant,

the grant date fair value of our common stock, which is issuable upon exercise of the option or warrant,

the expected volatility of our common stock,

expected dividends on our common stock (we do not anticipate paying dividends in the foreseeable future),

the risk free interest rate for the expected option or warrant term, and

the expected forfeiture rate.

Earnings Per Share - Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock warrants, options, convertible notes payable and Series A convertible preferred shares. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive. For details on number of common stock equivalents see Note 18 below.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SCRIPSAMERICA, INC.

CONSOLIDATED FINANCIAL STATEMENTS

Contents

	Page
Report of Independent Registered Public Accounting firm	F-1

Consolidated Financial Statements - December 31, 2013 and 2012

Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Changes in Stockholders’ Deficit	F-4
Consolidated Statements of Cash Flows	F-5

Consolidated Notes to Financial Statements	F-6 - F-28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of ScripsAmerica, Inc.

We have audited the accompanying consolidated balance sheet of ScripsAmerica, Inc. (the “Company”) as of December 31, 2013, and the related consolidated statement of operations, stockholders’ deficit, and cash flows for the year then ended. We have also audited the accompanying balance sheet of the Company as of December 31, 2012, and the related statement of operations, stockholders’ deficit and cash flows for the year then ended. ScripsAmerica, Inc.’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 audits 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 2013 consolidated financial statements referred to above present fairly, in all material respects, the financial position of ScripsAmerica, Inc. as of December 31, 2013, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the 2012 financial statements referred to above present fairly, in all material respects, the financial position of ScripsAmerica, Inc. as of December 31, 2012, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred an operating loss and net loss of $7.3 million and $11.2 million, respectively during the year ended December 31, 2013, a working capital deficit of $1.7 million and has negative cash flows from operations of $1.8 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. If the Company is unable to successfully refinance and raise additional capital to fund ongoing operations there would be a material adverse effect to the consolidated financial statements.

/s/ FRIEDMAN LLP

East Hanover, New Jersey

April 15, 2014

F-1

SCRIPSAMERICA, INC.

Consolidated Balance Sheets

	December 31,
	2013			2012
ASSETS
Current Assets
Cash	$	47,293		$	13,513
Accounts receivable trade, net of allowance for charge backs of $105,443		–			290,531
Receivable - contract packager, net of allowance of $408,150 and $0, respectively		1,088,598			1,579,051
Receivable - related party		24,223			–
Prepaid expenses and other current assets		329,673			198,820
Total Current Assets		1,489,787			2,081,915

Property and Equipment		–			69,650

Other Assets
Investments		276,956			–
Other Assets		14,720			200,000
		291,676			200,000
TOTAL ASSETS	$	1,781,463		$	2,351,565

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Line of credit	$	99,222		$	40,059
Accounts payable and accrued expenses		226,570			101,520
Purchase order financing - related party		1,037,494			578,280
Obligation due to factor		–			141,725
Royalty payable		5,302			42,000
Royalty payable - related party		–			10,500
Stock to be issued		273,947			–
Current portion of long-term debt - related party		122,529			112,021
Convertible notes payable - net of discount $259,396 and $50,918 respectively		289,839			64,832
Derivative liability		1,133,393			94,477
Total Current Liabilities		3,188,296			1,185,414

Non-Current Liabilities
Preferred stock dividends payable		187,740			104,300
Convertible notes payable - related parties		120,738			130,000
Convertible notes payable - net of discounts $168,273 and 0 respectively		628,795			719,400
Long-term debt, less current portion - related party		230,287			352,816
Total Non-Current Liabilities		1,167,560			1,306,516

Total Liabilities		4,355,856			2,491,930

Commitments and Contingencies
Series A Convertible preferred stock - $.001 par value; 10,000,000 shares authorized, 2,990,252 issued and outstanding		1,043,000			1,043,000

Stockholders' Deficit
Common stock - $0.001 par value; 150,000,000 shares authorized; 91,792,839 and 56,404,972 shares issued and outstanding as of December 31, 2013 and 2012, respectively		91,794			56,405
Additional paid-in capital		10,046,457			1,090,772
Accumulated deficit		(13,609,078	)		(2,330,542	)
Total Stockholders' Deficit of ScripsAmerica, Inc.		(3,470,827	)		(1,183,365	)

Deficit Attributed to Noncontrolling interest		(146,566	)		–
Total Stockholders' Deficit		(3,617,393	)		(1,183,365	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,781,463		$	2,351,565

See accompanying notes to consolidated financial statements.

F-2

SCRIPSAMERICA, INC.

Consolidated Statements of Operations

	For the Years Ended December 31,
	2013			2012
Net revenues
Product revenues - net of contract adjustments	$	152,650		$	3,762,677
Revenues net, from contract packager		333,638			152,517
Commission fees - related party		69,902			–
Total net revenues		556,190			3,915,194

Cost of Goods Sold
Product		210,540			3,331,846
Royalty expense		285,547			52,500
		496,087			3,384,346

Gross Profit		60,103			530,848

Selling, General and Administrative Expenses		2,432,540			1,861,374

Selling, General and Administrative Expenses share-based compensation issued for services		3,791,909			177,773

Provision for contract packager receivable		1,129,368			–

Research and Development		–			37,524

Total Operating Expenses		7,353,817			2,076,671

Loss from Operations		(7,293,714	)		(1,545,823	)

Other Income (Expenses), net
Interest expense		(332,947	)		(225,247	)
Loss from derivatives issued with debt greater than carrying value		(1,179,737	)		–
Financing costs		(971,840	)		–
Loss on revaluation of derivatives		(1,288,623	)		(6,750	)
Amortization of debt discount		(785,170	)		(40,833	)
Gain on extinguishment of debt		636,670			–
Income from equity investments		1,956			–
		(3,919,691	)		(272,830	)

Loss Before Provision for Income taxes		(11,213,405	)		(1,818,653	)

Provision for Tax Expense		–			43,179

Net Loss		(11,213,405	)		(1,861,832	)

Loss attributed to noncontrolling interest		(18,309	)		–

Net Loss Attributable to ScripsAmerica, Inc.		(11,195,096	)		(1,861,832	)

Preferred Stock Dividend		(83,440	)		(83,440	)

Net Loss Attributable to Common Shareholders	$	(11,278,536	)	$	(1,945,272	)

Loss Per Common Share
Basic and Diluted	$	(0.17	)	$	(0.04	)

Weighted Average Number of Common Shares
Basic and Diluted		68,119,715			55,140,192

See accompanying notes to consolidated financial statements.

F-3

SCRIPSAMERICA, INC.

Consolidated Statements of Changes in Stockholders' Deficit

For the Years Ended December 31, 2013 and 2012

	Common Stock						Subscription			Additional Paid-In			Retained Earnings			Stockholders' Deficit			Deficit			Total Stockholders'
	Shares			Amount			Receivable			Capital			(Deficit)			ScripsAmerica			Noncontrolling			Deficit
Balance - January 1, 2012		52,521,684		$	52,522		$	(170,800	)	$	494,487		$	(385,270	)	$	(9,061	)	$	–		$	(9,061	)

Payment received for stock subscription		–			–			170,800			–			–			170,800			–			170,800
Common stock issued for cash		300,000			300			–			29,700			–			30,000			–			59,700
Common stock issued for services - BOD		124,000			124			–			34,356			–			34,480			–			68,836
Common stock issued for services - employees		114,288			114			–			19,886			–			20,000			–			39,886
Common stock issued for conversion of convertible Notes payable		2,000,000			2,000			–			248,000			–			250,000			–			498,000
Common stock issued for services - non employees		1,345,000			1,345			–			229,755			–			231,100			–			460,855
Dividends for convertible preferred stock		–			–			–			–			(83,440	)		(83,440	)		–			(166,880	)
Warrants issued for services		–			–			–			34,588			–			34,588			–			69,176
Net Loss														(1,861,832	)		(1,861,832	)		–			(3,723,664	)

Balance - December 31, 2012		56,404,972		$	56,405		$	–		$	1,090,772		$	(2,330,542	)	$	(1,183,365	)	$	–		$	(1,183,365	)

Common stock issued for cash		4,854,952			4,855			–			526,253			–			531,108			–			531,108
Common stock issued for services - Directors		136,000			136			–			35,064			–			35,200			–			35,200
Common stock issued for conversion of Convertible Notes payable		11,456,639			11,457			–			2,765,834			–			2,777,291			–			2,777,291
Common stock issued for services - non employees		9,177,027			9,177			–			3,377,935			–			3,387,112			–			3,387,112
Common stock issued for debt and payables		8,690,000			8,690			–			1,294,810			–			1,303,500			–			1,303,500
Common stock issued for royalty payment		1,339,616			1,340			–			345,463			–			346,803			–			346,803
Common stock retired for services previously provided		(600,000	)		(600	)		–			(75,900	)		–			(76,500	)		–			(76,500	)
Common stock issued for warrants in a cashless conversion		333,633			334			–			(334	)		–			–			–			–
Dividends for convertible preferred stock		–			–			–			–			(83,440	)		(83,440	)		–			(83,440	)
Common stock options issued for services - Directors		–			–			–			246,731			–			246,731			–			246,731
Common stock options issued for services		–			–			–			439,829			–			439,829			–			439,829
Noncontrolling interest beginning balance		–			–			–			–			–			–			(8,607	)		(8,607	)
Distribution taken from noncontrolling interest		–			–			–			–			–			–			(119,650	)		(119,650	)
Net Loss		–			–			–			–			(11,195,096	)		(11,195,096	)		(18,309	)		(11,213,405	)

Balance - December 31, 2013		91,792,839		$	91,794		$	–		$	10,046,457		$	(13,609,078	)	$	(3,470,827	)	$	(146,566	)	$	(3,617,393	)

See accompanying notes to consolidated financial statements.

F-4

SCRIPSAMERICA, INC.

Consolidated Statements of Cash Flows

	For the Years Ended December 31,
	2013			2012
Cash Flows from Operating Activities
Net Loss	$	(11,213,405	)	$	(1,861,832	)
Adjustments to reconcile net loss to net cash used by operating activities:
Income from equity method investee		(1,956	)		–
Amortization of discount on convertible notes payable		785,170			38,892
Loss from derivatives issued with debt		1,179,737			–
Amortization of loan fees		263,973			–
Common stock issued for services		3,191,812			174,530
Common stock issued for payment of royalty fees		346,803			–
Common stock issued for finance fees		761,818			–
Options issued for services		439,829			–
Options issued for services - Directors		246,731			3,243
Change in derivative liability		1,288,623			6,750
Change in deferred Income tax provision		–			41,200
Reserve on receivable - Contract packager		1,385,000			743,503
Recovery of bad debt		(81,632	)		–
Gain on extinguishment of debt		(636,670	)		–
Allowance for chargebacks		(11,399	)		53,805
Loss for property and equipment disposal		69,650			–
Change in operating assets and liabilities
Accounts receivable - trade		253,485			(139,696	)
Accounts receivable – related party		24,222			–
Receivable - Contract packager		(667,336	)		(1,640,155	)
Prepaid expenses and other current assets		143,134			(10,125	)
Accounts payable and accrued expenses		428,157			118,400
Cash used in operating activities		(1,804,254	)		(2,471,485	)
Cash Flows from Investing Activities
Purchase of Investment		(150,000	)		–
Proceeds from note receivable		–			6,055
Cash provided by investing activities		(150,000	)		6,055
Cash Flows from Financing Activities
Proceeds under bank line of credit, net		59,164			40,059
Proceeds from Issuance of common stock		531,108			30,000
Proceeds for stock to be issued		50,925			–
Proceeds from convertible notes payable		1,579,867			435,150
Proceeds (Payments) from convertible notes payable - related party		(9,262	)		50,000
Proceeds from note payable - related party		–			500,001
Proceeds from PO financing from related party, net		437,964			878,867
Payments to factor, net		(141,725	)		141,725
Payments on convertible notes payable		(288,336	)		(200,000	)
Payments on note payable - related party		(112,021	)		(35,164	)
Payments to members of noncontrolling interest		(119,650	)
Collection of stock subscription receivable		–			170,800
Cash provided by financing activities		1,988,034			2,011,438

Net Increase (Decrease) in Cash		33,780			(453,992	)

*Cash* - Beginning of year		13,513			467,505

*Cash* - End of year	$	47,293		$	13,513

Supplemental Disclosures of Cash Flow Information		–
Cash Paid:
Interest	$	192,732			186,474
Noncash financing and investing activities:
Accrued Preferred Dividend payable		83,440			83,440
Conversion of note payable for common stock		979,554			250,000
Reduction in loan receivable from contract packager in exchange for inventory		–			250,000
Purchase order direct financing in exchange for inventory		–			300,587
Purchase of manufacturing equipment		–			69,650
Stock issued for inventory advance		275,010			–

See accompanying notes to consolidated financial statements.

F-5

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

1 -

Organization and Business

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

However, we had no exclusive contract with McKesson and the Company’s other pharmaceutical distributors to utilize our services and our margins became compressed. As a result, in 2013 the business of providing these pharmaceutical distribution services became curtailed and we are now primarily focused on generating revenue through (1) the marketing, sale and distribution of our RapiMed® products, (2) our services to the independent pharmacy distribution business and (3) our entry into the compounding pharmacy business. Specifically, we have developed a branded OTC product called “RapiMed” (www.rapimeds.com), which is a children’s pain reliever and fever reducer currently launched in China though our joint venture entity Global Pharma Hub, and which we hope to launch in retail outlets in North America sometime in 2014. We have also entered into agreements with third parties pursuant to which we receive fees based on a formula tied to the gross profit on sales of pharmaceutical products to independent pharmacies by such third parties. Lastly, on February 20, 2014 we entered into an agreement with a New Jersey compounding pharmacy that specializes in topical pain creams, pursuant to which we manage their business operations in exchange for a percentage of the pharmacy’s total revenue.

2 -

Liquidity, Business Risk and Going Concern

At December 31, 2013, the Company had approximately $47,000 in cash and incurred a loss from operations of approximately $7.3 million, of which approximately $5.1 million of the loss was due to non-cash charges and also had an accumulated deficit of $13.6 million. Further business with our largest customer in 2012 was stopped during 2013 which reduced our revenue by $3.3 million from 2012. After taking into consideration our 2014 interim results to date and current projections for the remainder of 2014, management believes that the Company’s cash flow from operations, coupled with recent financings are not sufficient to support the working capital requirements, debt service, applicable debt maturity requirements, and operating expenses through December 31, 2014. The Company’s ability to continue as a going concern is highly dependent upon (i) management’s ability to re-establish its business model and equal or exceed its planned operating cash flows (ii), maintain continued availability on its line of credit and the ability to obtain additional financing or capital to fund its debt service obligations coming due and operating expenses.

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty. Although the Company has successfully obtained various funding and financing in the past, future financing and funding options may be challenging in the current environment and cannot be expected based on past results.

We completed the development of a children’s pain relief rapid orally disintegrating 80 mg and 160 mg tablets for OTC products. In the second quarter of 2013, we signed a supply agreement with a generic manufacturer for the production of these rapid orally disintegrating products. In January 2014, the Company formed a joint venture entity, Global Pharma Hub, Inc., for the licensing, marketing and distribution of our pediatric RapiMed® acetaminophen in China. On March 10, 2014, we received a $200,000 purchase order for our children’s pain relief rapid orally disintegrating 80mg tablets from Global Pharma Hub for the China market. However, we estimate that we will need approximately $1.5 million of incremental funding to launch RapiMed® products in the United States. The funding for launching the rapid orally disintegrating products in the U.S. is expected to come from the sale of equity securities, or debt financing. However, such financing has not yet been secured.

3 -

Summary of Significant Accounting Policies

A summary of significant accounting policies follows:

a. Principles of Consolidation - The consolidated financial statements include the accounts of the Company and all of its subsidiary in which a controlling interest is maintained. All significant inter-company accounts and transactions have been eliminated in consolidation. Investments in entities in which the Company does not have a controlling financial interest, but over which we have significant influence are accounted for using the equity method. Investments in which we do not have the ability to exercise significant influence are accounted for using the cost method. For those consolidated subsidiaries where Company ownership is less than 100%, the outside stockholders’ interests are shown as non-controlling interest. Our equity investment is classified in Investments on the balance sheet.

F-6

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2013

b. 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.

c. Revenue Recognition – Product revenue associated with our pharmaceutical distribution services is recognized when product is shipped from a contract packager to our customers’ warehouses, and is adjusted for anticipated charge backs from our customers which include inventory credits, discounts or volume incentives. These charge back costs are received monthly from our customers’ and the sales revenue and accounts receivables are reduced accordingly based on historical experience, customer contract programs, product pricing trends and the mix of products shipped.

We also recognize revenue from our contract packager on a net basis according to ASC 605-45, Revenue Recognition: Principal Agent Considerations. Since we are not deemed to be the principal in these sales transactions we do not report the transaction on a gross basis in our statement of operations. These sales transactions relate to a contract that a Contract Packager has obtained with a government agency. The revenue is reported in a separate line in the statement of operations as “Product revenues net from Contract Packager”, and the gross sales are reduced by the cost of sales fees from our Contract Packager.

d. Research and Development - Expenditures for research and development (“R & D”) associated with contract research and development provided by third parties are expensed, as incurred. The Company had charges of $0 and $37,524 for research and development expenses for the years ended December 31, 2013 and 2012, respectively.

e. Accounts Receivable Trade, net - Accounts receivable are stated at estimated net realizable value net of the sales allowance due to charge backs. The Chargeback reserve at December 31, 2013 was zero because we did not have any receivable associated with McKesson and we no longer sell product to McKesson. Management provides for uncollectible amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of individual accounts and historical collection information. Balances that are deemed uncollectible after management has used reasonable collection efforts are written off through a charge to the allowance and a credit to accounts receivable. As of December 31, 2013 and 2012 no allowance for doubtful accounts was deemed necessary.

f. Property and Equipment - Property and equipment are stated at cost less accumulated depreciation. The Company computes depreciation using the straight-line method over the estimated useful lives of the assets. Maintenance costs, which do not significantly extend the useful lives of the respective assets and repair costs are charged to operating expense as incurred. In December 2013, it was discovered that a potential supplier of product who physically had the equipment which we had purchased in 2012, had gone bankrupt. It was determined that the equipment was unrecoverable and, consequently, we wrote-off the assets and expensed $69,650 to the statement of operations.

F-7

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

g. Receivable – Contract Packager - The Company has receivables from Marlex Pharmaceuticals, Inc. (Contract Packager), in the amount of $1,088,598 and $1,579,051 at December 31, 2013 and 2012, respectively. As of December 31, 2013, this receivable consists of PO financing, revenue earned for U.S. government sales and monthly payments due under the settlement agreement entered into on September 6, 2013 (see Note 10). The 2012 receivable consists of the following: a) receivables relating to sales with a government agency in the amount of $772,809, b) the Company’s payment of $600,000 to a vendor for the product to be manufactured on behalf of our Contract Packager, and c) the Company’s advance of $206,241 to our Contract Packager for the purchase of product inventory. In the second quarter of 2013, the Company fully reserved and expensed $1,210,999 which was the remaining balance. Per the September 6, 2013 settlement agreement, the Company is entitled to recover $408,150 of which $81,632 has been recovered during 2013. Consequently the reserved amount has been offset against the allotment and since collectability is still not certain on the remaining receivable, we have fully reserved it as of December 31, 2013.

h. Receivable – related party – WholesaleRx in which we have a 14% investment where we recognized Commission fees when earned on shipments of generic pharmaceutical and OTC products by our pharmaceutical partner, which is a DEA and State-licensed to store and distribute controlled substances. The receivable consists of PO financing, and revenue earned for commission sales agreement entered into in November 1, 2013. No reserve for un-collectability due to short history and no prior bad debts.

i. Customer, Product, and Supplier Concentrations - For the first four months of 2013 and the entire 2012 fiscal year we sold our products directly to a wholesale drug distributor who, in turn, supplies products to pharmacies, hospitals, governmental agencies, and physicians. The Company used one Contract Packager exclusively for all of its warehouse, customer service, distribution, and labeling services for the first four months of 2013 and entire 2012 fiscal year. In September 2013, the Company added a second supplier of products.

In 2013, we entered into an agreement with a company that represents over 700 pharmacy independent operations. Under this agreement, this partner company will order the goods from the manufacturers and have them shipped to our pharmaceutical partner, which is DEA and State-licensed to store and distribute controlled substances. The goods will be shipped to the pharmacies in the bottles as received by the manufacturer.

j. Concentration in Cash -. We maintain cash at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. All of our non-interest bearing cash balances were fully insured at December 31, 2013 and 2012.

k. Income Taxes - The Company provides for income taxes using the asset and liability based approach for reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and the tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized. The Company had a full valuation allowance of $2,015,200 and $597,591 against deferred tax assets at December 31, 2013 and 2012, respectively.

l. Derivative Financial Instruments - Derivative financial instruments consist of financial instruments or other contracts that contain a notional amount and one or more underlying values (e.g. interest rate, security price or other variable) that require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are, initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. The Company generally does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into various types of financing arrangements to fund its business capital requirements, including convertible debt and other financial instruments. These contracts require evaluation to determine whether derivative features embedded in host contracts require bifurcation and fair value measurement or, in the case of freestanding derivatives (principally warrants) whether certain conditions for equity classification have been achieved. In instances where derivative financial instruments require liability classification, the Company is required to initially and subsequently measure such instruments at fair value. Accordingly, the Company adjusts the fair value of these derivative components at each reporting period through a charge to income until such time as the instruments acquire classification in stockholders’ deficit.

F-8

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

m. Fair Value Measurements - The Company follows the provision of ASC No. 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 clarifies that fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date) and provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability.

The Company uses judgment in determining the fair value of assets and liabilities, and level 3 assets and liabilities involve greater judgment than level 1 and level 2 assets and liabilities.

The carrying values of accounts receivable, inventory, accounts payable and accrued expenses, royalty payable, obligation due factor, and notes payable approximate their fair values due to their short-term maturities. The carrying value of the Company’s investments approximate fair value because the investments were made in 2013 and the carrying value includes the Company’s share of the investee’s earnings from the date of acquisition. (See Note 8.) The carrying value of the Company’s long-term debt approximates fair value due to the borrowing rates currently available to the Company for loans with similar terms. See note 13 for fair value of derivative liabilities.

n. Advertising Expenses - The Company expenses advertising costs as incurred. The Company incurred advertising expenses in the amount of $371,786 and $62,875 for the years ended December 31, 2013 and 2012, respectively.

o. Shipping and Handling Cost – The Company expenses all shipping and handling costs as incurred. These costs are included in cost of sales on the accompanying financial statements.

p. Stock-Based Compensation – Compensation expense is recognized for the fair value of all share-based payments issued to employees. As of December 31, 2013, the Company has issued 1,320,000 employee stock options that would require calculating the fair value using a pricing model such as the Black-Scholes pricing model, see note 15 for fair value. As of December 31, 2012, the Company had not issued any employee stock options that would require calculating the fair value using a pricing model such as the Black-Scholes pricing model.

the stock option or warrant exercise price,

the expected term of the option or warrant,

the grant date fair value of our common stock, which is issuable upon exercise of the option or warrant,

the expected volatility of our common stock,

F-9

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

expected dividends on our common stock (we do not anticipate paying dividends in the foreseeable future),

the risk free interest rate for the expected option or warrant term, and

the expected forfeiture rate.

q. Cost of Goods Sold – In fiscal year 2012 and for the first half of fiscal year 2013, the Company purchases all of its products from one supplier, Marlex Pharmaceuticals Inc., a related party at various contracted prices. Raw materials were re-packaged by Marlex. Upon shipment of product, the Company is charged the contracted price for services provided to ship the product. Cost of goods consists of raw material costs, re-packaging costs and shipping and handling. The Company financed the purchase of inventory based on confirmed purchase orders via a revolving finance agreement, provided by a related party (see notes 6 and 10 below). Beginning is August 2013 we added a second source for supplying our pharmaceutical product needs. These purchases are also financed based on confirmed purchase orders via a revolving finance agreement, provided by a related party.

r. Earnings Per Share - Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock warrants, options, convertible notes payable and Series A convertible preferred shares. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive. For details on number of common stock equivalents see Note 18 below.

s. Reclassification - Certain amounts in the financial statements as of and for the year ended December 31, 2012 have been reclassified for comparative purposes to conform to the presentation in the financial statements as of and for the year ended December 31, 2013.

t. New Accounting Pronouncements –

On July 18, 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, “ Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ” (“ASU 2013-11”). ASU 2013-11 states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, except as follows. The unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets to the extent (i) a net operating loss carryforward, a similar tax loss or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position, or (ii) the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax assets for such purpose. The amendments in ASU 20103-11 are effective prospectively for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU 2013-11 is not expected to have a material impact on our financial position, results of operations or cash flows.

In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities,” and in January 2013 issued ASU No. 2013-01, “Clarifying the Scope of Disclosures About Offsetting Assets and Liabilities.” These standards create new disclosure requirements regarding the nature of an entity’s rights of setoff and related arrangements associated with its derivative instruments, repurchase agreements, and securities lending transactions. Certain disclosures of the amounts of certain instruments subject to enforceable master netting arrangements would be required, irrespective of whether the entity has elected to offset those instruments in the statement of financial positions. ASU 2011-11 and ASU 2013-01 are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of ASU 2011-11 did not have a material impact on the Company’s financial position or results of operations.

Management does not believe there would have been a material effect on the accompanying financial statements had any other recently issued, but not yet effective, accounting standards been adopted in the current period.

4 -

Accounts Receivable Trade, Net

The Company may at certain times during the year sell qualified receivables to a factor (United Capital Funding). This agreement allows the Company to sell its qualified accounts receivable with recourse in exchange for advances of funds equivalent to 83% of the value of receivables, leaving 17% of the receivables as a reserve by the factor for potential non-payment of the Company’s receivables. The factoring facility is for a term of one year, which was renewed in May 2013 and is cancellable by either party upon one month’s written notice, which provides a factoring line of up to $1,000,000. As collateral for the repayment of advances for receivables sold, the factor has a priority security interest in all present and future assets and rights of the Company. The factor has required that the Company notify all customers that all payments must be made to a lock-box controlled by the factor. The factoring fee is 2.2% every thirty days or 26.4% annually. Factoring fees charged to interest expense for the fiscal year ended December 31, 2013 and 2012, were $5,069 and $48,948 respectively.

F-10

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

As of December 31, 2013, there were no open receivables sold to a factor. As of December 31, 2012, gross accounts receivables were $395,974 of which $141,725 were sold to the factor and have been included in the liabilities section of the balance sheet.

5 -

Revenues Net, From Contract Packager and Commission Fees

In September 2012, the Company announced that our Contract Packager, secured an 8-year, $79 million pharmaceutical distribution contract with the U.S. government. On September 30, 2012, our Contract Packager began shipping its first order on this distribution contract with the U.S. government.

The Company had a Joint Operating Agreement with the Contract Packager which was superseded by an agreement entered into on September 6, 2013 (see Note 10). Under this September 6^th agreement, the Company is entitled to receive a percentage of the Contract Packager’s profit, as defined, net of financing charges and royalties. Since we are not deemed to be the principal in these sales transactions we do not report these sales transactions on a gross basis in our condensed statements of operations. The revenue is reported separately in the condensed statements of operations as revenues net, from Contract Packager. The gross sales and cost of sales from this U.S. government contacts were:

	December 31,
	2013		2012

Sales from U.S. government contract	$	6,433,644	$	1,173,207
Cost on U.S. government, per agreement		6,100,006		1,020,690
Revenues net, from contract packager	$	333,638	$	152,517

In August 2013, we entered into an agreement with a pharmaceutical partner which began shipping generic pharmaceutical and OTC products to independent pharmacies. Under the master agreement with our pharmaceutical partner, we received a commission of 12.5% on gross margins of pharmaceutical products shipped prior to November 1, 2013 and 20% on the gross margin of pharmaceutical products shipped after November 1, 2013. During 2013, this commission structure generated commission revenue of $69,902.

6 -

Receivable and Other Assets-Contract Packager

Beginning in fiscal year 2011, the Company loaned money to the Contract Packager in an unsecured, non-interest bearing loan which has no stipulated repayment terms as the loan was made pursuant to an oral agreement. The outstanding balance at December 31, 2013, and 2012 was $717,503 and $743,503 respectively. On September 14, 2012 the Company entered into a letter of intent agreement to purchase the Contract Packager. Upon closing of the purchase of the Contract Packager, the loan receivable would be eliminated. Management had determined that the outstanding balance should be fully reserved as of December 31, 2012 and was written off in the quarter ending September 30, 2013.

As of December 31, 2013, the outstanding receivable balance is $1,088,598 which consists of a receivable for PO financing, revenue earned on U.S. government sales and monthly payments.

The Company also had a $200,000 deposit in other assets as of December 31, 2012 which it considered a stand still fee and was to be applied towards future royalty payments. In March of 2013, the Company recorded a reserved against this deposit since there was uncertainty concerning the royalty agreement with its Contract Packager, as this amount may never be applied to future royalty payments or otherwise recovered (see Note 17). This deposit was written off in the quarter ending September 30, 2013 (see Note 8).

F-11

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

7 -

Receivable– related party

WholesaleRx in which we have a 14% investment where we recognized Commission fees when earned on shipments of generic pharmaceutical and OTC products by our pharmaceutical partner, which is a DEA and State-licensed to store and distribute controlled substances. The receivable consists of PO financing, and revenue earned for commission sales agreement entered into in November 1, 2013. The balances at December 31, 2013 is $24,223 . No reserve for un-collectability was deemed.

8 -

Equity Investments

WholesaleRx

Per the November 1, 2013 agreement with WholesaleRx the Company agreed to make an equity investment of $400,000 for 12,000 shares, which will represent 20% ownership interest in WholesaleRx. The subscription amount is to be paid in three installments ($150,000 upon execution of the agreement, $125,000 on December 31, 2013 (and was paid in January 2014) and $125,000 on February 15, 2014, which has not been made as of April 10, 2014).

This investment is accounted for under the equity method because the Company exercises significant influence but does not exercise control. Our initial investment of $275,000 was increased for the equity earnings of our 14% interest in WholesaleRx to $276,956. WholesaleRx’s unaudited financial information as of December 31, 2013 is as follows: (i) Current assets are approximately $137,000 of which inventory was valued at $72,000; (ii) Total assets were approximately $160,000; (iii) Total liabilities were approximately $19,000; and (iv) Stockholders’ equity was approximately $141,000.

P.I.M.D International, LLC

The Company is the primary beneficiary of P.I.M.D. International, LLC (“PIMD”), a start-up limited liability company based in, and proposing to do business in, Florida and Variable Interest Entity (VIE. Our determination PIMD investment is a variable interest entity (VIE) was based on the fact PIMD’s equity at risk is insufficient to finance its activities. The Company would be considered the primary beneficiary of the VIE as it has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant or the right to receive benefits from the VIE that could potentially be significant. ScripsAmerica receives a majority of its expected profits and losses. We also will provide be the primary financing for inventory purchases through related parties. Our loan receivable of $272,000 with Implex Corporation and PIMD’s loan payable was eliminated in the accompanying consolidated financial statements. The assets and liabilities and revenues and expenses of PIMD have been included in the accompanying consolidated financial statements. At November 1, 2013, PIMD’s beginning capital was $41,000 and they had accumulated deficit of $49,607. During December 2013 the non-controlling interest made a distribution of $119,650, making the total equity attributed to non-controlling interest to be a deficit of $146,566.

Details of the loan agreement are as follows: In December, 2013, the Company revised an October 2013 purchase agreement to acquire 90% of the Membership Units in P.I.M.D. International, LLC (“PIMD”), a start-up limited liability company based in, and proposing to do business in, Florida. Although founded approximately 4 years ago, PIMD has had no sales, but has the necessary licenses for operation of a drug wholesale operation. The purchase of the Membership Units in PIMD was subject to certain conditions precedent, of which the most important was that the Company obtain the necessary licenses from Florida (and the DEA) for the ownership of a drug distribution company like PIMD. However, it was determined that securing the licenses was going to require a substantially longer period of time than the parties had anticipated. Consequently, in order to preserve the business opportunity, it was necessary to change the structure of the relationship. Accordingly, the original purchase agreement was cancelled and voided. The funds already advanced by ScripsAmerica to PIMD were converted to a loan and the relationship between PIMD and ScripsAmerica became a Sourcing and Marketing Agreement. Implex Corporation, owned by the Company’s legal counsel, who is a Florida resident, has stepped in to assist with any licensing issues. The Company believes that if licensing is required it will be that of Implex, based in Florida and with a Florida owner.

F-12

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

The funds already advanced by ScripsAmerica to PIMD were converted to a loan. Implex, a related party, borrowed $272,000 from ScripsAmerica at an interest rate of 2% and it has re-loaned the funds to PIMD at an interest rate of 5%. Implex will keep the 3% differential. The Company’s loan to Implex and Implex’s loan to PIMD are both for a 5-year period. Implex will be entering into a “Business Development and Retention Agreement” with PIMD to assist PIMD with the development of its business.

Main Avenue Pharmacy, Inc. agreement with Implex Corporation a related party

On January 29, 2014, Implex Corporation, which is owned by our legal counsel, Richard C. Fox, entered into a stock purchase agreement with the owner to acquire the specialty pharmacy Main Avenue Pharmacy, Inc., located in Clifton, New Jersey, for $550,000. The purchase price will be paid in installments and the shares will be held by an escrow agent until the final payment is made. Under the purchase agreement, the final agreement is to be made on July 11, 2014 (unless extended by the parties). Since ScripsAmerica will have significant controlling interest via related party relationships and will be the primary beneficiary the company will consolidate financial activities of Main Avenue Pharmacy In. in first quarter 2014.

For details of this transactions see note 20.

9 -

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following :
	December 31,
	2013		2012
Prepayment for product to be manufactured		275,000		–
Prepaid insurances		25,400		23,676
Deferred financing costs, net		27,575		38,076
Prepaid consulting		–		114,268
Prepaid other		1,698		22,800
TOTAL PREPAID EXPENSES AND OTHER CURRENT ASSETS		329,673		198,820

10 -

Cancellation of Material Definitive Agreement – Contract Packager

On September 6, 2013, the Company and Marlex Pharmaceuticals, Inc., its former Contract Packager, entered into a settlement agreement pursuant to which the Company and its former Contract Packager resolved various disagreements that had arisen between the parties on various projects covered by written agreements between the Company and its former Contract Packager, namely (i) the Contract Packager’s agreement with the U.S. government, (ii) the parties agreement with respect to the production and packaging of the Company’s RapiMed® products and (iii) shares of the Company’s stock issued to the principals of the Contract Packager for consulting services. The settlement agreement provided mutual releases, continued the U.S. government arrangement under modified terms, as well as a partial reimbursement over fifteen months for previous amounts due the Company.

This agreement provides Marlex with financing through a related party, Development 72 LLC, for the continuance of its pharmaceutical distribution contract with the U.S. government and for Marlex to make 15 monthly payments to the Company with respect to prior shipments under the U.S. government contract (which had had stopped in May 2013 due to a dispute but have resumed in September 2013). The Company’s percentage of the profits under the U.S. government contract had been revised in terms of the rate and the number of bottles of product sold to the U.S. government for which the Company would receive revenue.

F-13

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

To protect our position with respect to the RapiMed® products we also terminated the Product Development, Manufacturing and Supply Agreement with the Contract Packager. All development costs through the date of the cancellation of this agreement have previously been expensed and paid. The Company subsequently entered into a manufacturing and supply contract directly with the manufacturer of this technology for the RapiMed® products; however, that agreement was terminated in the first quarter of 2014.

Pursuant to the September 6^th settlement agreement, the principals of the Contract Packager returned 500,000 shares of common stock of the Company which were previously valued at $50,000, and which they had received under consulting agreements and another 400,000 shares of common stock of the Company issued to them that would be held as security for the payments due to the Company under this September agreement. In September 2013, the Company retired the 500,000 shares and reversed the consulting expense previously incurred through additional paid in capital.

11 -

Related Party Transactions

During fiscal year 2013, the Company paid $120,000 in consulting fees and $23,231 for interest expense on loans to a consulting firm owned by the Company’s CEO and a note payable owned to the wife of the CEO. The Company also paid $178,000 in consulting fees to a consulting firm owned by the Company’s Chief Financial Officer.

During fiscal year 2012, the Company received payment of $6,055 from a stockholder, who is also an officer of the Company. As of December 31, 2012 and 2011, the outstanding balance is $0 and $6,055, respectively, and is classified as notes receivable - related party- net.

In 2012, the Company paid $120,000 in consulting fees and interest expense on loans to a consulting firm owned by the Company’s CEO. The Company issued 114,288 shares of common stock valued at $20,000 to the consulting firm owned by the CEO for services provided, and the Company accrued $5,000 for services provided in 2012 and accrued $4,000 for interest expense on a note payable to the wife of the CEO. The Company also paid $180,000 in consulting fees to a consulting firm owned by the Company’s Chief Financial Officer.

See note 12 for related party debt

See note 19 for purchase order financing with related party

12 -

Debt

Debt consists of the following as of December 31, 2013 and 2012:

	December 31, 2013		December 31, 2012

Line of credit		99,223		40,059
Debt with related party		352,816		464,837
12% Fixed rate Convertible notes payable		574,778		719,400
12% Fixed rate Convertible notes payable-related party		120,738		130,000
8% variable convertible notes payable		116,334		64,832
10% variable convertible notes payable		179,291		–
12% variable convertible notes payable		48,230		–
Total notes payable		1,491,410		1,419,128
Less current maturities		511,590		216,912
Long-term maturities		979,820		1,202,216

Debt discounts consist of the following:
8% variable convertible notes payable		286,166		50,918
10% variable convertible notes payable		100,709		–
12% variable convertible notes payable		40,794		–
		427,669		50,918

F-14

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

Line of Credit

In October 2013, the Company’s line of credit from Wells Fargo Bank was renewed. This line of credit will allow the Company to borrow up to a maximum of $100,000, at an interest rate of prime plus 6.25% (of 9% at December 31, 2013). The line is secured by a personal guarantee by the Company’s CEO. The outstanding borrowings under this line of credit at December 31, 2013 and 2012 were $99,222 and $40,059, respectively. The Company incurred interest expense under this line of credit of approximately $3,725 and $580 for the years ended December 30, 2013 and 2012, respectively.

Debt with related party

On August 15, 2012, the Company entered into a four year term loan agreement in the amount of $500,001 with Development 72, LLC (a related party) for the purpose of funding the inventory purchases of RapiMed® rapid orally disintegrating formulation products. This loan bears interest at the rate of 9% per annum, with 48 equal monthly installments of interest and principal payments of $12,443 and matures on August 15, 2016. The Company may prepay the loan, in full or in part, subject to a prepayment penalty equal to 5% of the amount of principal being prepaid. The loan is secured by the assets of the Company.

In addition to the monthly loan repayments, during the 48 month period ending August 15, 2016, and regardless if the loan is prepaid in full, the Company will pay to Development 72 a royalty equal to one percent (1%) of all revenues that the Company receives from the Company’s sale or distribution of its RapiMed® rapid orally disintegrating formulation products. The royalty payments will be made quarterly and are subject to a fee for late payment or underpayment Development 72 is a related party because the manager of Development 72, Andrius Pranskevicius, is a member of the Company’s board of directors. There were no sales during 2013 and 2012 related to and therefore no royalties expensed or owed.

In the event of a default on our loan from Development 72, the interest rate on the loan will increase to 13% for as long as the default continues. A default will occur upon (i) non-payment of a monthly installment or non-performance under the note or loan agreement, which is not cured within ten (10) days of written notice of such non-payment or nonperformance from Development 72, (ii) a materially false representation or warranty made to Development 72 in connection with the loan, (iii) a bankruptcy or dissolution of the Company or (iv) a change of control of the Company or an acquisition of an entity or business by the Company without the affirmative vote of Andrius Pranskevicius as a member of the Company’s board of directors.

The Company is subject to various negative covenants in its loan agreement with Development 72, including but not limited to (i) restrictions on secured loans (subject to certain exceptions), (ii) judgments against the Company in excess of $25,000, (iii) prepayment of any long-term debt of the Company other than promissory notes held by certain investors in the Company, and (iv) repurchases by the Company of outstanding shares of its common stock. The loan agreement also provides certain financial covenants which limit the amount of indebtedness the Company may incur until the loan is repaid and restricts the payment of any dividends on its capital stock except for dividends payable with respect to the Company’s outstanding shares of its Series A Preferred Stock.

Interest expense associated with this note for the fiscal, 2013, was $37,289. The outstanding balance at December 31, 2013 and 2012, was $352,816 and $464,837, respectively with the current liability balance of $122,529 and $112,021, respectively.

F-15

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

12% Fixed rate Convertible notes payable

The Company has obtained loans in various amounts beginning in 2011, these notes currently have terms of no required principal payment until maturity which currently is January 30, 2015, and November 30, 2015. The principal portion of these notes can be converted into common stock at any time during the term of the loan at the rate of $0.17 per share at the option of the lender. These notes provides for interest only payments of 3%, payable quarterly (12% annually), in cash, or common stock of the Company at $0.17 per share, at the option of the lender.

In December 2013, the Company and the lenders mutually agreed to change the conversion rate for loans issued in 2012 from $.25 per share to $.17 per share and also agree to extend the maturity date from January 30, 2014 to January 30, 2015. In addition, for some of these loans by mutual consent the interest rate was decreased from 2% per month to 1% per month. The Company determined that the resulting modification of the these notes were not substantial in accordance with ASC 470-50, “Modification and Extinguishments.” During fiscal year 2013 the following activity occurred relating various notes in this category: the Company received $418,200 in cash for several new convertible promissory notes, the Company made $115,522 in principal payments, $229,400 of principal was converted into new notes with new terms which are disclose in the variable convertible description, $230,000 of principal was retired via a liability exchange for stock. The Company recorded interest expense for fiscals years 2013 and 2012, of $77,250 and $86,164, respectively.

12% Fixed rate Convertible notes payable-related party

The Company obtained loans in the amount of $80,000 in 2011 from a company owned by ScripsAmerica Company’s president and CEO. There is no required principal payment on the note until maturity which is January 30, 2015. The principal portion of the note can be converted into common stock at any time during the term of the loan at the rate of $0.17 per share at the option of the lender. These notes provides for interest only payments of 3%, payable quarterly (12% annually), in cash, or common stock of the Company at $0.17 per share, at the option of the lender.

In December 2013, the Company and the lender mutually agreed to change the conversion rate from $.25 per share to $.17 per share and also agree to extend the maturity date from January 30, 2014 to January 30, 2015. In 2012 by mutually consent the interest rate was changed from 2% per month to 1% per month effective October 1, 2012. As of December 31, 2013 and 2012 the principal balance is $80,000. The Company recorded interest expense for fiscals years 2013 and 2012, of $9,600 and $16,000, respectively.

In 2012, the Company received $50,000 in cash for one convertible promissory note payable from a related party. The note provides for interest only payments of 3%, payable quarterly (12% annually), in cash, or common stock of the Company at $0.17 per share, at the option of the lender. There is no required principal payment on the note until maturity which is January 30, 2015. The principal portion of the note can be converted into common stock at any time during the term of the loan at the rate of $0.17 per share at the option of the lender. The note can be extended by mutual consent of the lender and the Company. In December 2013, the Company and the lender mutually agreed to change the conversion rate from $.25 per share to $.17 per share and also agree to extend the maturity date from January 30, 2014 to January 30, 2015. The Company determined that the resulting modification of these notes were not substantial in accordance with ASC 470-50, “Modification and Extinguishments.” Our Contact Packager also co-signed this note. Additionally, the Company shall pay to the lender a royalty of 0.9% on the first $25 million of sales of a generic prescription drug under distribution contracts with Federal government agencies. Payments for royalty will be paid quarterly beginning December 31, 2012. In December 2013 the Company made a cash principal payment in the amount of $9,262. As of December 31, 2013 and 2012 the principal balance is $40,738 and $50,000, respectively. The Company recorded interest expense for fiscal years 2013 and 2012, of $6,000 and $16,000, respectively. As of December 31, 2012, the Company has accrued $10,500 in royalties. In fiscal 2013 the Company issued 224,944 shares of its common stock for payment of royalty expense and recorded a royalty expense of $57,580. Collateral for this loan also includes 200,000 shares of the Company’s common stock.

6% Variable Convertible notes payable

During fiscal year 2013, the Company entered into three securities purchase agreement with a lender pursuant to which the leader purchased a 6% convertible note. The Company received $95,300 in cash for three 6% convertible note payable with a principal amounts totaling 110,000. These notes did not include a discount, but $14,700 was paid directly to a third party on the Company’s behalf. The accrued interest and principal were due one year from the issuance date. The conversion price is equal to 70% of the lowest trading price of the Company’s common stock at the close of trading during the 5 trading day period prior to the date of the notice of conversion.

During fiscal year 2013 the lender converted $110,000 of principal into 1,235,868 shares of our common stock valued at $246,941. In connection with these conversion the Company recorded a gain on extinguishment of $40,026 after taking into consideration the carrying value of the note and the corresponding embedded derivative liability related to the note on the conversion date.

F-16

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

8% Variable Convertible notes payable

During fiscal year 2012, the Company entered into two securities purchase agreement with lenders pursuant to which the leader purchased a 8% convertible note. The Company received $110,000 in cash for two 8% convertible note payable with a principal amounts totaling $115,750. These notes did not include a discount, but $5,750 was paid directly to a third party on the Company’s behalf. The accrued interest and principal were due six months and eight months from the issuance date. Since these notes had a convertible feature with a significant discount and could result in the note principal being converted to a variable number of the Company’s common shares we recorded the associated embedded derivative as a discount. The conversion price for one loan was equal to 35% of the lowest trading price of the Company’s common stock at the close of trading during the 10 trading day period prior to the date of the notice of conversion. The conversion price for the second loan was equal to 42% of the lowest trading price of the Company’s common stock at the close of trading during the 10 trading day period prior to the date of the notice of conversion.

During fiscal year 2013 the Company paid the sum of $167,365 to the holders of these notes for the principal of $115,750, accrued interest. These payments included a prepayment penalty charge of $51,615. The company extinguished the debt and the embedded derivative of which resulted in a gain on extinguishment of $103,170.

Also during fiscal year 2013 the Company entered into six new securities purchase agreements with various lenders to which the lenders purchased a 8% convertible note. The Company received $462,000 in cash for these 8% convertible notes payable with principal amounts equaling $547,500, some of these notes included a 10% discount the discount amounts equal $27,500 and fees totaling $58,000 were paid directly to third parties for legal and finder fees. The maturity dates for these notes range from six months to nineteen months from date of issuance. The conversion price for these notes is equal to a 40% to 65% discount to the lowest closing trading prices or an average of trading prices of the Company’s common stock at the close of trading during a 5 to 10 trading day period prior the date of the notice of conversion. For some of these note there is a prepayment charge range from 150% to 125% of the principal amount and accrued interest before a set period of time.

Since these notes have a convertible features with a significant discount and could result in the note principal being converted to a variable number of the Company’s common shares, the instrument includes an embedded derivative. The fair value of the derivative associated with this note was determined by using the Black-Scholes pricing model with the following assumptions: no dividend yield, expected volatility ranges between 161.6% to 200.7%, risk-free interest rate ranges between .07% to .12% and expected life of 12 to 11 months. The fair value of the derivative at the date issued amounted to $1,329,815 and was revalued at December 31, 2013 to be $606,112. The debt discount associated with this derivative is being amortized over the life of the notes.

In addition to obtaining new borrowings in 2013 lenders converted $237,526 of principal into 2,902,496 shares of our common stock valued at $971,103. Along with these stock conversions the Company paid the sum of $37,410 to the holders of these notes for the principal of $22,174, and accrued interest. These payments included a prepayment penalty charge of $15,236. The company extinguished the debt and the embedded derivative which resulted in a gain on extinguishment of $238,015.

As of December 31, 2013 and 2012 the principal balance is $402,500 and $115,750 and the unamortized debt discount is $286,166 and $50,918, respectively. The Company recorded interest expense for fiscals years 2013 and 2012, of $112,593 and $36,809, respectively. The Company would have been required to issue 6,044,978 of common stock if the lenders converted on December 31, 2013. The Fair value of the derivative liability at December 31, 2013 and 2012 is $606,112 and $94,477, respectively

10% Variable Convertible notes payable

During fiscal year 2013 the Company entered into twelve new securities purchase agreements with various lenders to which the lenders purchased a 10% convertible note. The Company received $371,167 in cash for these 10% convertible notes payable with principal amounts equaling $405,000, some of these notes included a 10% discount the discount amounts equal $11,250 and fees totaling $22,583 were paid directly to third parties for legal and finder fees. The maturity dates for these notes range from six months to twelve months from date of issuance. The conversion price for these notes are equal to a 35% to 65% discount to the lowest closing trading prices or an average of trading prices of the Company’s common stock at the close of trading during a 5 to 20 trading day period prior the date of the notice of conversion. For some of these note there is a prepayment charge range from 150% to 125% of the principal amount and accrued interest before a set period of time.

F-17

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

Since these notes have a convertible features with a significant discount and could result in the note principal being converted to a variable number of the Company’s common shares, the instrument includes an embedded derivative. The fair value of the derivative associated with this note was determined by using the Black-Scholes pricing model with the following assumptions: no dividend yield, expected volatility ranges between 161.6% to 200.7%, risk-free interest rate ranges between .07% to .12% and expected life of 12 to 11 months. The fair value of the derivative at the date issued amounted to $631,361 and was revalued at December 31, 2013 to be $383,337. The debt discount associated with this derivative is being amortized over the life of the notes.

In addition to obtaining new borrowings in 2013 lenders converted $203,702 of principal into 2,654,353 shares of our common stock valued at $1,073,185. Along with these stock conversions the Company paid the sum of $53,339 to the holders of these notes for the principal of $52,468. These payments included a prepayment penalty charge of $871. The company extinguished the debt and the embedded derivative which resulted in a gain on extinguishment of $204,091.

As of December 31, 2013 and 2012 the principal balance is $280,000 and the unamortized debt discount is $100,709. The Company recorded interest expense for fiscal years 2013 of $178,547. The Company would have been required to issue 4,484,138 of common stock if the lenders converted on December 31, 2013. The Fair value of the derivative liability at December 31, 2013, is $383,337.

12% Variable Convertible notes payable

During fiscal year 2013 the Company entered into seven new securities purchase agreements with various lenders to which the lenders purchased a 12% convertible note. The Company received $233,200 in cash for these 12% convertible notes payable with principal amounts equaling $263,000, some of these notes included a 10% discount the discount amounts equal $15,000 and fees totaling $14,800 were paid directly to third parties for legal and finder fees. The maturity dates for these notes range from three months to twelve months from date of issuance. The conversion price for these notes are equal to a range of 42.5% to 60% discount to the lowest closing trading prices or an average of trading prices of the Company’s common stock at the close of trading during a 5 to 20 trading day period prior the date of the notice of conversion. For some of these note there is a prepayment charge range from 25% to 125% of the principal amount and accrued interest before a set period of time. We did not incur any penalty costs during 2013 for conversion of 12% variable notes payable.

Since these notes have a convertible features with a significant discount and could result in the note principal being converted to a variable number of the Company’s common shares, the instrument includes an embedded derivative. The fair value of the derivative associated with this note was determined by using the Black-Scholes pricing model with the following assumptions: no dividend yield, expected volatility ranges used were between 161.6% to 187.9%, risk-free interest rate ranges between .07% to .12% and expected life of 12 to 11 months. The fair value of the derivative at the date issued amounted to $407,104 and was revalued at December 31, 2013 to be $143,944. The debt discount associated with this derivative is being amortized over the life of the notes.

In addition to obtaining new borrowings in 2013 lenders converted $198,326 of principal into 3,028,466 shares of our common stock valued at $655,239. The company extinguished the debt and the embedded derivative which resulted in a gain on extinguishment of $124,500.

As of December 31, 2013, the principal balance is $89,025 and the unamortized debt discount is $40,795. The Company recorded interest expense for fiscal years 2013 of $116,348. The Company would have been required to issue 1,512,736 of common stock if the lenders converted on December 31, 2013. The Fair value of the derivative liability at December 31, 2013, is $143,944.

13 -

Derivative Financial Instruments

Derivative liabilities consist of convertible notes with features that could result in the note principal being converted to a variable number of the Company’s common shares. The fair value of the embedded derivative associated with these notes was determined by using the Black-Scholes pricing model with the following assumptions:

As of :	December 31, 2012		December 31, 2013
Volatility		61.7% - 63.7%		110.4% - 228.5%
Expected life (in years)		.5 – 2.5		.03 – .6
Risk-free interest rate		.12% - .35%		.07% - .12%
Dividend yield		0.00%		0.00%

F-18

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

These derivative financial instruments are indexed to an aggregate of 13,176,251 shares and 702,852 shares of the Company’s common stock as of December 31, 2013 and December 31, 2012, respectively, and are carried at fair value using level 2 inputs. The balance at December 31, 2013 and December 31, 2012 was $1,333,393 and $94,477, respectively.

Activity during the current period is as follows:

Derivative liabilities at December 31, 2011	$	–

New derivative liabilities issued in 2012		87,724
Extinguishment		–
Revalue at reporting period		6,753
Derivative liabilities at December 31, 2012	$	94,477
New derivative liabilities issued in 2013		2,590,688
Extinguishment		(2,840,395	)
Revalue at reporting period		1,288,623
Derivative liabilities at December 31, 2013	$	1,133,393

The significant fluctuations in the revaluation of derivative liabilities at December 31, 2013 relate partially to the Company having sufficient trading activity to utilize the actual volatility of the trading of the Company’s common stock as an assumption when computing the fair value of derivative liabilities which were deemed to be sufficient trading activity commencing in January 2013. The Company had previously estimated the volatility assumption by averaging the volatility of three similar entities which resulted in a lower volatility. The increase in value of the volatility assumption has led to a higher valuation of derivative liabilities associated with the convertible notes payable, disclosed in Note 12.

14 -

Convertible Preferred Stock

Convertible Preferred Stock

On April 1, 2011 the Company issued 2,990,252 shares of convertible preferred stock (“Series A Preferred stock”) for $1,043,000 to a related party. The Series A Preferred stock has the following rights, preferences, powers, privileges, and restrictions: (a) 8% dividend (appropriately adjusted to reflect any stock splits); the dividends shall accrue and are payable quarterly when the Company has positive equity and earnings per Delaware General Corporation Law. (b) Preferential payments of the assets available for distribution to its stockholders by reason of their ownership in an amount equal to the Series A Preferred stock Original Issue price ($.1744). (c) Voting rights - one vote for the number equal to the number of whole shares of common stock and shall be entitled to elect one director of the Corporation. (d) Rights to Convert – Each share of Series A Preferred stock shall be convertible, at the option of the holder at any time and from time to time without the payment of additional consideration by the holder into such number of fully paid and non-assessable shares of common stock as determined by dividing the Original Issue price by the Conversion price in effect at the time of the conversion. The conversion price is initially equal to $.1744 and can be adjusted any time if the Company issues non-exempted common shares at a price below $.1744. At December 31, 2013 and December 31, 2012 these convertible preferred stock shares can be converted into 5,980,504 shares of the Company’s common stock. (e) the owner of the Series A Preferred stock can waive its right to adjust the conversion price at his choosing and as of April 10, 2014 has not exercise his right to do so. (f) Exempted securities – no anti-dilution protection for shares issued to employees, directors or consultants or advisors if the issuance is approved by the Board.

The Company has reviewed the rights and privileges of the convertible preferred stock and determined the holders have a liquidation preference which requires the Company to redeem the preferred shares at the original issuance price as a result of either a voluntary or involuntary liquidation event, as defined. The Company has determined this preference meets the requirement that the potential redemption is outside of the control of the Company. As a result, the convertible preferred stock has to be recorded outside of permanent equity.

Since this Series A Preferred Stock has liquidation preference which is outside the control of the Company it was not recorded in the stockholders' deficit section but rather as mezzanine equity in the consolidated balance sheets. Because we also had losses for 2012 and 2013 and an accumulated deficit, under Section 174 of the Delaware General Corporation Law our directors cannot declare a dividend without incurring personal liability. However, in accordance with privileges of the Series A Preferred stock, as noted above, the Company shall continue to accrue dividends regardless of declaration by the Board of Directors. We had a stockholders’ deficit of $3,470,827 at December 31, 2013. Since we did not generate net income in fiscal years 2013 and 2012, our board of directors will not be able to declare a dividend nor will we be able to pay the dividend owed to the Series A Preferred Stockholder, and as such, dividends will be accrued. As of December 31, 2013 we have accrued $187,740 which is classified as a long-term liability in the balance sheet. We will not be able to declare any dividends to our common stockholders until the accrued dividends owed to the Series A Preferred Stockholder have been paid.

F-19

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

15 -

Stockholders’ Deficit

Common Stock

General

The preferred shares have a par value of $.001 per share, and the Company is authorized to issue 10,000,000 shares. The preferred stock of the Company shall be issued by the board of directors of the Company in one or more classes or one or more series within any class, and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the board of directors of the Company may determine, from time to time.

The common stock shares have a par value of $.001 per share and the Company is authorized to issue 150,000,000 shares, each share shall be entitled to cast one vote for each share held at all stockholders’ meeting for all purposes, including the election of directors. The common stock does not have cumulative voting rights.

Issuances during 2013

The Company issued 4,854,952 restricted shares of common stock for cash proceeds of $531,108 in various private subscription agreements during the fiscal year 2013. A significant portion of these issuances where part of securities purchase agreement with Seaside 88, L.P., the details of the transactions are as follows:

During the fiscal year 2013, the Company issued 9,177,027 restricted shares of its common stock to non-employees for services rendered during the year. These services were valued at $3,387,112 and the Company charged its operations in fiscal year 2013.

During the fiscal year 2013, the Company issued 333,633 restricted shares of its common stock in connection with conversion of 478,440 warrants in a cashless transaction.

During the fiscal year 2013, the Company issued 136,000 restricted shares of its common stock in connection with payment provided by members of the board of directors during the year. The Company charged its operations $35,200 in fiscal year 2013.

During the fiscal year 2013, the Company issued 1,339,616 restricted shares of its common stock to non-employees for payment of royalties. The payment of royalties was valued at $346,802.

F-20

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

On November 18, 2013, the Company issued 8,690,000 unrestricted shares of its common stock in a debt payment agreement whereas debt financing company (Ironridge) purchased from ScripsAmerica liabilities from our creditors previously incurred by the us. The liabilities and expenses paid on our behalf were valued at $755,658 and the Company recorded a Financing fee of $547,842.

During the fiscal year 2013, the Company issued 11,456,639 shares of its common stock for the conversion of approximately $1,805,000 of principal and interest of our convertible notes payable.

The Company retired 600,000 shares of its common stock that was previously issued in 2012 and 2013. The value was determined to be $76,500. The Company received and retired 500,000 shares from the Contract Packager as part of a settlement agreement (see Note 9). These shares were valued at $50,000 in 2012 when issued and we reversed the consulting expense for this value. 100,000 shares issued in September 2013 were also returned and retired during the third quarter 2013.

Issuances during 2012

The Company issued 300,000 restricted shares of common stock for cash proceeds of $30,000 during the fiscal year 2012.

In March 2012, the Company received payment for the balance of the outstanding subscription stock receivable, $170,800. This payment is related to an April 29, 2011 transaction where the Company agreed to issue 5,200,000 restricted shares of common stock to four purchasers for an aggregate purchase price of $176,000. The stock subscription receivable was recorded as a, contra equity account, in the equity section of the balance. The Company had received $5,200 in fiscal year 2011.

The Company issued 114,288 restricted shares of its common stock to the Company’s President and CEO for payment of his salary in lieu of cash compensation payments for services rendered during the year ended December 31, 2012. These services were valued at $20,000 and the Company charged this amount to operations in fiscal year 2012.

On March 12, 2012, the holders of a long-term note payable in the amount of $250,000 elected to convert the convertible note payable into 2,000,000 shares of the Company’s common stock.

Warrants

On August 15, 2012, the Company issued 228,572 common stock warrants to a third party for debt issue costs. These warrants have a strike price of $0.39, are 100% vested and have a contractual life of 5 years, expiring on August 14, 2017. The Company calculated the fair value of the warrants to be $34,588, using the Black-Scholes option pricing model. The fair value of $34,588 will be amortized over the life of the long term debt. The Company recorded a $3,243 in interest expense related to the amortization of the warrants for the year ended December 31, 2012. The assumptions used in computing the fair value are a closing stock price of $0.39, expected term of 2.5 years utilizing the “plain vanilla” method. Also since the Company does not have a history of stock prices over 5 years the Company used the expected volatility of three peer entities within our sector whose share or option price are publicly available, per Staff Accounting Bulletin topic 14 interpretations and guidance. The average of the three comparable companies was used to determine that the expected volatility of 63.7 %, while the risk free rate was estimated to be .35%.

F-21

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

Summary of our warrant activity and related information for 2013 and 2012

	Number of shares under warrants			Weighted Average Exercise price		Weighted Average Remaining Contractual term in Years		Aggregate Intrinsic Value
Outstanding at December 31, 2011		478,440		$	0.17		4.3	$	–

Granted		228,572		$	0.39		4.6
Exercised		–
Cancelled/expired		–

Outstanding at December 31, 2012		707,012		$	0.24		3.7	$	45,700

Granted		–
Exercised		(478,440	)	$	0.17
Cancelled/expired		–

Outstanding at December 31, 2013		228,572		$	0.39		3.6	$	–

Vested and exercisable at December 31, 2013		228,572


		2012
Fair value per warrant		$0.15
Risk-free interest rate		.35% - 1.3%
Volatility		63.70%
Terms in years		2.5
Dividend yield		0%

Options

On September 11, 2013 the Company issued 2,000,000 options to a consultant for services provided. These options vested immediately and will expire 3 years from the date of issuance. The option price is $.15 and the fair value of these warrants is $249,335 which was expensed to selling, general and administrative.

On November 6, 2013 the Company issued 1,000,000 options to a consultant for services provided. These options vested immediately and will expire 3 years from the date of issuance. The option price is $.22 and the fair value of these warrants is $190,494 which was expensed to selling, general and administrative.

On October 15, 2013, the Company issued 1,320,000 options to members of the Board of directors for services provided. These options vested immediately and will expire 3 years from date of issuance. The option price is $.15 and the fair value of these warrants is $166,373 which was expensed to selling, general and administrative.

On December 18, 2013, the Company issued 60,000 options to members of the Board of directors for services provided. These options vested immediately and will expire 3 years from date of issuance. The option price is $.13 and the fair value of these warrants is $6,464 which was expensed to selling, general and administrative.

On December 31, 2013, the Company issued 635,000 options to members of the Board of directors for services provided. These options vested immediately and will expire 3 years from date of issuance. The option price is $.14 and the fair value of these warrants is $73,893 which was expensed to selling, general and administrative.

F-22

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

	Number of shares under options		Weighted Average Exercise price		Weighted Average Remaining Contractual term in Years		Aggregate Intrinsic Value
Outstanding at December 31, 2012		–	$	–		0	$	–

Granted		5,015,000	$	0.16		3
Exercised		–
Cancelled/expired		–

Outstanding at December 31, 2013		5,015,000	$	0.16		2.8	$	–

Vested and exercisable at December 31, 2013		5,015,000


		2013
Option fair value		$ 0.10 - $ 0.19
Risk-free interest rate		.34% - .78%
Volatility		190.06%
Terms in years		3
Dividend yield		0%

16 -

Income Taxes

As of December 31, 2013, the Company had a net operating loss carryforward of approximately $5,927,000 available to reduce future federal and state taxable income, expiring through 2033. We established valuation allowance of $2,015,200 and $597,591, or 100%, as of December 31, 2013 and 2012, respectively, of the deferred tax asset because of the uncertainty of the utilization of the operating losses in future periods. The allowance increased $1,417,609 and $597,591 during 2013 and 2012, respectively.

Future ownership changes may limit the future utilization of these net operating loss and research and development tax credit carry-forwards as defined by the Internal Revenue Code. We performed an analysis and determined that the Net operating losses and research and development expenses are not limited under Section 382. The net deferred tax asset has been fully offset by a valuation allowance due to our history of taxable losses and uncertainty regarding our ability to generate sufficient taxable income in the future to utilize these deferred tax assets.

The Company files federal and Delaware state income taxes. Currently, there are no tax examinations in progress, nor has the Company had any federal or state examinations since its inception in 2008. All of the Company’s tax years are subject to federal and state tax examination.

Our provision for income taxes at December 31, 2013 and 2012 consisted of the following

	2013		2012
Current
Federal	$	–	$	41,200
State		–		1,797

Deferred
Federal		–		–

Income Tax Expense	$	–	$	43,179

F-23

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

The effective tax rates differ from the statutory rates for 2012 and 2011 primarily due to the following:

	2013						2012
	Amount			Effective Tax Rate Percentage			Amount			Effective Tax Rate Percentage

Federal income tax liability (benefit)	$	(3,794,531	)		-34.0	%	$	(618,542	)		-34.0	%
State taxes		–			0	%		1,979			0.1	%
Permanent deductible expense		1,700,633			15.2	%		62,151			3.4	%
Adjustment in valuation allowance		2,093,898			18.8	%		587,591			19.0	%
Tax expense (benefit)	$	–			0.0	%	$	43,179			-2.4	%

The components of the net deferred tax assets (liabilities) at December 31, 2013 and 2012 are as follows:

	2013		2012
Deferred Tax asset
Allowance for doubtful accounts	$	423,497	$	252,791
Net Operating Loss		1,591,703		344,800
Total Deferred Tax asset		2,015,200		597,591
Deferred Tax Liability		–		–

Less Valuation Allowance		2,015,200		597,591
Total Deferred tax asset	$	–	$	–

The Company periodically assesses the likelihood that it will be able to recover its deferred tax assets and determines if a valuation allowance is necessary. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income. As a result of this analysis the Company concluded that it is more likely than not that the Company will not recover the deferred tax asset and, accordingly, recorded a valuation allowance for the years ended December 31, 2013 and 2012.

17 -

Commitments and Contingencies

Previously, the Company had entered into a Product Development, Manufacturing and Supply Agreement with Marlex Pharmaceuticals, Inc. (the “Contract Manufacturer” or “Marlex”) in March 2010. The Contract Manufacturer was to develop rapid melt tablets in accordance with the specifications of the agreement with the Company responsible for all associated costs with the proprietary rights owned by the Company. The Company and the Contract Manufacturer agreed upon a projected product cost to be paid to the Contract Manufacturer as well as 7% of gross profits for the term of the agreement. The Company can terminate this agreement and did so in the third quarter 2013 (see note 10). All development costs through the date of notice have previously been expensed and paid.

The holders of a $250,000 convertible note which was converted into 2,000,000 shares of our common stock on March 12, 2012 are entitled to a 4% royalty from the sales of our orally disintegrating rapidly dissolving 80mg and 160mg pain relief tablets. The royalty payments associated with this agreement have no minimum guarantee amounts and royalty payments will end only if the product line of Acetaminophen rapidly dissolving 80mg and 160mg tablets is sold to a third party. There have been no shipments through December 31, 2013 applicable to this royalty payment.

F-24

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

The holder of a $320,000 note payable are entitled to a to 1.8% royalty payment on the first $10 million of sales of a generic prescription drug under distribution contracts with Federal government agencies and 0.09% on the next $15 million of such sales. Payments for royalties will be paid quarterly and as of December 31, 2012, the Company had accrued $42,000 in royalties. During fiscal year 2013 the Company issued the holder of this note 1,114,672 shares of its common stock for payment of royalty expense. In addition a holder of a $50,000 note payable, a related party, is entitled to a 0.9% on the first $25 million of sales of a generic prescription drug under distribution contracts with Federal government agencies. The Company had accrued $10,500 in royalties as of December 31, 2012, and in fiscal year 2013 the Company issued 224,944 shares of its common stock for payment of royalty expense. The Company has recorded a royalty expense of $304,290 for fiscal year 2013, respectively.

In July of 2013, the Company entered into a memorandum of understanding (“MOU”) with a Forbes Investments Ltd (“Forbes”) to provide future services. Upon the signing of this MOU agreement the Company issued 350,000 shares of our Company’s common stock to two parties of this agreement. The value of the common stock at issuance was $154,000 and this amount was recorded to prepaid and was expensed to selling, general and administrative through balance of 2013. The MOU agreement has a 12 month exclusivity clause, a two-way break-up fee of $50,000 in cash or securities at 50% of market rate upon 30 day running average of termination. Upon successfully completing the goal of this agreement the two parties are entitled to each receive 200,000 shares of ScripsAmerica’s common stock and also shall be entitled to receive 25,000 shares of our common stock per $250,000 financing arranged from any source up to $5 million during the first 12 months of this agreement. In January 2014 licensing agreements were entered into (see note 21 below Global Pharma Hub) and the 400,000 shares of ScripsAmerica’s common stock was issued at a value of $52,000.

On October 15, 2013 the Board of Directors approved a revised compensation plan for our CEO, Robert Schneiderman and our CFO, Jeffrey Andrews, contingent on the Company raising $4 million via equity, debt or a combination of both. Contingent on raising the $4 million compensation would be as follows: CEO annual salary $200,000, CFO annual salary $192,000, and both would receive 50,000 options quarterly at 120% of our market price on the date granted with a one year vesting period.

On October 15, 2013, the Board of Directors approved additional compensation to Board members in the form of issuance of stock options. Board members were granted 100,000 stock options for each year served commencing in 2012. The chairman of the Board was granted 135,000 stock options for each year served. The effective date of the grants was October 7, 2013. The options vest immediately and the option exercise price was 110% of the market price on the grant date. Additionally, directors will also receive 10,000 options for each board meeting attended 5,000 options for each committee meeting attended. In fiscal year 2013 the Company issued 2,015,000 options that had a fair value of $246,731 which were expensed to the statement of operations (see note 13 option).

Operating Lease - In November our subsidiary PIMD (see note 19) entered into a 25 month operating lease for a distribution facility in Doral Florida. The lease begins January 1, 2014 and expires January 31, 2016, monthly rent is $4,585 for the first thirteen months with the first month free and $4,724 for the last twelve months. The total minimum lease payments are $111,714, for 2014, $50,441 for 2015, $56,548, and for 2016 the are $4,724.

18 -

Earnings Per Common Share

The basic earnings per share or loss per share is computed using the weighted average number of common shares outstanding. The assumed exercise of common stock equivalents were excluded from the calculation of diluted net loss per common share for the years ended December 31 2013 and 2012 because their inclusion would have been anti-dilutive. As of December 31, 2013, common stock equivalents consisted of preferred stock convertible into 5,980,504 shares, warrants convertible into 228,572 shares, options convertible into 5,015,000 shares and notes payable convertible into 16,016,229 shares of common stock. As of December 31, 2012, common stock equivalents consisted of preferred stock convertible into 5,980,504 shares, warrants convertible into 707,012 shares and notes payable convertible into 4,220,452 shares of common stock.

	For the Year Ended December 31, 2013
	Income (Numerator)			Shares (Denominator)		Per Share Amount

Net Loss attributed to ScripsAmerica, Inc.	$	(11,195,096	)
Preferred stock dividends		(83,440	)
Net Loss attributable to common stockholders	$	(11,278,536	)

Basic loss per common share	$	(11,278,536	)		68,119,715	$	(0.17	)
Diluted earnings per common share	$	(11,278,536	)		68,119,715	$	(0.17	)

F-25

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

	For the Year Ended December 31, 2012
	Income (Numerator)			Shares (Denominator)		Per Share Amount

Net Loss	$	(1,861,832	)
Preferred Stock Dividend		(83,440	)
Basic loss per common share	$	(1,945,272	)		55,140,192	$	(0.04	)
Effect of dilutive securities - notes payable		–			–		–

Diluted earnings per common share	$	(1,945,272	)		55,140,192	$	(0.04	)

19 -

Purchase Order Financing with related party

In June 2012, the Company entered into a purchase order finance agreement with Development 72, a major stockholder of the Company which is controlled by a member of the Board of Directors. The agreement will allow the Company to borrow up to $1.2 million on a case by case basis, at an interest rate of 0.6% per 10 day period, 1.8% monthly and 21.6% annually. During the fiscal year 2013, the Company financed $5,114,321 of its purchase orders and incurred an interest expense of $73,232. As of December 31, 2013 and 2012, the unpaid purchase order finance balance was $1,037,494 and $578,280, respectively, and accrued fees and interest are $24,192 and $8,280, respectively

20 -

Concentrations

During the year ended December 31, 2013, the Company derived approximately $403,000, or 73%, of its revenue from two customers, of this total one customer accounted for 61% and the other accounted for 12%. During the year ended December 31, 2012, the Company derived approximately $3,524,000 or 90% of its revenue from two customers, of this total one customer accounted for 74% and the other accounted for 16%.

As of December 31, 2012, the Company had two customers in our accounts receivable – trade, one customer accounted for $175,054, or 60% of the Company’s accounts receivable balance of $290,531.

21 -

Subsequent Events

From January 1, 2014 to April 1 2014, the Company issued 33,817,597 shares of common stock for the following transactions: a) We issued 19,207,420 shares of common stock in a private subscription sale , for $1,009,067 in cash, b) 642,703 shares for payment of royalty expense valued at $79,233, c) 2,531,400 shares for services performed and to be performed, valued at $306,768, d) 6,622,504 shares for conversion of $416,895 of principal for various convertible notes payable, of which the fair value of stock issued was $957,117, e) 32,000 shares were issued to members of the Board of Directors for services provided, and f) As part of our securities purchase agreement with Seaside (see note 17) We issued the following shares in 2014:(i) January 6, 2014, sold to Seaside 928,670 restricted shares of common stock for gross proceeds of $69,093 of which $2,500 was used to pay the legal fees for Seaside and (ii) February 4, 2014, sold to Seaside 1,342,070 restricted shares of common stock for gross proceeds of $142,528 and (iii) on February 24, 2014 we issued 1,615,550 restricted shares of common stock for financing fees which were expensed in 2013. (iv) we issued 925,153 restricted shares of common stock for gross proceeds of $58,200, g) on January we issued 887,7820 restricted shares for $125,381 in cash as part of a settlement agreement with GEM see cancellation agreement below in this note for details

In January 2014, the Company formed Global Pharma Hub, Inc. with Forbes Investments, Ltd. (and its assigns) and Sterling, LLC (and its assigns) for the purpose of marketing, supplying and distributing OTC products as RapiMed® orally dissolving tablets in foreign markets. The initial market is in China, where Global Pharma Hub began marketing and distributing our RapiMed® children’s acetaminophen in China. The ownership of Global Pharma Hub, Inc. is as follows: (a) the Company owns 37%, (b) Forbes Investments, Ltd. owns 37% and (c) Sterling, LLC owns 26%. Forbes Investment, Ltd. is based in Shenzhen, China. The parties have a written understanding of this joint venture although a final, binding contract is in process of being prepared for signature.

F-26

SCRIPSAMERICA, INC.
Notes to Consolidated Financial statements	December 31, 2013 and 2012

$500,000 in purchase orders during first 12 months of License Agreement;

$1,400,000 in purchase orders during second 12 months; and

$2,400,000 in purchase orders during the third 12 months.

$550,000 in purchase orders during first 12 months;

$1,500,000 in purchase orders during the second 12 months; and

$2,500,000 in purchase orders during the third12 months

$120,000 in purchase orders during first 12 months;

$220,000 in purchase orders during the second 12 months; and

$320,000 in purchase orders during the third 12 months.

Main Ave Pharmacy Management agreement:

On February 20, 2014, Implex Corporation and Main Avenue Pharmacy, Inc., the specialty pharmacy being acquired by Implex, entered into a Business Management Agreement with ScripsAmerica, effective as of February 7, 2014. Under this agreement, Implex has engaged the Company to manage the day to day business operations of Main Avenue Pharmacy, subject to the directives of Implex. The Company’s day to day management responsibilities includes financial management but excludes any matters related to licensing and those responsibilities which require Federal or state licensure (“Licensing Matters”). Prior to the final closing, the Licensing Matters will be handled by Main Avenue Pharmacy’s owner and after the final closing Implex will be responsible for managing Licensing Matters. The Company will also provide funding (as a loan or advance), to the extent not covered by the funds of the pharmacy, to pay all costs and expenses incurred in the operation of Main Avenue Pharmacy.

Implex will be entitled to make monthly draws on the first day of each month, as owner of Main Avenue Pharmacy, as follows: (i) commencing on April 1, 2014 and continuing to, and including, March 1, 2015, $47,003 plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month (except that the first such payment shall include prescriptions processed since the initial closing on February 7, 2014); (ii) commencing on April 1, 2015 and continuing to, and including, March 1, 2016, $8,827 plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month; (iii) commencing on April 1, 2016 and continuing thereafter plus $30 for each prescription processed by Main Avenue Pharmacy during the preceding month and (iv) commencing on the 10,001 prescription processed by Main Avenue Pharmacy the rate will be reduced to $10 for each prescription processed by Main Avenue Pharmacy during the preceding month.

F-27

SCRIPSAMERICA, INC.
Notes to Notes to Financial statements	December 31, 2013 and 2012

For the management services provided by the ScripsAmerica under this Business Management Agreement, Implex will pay us a combined monthly Management and Financing Fee. This combined fee will be equal to 97% of the Calculation Basis (receipts from paid invoices less Implex’s monthly draw and various expenses of Main Avenue Pharmacy). Since ScripsAmeica will have controlling interest in Implex management plans to consolidate activities of Main Ave into our financial statements in first quarter 2014.

Cancellation of GEM Agreement

On October 11, 2013, the Company entered into a financing agreement with GEM Global Yield Fund Limited ("GEM Global") and a related party to provide funding to the Company of up to $2 million. Under the terms of the financing agreement, the Company may sell restricted shares of its common stock to GEM Global, subject to the satisfaction of certain conditions, at a purchase price to be negotiated between the Company and GEM Global pursuant to section 4(2) and/or rule 506 of regulator. The Registrant will use the capital raised from the financing agreement primarily to fund the manufacturing and marketing of its RapiMed® children's pain reliever domestically and internationally, as well as for working capital. As of November 14 there were no shares issued for funding.

On January 14, 2014, the Company entered into a settlement agreement with GEM Global, 590 Partners, LLC and the GEM Group, pursuant to which, among other things, the parties agreed to declare null and void and of no further effect the October 2013 financing agreement as well as any other negotiated but unsigned documents between and/or among the parties. In addition, in connection with such voiding, the GEM Warrants were cancelled and the Company issued to each of GEM Global and 590 Partners, LLC (i) a warrant exercisable to purchase 1,000,000 shares of common stock at an exercise price of $0.41, (ii) a warrant exercisable to purchase 750,000 shares of common stock at an exercise price of $0.55 and (iii) a warrant exercisable to purchase 750,000 shares of common stock at an exercise price of $0.75 (collectively, the “New GEM Warrants”). All of the New GEM Warrants expire on January 14, 2019 and are only exercisable on a cash basis (they do not contain any cashless exercise provisions) Additionally, the Company granted registration rights to 590 Partners and GEM Global to register the resale of the shares underlying the New GEM Warrants. The New GEM Warrants do have price protection features. Additionally, in the event that the closing price of the Company’s common stock is equal to or greater than 160% of the exercise price of the applicable New GEM Warrant for 22 consecutive trading days, then such New GEM Warrant will automatically be cancelled 30 days after the Company delivers notice of such cancellation to GEM Global and 590 Partners. However, each of GEM Global and 590 Partners may exercise their New GEM Warrant in full after the notice from the Company but prior to the cancellation date.

The fair value of these 5.0 million warrants on January 14, 2014, was $552,318 using the Black-Sholes model with the following assumptions: Volatility 182.9%, 5 year life, risk free rate of 1.65% and zero dividend rate. This fair value of $552,318 will be expensed in our first quarter earnings in 2014.

Pursuant to its the settlement agreement with GEM, (a) the Company sold 887,280 to GEM 887,280 restricted shares of common stock for a purchase price of $125,381, and (b) GEM concurrently assigned to Steve Urbanski the right to receive the 887,280 shares of the Company's common stock upon the receipt by the Company of the purchase price (net of $15,211 which was paid to GEM's legal counsel). The Company issued the 887,280 shares to Mr. Urbanski on January 22, 2014.

F-28

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.

CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

The term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within required time periods. “Disclosure controls and procedures” include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer noted the deficiencies in internal controls identified is subsection (c) of this Item. Accordingly, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, such controls and procedures were not effective.

(b) Changes in Internal Controls.

The term “internal control over financial reporting” (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated any changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of the year covered by this annual report, and they have concluded that there was no change to the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

(c) Management’s Report on Internal Control over Financial Reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. We have assessed the effectiveness of those internal controls as of December 31, 2013, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control –Integrated (1992) Framework as a basis for our assessment.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified the following material weaknesses in our internal control over financial reporting:

a. Deficiencies in Internal Control Structure Environment. The Company became a public corporation in November 2011. The Company’s focus was on securing the financing necessary to initiate revenue production. In June 2010, the Board engaged a full time Chief Financial Officer, who started in October 2010, and charged him with responsibility for establishing a system of internal controls appropriate for a public company. During 2013, the Company’s revenue significantly decreased and left inadequate resources for the Company’s Chief Financial Officer to establish a system of internal controls appropriate for us as a public company.

b. Inadequate staffing and supervision within the accounting operations of our company. The relatively small number of employees who are responsible for accounting functions prevents the Company from segregating duties within its internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. The Company’s plan is to expand its accounting operations as the business of the Company expands.

The Company believes that the financial statements fairly present, in all material respects, the Company’s balance sheets as of December 31, 2013 and 2012 and the related statements of operations, stockholders’ deficit, and cash flows for the years ended December 31, 2013 and 2012, in conformity with generally accepted accounting principles, notwithstanding the material weaknesses we identified.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

ITEM 9B.

OTHER INFORMATION

None

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The name, age and business experience of each of our directors and executive officers as of February __, 2011 are shown below. Biographical information for each is set forth following the table.

NAME	AGE	POSITION	DATE APPOINTED
Robert Schneiderman (1)	71	Chief Executive Officer, Director **	May 12, 2008
Jeffrey Andrews	62	Chief Financial Officer	October 10, 2010
Brian Ettinger (1)	61	Director; Chairman of the Board ***	April 1, 2011 (Chairman since May 17, 2011)
Brian Anderson (2)	62	Director ***	May 24, 2011
Dr. Joseph Camardo (2), (3)	61	Director ***	April 1, 2011
Dr. Michael Imperiale (2), (3)	53	Director ***	April 25, 2011
Andrius Pranskevicius (1)	34	Director *	April 1, 2011

(1) Member of Compensation Committee.

(2) Member of Audit Committee.

(3) Member of Nominating and Corporate Governance Committee.

*Appointed to the Board as the nominee selected by the Series A Preferred Stockholder.

** Elected to the board by the Common stockholders.

*** Appointed to the Board as the nominee selected by the Series A Preferred Stockholder and the Common stockholders.

The following summarizes the occupation and business experience during the past five years for our officers and directors. Mr. Schneiderman was elected to the board because he is one of our co-founders and built the foundation of our company. Mr. Brian Ettinger was appointed to our board because he has prior experience as a director of a public company; he served as director and Chairman of the Board of Global Resource Corp. (OTCBB: GBRC) from November 2009 to July 2010. Mr. Brian Anderson was appointed to our board because of his extensive public accounting experience and because he is our “financial expert” on our audit committee. Drs. Camardo and Imperiale were appointed to our board because of their significant pharmaceutical industry experience. Mr. Pranskevicius was appointed to our board by Development 72, LLC, a limited liability company, which owns all of our outstanding shares of Series A Preferred Stock and is controlled by Mr. Pranskevicius. Under our amended and restated articles of incorporation, the holder the Series A Preferred Stock is entitled to elect one member to our board.

Robert Schneiderman has served as our Chief Executive Officer and has been a director since May 12, 2008 (the date of our inception). Mr. Schneiderman is one of our founding shareholders. From February 2002 until May 2008, Mr. Schneiderman owned and ran Harry James Production DBA R S and Associates, a financial consulting firm. From August 1966 to January 2002, Mr. Schneiderman, worked at P. Robert Dann Inc., a prominent Philadelphia recruiting firm, during which he served as CEO from August 1966 to January 2002. Mr. Schneiderman is the sole owner and employee of Harry James Production DBA R S and Associates, through which Mr. Schneiderman provides financial consulting services. The Company is not the only client of Harry James Production DBA R S and Associates, which had other clients prior to 2011. The Company is not the only client of Harry James Production DBA R S and Associates, which had other clients prior to 2011. The financial consulting work performed by Mr. Schneiderman consisted of (i) managing operations, marketing, strategy and financing; (ii) creating our corporate culture by building the senior management team; (iii) raising capital; (iv) establishing corporate strategy and vision; (v) determining which markets we will enter, against which competitors and with what product lines; (v) setting budgets; (vi) forming strategic partnerships; (vii) communicating our business strategy and vision; and (viii) allocating our capital to fund projects which support our strategy. Mr. Schneiderman received a B.S. from Temple University in 1964.

Jeffrey J. Andrews has served as our Chief Financial Officer since October 2010. Prior to that time, Mr. Andrews was a financial consultant with Powell Strategic Advisors, Inc., a financial consulting firm owned by Mr. Andrews, from February 2010 until October 2010, and he served as the Chief Financial Officer, Treasurer and Secretary of Global Resources Corp., a public alternative energy company, from September 2006 until February, 2010 and as a director from September 2006 until his resignation on May 21, 2008. The Company is not the only client of Powell Strategic Advisors, which had other clients prior to 2011. The financial consulting work performed by Mr. Andrews consisted of (i) developing and analyzing business planning for capital expenditures, inventory management and strategic planning; (ii) preparing budgets and forecasts; (iii) developing our financial reporting infrastructure; (iv) handling accounting, financial reporting and compliance matters; and (v) assisting us with SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. Mr. Andrews graduated from Villanova University in May, 1974 with a B.S. in Accounting. He has been a C.P.A. in Pennsylvania since 1978. He commenced his accounting career as an Audit Manager for a regional firm, and over his career has served as the Controller, Treasurer and/or CFO of various companies, and has had experience in corporate restructurings and reorganizations as well as IPO's and SEC periodic reporting. From April, 1999 to June, 2002, Mr. Andrews served as CFO of Collectible Concepts Group, Inc., a public company. From June 2002 to October 2004 Mr. Andrews was the Controller of Encapsulation Systems Inc., a medical device company.

Brian Ettinger has served as a director and our Chairman of its Board of Directors since April 1, 2011. Since January 1984, Mr. Ettinger has practiced law in Houston, Texas. Mr. Ettinger’s law practice currently emphasizes representation for international and domestic multi-industry businesses, including oil, natural gas and liquefied natural gas, addressing production and exploration, rig equipment and oil services, contracts, negotiations, collections and business development. Since April 1, 2012, he has served as General Counsel for Drilling Structures Services, Inc., a drilling rig manufacturer and steel fabricator which has facilities in Houston, Texas and Columbia in the free trade zone. Since June 2012, Mr. Ettinger has served as General Counsel for United LNG, LP, an international company involved in the production and exporting of liquefied natural gas. From September 2011 to June 2012, Mr. Ettinger served as general counsel for Farouk Systems, Inc., an international beauty supply manufacturer and company. Since 2002, Mr. Ettinger has served as the CEO and General Counsel for Worldwide Strategic Partners, Inc., a privately-held energy consulting firm involved in domestic and international energy projects involving oil and gas production, exploration, alternative fuels, waste to energy, biofuels, power and pipelines. Mr. Ettinger is a registered lobbyist for foreign governments, sovereign owned energy companies, and international businesses, and he is also a qualified mediator and arbitrator for domestic and international legal matters. Mr. Ettinger received a B.A. degree in Political Science and Economics from LaSalle College in 1974 and a Juris Doctor degree from South Texas College of Law in 1983.

Brian Anderson has served as our director since May 24, 2011. Since February 1, 2011, Mr. Anderson has been the Chief Operating Officer of The Broadsmoore Group, a privately-held diversified merchant bank providing fully integrated business and investment services for private equity, public market and real estate transactions. From November 2007 to December 2010, he was a Director in the fixed income group at Oppenheimer & Co. Inc. From November 2007-December 2009 Mr. Anderson was the Chief Operating Officer at Vanquish Capital Group, LLC, which operated a hedge fund, an investment advisor and a broker dealer. Mr. Anderson was a Director in the Capital Markets Group at Washington Mutual from 2005 to 2007 where he specialized in structured credit transactions. From 1983 to 2005, Mr. Anderson worked in the institutional mortgage business at Lehman Brothers, Morgan Stanley, Drexel Burnham Lambert, Kidder Peabody, Paine Webber and Countrywide Securities. Mr. Anderson received a Bachelor of Science degree from the United States Military Academy at West Point in 1974, and an MBA from the University of Pennsylvania in 1983. Mr. Anderson served in the United States Army from June 1974 to August 1981.

Joseph Camardo, M.D. has served as our director since April 1, 2011. Dr. Camardo worked at Wyeth-Ayerst laboratories in Philadelphia from 1989, when he joined as an Associate Director, Clinical Research, until 2010, when he retired as Senior Vice President of Global Medical Affairs. Dr. Camardo received a Bachelor of Arts degree in Biology from the University of Pennsylvania in Philadelphia in 1974, and an MD from the University of Pennsylvania School of Medicine in 1979. He completed his internship at the Hospital of the University of Pennsylvania in 1980, and his residency at Presbyterian Hospital in Philadelphia in 1988. Between his internship and residency Dr. Camardo worked as a postdoctoral fellow at the Division of Neurobiology and the Department of Pharmacology at the College of Physicians and Surgeons of Columbia University in New York.

Michael Imperiale M.D. has served as our director since April 1, 2011. Since 2009 Dr. Imperiale has served as Senior Director, Global Medical Affairs for BioMarin in Novato California. Prior to joining BioMarin from 2007 to 2009, he was Vice President of Clinical research Operations at Hana Biosciences in South San Francisco. Dr. Imperiale has served in a number of positions in the Pharmaceutical and Biotechnology industries including as Senior Director of Medical Services at Nuvelo and Director of Clinical Trials Development at Exelixis from 2004 to 2006. Dr. Imperiale received a M.D. from The Hahnemann University School of Medicine in 1987 and a B.A. from Villanova University in 1982.

Andrius Pranskevicius has served as our director since April 1, 2011. Since October 2010, Mr. Pranskevicius has served as an investment manager at Mart Management LLC, a private equity advisor. From January 2007 to March 2010, he was the Chief Financial Officer at MMM Projecktai UAB, a real estate development and acquisition firm. From January 2004 to January 2007, Mr. Pranskevicius was the Chief Financial Officer at UAB “SP Investicija”, which develops and manages food chains. He received a B.A. in Management and Business Administration in 2001 from Vilnius University in Lithuania.

Section 16(a) beneficial reporting compliance

No person who, during the fiscal year ended December 31, 2011, was a director or officer of the Company, or beneficial owner of more than ten percent of the Company’s Common Stock (which is the only class of securities of the Company registered under Section 12 of the Exchange Act), failed to file on a timely basis reports required by Section 16 of the Act during such fiscal year except that (i) Steve Urbanski filed an untimely Form 4 on November 21, 2013 (for an event occurring on November 18, 2013); (ii) Brian Anderson filed an untimely Form 4 on May 23, 2013 (for an event occurring on April 12, 2013), an untimely Form 4 on December 17, 2013 (for events occurring on July 30, 2013, and October 15, 2013), , an untimely Form 4 on January 7, 2014 (for events occurring on December 18, 2013, December 23, 2013 and December 31, 2013) and an untimely Form4 on April 2, 2014 (for an event occurring on October 16, 2013); (iii) Dr. Michael Imperiale filed an untimely Form 4 on May 20, 2013 (for an event occurring on April 12, 2013) and a Form 5 on January 10, 2014 (for events occurring on June 25, 2013, July 30, 2013, October 15, 2013, December 18, 2013, December 23, 2013 and December 31, 2013; (iv) Brian Ettinger filed an untimely Form 4 on August 13, 2013 (for events occurring on April 12, 2013 and July 30, 2013), an untimely Form 4 on December 18, 2013 (for an event occurring on October 15, 2013), an untimely Form 4 on January 6, 2014 (for events occurring on December 18, 2013, December 23, 2013 and December 31, 2013) and an untimely Form 4 on April 2, 2014 (for an event occurring on October 16, 2013); (v) Dr. Joseph Camardo filed an untimely Form 4 on April 25, 2013 (for an event occurring on April 12, 2013), an untimely Form 4 on December 18, 2013 (for events occurring on July 30, 2013 and October 15, 2013), an untimely Form 4 on December 24, 2013 (for an event occurring on December 18, 2013), an untimely Form 4 on January 6, 2014 (for events occurring on December 23, 2013 and December 31, 2013) and an untimely Form 4 on April 3, 2014 (for an event occurring on October 16, 2013); (vi) Andrius Pranskevicius filed an untimely Form 4 on May 1, 2013 (for an event occurring on April 12, 2013), an untimely Form 4 on August 6, 2013 (for an event occurring on July 30, 2013), an untimely Form 4 on November 15, 2013 (for an event occurring on October 16, 2013), an untimely Form 4 on December 23, 2013 (for an event occurring on October 15, 2013) and an untimely Form 4 on January 7, 2014 (for events occurring on December 18, 2013, December 23, 2013 and December 31, 2013); and (vii) Robert Schneiderman filed an untimely Form 4 on September 13, 2013 (for an event occurring on September 10, 2013), an untimely Form 4 on September 13, 2013 (for an event occurring on September 10, 2013), an untimely Form 4 on December 13, 2013 (for an event occurring on October 15, 2013) and an untimely Form 4 on December 24, 2013 (for events occurring on October 11, 2013, November 27, 2013, December 9, 2013 and December 18, 2013). The foregoing is based solely upon a review by the Company of Forms 3 and 4 relating the most recent fiscal year as furnished to the Company under Rule 16a-3(d) under the Act, and Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year.

Audit Committee; Audit Committee Financial Expert

The three members of the Audit Committee of our Board of Directors (the “Audit Committee”) are Brian Anderson (Chairman), Dr. Joseph Camardo and Dr. Michael Imperiale. The Board of Directors has determined that each member of the Audit Committee meets the independence criteria prescribed by applicable law and the rules of the SEC for audit committee membership and meets the criteria for audit committee membership required by NASDAQ. Further, each Audit Committee member meets NASDAQ’s financial knowledge requirements. Also, our Board has determined that Brian Anderson qualifies as an “audit committee financial expert,” as defined in the rules and regulations of the SEC. Mr. Anderson qualifies as an independent director under Rule 10A-3 of the Securities Exchange Act and as defined in Nasdaq Marketplace Rule 4200(15).

Code of Ethics

On May 17, 2011, we adopted a code of ethics that applies to all of our directors, officers (including our chief executive officer and chief financial officer, and any person performing similar functions) and employees. We have made our Code of Ethics available by filing it as Exhibit 14 to our registration statement on Form S-1, SEC File No. 333-174831.

ITEM 11.

EXECUTIVE COMPENSATION

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officer during the years ended December 31, 2013, and 2012 in all capacities for the accounts of our executive, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)			Option Awards ($)	All Other Compensation ($)		Total ($)
Robert Schneiderman		2013	$	120,000		–	$	–		–		–	$	120,000
Chief Executive Officer		2012	$	100,000		–	$	20,000	(1)	–		–	$	120,000

Jeffrey Andrews (2)		2013	$	178,000		–	$	–		–		–	$	178,000
Chief Financial Officer		2012	$	180,000		–	$	–		–	$	–	$	180,000

(1)

Consists of 114,288 shares of common stock valued at $20,000 that we issued to Harry James Production DBA R S and Associates, a consulting firm owned by Mr. Schneiderman, for payment of Mr. Schneiderman’s salary in lieu of a cash compensation payments for services rendered during the year ended December 31, 2012.

Employment Agreements

We do not have any employment agreements with any of our executive officers. We expect that Messrs. Schneiderman and Andrews will enter into employment agreements with us by the end of 2014. In connection with our sale of shares of Series A Preferred Stock, our Chief Executive Officer and Chief Financial Officer each entered into a restrictive covenant agreement. Under this agreement, these officers are subject to a five year non-compete and non-solicitation provision. They are also subject to a confidentiality provision. Lastly, under the restrictive covenant agreement, these officers assigned to us any and all inventions, developments and improvements developed by them and which are within the scope of our business (regardless of where and when invented, developed or improved). Each of our executive officers works on a full time basis.

Outstanding Equity Awards at Year End

We currently do not have any equity compensation plans. Except for 5,000,000 shares of our common stock we granted to our Chief Financial Officer, Jeffrey Andrews, in connection with his hiring and the stock awards we granted to our outside directors for their attendance at board and committee meetings and stock options granted to directors for their service on the board, we have not made any equity awards to any of our officers or directors. We do not have any outstanding options or other forms of equity compensation.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

Option Awards						Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable (1)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

	–	–	–	–	–	–	–	–	$ –

Director Compensation

In June 2011, upon recommendation of the Compensation Committee of the board of directors, our board approved a compensation plan for our outside, or non-employee, directors. Each outside director would receive 100,000 shares of restricted common stock for joining our board (effective retroactively for all directors). Outside Directors will receive $1,000 and 4,000 shares of restricted common stock for each board meeting attended (in person or by telephonic means). Additionally, each outside director who is a member of a committee will receive 4,000 shares of restricted stock for each committee meeting attended (in person or by telephonic means). In addition to the foregoing stock grants and cash payments, our board approved a plan that would grant the following options to directors: (i) an annual grant of a stock option exercisable to purchase 100,000 shares of common stock for their annual service on the board and (ii) a grant of a stock option exercisable to purchase 10,000 shares of common stock for attendance at a board meeting and (iii) a grant of a stock option exercisable to purchase 5,000 shares of common stock for attendance at a committee meeting. The options will be exercisable for three (3) years and have an exercise price equal to 110% of the closing price of our common stock on the date of grant. Our board of directors is required to meet four (4) times a year. Our audit committee will meet at least four (4) times a year, and the Compensation Committee and the Nominating Committee will each meet at least twice a year.

Name	Fees earned or paid in cash ($)			Stock Awards ($)			Option awards ($)			Non-equity incentive plan compensation ($)		Nonqualified deferred compensation earnings ($)		All other compensation ($)		Total ($)
Brian Ettinger	$	4,000	(1)	$	6,040	(1)		52,078	(1)		–		–		–	$	62,118
Brian Anderson	$	4,000	(2)	$	7,360	(2)		39,183	(2)		–		–		–	$	50,143
Dr. Joseph Camardo	$	4,000	(3)	$	8,400	(3)		39,183	(3)		–		–		–	$	51,583
Dr. Michael Imperiale	$	4,000	(4)	$	8,400	(4)		39,183	(4)		–		–		–	$	51,583
Andrius Pranskevicius	$	4,000	(5)	$	5,000	(5)		39,183	(5)		–		–		–	$	48,183
Robert Schneiderman		--			--			37,922	(6)							$	37,922

(1)	Consists of $4,000 paid in cash for board meetings attended during 2013,24,000 shares of common stock for attendance at board and committee meetings during 2013 and options exercisable to purchase 425,000 shares of common stock.
(2)	Consists of $4,000 paid in cash for board meetings attended during 2013, 28,000 shares of common stock for attendance at board and committee meetings during 2013 and options exercisable to purchase 320,000 shares of common stock.
(3)	Consists of $4,000 paid in cash for board meetings attended during 2013, 32,000 shares of common stock for attendance at board and committee meetings during 2013 and options exercisable to purchase 320,000 shares of common stock.
(4)	Consists of $4,000 paid in cash for board meetings attended during 2013, 32,000 shares of common stock for attendance at board and committee meetings during 2013 and options exercisable to purchase 320,000 shares of common stock.
(5)	Consists of $4,000 paid in cash for board meetings attended during 2013, 20,000 shares of common stock for attendance at board and committee meetings during 2013 and options exercisable to purchase 320,000 shares of common stock.
(6)	Consists of options exercisable to purchase 310,000 shares of common stock.

For the year ended December 31, 2013, we issued 136,000 shares of common stock to our outside directors for the compensation as outlined above, which was valued at $35,200, and options exercisable to purchase 2,015,000 shares of common stock, which was valued at $246,731.

Equity Compensation Plan Information

We currently do not have any equity compensation plans. Except for 5,000,000 shares of our common stock we granted to our Chief Financial Officer, Jeffrey Andrews, in connection with his hiring and the stock awards we granted to our outside directors for their attendance at board and committee meetings, we have not made any equity awards to any of our officers or directors. We do not have any outstanding options or other forms of equity compensation.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of April 8, 2014, certain information concerning the beneficial ownership of our common stock, by (i) each person known by us to own beneficially five per cent (5%) or more of the outstanding shares of each class, (ii) each of our directors and executive officers, and (iii) all of our executive officers and directors as a group.

The number of shares beneficially owned by each 5% stockholder, director or executive officer is determined under the rules of the Securities and Exchange Commission, or SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares that the individual or entity has the right to acquire within 60 days after March 19, 2013 through the exercise of any stock option, warrant or other right, or the conversion of any security. Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

Name and Address(1)	Shares of Common Stock Beneficially Owned			Percent of Common Stock (2)

Robert Schneiderman		18,882,663	(3)		15.0	%
Steve Urbanski 503 Summit Court Virginia Beach, VA 23462		18,972,850			15.1	%
Jeffrey Andrews		3,930,000	(4)		3.1	%
Brian Ettinger		597,000	(5)		*
Brian Anderson		404,000	(6)		*
Dr. Michael Imperiale		360,000	(7)		*
Andrius Pranskevicius		6,468,504	(8)		4.9	%
Dr. Joseph Camardo		516,000	(9)		*
All executive officers and directors as a group (7 persons)		31,143,167	(10)		23.3	%

*	Less than 1%.
(1)	The address for each named person, other than Mr. Steve Urbanski,, is c/o ScripsAmerica, Inc., Corporate Office Centre Tysons II, 1650 Tysons Boulevard, Suite 1580, Tysons Corner, VA 22102.
(2)	For each named person and group included in this table, percentage ownership of our common stock is calculated by dividing the number of shares of our common stock beneficially owned by such person or group by the sum of (a) 125,610,436 shares of our common stock outstanding as of April 8, 2014 and (b) the number of shares of our common stock that such person has the right to acquire within 60 days after April 8, 2014.
(3)	Includes 314,292 shares of common stock held by Harry James Production DBA R S and Associates, a consulting firm owned by Mr. Schneiderman, which shares were issued in lieu of cash salary paid to Mr. Schneiderman, 283,371 shares held by Mr. Schneiderman’s wife and 325,000 shares of common stock issuable upon the exercise of stock options held by Mr. Schneiderman.
(4)	Includes 150,000 shares held by Mr. Andrews’ wife.
(5)	Includes 425,000 shares of common stock issuable upon the exercise of stock options held by Mr. Ettinger.
(6)	Includes 320,000 shares of common stock issuable upon the exercise of stock options held by Mr. Anderson.
(7)	Includes 320,000 shares of common stock issuable upon the exercise of stock options held by Dr. Imperiale.
(8)	Includes (a) 5,980,504 shares of common stock issuable upon the conversion of 2,990,252 shares of Series A Preferred Stock held by Development 72, LLC, a limited liability company owned by Mr. Pranskevicius, who is a member of our board of directors by virtue of being nominated to the board by the Series A Preferred Stock pursuant to our amended and restated articles of incorporation, (b) 168,000 shares of common stock issued to Mr. Pranskevicius as compensation for his service on our board of directors and (c) 320,000 shares of common stock issuable upon the exercise of stock options issued to Mr. Pranskevicius as compensation for his service on our board of directors.

(9)

Includes 320,000 shares of common stock issuable upon the exercise of stock options held by Dr. Camardo.

(10)

Includes 2,015,000 shares of common stock issuable upon the exercise of stock options held by the directors and 5,980,504 shares of common stock issuable upon the conversion of 2,990,252 shares of Series A Preferred Stock held by Development 72, LLC, a limited liability company owned by Mr. Pranskevicius, who is a member of our board of directors by virtue of being nominated to the board by the Series A Preferred Stock pursuant to our amended and restated articles of incorporation.

Securities authorized for issuance under equity compensation plans

We currently do not have any equity compensation plans. We have not made any equity awards to any of our officers or directors. We do not have any outstanding options or other forms of equity compensation.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

In March 2012, our CEO and president agreed to amend the maturity date and interest rate on his $50,000 promissory notes and the $30,000 promissory notes held by Harry James Production DBA R S and Associates (as described in the preceding two paragraphs). The maturity date on these notes has been extend from September 30, 2012 until January 30, 2014. The interest rate on the notes has been decreased from 2% monthly to 1% monthly effective on October 1, 2012.

For the year ended December 31, 2012, we issued 124,000 shares of common stock to our outside directors for the compensation as outlined above in Item 12 (attendance at board and committee meetings), which was valued at $34,480.

In October 2011, our CEO agreed to accept payment of part of his salary in shares of restricted stock, starting as of July 1, 2011, until we become a public company. Accordingly, during the year ended December 30, 2012, we issued 200,004 shares of common stock to Harry James Production DBA R S and Associates, a consulting firm owned by our Chief Executive Officer, Mr. Schneiderman, which shares were issued in lieu of cash salary paid to Mr. Schneiderman. Such shares were valued at $35,000.

In 2012, the Company paid $107,700 in consulting fees to by Harry James Production DBA R S and Associates and interest expense on loans from by Harry James Production DBA R S and Associates, which is a consulting firm owned by the Company’s CEO and President. In 2012, the Company also paid $180,000 in consulting fees to a consulting firm owned by the Company’s Chief Financial Officer.

On August 16, 2012, the Company entered into a loan agreement with Development 72, LLC for the purpose of building the inventory of RapiMed rapidly dissolving formulation products. Development 72 made a four (4) year term loan to the Company in the amount of $500,001. The loan is secured by the assets of the Company. Development 72 is the holder of record of 2,990,252 shares of the registrant’s Series A Preferred Stock which is convertible into 5,980,504 shares of the Company’s common stock (representing approximately 10.6% of the outstanding shares). In addition, the manager of Development 72, Andrius Pranskevicius, is a member of the registrant’s board of directors.

In June 2012, we entered into a purchase order finance agreement with Development 72, a major stockholder of the Company which is controlled by a member of the Board of Directors. The agreement will allow the Company to borrow from Development 72 up to a maximum range of $500,000 to $600,000 on a case by case basis, at an interest rate of 0.6% per 10 day period, 1.8% monthly and 21.6% annually. During the 2012, we financed $1,497,904 of our purchase orders under this finance agreement and we incurred an interest expense of $36,357 for the fiscal year 2012. As of December 31, 2012, the unpaid purchase order finance balance was $570,000 and accrued fees and interest was $8,280.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The following is a summary of the fees billed to us by Friedman LLP for professional services rendered for the fiscal years ended December 31, 2013 and 2012:

Fee Category	Fiscal 2013 Fees		Fiscal 2012 Fees
Audit Fees	$	110,000	$	75,367
Audit Related Fees		6,500		62,805
Tax Fees				–
All Other Fees				–

Total Fees	$	116,500	$	138,172

Audit Fees. Consists of fees billed for professional services rendered for the audit of our financial statements and review of interim financial statements included in quarterly reports and services that are normally provided by Friedman LLP in connection with statutory and regulatory filings or engagements in fiscal 2013 and 2012.

Audit Related Fees. Consists of fees billed for accounting, assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees”. These services were provided by Rosenberg Rich Baker Berman & Company in connection with a registration statement and SEC reports we filed in 2013 and 2012.

Tax Fees. Consists of fees billed for professional services for tax compliance, tax advice and tax planning.

All Other Fees. Consists of fees for product and services other than the services reported above.

Policy on audit committee pre-approval of audit and permissible non-audit services of independent auditors

The Board has adopted a policy that requires advance approval of all audits, audit-related, tax, and other services performed by our independent registered public accounting firm. The policy provides for pre-approval by the Board of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Board must approve the permitted service before the independent registered public accounting firm is engaged to perform it. All of the services performed by our independent registered public accounting firm during 2013 and 2012 were pre-approved by the Board of Directors.

PART IV

ITEM 15.

EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as a part of this report.

1.	List of Financial Statements.

The following financial statements of ScripsAmerica, Inc. and Report of Friedman LLP, Independent Registered Public Accounting Firm, are included in this report:

·	Report of Friedman LLP, Independent Registered Public Accounting Firm.

·	Consolidated Balance Sheets at December 31, 2013 and 2012

·	Consolidated Statements of Operations for the years ended December 31, 2013 and 2012

·	Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2013 and 2012

·	Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012

·	Notes to Consolidated Financial Statements

2.	List of all Financial Statement Schedules.

All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

Exhibits required by Item 601 of Regulation S-K. The following exhibits are filed as a part of, or incorporated by reference into, this Report:

EXHIBIT NUMBER	DESCRIPTION
3.1#	Amended and Restated Certificate of Incorporation.
3.2#	By-Laws.
5.1@	Opinion of Fox Law Offices, P.A.
10.1 ^^	Series A Preferred Stock Purchase Agreement, dated as of April 1, 2011, by and between ScripsAmerica, Inc. and Development 72, LLC.
10.2#	Investors’ Rights Agreement, dated as of April 1, 2011, by and between ScripsAmerica, Inc. and Development 72, LLC.
10.3#	Right of First Refusal and Co-Sale Agreement, dated as of April 1, 2011, by and among ScripsAmerica, Inc., Development 72, LLC, Robert Schneiderman, Jeffrey Andrews and Steve Urbanski.
10.4#	Form of Indemnification Agreement by and between ScripsAmerica and each member of its board of directors.
10.5#	Form of Restrictive Covenant Agreement by and between ScripsAmerica and each of its officers and directors.
10.6	Securities Purchase Agreement, dated as of November 4, 2013, by and between the Registrant and Seaside 88, L.P. (previously filed as Exhibit 10.1 to Form 8-K, dated November 4, 2013, filed on November 7, 2013 and incorporated herein by reference)
10.7#	Form of Private Placement Subscription Agreement.
10.8#	Form of Promissory Note.
10.9@	Consulting Agreement, dated April 1, 2011, by and between Artemis and ScripsAmerica.
10.10@	Services Agreement, dated November 23, 2010, by and between Clementi & Associates Ltd. and ScripsAmerica.
10.11#	Factoring and Security Agreement with United Capital Factoring.
10.12#	Form of Regulation S Subscription Agreement (April 2011).
10.13#	Form of Regulation S Subscription Agreement (May 2011).
10.14*	Agreement, made on September 6, 2013, by and between ScripsAmerica, Inc. and Marlex Pharmaceuticals, Inc. Sarav A. Patel and Samir Patel
10.15@	Independent Consulting Agreement, made June 6, 2011, by and between ScripsAmerica and Lincoln Associates, Inc.
10.16	Loan Agreement, dated as of August 15, 2012, by and between the registrant and Development 72, LLC (previously filed as Exhibit 10.1 to Form 8-K, dated August 15, 2012, filed on August 16, 2012 and incorporated herein by reference).
10.17	Term Promissory Note made by registrant in favor of Development 72, LLC (previously filed as Exhibit 10.2 to Form 8-K, dated August 15, 2012, filed on August 16, 2012 and incorporated herein by reference).
10.18	Master Agreement, made on November 7, 2013 but retroactively effective as of November 1, 2013, by and between the Registrant and Wholesale Rx, Inc. (previously filed as Exhibit 10.1 to Form 8-K, dated November 8, 2013, filed on November 14, 2013 and incorporated herein by reference).
10.19*	Settlement Agreement, made on January 14, 2014, by and among ScripsAmerica, Inc., Steve Urbanski, GEM Global Yield Fund Limited, 590 Partners, LLC and The GEM Group.
10.20*	Form of Warrant
10.21	Purchase Agreement, made as of September 30, 2013 by and among P.I.M.D. International, LLC, Vanessa Gonzalez and the Registrant (previously filed as Exhibit 10.1 to Form 8-K, dated October 18, 2013, filed on October 24, 2013 and incorporated herein by reference).
10.22*	Sourcing and Marketing Agreement, made on March 15, 2014, by and between ScripsAmerica, Inc. and P.I.M.D. International, LLC.
10.23*	Promissory Note, dated October 1, 2013, made by Implex Corporation in favor of ScripsAmerica, Inc.
10.24*	Business Management Agreement, made as of February 7, 2014, by and among ScripsAmerica, Inc., Main Avenue Pharmacy and Implex Corporation.
10.25*	Worldwide Licensing Agreement, dated January 27, 2014, by and between ScripsAmerica, Inc. and Global Pharma Hub, Inc.

10.26*	Canada License Agreement by and among Global Pharma Hub, Inc., Sheen Boom Investments, Ltd., Jetsaw Pharmaceutical, Inc. and ScripsAmerica, Inc.
14.1#	ScripsAmerica Code of Conduct.
31.1*	Section 302 Certification of Principal Executive Officer.
31.2*	Section 302 Certification of Principal Financial Officer.
32.1*	Section 906 Certification of Principal Executive Officer - Certification of Compliance to Sarbanes-Oxley.
32.2*	Section 906 Certification of Principal Financial Officer - Certification of Compliance to Sarbanes-Oxley.
99.1*	Temporary Hardship Exemption
101.INS**	XBRL Instance Document
101.SCH**	XBRL Schema Document
101.CAL**	XBRL Calculation Linkbase Document
101.DEF**	XBRL Definition Linkbase Document
101.LAB**	XBRL Label Linkbase Document
101.PRE**	XBRL Presentation Linkbase Document

*	Filed herewith

**	To be furnished by amendment per Temporary Hardship Exemption under Regulation S-T.

#	Previously filed with the registration statement on Form S-1, SEC File No. 333-174831, filed on June 10, 2011 and incorporated herein by reference.

@	Previously filed with the amendment no. 1 to the registration statement on Form S-1, SEC File No. 333-174831, filed on August 23, 2011 and incorporated herein by reference.

^^	Previously filed with the amendment no. 2 to the registration statement on Form S-1, SEC File No. 333-174831, filed on September 26, 2011 and incorporated herein by reference.

+++	Previously filed with the amendment no. 3 to the registration statement on Form S-1, SEC File No. 333-174831, filed on October 20, 2011 and incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf on April 15, 2014 by the undersigned thereunto duly authorized.

	SCRIPSAMERICA, INC.


	/s/ Robert Schneiderman
	Robert Schneiderman, Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Robert Schneiderman	Chief Executive Officer and Director	April 15, 2014
Robert Schneiderman	(Principal Executive Officer)

/s/ Jeffrey Andrews	Chief Financial Officer	April 15, 2014
Jeffrey Andrews	(Principal Financial and Accounting Officer)

/s/ Brian Ettinger	Chairman of the Board and Director	April 15, 2014
Brian Ettinger

/s/ Brian Anderson	Director	April 15, 2014
Brian Anderson

/s/ Joseph Camardo	Director	April 15, 2014
Joseph Camardo

/s/ Michael Imperiale	Director	April 15, 2014
Michael Imperiale

/s/ Andrius Pranskevicius	Director	April 15, 2014
Andrius Pranskevicius

EX-10.14 2 scrips_10k-ex1014.htm AGREEMENT

EXHIBIT 10.14

AGREEMENT

THIS AGREEMENT ("Agreement"), is made this 6th day of September, 2013, by and between SCRIPSAMERICA, INC. ("Scrips") on the one hand and MARLEX PHARMACEUTICALS, INC. ("Marlex"), SARAV A. PATEL, and SAMIR PATEL (together, the "Patels") on the other.

WHEREAS, beginning in 2010, Scrips and Marlex began to work together on various projects within the pharmaceutical industry under various written and oral arrangements.

WHEREAS, various disputes have arisen between the parties, which disputes the parties desire to resolve by this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, agreements and understandings contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1. McKesson. Marlex acknowledges as an obligation and shall pay Nine Thousand Four Hundred Forty Dollars ($9,440.00) to Scrips. Beyond that, Scrips relinquishes any other claim against Marlex with respect to proceeds from sales to McKesson Corporation by Marlex.

2. DLA. Scrips and Marlex entered into a Joint Operating Agreement, effective May, 2012. The Joint Operating Agreement is hereby superseded as set forth herein. Marlex shall pay to Scrips:

(a) the sum of Two Hundred Fifty Thousand Seven Hundred Twelve Dollars ($250,712.00);

(b) the sum of One Hundred Forty-Eight Thousand Dollars ($148,000);

(c) monthly payments equal to the sum of One Thousand Four Hundred Eighty Dollars ($1480.00) commencing September 30, 2013 for interest until 30,300 additional bottles are sold;

(d) the sum of Eight Dollars ($8.00) which represents 40% of the Royalty of Twenty ($20.00) as a royalty payment for each bottle sold to the DLA between the date of the Agreement and when 30,300 additional bottles have been sold;

(e) the sum equal to 40% of the profit on shipments to the DLA (net of costs of goods, which is Four Hundred Eighty Dollars ($480.00) per bottle, net of monthly Interest, which is Three Thousand Seven Hundred Dollars ($3,700.00), net of Royalties which is Twenty Dollars ($20.00) per bottle, and net of Development 72 LLC Fees) between the date of the Agreement and when 30,300 additional bottles are sold; and

(f) interest at the actual rate charged by Development 72 LLC (but no more than 0.6% per full or partial 10 days increments for outstanding funds provided by Development 72 LLC to Marlex (through Scrips) will be reduced by Scrips to Marlex the amount of Sixty Thousand Six Hundred ($60,600) Interest. Scrips will pay Development 72 LLC in monthly payments of Four Thousand Forty Dollars ($4,040.00) Interest between the date of this Agreement and when 30,300 additional bottles are sold. Marlex will not be liable for the Sixty Thousand Six Hundred ($60,600) Interest.

3. Payment terms. The sums set forth in paras. 1 and 2(a) and (b) shall be paid, commencing September 30,2013, in fifteen monthly payments of Twenty-Seven Thousand Two Hundred Ten Dollars and Thirty Three Cents ($27,210.33).

4. RapiMed. Marlex and the Patels hereby acknowledge that the tooling for the production and packaging of a rapid melt pharmaceutical, presently located at Capricorn Pharma in Frederick, Maryland, was paid for by Scrips and owned by Scrips and that Marlex has no claim with respect to it. Marlex will sign the Jetter attached as Exhibit A hereto with respect to that acknowledgment. Beyond that, Scrips and Marlex relinquish any other claim against either has against the other regarding the RapiMed products.

5. Scrips stock. The Patels received shares of Scrips stock under consulting agreements. Within seven (7) days of the execution of this Agreement, the Patels shall deliver to the transfer agent, aide Monmouth:

(a) Certificate No. 1197, for 500,000 shares, for cancellation, with no further obligation either to Marlex or the Patels with respect thereto; and

(b) Certificate No. 1196, for 400,000 shares, to be held in safekeeping and for recourse in the event the payment obligations in paras. 1, 2 and 3 are not met. Commencing September 30, 2013, 27,000 shares for 14 months and 22,000 the 15^thmonth shall, via DWAC, be sent monthly to an account designated by Sarav or Samir Patel, which will be immediately free-trading shares without any restrictions.

6. Mutual release. Other than the obligations set forth herein, Scrips on the one hand and Marlex and the Patels on the other hand, hereby release, acquit and forever discharge each other and their respective affiliates and representatives from, and relinquish, any and all past, present and future claims, demands, actions and causes of action relating to or in any way connected with the joint business efforts and arrangements of the parties, the Patels’ service as independent consultants to Scrips, and a contemplated business combination between Scrips and Marlex.

7. Confidentiality and non-disparagement. Each party warrants that it shall not disclose, disseminate and/or publicize, or cause or authorize to be disclosed, disseminated or publicized, the existence, nature, extent, scope or amount of this Agreement or the terms hereof to any person, bank or corporation, association, governmental agency or other legal entity without the consent of the other parties hereto, except to its legal counsel, accountants, auditors, tax preparers, the IRS or state taxing authority, its Board of Directors, the Security Exchange Commission in required filings, or a prospective purchaser of some or all of a party's business, or as may be required by a court order. If this Agreement is responsive to a document request or a subpoena from a third party, the party that has received the request shall refuse to produce the Agreement absent a court order requiring same. If a third party brings a motion to compel production of this Agreement, the party against whom the motion is directed shall: (i) give prompt written notice to the other parties to this Agreement, so that such other parties may seek to intervene in the motion, and (ii) use reasonable efforts to resist such a motion. Specifically, and without limiting the generality of this paragraph, the parties agree not to issue any press releases or make any comment to the media, on any Internet blog, on any website, or in any similar forum, regarding the this Agreement. For the sake of clarity and not in diminution of the broad confidentiality intended by this paragraph, the parties agree that they will not disparage or demean any of the other parties or their employees, officers, directors, agents, representatives, or attorneys.

9. Entire understanding. This Agreement states the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior and written communications, writings and agreements with respect to the subject matter hereto by and between the parties..

10. Counterparts. This Agreement may be executed with facsimile signatures, in any number of counterparts, each of which when so executed and delivered shall be deemed an original hereof, but all of which together shall constitute one and the same instrument.

11. Controlling law. This Agreement shall be governed by, and construed, interpreted and enforced in accordance with the laws of the State of Delaware, without regard to principles of conflict of law.

12. Attorneys' fees; enforcement. Should it become necessary to initiate litigation to enforce this Agreement, the prevailing party, in addition to all other relief, shall be entitled to his or its actual attorneys' fees and costs of suit incurred in connection therewith. Further, if Scrips seeks to enforce the payment obligations in this Agreement, it shall have recourse to those remaining shares then held by the transfer agent, Olde Monmouth, following letter notification (copied to Marlex and the Patels) which shall be sufficient to suspend the monthly transfer program set forth in para. 5 above. If Scrips seeks to suspend any shares pursuant to this paragraph, but ultimately is not the prevailing party, Scrips shall be liable to Marlex and the Patels for the difference between the highest closing price during the suspended period and the closing price on the day that the suspension is lifted for each of the shares covered by the suspension.

IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have executed this Agreement.

SCRIPSAMERICA, INC.		MARLEX PHARMACEUTICALS, INC.


By:	/s/ Robert Schneiderman	By:	/s/ Sarav A. Patel
	Robert Schneiderman, President		Sarav A. Patel, President

		/s/ Sarav A. Patel
		Sarav A. Patel

		/s/ Samir Patel
		Samir Patel

EX-10.19 3 scrips_10k-ex1019.htm SETTLEMENT AGREEMENT

EXHIBIT 10.19

SETTLEMENT AGREEMENT

(with Mutual General Release)

THIS SETTLEMENT AGREEMENT (this “Settlement Agreement”), made this 14^th day of January 2014 and to be effective as of such date, by and among:

The Parties of the First Part, being:

1. ScripsAmerica, Inc., a Delaware corporation with executive offices at Corporate Office Center Tysons II, 1650 Tysons Boulevard, Suite 1580, Tyson Corner, VA 22102 (hereinafter “Scrips”); and

2. Steve Urbanski, an adult individual residing at 1142 Bonnie Lane, Mt. Pleasant, SC 29464 (hereinafter “Urbanski”);

AND

The Parties of the Second Part, being:

1. GEM Global Yield Fund Limited, a company organized under the laws of the Cayman Islands and having a principal office at c/o CM Group, Commerce House, 1 Bowring Road, Ramsey, Isle of Man IM8 2LQ (hereinafter “GEM”); and

2. 590 Partners, LLC, a company with offices co-located with GEM (hereinafter “590"); and

3. Global Emerging Markets and/or The GEM Group, with offices located at 590 Madison Avenue, New York, New York 10022 (hereinafter “GEM Group”, and together with Scrips, Urbanski, GEM and 590, each a “Party” and collectively, the “Parties”);

WITNESSETH THAT:

WHEREAS, the various parties negotiated various documents, such as a Share Lending Agreement dated as of October 10, 2013 (entered into between Urbanski and GEM) (the “Share Lending Agreement”), a Common Stock Purchase Agreement (entered into between Scrips and GEM) (the “Common Stock Purchase Agreement”), an Agreement dated as of October 10, 2013 (entered into between Scrips and GEM) and various other related agreements;

WHEREAS, some of the negotiated agreements were reduced to writing and executed by the relevant parties; some of the negotiated agreements although reduced to writing were executed by one party but not the other(s), while others remained as oral understandings, and some documents, although reduced to writing and signed by at least one party were not delivered;

WHEREAS, as events have unfolded, certain disagreements have arisen between the various parties e.g., Urbanski and GEM, and the parties desire to settle the disputes, to terminate any and all arrangements between themselves, and to release one another from any and all obligations arising out of the referenced agreements; and

WHEREAS, the parties desire, among other things, to cancel the Common Stock Purchase Agreement and enter into a new Common Stock Purchase Agreement and related Warrants.

NOW, THEREFORE, in consideration of the mutual promises, covenants and releases contained herein, and intending to be legally bound, the parties have agreed, and do hereby agree, as follows:

Page 1 of 7

1. (a) Upon the Parties performing all of the obligations and undertakings pursuant to this Settlement Agreement, any and all memoranda, agreements, contracts, understandings and undertakings, written or oral (“Documents”) by and between/among the parties hereto are, except as otherwise provided herein or to the extent necessary to effectuate this Settlement Agreement, declared null and void, ab initio, and of no further effect. Any offers and/or acceptances of any party, to any such Documents, are, except to the extent necessary to effectuate this Settlement Agreement, withdrawn and revoked. No party, nor any associate, affiliate, parent or subsidiary of any party, shall have any right or duty under any such Document, except to the extent necessary to effectuate this Settlement Agreement.

(b) The term “associate”, solely for purposes of this Settlement Agreement, shall include, for Scrips, its administrators, predecessors, successors, assigns, affiliates, parents, subsidiaries, officers, directors, employees, associated persons, attorneys, agents, contractors and representatives, and all persons acting by, through and under each of them, including, without limitation, Robert Schneiderman and Jeffrey Andrews.

(c) The term “associate”, solely for purposes of this Settlement Agreement, shall include, for Urbanski, his heirs, executors, administrators, predecessors, successors, assigns, affiliates, employees, associated persons, attorneys, agents, contractors and representatives, and all persons acting by, through and under each of them.

(d) The term “associate”, solely for purposes of this Settlement Agreement, shall include for the Parties of the Second Part, their administrators, predecessors, successors, assigns, affiliates, parents, subsidiaries, officers, directors, employees, associated persons, attorneys, agents, contractors and representatives, and all persons acting by, through and under each of them, including, without limitation, Franco Scalamandre, Christopher Brown, and Warren P. Baker.

2. (a) Pursuant to the Share Lending Agreement, Urbanski loaned to GEM a total of 3,640,786 shares of the Common Stock of Scrips.

(b) On or about the date hereof, GEM shall return to Scrips’ stock transfer agent, for the benefit of Urbanski, 2,753,506 shares of the Common Stock of Scrips, being a return and partial repayment of that number of the 3,640,786 borrowed shares.

(c) Scrips hereby agrees to sell to GEM, and GEM hereby agrees to purchase from Scrips, Eight Hundred Eighty-Seven Thousand, Two Hundred Eighty (887,280) shares of its restricted Common Stock for the sum of One Hundred Twenty Thousand, Three Hundred Eighty-One dollars (US$125,381) to be paid as follows:

(i) GEM shall, promptly upon execution of this Settlement Agreement, time being of the essence, pay to Scrips, by wire transfer to Scrips’ bank account (with such wire transfer instructions being provided separately by Scrips to GEM), the sum of One Hundred Ten Thousand, One Hundred Sixty-Nine dollars and Seventy-Five cents (US$110,169.75) and

(ii) GEM shall, immediately upon execution of this Settlement Agreement, time being of the essence, pay to the law firm of Gottbetter & Partners, LLP, 488 Madison Avenue, New York 10022 the sum of Fifteen Thousand, Two Hundred Eleven dollars and Twenty-Five cents (US$15,211.25), which sum GEM represents to be payment in full to such firm of any amounts owing by Scrips, Urbanski or any associate thereof in connection with the Documents and the contemplated transactions.

Page 2 of 7

(d) GEM hereby assigns its right to receive the 887,280 shares to Urbanski and Urbanski accepts such shares as full and final repayment of the shares owed to him under the Share Lending Agreement. Scrips shall, immediately upon receipt the above wire transfer, issue the 887,280 shares purchased by GEM to Urbanski (the “Share Issuance”). For the avoidance of doubt, it is hereby agreed and understood by the Parties that with this assignment and issuance, GEM, GEM Global, 590 and their associates shall have no further obligation whatsoever to repay any additional shares or any other consideration to Urbanski and his associates under the Share Lending Agreement or otherwise.

3. (a) All Warrants, heretofore issued by Scrips to 590 and/or GEM and any associates of either are mutually cancelled. The cancelled warrants (collectively, the “Warrants”) were issued on October 10, 2013, as follows:

Warrant ID	No. of Shares	Warrant holder	Exercise Price
GEM 001	2,000,000	GEM	$.41
GEM 002	2,000,000	590	$.41
GEM 003	1,500,000	GEM	$.55
GEM 004	1,500,000	590	$.55
GEM 005	1,500,000	GEM	$.75
GEM 006	1,500,000	590	$.75

(b) GEM and 590, jointly and severally, shall, promptly after execution of this Settlement Agreement, time being of the essence, return all of the original Warrants marked as “CANCELLED to Scrips.

(c) The Parties of the Second Part agree that no other warrants are owing to, issuable to, or otherwise owed to GEM, 590 or any associate thereof as the result of any Document referenced in Paragraph 1 above, other than as set forth in Paragraph 4 below.

4. NEW SHARE PURCHASE ARRANGEMENT. (a) Scrips and the Parties of the Second Part have negotiated a new arrangement for the above-cancelled Common Stock Purchase Agreement. Subject to the prior timely performance by all Parties of their respective obligations in Paragraph 2, the Common Stock Purchase Agreement in the form to be agreed to among GEM, 590 and Scrips (the “New Common Stock Purchase Agreement”) shall be executed by such Parties after the date hereof and promptly delivered to the other parties.

(b) On or prior to the date hereof, Scrips shall issue to GEM and 590 new warrants to purchase common stock of Scrips, dated as of the date hereof, in the amended form as the specimen attached hereto as Exhibit A (the “New Warrants”), as follows:

Warrant ID	No. of Shares	Warrant holder	Exercise Price
GEM 007	1,000,000	GEM	$.41 fixed
GEM 008	1,000,000	590	$.41 fixed
GEM 009	750,000	GEM	$.55 fixed
GEM 010	750,000	590	$.55 fixed
GEM 011	750,000	GEM	$.75 fixed
GEM 012	750,000	590	$.75 fixed

The Warrants shall contain a provision empowering Scrips, in the event that the Scrips’ common stock trades at or above 160% of the applicable exercise price of the New Warrant for twenty two (22) consecutive trading days, to call the affected Warrants for cancellation, with the New Warrant holder having the right for thirty (30) days after delivery of Scrips’ call to exercise such New Warrant in accordance with the terms of the New Warrant. For the avoidance of doubt, Scrips, GEM and 590 hereby agree and acknowledge that the New Warrants will be fully earned and due, and Scrips shall have an obligation to issue the New Warrants to GEM and 590, on the date hereof, irrespective of whether any transactions are consummated under the New Common Stock Purchase Agreement or otherwise. GEM and Urbanski further agree and acknowledge that GEM, 590 and GEM Group are entering into this Agreement in reliance on, and as a condition of, such obligation by Scrips to issue the New Warrants.

Page 3 of 7

(c) In the event that Scrips raises funding of gross proceeds of $1,500,000 or more (whether in one or more closings), which funding would be a result of the actions of GEM, whether direct or indirect, Scrips shall issue to GEM and 590 an additional 5,000,000 Warrants, divided as set forth in (b) above.

5. MUTUAL GENERAL RELEASE. The parties desire this Settlement Agreement to finally terminate all relations among them. Subject to performance by the parties of all of their respective obligations and undertakings as provided in this Settlement Agreement, and for and in consideration of the terms contained herein, Scrips and Urbanski, the Parties of the First Part, and their associates, on the one hand, and GEM, 590 and GEM Group, the Parties of the Second Part, and their associates, on the other hand, do hereby, individually and collectively, release, remise, hold harmless and forever discharge each other, as well as their associates of and from any and all manner of actions, liabilities, causes of action, suits, debts, dues, accounts, sums of money, damages, reckonings, bills, specialties, bonds, covenants, notes, contracts, controversies, agreements, judgments, demands, promises, variances, trespasses, extents, executions, claims, counterclaims and claims whatever nature and kind, in law, admiralty or in equity (including reasonable attorney’s fees/expenses and court costs arising directly or indirectly therefrom), whether or not heretofore known, suspected or asserted, foreseen or unforeseen, which any party, individually or collectively, ever had, or now has or may have in the future against the other party by reason of any matter, cause or thing whatsoever from the beginning of time to the date hereof; provided that nothing contained in this Agreement shall be deemed to effect a release of any obligation undertaken by any of the Parties pursuant to this Settlement Agreement.

6. COVENANT NOT TO SUE. Subject to timely performance by the Parties of all of their respective obligations and undertakings as provided above, each Party, for itself or himself and its or his associates, hereby covenant not to sue, at law, admiralty or in equity, or demand arbitration against, or to otherwise seek any claims, liabilities, redress, damages, injunctions, prohibitions, judgments, extents, executions, claims sums of money, dues or any other remedy from or against any other Party or its or his associates, pertaining to the contemplated transactions (including, without limitation, the Share Issuance) and the Documents.

Page 4 of 7

7. NO DISPARAGEMENT. Scrips and Urbanski shall not, and shall cause their associates not to, disparage GEM, 590, GEM Global or any of their associates. GEM, 590 and GEM Global shall not, and shall cause their associates not to, disparage Scrips or Urbanski or any of their associates.

8. WARRANTY OF AUTHORITY. Each party to this Settlement Agreement hereby represents and warrants that it has the requisite corporate or individual power and authority (as applicable) to enter into and to consummate the transactions require pursuant to this Settlement Agreement and that the completion of the transactions required hereby has been duly authorized by all necessary action.

8. GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions. The parties agree that venue for any dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The parties irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The parties consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof.

9. SIGNATURES. This Agreement may be executed in multiple counterparts, each one of which shall be deemed an original, but all of which shall be considered together as one and the same instrument. Delivery of an executed counterpart of this Agreement may be made by facsimile or other electronic transmission. Any such counterpart or signature pages sent by facsimile or other electronic transmission shall be deemed to be written and signed originals for all purposes, and copies of this Agreement containing one or more signature pages that have been delivered by facsimile or other electronic transmission shall constitute enforceable original documents. As used in this Agreement, the term “electronic transmission” means and refers to any form of communication not directly involving the physical transmission of paper that creates a record that may be retained, retrieved and reviewed by a recipient of the communication, and that may be directly reproduced in paper form by such a recipient through an automated process.

[Signature Page Follows]

Page 5 of 7

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused this agreement to be executed in multiple originals, on the date first mentioned above.

SCRIPSAMERICA, INC.

By: /s/Robert Schneiderman

Name: Robert Schneiderman

Title: CEO

GEM GLOBAL YIELD FUND LIMITED	590 PARTNERS, LLC


By: /s/Chris Brown	By: /s/Franco Scalamandre
Name: Chris Brown	Name: Franco Scalamandre
Title:	Title:

THE GEM GROUP

By: /s/Chris Brown

Name: Chris Brown

Title:

STEVE URBANSKI, INDIVIDUALLY

/s/Steve Urbanski

Page 6 of 7

EXHBIT A

Form of New Warrants

[see attached]

Page 7 of 7

EX-10.20 4 scrips_10k-ex1020.htm COMMON STOCK PURCHASE WARRANT

EXHIBIT 10.20

No.: GEM-___

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY ONLY BE EXERCISED BY A PERSON WHO QUALIFIES AS AN “ACCREDITED INVESTOR” PURSUANT TO RULE 501 OF REGULATION D OF THE ACT.

SCRIPSAMERICA, INC.

COMMON STOCK PURCHASE WARRANT

Number of Shares: 1,000,000

Issuance Date: January [l], 2014

FOR VALUE RECEIVED, the undersigned, ScripsAmerica, Inc., a Delaware corporation (together with its successors and assigns, the “Issuer” and the “Company”), hereby certifies that GEM Global Yield Fund Limited (“GEM”) or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), in accordance with the terms of this Warrant, up to one million (1,000,000) shares (“Shares”) of the duly authorized, validly issued, fully paid and non-assessable Common Stock of the Issuer, at a fixed exercise price per share of $0.41 (as such price may be adjusted from time to time as shall result from the adjustments specified in Section 4 of this Warrant). Capitalized terms used in this Warrant and not otherwise defined herein shall have the respective meanings specified in Section 9 hereof.

1. Term. The term of this Warrant shall commence on January [l], 2014 and shall expire at 6:00 p.m., Eastern Time, on January [l], 2019 (such period being the “Term”); provided that if the Company fails to have the Warrant Registration Statement (as defined in the Purchase Agreement) declared effective by the Commission on or before the Registration Effective Date (as defined in the Purchase Agreement), the Term shall be extended by the number of days that elapse after the Registration Effective Date until the Warrant Registration Statement is declared effective by the Commission.

2. Vesting; Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange; Automatic Cancellation of Warrant.

(a) Time of Exercise. The purchase rights represented by this Warrant may be exercised in whole or in part during the Term.

(b) Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the exercise form attached hereto duly executed) at the principal office of the Issuer, and by the payment to the Issuer of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with respect to which this Warrant is then being exercised, payable at such Holder’s election by certified or official bank check or by wire transfer to an account designated by the Issuer.

(c) Issuance of Stock Certificates. In the event of any exercise of this Warrant in accordance with and subject to the terms and conditions hereof, certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise and delivered to the Holder hereof within a reasonable time, not exceeding five (5) Business Days after such exercise (the “Delivery Date”) or, at the request of the Holder (provided that a registration statement under the Securities Act (as defined below) providing for the resale of the Warrant Stock being purchased is then in effect or that such Warrant Stock are otherwise exempt from registration), issued and delivered to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) on or before the Delivery Date (if the Corporation is eligible for DWAC services at such time), and the Holder hereof shall be deemed for all purposes to be the holder of the shares of Warrant Stock so purchased as of the date of such exercise, and, unless this Warrant has been fully exercised or expired, a new warrant having the same terms as this Warrant and representing the remaining portion of such shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder hereof as soon as possible and in any event within twenty (20) Business Days after such effective exercise.

(d) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Issuer fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Stock pursuant to an exercise on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Warrant Stock that the Issuer was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Stock for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Issuer timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Issuer shall be required to pay the Holder $1,000. The Holder shall provide the Issuer written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

(e) Transferability of Warrant. Subject to Section 2(f) hereof, this Warrant may be transferred by a Holder, in whole or in part, without the consent of the Issuer. If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Issuer by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable at the principal office of the Issuer for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto.

(f) Continuing Rights of Holder. The Issuer will, at the time of or at any time after each exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided that if any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder.

(g) Compliance with Securities Laws.

(i) The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws.

(ii) Except as provided in paragraph (iii) below, this Warrant and all certificates representing shares of Warrant Stock issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form:

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

(iii) The Issuer agrees to reissue this Warrant or certificates representing any of the Warrant Stock, without the legend set forth above if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Issuer describing the manner and terms of such transfer. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the Securities and Exchange Commission and has become effective under the Securities Act, (iii) the Issuer has received other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required, or (iv) the Holder provides the Issuer with reasonable assurances that such security can be sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto. The Issuer will respond to any such notice from a holder within five (5) Trading Days. In the case of any proposed transfer under this Section 2(g), the Issuer will use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Issuer. The restrictions on transfer contained in this Section 2(g) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Warrant. Whenever a certificate representing the Warrant Stock is required to be issued to a the Holder without a legend, in lieu of delivering physical certificates representing the Warrant Stock, the Issuer shall cause its transfer agent to electronically transmit the Warrant Stock to the Holder by crediting the account of the Holder or Holder’s Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Warrant or the Purchase Agreement).

(h) Accredited Investor Status. In no event may the Holder exercise this Warrant in whole or in part unless the Holder is an “accredited investor” as defined in Regulation D under the Securities Act.

(i) Automatic Cancellation of Warrant. If the Closing Price of the Common Stock is equal to or greater than one hundred sixty percent (160%) of the Warrant Price for twenty-two (22) consecutive Trading Days, then this Warrant shall automatically be cancelled at 6:00 p.m., Eastern Time, on the thirtieth (30^th) calendar day after the Company delivers written notice of such cancellation to the Holder at the address provided by the Holder to the Company (the “Cancellation Date”); provided, however, that the Holder may exercise this Warrant in accordance with this Section 2 on or before the Cancellation Date.

3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

(a) Stock Fully Paid. The Issuer represents, warrants, covenants and agrees that all shares of Warrant Stock which may be issued upon the exercise of this Warrant or otherwise hereunder will, when issued in accordance with the terms of this Warrant, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by or through the Issuer. The Issuer further covenants and agrees that during the period within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose of the issuance upon exercise of this Warrant a number of authorized but unissued shares of Common Stock equal to at least one hundred fifty (150%) of the number of shares of Common Stock issuable upon exercise of this Warrant without regard to any limitations on exercise.

(b) Reservation. If any shares of Common Stock required to be reserved for issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or qualification with any Governmental Authority under any federal or state law before such shares may be so issued, the Issuer will in good faith use its reasonable best efforts at its expense to cause such shares to be duly registered or qualified. If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, and maintain and increase when necessary such listing, of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder (provided that such Warrant Stock has been registered pursuant to a registration statement under the Securities Act then in effect), and, to the extent permissible under the applicable securities exchange rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer.

(c) Covenants. The Issuer shall not by any action including, without limitation, amending the Certificate of Incorporation or the Bylaws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof. Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price, (ii) not amend or modify any provision of the Certificate of Incorporation or Bylaws of the Issuer in any manner that would adversely affect the rights of the Holder, (iii) take all such action as may be reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Warrant.

(d) Loss, Theft, Destruction of Warrant. Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares of Common Stock.

(e) Payment of Taxes. The Issuer will pay any documentary stamp taxes attributable to the initial issuance of the Warrant Stock issuable upon exercise of this Warrant; provided, however, that the Issuer shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates representing Warrant Stock in a name other than that of the Holder in respect to which such shares are issued.

4. Adjustment of Warrant Price. The price at which such shares of Warrant Stock may be purchased upon exercise of this Warrant shall be subject to adjustment from time to time as set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with the notice provisions set forth in Section 5.

(a) Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale.

(i) In case the Issuer after the Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate or merge with or into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made to the Warrant Price and the number of shares of Warrant Stock that may be purchased upon exercise of this Warrant so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Warrant Price as adjusted to take into account the consummation of such Triggering Event, in lieu of the Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Warrant immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4. Immediately upon the occurrence of a Triggering Event, the Issuer shall notify the Holder in writing of such Triggering Event and provide the calculations in determining the number of shares of Warrant Stock issuable upon exercise of the new warrant and the adjusted Warrant Price. Upon the Holder’s request, the continuing or surviving corporation as a result of such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted number of shares of Warrant Stock and the adjusted Warrant Price pursuant to the terms and provisions of this Section 4(a)(i). Notwithstanding the foregoing to the contrary, this Section 4(a)(i) shall only apply if the surviving entity pursuant to any such Triggering Event is a company that has a class of equity securities registered pursuant to the Exchange Act and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board. In the event that the surviving entity pursuant to any such Triggering Event is not a public company that is registered pursuant to the Exchange Act or its common stock is not listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, then the Holder shall have the right to demand that the Issuer pay to the Holder an amount in cash equal to the value of this Warrant calculated in accordance with the Black-Scholes formula.

(ii) In the event that the Holder has elected not to exercise this Warrant prior to the consummation of a Triggering Event and has also elected not to receive shares of Common Stock pursuant to the provisions of Section 4(a)(i) above, so long as the surviving entity pursuant to any Triggering Event is a company that has a class of equity securities registered pursuant to the Exchange Act and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, the surviving entity and/or each Person (other than the Issuer) which may be required to deliver any Securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer under this Warrant (and if the Issuer shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Issuer from, any continuing obligations of the Issuer under this Warrant) and (B) the obligation to deliver to such Holder such Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a), such Holder shall be entitled to receive, and the surviving entity and/or each such Person shall have similarly delivered to such Holder an opinion of counsel for the surviving entity and/or each such Person, which counsel shall be reasonably satisfactory to such Holder, or in the alternative, a written acknowledgement executed by the President or Chief Financial Officer of the Issuer, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this subsection (a)) shall be applicable to the Securities, cash or property which the surviving entity and/or each such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto.

(b) Stock Dividends, Subdivisions and Combinations. If at any time the Issuer shall:

(i) make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock,

(ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

(iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (2) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment.

(c) Certain Other Distributions. If at any time the Issuer shall make or issue or set a record date for the holders of all of the Common Stock for the purpose of entitling them to receive any dividend or other distribution of:

(i) cash,

(ii) any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or shares of Common Stock), or

(iii) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Issuer and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (2) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4(b).

(d) Other Provisions Applicable to Adjustments Under This Section. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect provided for in this Section 4:

(i) Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100^th) of a share.

(ii)

(iii) When Adjustment Not Required. If the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(e) Form of Warrant After Adjustments. The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant.

(f) Escrow of Warrant Stock. If after any property becomes distributable pursuant to this Section 4 by reason of the taking of any record all of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and the Holder exercises this Warrant, any shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for the Holder by the Issuer to be issued to the Holder upon and to the extent that the event actually takes place, upon payment of the Warrant Price. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Issuer and escrowed property returned.

5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an “adjustment”), the Issuer shall cause its Chief Financial Officer to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each adjustment. Any dispute between the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to a national or regional accounting firm reasonably acceptable to the Issuer and the Holder, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection. The firm selected by the Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and binding on the parties hereto. The costs and expenses of the initial accounting firm shall be paid equally by the Issuer and the Holder and, in the case of an objection by the Issuer, the costs and expenses of the subsequent accounting firm shall be paid in full by the Issuer.

6. Fractional Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.

7. Ownership Cap and Exercise Restriction. Notwithstanding anything to the contrary set forth in this Warrant, at no time may a Holder of this Warrant exercise this Warrant if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when aggregated with all other shares of Common Stock owned by such Holder and its affiliates at such time, the number of shares of Common Stock which would result in such Holder and its affiliates beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock; provided, however, that upon a Holder of this Warrant providing the Issuer with sixty-one (61) days’ notice (pursuant to Section 13 hereof) (the “Waiver Notice”) that such Holder would like to waive this Section 7 with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 7 will be of no force or effect with regard to all or a portion of the Warrant referenced in the Waiver Notice until the date that the Holder notifies the Issuer (pursuant to Section 13 hereof) that the Holder revokes the Waiver Notice; provided , further , that during the sixty-one (61) day period prior to the expiration of the Term, the Holder may waive this Section 7 by providing a Waiver Notice at any time during such sixty-one (61) day period.

8. [Reserved.]

9. Definitions. For the purposes of this Warrant, the following terms have the following meanings:

“Board” shall mean the Board of Directors of the Issuer.

“Capital Stock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

“Certificate of Incorporation” means the Certificate of Incorporation of the Issuer as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law.

“Closing Price” shall mean the closing sale price of the Common Stock, as recorded by the Principal Market, on a particular day.

“Commission” shall mean the United States Securities and Exchange Commission or any successor entity.

“Common Stock” means the common stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

“Common Stock Equivalent” means any Convertible Security or warrant, option or other right to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Security.

“Convertible Securities” means evidences of indebtedness, shares of Capital Stock or other Securities which are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock. The term “Convertible Security” means one of the Convertible Securities.

“Governmental Authority” means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign.

“Holders” mean the Persons who shall from time to time own any Warrant. The term “Holder” means one of the Holders.

“Independent Appraiser” means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant.

“Original Issue Date” means January 14, 2014.

“OTC Bulletin Board” means the over-the-counter electronic bulletin board.

“Other Common Stock” means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the date of this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assets of the Issuer without limitation as to amount.

“Outstanding Common Stock” means, at any given time, the aggregate amount of outstanding shares of Common Stock, assuming full exercise, conversion or exchange (as applicable) of all options, warrants and other Securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, shares of Common Stock that are outstanding at such time.

“Person” means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature.

“Per Share Market Value” means on any particular date (a) the last Closing Price per share of the Common Stock on such date on a registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the Closing Price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed or traded then on any registered national stock exchange, the last Closing Price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or by Pink Sheets LLC (or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Holder; provided, however, that the Issuer, after receipt of the determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and provided , further that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value by an Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights.

“Purchase Agreement” means the Common Stock Purchase Agreement, dated as of the date hereof, between the Issuer and the GEM Global Yield Fund Limited.

“Securities” means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. ”Security” means one of the Securities.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute then in effect.

“Subsidiary” means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

“Term” has the meaning specified in Section 1 hereof.

“Trading Day” means (a) a day on which the Common Stock is traded on a national securities exchange, or (b) if the Common Stock is not traded on a national securities exchange, a day on which the Common Stock is quoted in the over-the-counter market as reported by the OTC Bulletin Board or Pink Sheets LLC (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

“Voting Stock” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board of Directors (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

“Warrant Price” means $0.41.

“Warrant Share Number” means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased upon exercise of this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

“Warrant Stock” means Common Stock issuable upon exercise of this Warrant.

10. Other Notices. In case at any time:

	(A)	the Issuer shall make any distributions to the holders of Common Stock; or
	(B)	the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or
	(C)	there shall be any reclassification of the Capital Stock of the Issuer; or
	(D)	there shall be any capital reorganization by the Issuer; or
	(E)	there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantially all of the Issuer’s property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or
	(F)	there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall, to the extent permitted by law, give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. To the extent permitted by law, such notice shall be given at least twenty (20) days prior to the action in question and not less than five (5) days prior to the record date or the date on which the Issuer’s transfer books are closed in respect thereto. This Warrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders of the Common Stock.

11. Amendment and Waiver. Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by the Issuer and the Holder.

12. Governing Law; Jurisdiction. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Warrant shall not be interpreted or construed with any presumption against the party causing this Warrant to be drafted. The Issuer and the Holder agree that venue for any dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Issuer and the Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 12 shall affect or limit any right to serve process in any other manner permitted by law. The Issuer and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Warrant or the Purchase Agreement, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties hereby waive all rights to a trial by jury.

13. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

If to the Issuer:

ScripsAmerica, Inc.

Corporate Office Centre Tysons II

1650 Tysons Boulevard, Suite 1580

Tysons Corner, VA 22102
Attn: Robert Schneiderman, CEO

with copies (which copies

shall not constitute notice)

to:

Fox Law Offices, P.A.

561 NE Zebrina Senda

Jensen Beach, FL 34957

Telephone number: (772) 225-6435

Fax: (772) 225-6435 (call first)

Attention: Richard C. Fox, Esq.

If to the Holder:

GEM Global Yield Fund Limited

c/o CM Group

Commerce House

1 Bowring Road

Ramsey

Isle of Man

IM8 2LQ

with copies (which copies

shall not constitute notice)

to:

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, New York 10022

Telephone Number: (212) 400-6900

Fax: (212) 400-6901

Attention: Adam S. Gottbetter, Esq.

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto.

14. Warrant Agent. The Issuer may, by written notice to each Holder of this Warrant, appoint an agent having an office in New York, New York for the purpose of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

15. Remedies. The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

16. Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.

17. Modification and Severability. If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein.

18. Headings. The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

19. Registration Rights. The Holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to the terms of the Purchase Agreement and the registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant by any subsequent Holder may only be assigned in accordance with the terms and provisions of this Warrant and the Purchase Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year first above written.

	SCRIPSAMERICA, INC.

	By:
		Name:
		Title:

[Signature Page to Warrant]

NOTICE OF EXERCISE FORM

SCRIPSAMERICA, INC.

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of covered by the within Warrant.

		___________________________ (name)

Dated: _________________	Signature	___________________________

	Address:	___________________________
		___________________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: _________________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.

The undersigned intends that payment of the Warrant Price shall be made as (check one):

Cash Exercise_______

Since the Warrant is only exercisable via Cash Exercise, the Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Warrant.

ASSIGNMENT FORM

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within named corporation.

		___________________________ (name)

Dated: _________________	Signature	___________________________

	Address:	___________________________
		___________________________

PARTIAL ASSIGNMENT FORM

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

		___________________________ (name)

Dated: _________________	Signature	___________________________

	Address:	___________________________
		___________________________

FOR USE BY THE ISSUER ONLY:

This Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, Warrant No. W-_____ issued for ____ shares of Common Stock in the name of _______________.

EX-10.22 5 scrips_10k-ex1022.htm SOURCING AND MARKETING AGREEMENT

Exhibit 10.22

SOURCING AND MARKETING AGREEMENT

This SOURCING AND MARKETING AGREEMENT (“Agreement”) is made this 5th day of March, 2014 and shall be effective as of December 1, 2013 (“Effective Date”), by and between P.I.M.D. International, LLC (“PIMD”) and ScripsAmerica, Inc. (“SCRIPS”). Each may be individually referred to as “Party” or jointly as the “Parties.”

In consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree to the following:

This Agreement is intended to establish a non-exclusive sourcing and marketing relationship between SCRIPS and PIMD upon the terms and conditions provided herein, and shall be so interpreted.

Sourcing Services.

(a) SCRIPS is engaged in the purchase, repackaging, labeling and nationwide distribution of various pharmaceutical products. As a result, SCRIPS has access to pharmaceutical products for which a minimum order quantity is required, or for which a volume-based price discount is available, or for which favorable payment terms are available, or for which certain financial capability is required. PIMD desires to obtain the benefit of all such by contracting for SCRIPS’ sourcing services.

(b) SCRIPS may introduce PIMD to various sources of both pharmaceutical products and financial support with which PIMD, in its sole discretion, may contract; notwithstanding the separate and independent arrangements which PIMD may establish, the services of such third parties shall be deemed services of SCRIPS hereunder for the purpose of measuring performance by SCRIPS of its sourcing duties and obligations hereunder.

Marketing Services.

(a) SCRIPS is a publicly-traded company with growing name recognition and with nationwide distribution and marketing contacts. As a result, SCRIPS has entry and access to market participants and segments which PIMD, as a start-up company, does not have. PIMD desires to obtain the benefit of all such by contracting for SCRIPS’ marketing services.

(b) SCRIPS may introduce PIMD to various distributors, sub-distributors, wholesalers, retailers, sales representatives, sales rep services, etc. with which PIMD, in its sole discretion, may contract; notwithstanding the separate and independent arrangements which PIMD may establish, the services of such third parties shall be deemed services of SCRIPS hereunder for the purpose of measuring performance by SCRIPS of its marketing duties and obligations hereunder.

Page 1 of 9

Non-Exclusive Mutual Relationship.

(a) PIMD acknowledges that SCRIPS has established networks of suppliers and distributors, that SCRIPS is engaged in similar or identical business relationships and activities with other parties, and that PIMD’s relationship with SCRIPS is not exclusive, and that SCRIPS is free to engage in similar or identical business relationships with other parties.

(b) SCRIPS acknowledges that PIMD is a start-up company, that PIMD desires to establish favorable relationships with as many sources and marketers as possible, and that PIMD is free to engage in similar or identical relationships with other parties.

Term. The initial Term of this Agreement shall commence as of December 1, 2013 and shall continue until December 31, 2018 unless earlier terminated as set forth below. This Agreement shall automatically renew, for successive five year terms, until and unless properly terminated as provided below.

Sourcing and Marketing Fee; Expenses.

(a) In consideration for SCRIPS providing its services hereunder, PIMD shall pay to SCRIPS a Sourcing and Marketing Fee in an amount calculated as forty-five percent (45%) of the Calculation Basis as defined herein (“Fee”). The Fee shall be calculated monthly based upon the data from the preceding calendar month. The “Calculation Basis” is PIMD’s total receipts from paid invoices during the preceding calendar month (i.e., total revenue on a cash basis) less the Allowable Deductions as defined herein. The “Allowable Deductions” shall consist of (i) the purchase cost of the pharmaceutical products sold during the preceding calendar month, together with the related in-bound freight and out-bound delivery costs, and the warehousing and storage costs allocated for such sold products, (ii) rent, CDR salary per employment agreement, salesmen’s commissions and other reasonable overhead such as telephone, utilities, office supplies, travel and entertainment, etc., but shall exclude (iii) interest, (iv) income taxes, and (v) depreciation/amortization and other non-cash deductions. The Fee calculated for each month’s Calculation Basis shall be paid to SCRIPS on or before the fifteenth calendar day of the succeeding month. If such day is a holiday, payment shall be made on the immediately prior business day. Each Fee payment shall be accompanied by a report, in a form acceptable to SCRIPS, detailing the calculation of the Fee payment for such preceding month. There shall be no carryback nor carryforward from month to month and no loss shall be distributed to SCRIPS. During the term of this Agreement, SCRIPS and its representatives shall have continuing access to the books and records of PIMD in order to verify the data provided, and in the event of an error or discrepancy, the Parties shall true-up the data and adjust currently for the underpayment or overpayment. Any true-up shall be only with respect to correction of any data relied upon at the time of the calculation and payment of the Fee for any month.

Page 2 of 9

(b) SCRIPS shall be responsible for payment of all of its normal costs and expenses incurred in the rendering of its sourcing and marketing services. However, in connection with the rendering of all special services, as requested by PIMD, PIMD shall reimburse SCRIPS for out-of-pocket expenses incurred upon presentation by SCRIPS of an itemized account of such expenditures, together with receipts or other proofs of the expenditures.

7. Obligations of PIMD.

(a) PIMD, in conformity with its due diligence requirements under state and federal law, may accept or reject any potential transaction or receipt or transfer of any pharmaceutical products it deems, through its certified designated representative (CDR), to be non-conforming or potentially non-conforming within the framework or interpretation of statutes or regulations related to wholesale pharmaceutical sales- and transfer transactions, including, but not limited to receipt, storage, transfer, best manufacturing practices and pedigree requirements. SCRIPS has no authority, right or power to require or bind PIMD to engage in any transaction related to the purchase, sale or transfer of pharmaceutical products.

(b) PIMD hereby agrees that, during the Term of this Agreement and any extensions or renewals thereof, it will:

Maintain current and in good standing all of the licenses and registrations required by law for the wholesale distribution of pharmaceuticals and the conduct of its business under this Agreement.

ii.

Administer all customer accounts in a commercially reasonable manner.

iii.

Administer all customer accounts in accordance with all applicable federal, state, and local law and in conformity with all ethical standards.

iv.

Maintain facilities, equipment, and personnel sufficient to administer the customer accounts in a professional and timely manner and in accordance with all applicable regulatory requirements.

Pay the Fee to SCRIPS in full and timely in accordance with the provisions set forth in Paragraph 6(a).

vi.

Provide SCRIPS with (i) detailed accounting reports no less than monthly, showing all relevant data in relation to the calculation of the Fee and (ii) access to the raw data used to prepare such reports. Provide SCRIPS with audited financial statements annually.

vii.

Provide SCRIPS with pricing, pricing lists or formulas as well as purchase and transfer procedures to enable SCRIPS to make informed presentations or proposed offers to potential customer accounts.

Page 3 of 9

8. Obligations of SCRIPS. SCRIPS hereby agrees that, during the Term of this Agreement and any renewals or extensions thereof, it will:

(a) Use its efforts to distribute information relating to the pharmaceutical products provided by PIMD. Such information may include, but will not be limited to, informational mailings, introductions, distribution of sales materials, organized efforts for communications with prospective clients, participation in trade shows and conferences, and additional forms of information as agreed by the Parties.

(b) Obtain prior consent of PIMD regarding all marketing communications to prospective customer accounts or suppliers concerning pharmaceutical products available for purchase from, or sale by, PIMD.

(c) In providing its services to PIMD, SCRIPS shall not engage in activities as a broker, obtain or make any payment for the purchase or sale of pharmaceutical products, arrange for the transfer of any pharmaceutical product, receive or store any pharmaceutical product or make any binding representation or warranty with regard to the purchase or sale of any pharmaceutical product. SCRIPS shall refer to PIMD, for its resolution, all responsibility for the purchase or sale of any pharmaceutical products, the arrangements for the receipt and transfer of any pharmaceutical products and any representation or warranties with regard to the purchase of any pharmaceutical products.

9. Warranties and Representations of PIMD. PIMD makes the following warranties and representations, as an inducement to SCRIPS to enter into this Agreement and with the intent that SCRIPS will rely on same:

(a) PIMD is a duly organized limited liability company under the laws of the state of Florida and remains in good standing with all applicable licensing, regulatory and governing authorities for the conduct of its business operations. At all times during the Term of this Agreement, PIMD shall maintain all licenses and registrations for its business current and in good standing.

(b) PIMD is financially sound and has the financial resources to perform this Agreement and to make all reasonably foreseeable expansions in its staff, facilities and equipment necessary to perform hereunder in the future.

(c) PIMD is not engaged in nor under investigation for any criminal activity, fraudulent activity or other activity reasonably construed as a deceptive or unfair trade practice.

10.

Warranties and Representations of SCRIPS. SCRIPS makes the following warranties and representations, as an inducement to PIMD to enter into this Agreement and with the intent that PIMD will rely on same:

(a) SCRIPS is a duly organized corporation under the laws of the state of Delaware and remains in good standing with all applicable licensing, regulatory and governing authorities for the conduct of its business operations.

Page 4 of 9

(b) SCRIPS is financially sound and has the financial resources to perform this Agreement and to make all reasonably foreseeable expansions in its staff, facilities and equipment necessary to perform hereunder in the future.

(c) SCRIPS is not engaged in nor under investigation for any criminal activity, fraudulent activity or other activity reasonably construed as a deceptive or unfair trade practice.

11.

Relationship of Parties.

(a) Independent Contractor Relationship. The Parties intend that this Agreement shall not create or establish any partnership, joint venture, parent-subsidiary, brother-sister, or other business entity or association between the Parties and, except as specifically provided herein, no Party is intended to have any interest in the business, revenues, income, profits and losses, or property of the other by reason of this Agreement.

(b) No Authority. The Parties agree that neither of them shall have the authority to bind the other in contract nor to sign any document on behalf of the other, and that neither of them shall indicate or imply such condition to any other person. SCRIPS has no authority, right or power to require or bind PIMD to engage in any transaction related to the purchase, sale or transfer of pharmaceutical products.

12. Indemnification.

(a) PIMD hereby agrees to indemnify, defend, and hold harmless, SCRIPS and its affiliates, and their respective directors, officers, employees, agents, and representatives from any and all manner of third party claims and liabilities caused by or resulting from, in whole or in part, the actions or omissions of PIMD, its staff or representatives, arising out of or related to the subject matter of this Agreement.

(b) SCRIPS hereby agrees to indemnify, defend, and hold harmless, PIMD and its affiliates, and their respective members, directors, officers, employees, agents, and representatives from any and all manner of third party claims and liabilities caused by or resulting from, in whole or in part, the actions or omissions of SCRIPS, its staff or representatives, arising out of or related to the subject matter of this Agreement.

13. Survival. Paragraph 12 and the Fee payment provisions of Paragraph 14 of this Agreement shall survive the termination of this Agreement, and any renewal terms or other extensions thereof.

14. Termination. This Agreement may only be terminated as follows:

(a) Mutual Agreement. By mutual written agreement of the Parties at any time during the Term.

(b) Termination on Breach. In the event that either Party materially breaches this Agreement at any time, this Agreement may be terminated by the non-breaching Party as set forth below. A material breach includes, but is not limited to, any regulatory or statutory violation related to the purchase or sale of pharmaceutical products, a Party’s breach of any of its representations or warranties contained in this Agreement, PIMD’s failure to pay the Fee in accordance with the terms herein.

Page 5 of 9

i. If breach is by SCRIPS, PIMD shall provide written notice to SCRIPS specifying the actions that constitute such material breach. If SCRIPS fails to cure such breach within 30 calendar days of receipt of the PIMD notice, PIMD may terminate this Agreement immediately. In the event of such termination by PIMD, it may seek to maintain its relationship with any current SCRIPS Accounts and SCRIPS shall not seek to interfere with such relationships. Notwithstanding such termination, Scrips shall be entitled to the Fee calculated on customer accounts in effect on the date of termination for the remainder of the Term of the Agreement as though the Agreement had not been terminated.

ii. If breach is by PIMD, SCRIPS shall provide written notice to PIMD specifying the actions that constitute such material breach. If SCRIPS fails to cure (x) a breach for failure to pay the Fee timely and in full within five business days, or (y) a breach for any other reason within 30 calendar days, of receipt of the SCRIPS notice, SCRIPS may terminate this Agreement immediately. In the event of such termination by SCRIPS, it shall be entitled to payment of the Fee for a period of five years following the effective date of termination of this Agreement. The obligations of PIMD set forth in Paragraphs 6 and 7 of this Agreement shall survive during the period in which the Fee is required to be paid to SCRIPS under this provision. In addition to, and not in lieu of, its right to continuing payment of the Fee, SCRIPS shall be entitled to encourage any of the customers that it referred to PIMD to cease doing business with PIMD and encourage such customers or suppliers to engage in business with any other pharmaceutical wholesaler or supplier without liability for any claim by PIMD for tortious interference, breach of contract or any other claim or remedy related to such conduct.

(c) Termination Due to Agreement Revision. SCRIPS may terminate this Agreement as provided in Paragraph 15(a). In the event of such termination, SCRIPS shall be entitled to the Fee calculated on customer accounts in effect on the date of termination for the remainder of the Term of the Agreement as though the Agreement had not been terminated.

15. Miscellaneous.

(a) Severability. If a court of competent jurisdiction holds any provision of this Agreement unenforceable or invalid, it is the intent of the Parties that the court should modify the provision to give it the maximum legal effect in consideration of the original intent of the Parties and that the various provisions contained herein shall remain in full force and effect as severable and independent clauses, however, a modification of the calculation or payment of the Fee which is unacceptable to SCRIPS shall, in the discretion of SCRIPS, effect a termination of this Agreement.

Page 6 of 9

(b) Notices. Any notice or other communication required or permitted to be given under this Agreement shall be deemed to have been effectively given and made if in writing and served by personal delivery to the Party for which it is intended, or by being sent via a commercially reasonable carrier, to the following addresses:

	If to PIMD:	P.I.M.D. International, LLC
		8280 NW 27th Street, Suite 506
		Doral, FL 33122
		Attn: Vanessa Gonzalez

	With a copy to:	Bernard M. Cassidy, Esq.
		Lubell Rosen

200 South Andrews Ave.

		Fort Lauderdale, FL 33301

	If to SCRIPS:	ScripsAmerica, Inc.
		843 Persimmon Lane
		Langhorne, PA 19047
		Attn: Robert Schneiderman, CEO

	With a copy to:	Richard Fox, Esq.
		561 NE Zebrina Senda
		Jensen Beach, FL 34957

or to such other location as a Party may designate in writing from time to time. For personal delivery, such notice shall be deemed delivered on the day of receipt. A commercial carrier delivery shall be deemed delivered on the date shown on the receipt as delivered or first refused. Notice sent to the attorneys for the Parties is a courtesy copy only and will not constitute notice to that Party.

(c) Construction. Whenever used herein, the singular number shall include the plural, and the plural number shall include the singular, and use of any gender or the neuter shall include all genders and the neuter. The paragraph headings in this Agreement are for convenience of reference only and shall not be used as an aid in the construction of any provision. The Parties hereby agree that this Agreement is jointly authored or hereby deemed prepared by each of the Parties, who further hereby agree to waive any rule of construction that may apply for or against any Party due to its authorship.

(d) Choice of Law; Jurisdiction and Venue; Enforcement Costs. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. Venue and jurisdiction for any action related to or arising out of this Agreement shall be only in the state or federal courts of the State of Florida. The prevailing Party in any action at law or in equity arising out of or related to this Agreement shall be entitled to recover from the non-prevailing Party its costs at all levels, including without limitation its attorneys’ and accountants’ fees.

(e) Assignment and Delegation. No Party may assign this Agreement, in whole or in part, without the prior written consent of the other Party. Any such non-consensual assignment, sublicense, subcontract or encumbrance of this Agreement shall be invalid and of no force or effect.

Page 7 of 9

(f) Wavier and Modification. No failure on the part of any Party to exercise any right under this Agreement shall operate as a waiver of such right; nor shall any single or partial exercise of any right preclude any other or further exercise or the exercise of any other rights. This Agreement may only be modified in a writing signed by both Parties.

(g) Third Party Beneficiaries. The Parties specifically agree that this Agreement is not intended by any of its provisions to create a third party beneficiary interest in the public or any member thereof or to authorize anyone not a party to this contract to maintain a suit for injuries or property damages by reason of its contents.

(h) Successors. The provisions of this Agreement shall inure to the benefit of and shall be binding on the permitted assigns and successors in interest of each of the Parties.

(i) Entire Agreement. This Agreement contains the entire understanding between the Parties concerning the subject matter contained herein. The Parties hereby acknowledge and agree that there are no representations, agreements, arrangements, or understandings, oral or written, between or among the Parties relating to the subject matter of this Agreement that are not fully expressed herein and that no Party has relied on the statement of any other as an inducement to enter into this Agreement.

(j) Counterparts and Signatures. This Agreement may be executed in one or more counterparts and, in making proof of this Agreement, it shall not be necessary to produce or account for more than one fully executed counterpart hereof. A faxed or electronic signature shall have the same effect as an original.

[signature page follows]

Page 8 of 9

IN WITNESS WHEREOF, the duly authorized officers of the Parties have executed this Agreement, intending to be legally bound, as of the date first written above.

P.I.M.D. International, LLC

By: /s/Vanessa Gonzalez

Vanessa Gonzalez, as Manager and Sole Member

ScripsAmerica, Inc.

By: /s/Robert Schneiderman

Robert Schneiderman, CEO

Page 9 of 9

EX-10.23 6 scrips_10k-ex1023.htm PROMISSORY NOTE

EXHIBIT 10.23

PROMISSORY NOTE

$262,000.00

October 1, 2013

BORROWER:	Implex Corporation
	4650 Wedekind Road, Suite 2
	Sparks, NV 89431-7722

(Hereinafter referred to as “Borrower”)

LENDER:	ScripsAmerica, Inc.
	843 Persimmon Lane
	Langhorne, PA 19047

(Hereinafter referred to as “Lender”)

Borrower promises to pay to the order of Lender, in lawful money of the United States of America, by wiring to the financial institution account specified hereinafter or wherever else Lender may specify, the sum of Two Hundred Sixty-two Thousand Dollars ($262,000.00) or such sum as may be advanced and outstanding from time to time, with base interest and participating interest on the unpaid principal balance at the rate and on the terms provided in this Promissory Note (including all renewals, extensions or modifications hereof, this “Note”).

DEFINITIONS.

The term “Obligations”, as used in this Note, refers to any and all indebtedness and other obligations under this Note.

All terms that are used but not otherwise defined shall have the definitions provided in the Uniform Commercial Code in effect in the State of Nevada.

SECURITY/GUARANTY. Lender has waived (a) any lien encumbrance or security interest in the property and assets of the Borrower and (b) any personal guaranty by the shareholders of the Borrower.

BASE INTEREST RATE. Interest shall accrue on the unpaid principal balance of this Note outstanding from time to time from the date hereof at two percent (2%) per annum (the “Base Interest Rate”). Interest shall be due and payable on or before the fifteenth day of the month following the end of each calendar quarter.

DEFAULT RATE. In addition to all other rights contained in this Note, if a Default (as defined herein) occurs and as long as a Default continues, all outstanding Obligations shall bear interest at the Default Interest Rate of six percent (6%) per annum simple interest (the “Default Rate”) instead of the Base Interest Rate of two percent (2%). The Default Rate shall also apply from acceleration until the Obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be computed on the basis of a 360-day year for the actual number of days in the applicable period (“Actual/360 Computation”). The Actual/360 Computation determines the annual effective interest yield by taking the stated (nominal) rate for a year's period and then dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the applicable period. Application of the Actual/360 Computation produces an annualized effective rate exceeding the nominal rate.

REPAYMENT TERMS. This Note shall have a term of five (5) years and five (5) months with a maturity date of February 28, 2019 (“Maturity Date”), without amortization. The outstanding principal balance of this Note, together with all accrued and unpaid interest thereon, and any and all other sums due hereunder, shall mature and be due and payable to Lender on the Maturity Date.

APPLICATION OF PAYMENTS. Monies received by Lender from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal. If a Default (as defined below) occurs, monies may be applied to the Obligations in any manner or order deemed appropriate by Lender. If any payment received by Lender under this Note or other Loan Documents is rescinded, voided or for any reason returned by Lender because of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note or other Loan Documents as though such payment had not been made.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to Lender a late charge equal to five percent (5%) of each payment past due for five (5) or more days. Acceptance by Lender of any late payment without an accompanying late charge shall not be deemed a waiver of Lender's right to collect such late charge or to collect a late charge for any subsequent late payment received.

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Lender’s reasonable expenses actually incurred to enforce or collect any of the Obligations including, without limitation, reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

DEFAULT. If any of the following occurs, a default under this Note (a “Default”) shall exist:

Nonpayment; Nonperformance. The failure to make any payment, or perform any obligation, under this Note within ten (10) business days of the due date, which failure is not cured within ten (10) days of the date that written notice of such failure is given by Lender to Borrower.

Cessation; Bankruptcy. The dissolution of, termination of existence of, loss of good standing status by, appointment of a receiver for, assignment for the benefit of creditors of, or commencement of any bankruptcy or insolvency proceeding by or against Borrower.

REMEDIES UPON DEFAULT. If a Default occurs under this Note, Lender may, at any time thereafter, take any of the following actions: (a) accelerate the maturity of this Note and, at Lender’s option, any or all other Obligations, whereupon this Note and the accelerated Obligations shall be immediately due and payable; provided, however, if the Default is based upon a bankruptcy or insolvency proceeding commenced by or against Borrower or any guarantor or endorser of this Note, all Obligations shall automatically and immediately be due and payable; and/or (b) exercise any rights and remedies as provided under the Note or as provided by law or equity. The remedies of the Lender set forth above shall be cumulative.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note shall be valid unless in writing and signed by an officer of Lender. No waiver by Lender of any Default shall operate as a waiver of any other Default or the same Default on a future occasion. Neither the failure nor any delay on the part of Lender in exercising any right, power, or remedy under this Note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

Except to the extent prohibited by law, Borrower and each other person liable under this Note waives presentment, protest, notice of dishonor, demand for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and all other notices of any kind. Further, each agrees that Lender may (i) extend, modify or renew this Note or make a novation of the loan evidenced by this Note, and/or (ii) grant releases, compromises or indulgences with respect to any collateral securing this Note, or with respect to Borrower or any other person liable under this Note, all without notice to or consent of Borrower and other such person, and without affecting the liability of Borrower and other such person; provided, Lender may not extend, modify or renew this Note or make a novation of the loan evidenced by this Note without the consent of the Borrower, or if there is more than one Borrower, without the consent of at least one Borrower; and further provided, if there is more than one Borrower, Lender may not enter into a modification of this Note which increases the burdens of a Borrower without the consent of that Borrower.

MISCELLANEOUS PROVISIONS.

Assignment. This Note shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. Lender's interests in and rights under this Note are freely assignable, in whole or in part, by Lender. In addition, nothing in this Note shall prohibit Lender from pledging or assigning this Note or any interest therein. Borrower shall not assign its rights and interest hereunder without the prior written consent of Lender, and any attempt by Borrower to assign without Lender's prior written consent is null and void. Any assignment shall not release Borrower from the Obligations.

Applicable Law. This Note shall be governed by and interpreted in accordance with federal law and, except as preempted by federal law, the laws of the State of Nevada without regard to that state's conflict of laws principles.

Severability. If any provision of this Note shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or other such document.

Advances. Lender may, with the agreement of Borrower, make other advances which shall be deemed to be advances under this Note, even though the stated principal amount of this Note may be exceeded as a result thereof.

Fees and Taxes. Borrower shall promptly pay all documentary, intangible recordation and/or similar taxes on this transaction whether assessed at closing or arising from time to time.

Final Agreement. This Note represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent agreements of the parties. There are no unwritten agreements between the parties.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER BY EXECUTION HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO ACCEPT THIS NOTE. BORROWER AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has caused this Promissory Note to be duly executed under seal.

BORROWER:

Implex Corporation, a Nevada corporation

By: /s/ Richard C. Fox

Name: Richard C. Fox, President

EX-10.24 7 scrips_10k-ex1024.htm BUSINESS MANAGEMENT AGREEMENT

EXHIBIT 10.24

BUSINESS MANAGEMENT AGREEMENT

THIS BUSINESS MANAGEMENT AGREEMENT (“Agreement”), made this _____ day of February, 2014 by and among:

MAIN AVENUE PHARMACY, INC., a New Jersey corporation with a business location at 1094 Main Avenue, Clifton, NJ 07011 (hereinafter “Pharmacy”);

AND

SCRIPSAMERICA, INC., a Delaware corporation with its principal offices located at 843 Persimmon Lane, Langhorne, PA 19047 (hereinafter “Scrips”)

AND

IMPLEX CORPORATION, a Nevada corporation with its registered office located at 4650 Wedekind Road, Suite 2, Sparks, NV 89431-7722 (hereinafter “Implex”)

WITNESSETH THAT:

WHEREAS, Implex is entering into a certain agreement to purchase, over time, 100% of the issued and outstanding capital stock of Pharmacy, and the current owner of Pharmacy, Dmitriy Naydenko, desires to discontinue his business management functions, while continuing his legal responsibilities with respect to the compounding pharmacy operations pending completion of the sale/purchase and the licensing of Implex, but Implex is not in a position to provide business management functions, and Implex desires to secure third-party business management for the Pharmacy;

WHEREAS, Scrips is able to provide the business management for Pharmacy, including financial support for Pharmacy’s day-to-day operations and both Implex and Pharmacy desire to secure such services;

WHEREAS, the parties have discussed the situation and have negotiated and reached certain understandings, for which they desire a document to formalize and evidence such understandings;

NOW, THEREFORE, intending to be legally bound, and in consideration of the mutual promises and covenants contained herein, the parties have agreed, and do hereby agree, as follows:

1. ENGAGEMENT OF SCRIPS. (a) Implex, under the terms and conditions of this Agreement, hereby appoints, hires and engages Scrips to manage the day-to-day business operations of Pharmacy.

(b) Pharmacy, under the terms and conditions of this Agreement, hereby appoints, hires and engages Scrips to manage its day-to-day business operations.

(c) Scrips, under the terms and conditions of this Agreement, hereby accepts the appointment and engagement to manage the Pharmacy.

2. PURPOSE OF ENGAGEMENT. The general purpose of the engagement of Scrips is to establish a management structure for the Pharmacy on behalf of Implex. However, the “management structure” for purposes of this Agreement shall not include any action or activity from which Scrips would be required to file for, secure and maintain any federal or state license for the purchase, handling, processing and sale of controlled substances, but shall refer solely to such management as required for the day-to-day business operations of the Pharmacy. In the event of any confusion, reference is made to the limitations on Implex contained in the stock purchase agreement. Pending Implex’s purchase of the ownership interest in Pharmacy, Dmitriy Naydenko shall continue the responsibilities for which a license is required, pending Implex establishing its own structure and control of such activities and obtaining all necessary licenses.

(b) Scrips shall have no authority or power with respect to those areas of the business activities of Pharmacy which require federal or state licensure and Scrips shall not interfere with the management of the compounding pharmacy with respect to those areas.

3. NATURE OF ENGAGEMENT. (a) Scrips shall report to, act under the authority of, and follow the directives of, Implex as the owner of Pharmacy and Implex shall have full authority to direct the management of Pharmacy.

(b) The parties are separate corporate entities. Nothing in this Agreement is intended to form a partnership, joint venture, other entity or profit-sharing arrangement among the parties, nor, except as otherwise specifically provided, to give any party an interest in the assets, business, profits, losses, liabilities, obligations, and/or revenues of the other.

(c) Scrips is an independent contractor and shall be responsible for the conduct of management by its own employees, consultants and agents. Scrips shall be responsible for its own taxes, including payroll taxes, and all other costs and liabilities associated with its operations and its management of Pharmacy.

4. TERM. (a) The initial term of this Agreement shall be from February 7, 2014 to January 31, 2019, unless sooner terminated pursuant to Paragraph 9 below.

(b) If, at September 30, 2018 this Agreement is still in effect, and Scrips is not in default under this Agreement, then Scrips shall have the option to continue this Agreement and relationship for a further term of five (5) years; i.e., from February 1, 2019 to January 31, 2024.

5. DUTIES OF SCRIPS. (a) Upon the Initial Closing by Implex of its stock purchase agreement, Implex shall notify Scrips of such and thereupon Scrips shall assume the management of Pharmacy, including the financial management. Scrips shall provide the funds, to the extent necessary, to pay all costs and expenses incurred in the operation of the Pharmacy, including but not limited to labor, payroll taxes, fringe benefits, insurance repairs, maintenance and professional fees, as well as all financing costs and debt service pertaining to the financing obtained for operation of the Pharmacy, including specifically accounts receivable financing. Scrips shall open a bank account for Pharmacy, in the name of Pharmacy, which Scrips shall control but to which Implex shall have signature authority and access. Scrips shall, from time to time, in addition to the regular deposits of the funds of Pharmacy, when such deposits are inadequate, deposit such of its own funds as advances or loans, to Pharmacy, as necessary or desirable for the timely payment of Pharmacy’s payables. Scrips, from time to time, as available cash and timing permit, shall withdraw up to such amounts in repayment of its loans and advances as Scrips shall determine. In general, Scrips shall be responsible for the timely cash management of Pharmacy.

(b) Scrips shall manage and supervise the operation of Pharmacy, in the name of Pharmacy, including, but not limited to:

(i) hiring, firing, training, supervising, setting pay scales for and paying, all required Pharmacy personnel;

(ii) hiring, firing, supervising, negotiating pay and commission scales for, and paying, all required sales and marketing personnel;

(iii) establishing and enforcing personnel, safety, controlled substance and environmental policies;

(iv) determining and establishing sources for products and inventory needed for the operation of the Pharmacy and purchasing of same;

(v) establishing and applying quality controls on the output of the compounding Pharmacy;

(vi) maintaining, repairing, refurbishing and replacing all Pharmacy equipment, machinery, vehicles, fixtures, and leasehold improvements;

(vii) assisting Pharmacy and Implex in applying for, obtaining, re-applying for, and retaining all licenses, permits and other authorizations required for operation of the Pharmacy as a compounding pharmacy;

(viii) establishing, applying and enforcing all governmental workplace safety (e.g. OSHA) and environmental regulations and requirements;

(ix) insuring the Pharmacy, and all of its equipment, machinery, vehicles, fixtures, and leasehold improvements against damage or loss to the extent required by all lenders, but not less than full market value; and

(x) maintaining the Pharmacy and the security thereof.

6. OWNER’S DRAWS. (a) Implex shall be entitled to draw certain amounts, each month, commencing April 1, 2014 and continuing for the term of this Agreement, which amounts shall either be paid over to Implex or paid to such persons and/or entities as Implex may direct. Such amounts shall be an Allowable Deduction for purposes of calculating the Management Fee payable to Scrips pursuant to Paragraph 7 following.

(b) Commencing April 1, 2014 and continuing to, and including, March 1, 2015, Implex shall be entitled to a monthly draw calculated as the total of (i) $26,654.44, (ii) $7,160.64, (iii) $13,187.88 and (iv) a sum calculated as $30 per prescription processed by the Pharmacy during the preceding month, except that the payment for April 1, 2014 shall include all prescriptions processed since the First Closing by Implex.

(c) Commencing April 1, 2015 and continuing to, and including, March 1, 2016, Implex shall be entitled to a monthly draw calculated as the total of (i) $7,160.64, (ii) $ 1,666.66 and (iii), subject to sub-paragraph (e) following, a sum calculated as $30 per prescription processed by the Pharmacy during the preceding month.

(d) Commencing April 1, 2016 and continuing thereafter, Implex shall be entitled to a monthly draw calculated as $30 per prescription processed by the Pharmacy during the preceding month.

(e) At such time as the Pharmacy shall have processed 10,000 prescriptions, the sum to be paid shall be reduced, commencing with the 10,001^st prescription, to $10 per prescription instead of $30.

7. COMPENSATION OF SCRIPS. In consideration for SCRIPS providing (i) the financing of the day-to-day operations of Pharmacy and (ii) its management services hereunder, Pharmacy shall pay to SCRIPS a combined Financing Fee (including interest on all funds advanced or loaned) and Management Fee in an amount calculated as ninety-seven percent (97%) of the Calculation Basis as defined herein (“Fee”). The Fee shall be calculated monthly based upon the data from the preceding calendar month. The “Calculation Basis” is Pharmacy’s total receipts from paid invoices during the preceding calendar month (i.e., total revenue on a cash basis) less the Allowable Deductions as defined herein. The “Allowable Deductions” shall consist of (i) the owner’s draw as provided in Paragraph 6 above, (i) the purchase cost of the pharmaceutical products sold during the preceding calendar month, together with the related in-bound freight and out-bound delivery costs, and the warehousing and storage costs allocated for such sold products, (iii) rent, CDR salary per employment agreement, salesmen’s commissions and all other reasonable overhead and operating costs such as telephone, utilities, office supplies, travel and entertainment, etc., but shall exclude (iii) interest, (iv) income taxes, and (v) depreciation/amortization and other non-cash deductions. The Fee calculated for each month’s Calculation Basis shall be drawn from the Pharmacy account described in Paragraph 5(a) at such times as Scrips shall determine, given Scrips’ responsibility for the tiomely cash management of the Pharmacy. There shall be no carryback nor carryforward from month to month and no loss shall be distributed to SCRIPS. In the event of a subsequently discovered error or discrepancy, the parties shall true-up the data and adjust currently for the prior underpayment or overpayment. Any true-up shall be only with respect to correction of any data relied upon at the time of the calculation and payment of the Fee for any month.

8. BOOKS AND RECORDS. Scrips, at its sole expense, shall maintain separate and complete books and records, on the appropriate accrual basis, in accordance with sound and generally accepted accounting principles (which, having been adopted, shall not be changed without unanimous consent of the parties) showing all revenues, sales, receipts, costs, expenses, liabilities, receivables, profits and losses. Implex and Pharmacy shall have full access, during normal business hours, to all such books and records and the supporting documentation therefor.

9. REPORTS AND TAX REPORTS. (a) Promptly after each fiscal year, such accountant as Scrips may, from time to time, appoint, shall prepare such financial reports of Pharmacy from the books which it keeps, as would be required for delivery to an auditor for audit purposes and deliver copies thereof to Implex and Pharmacy. Such financial statements shall be at the expense of Scrips.

(b) The accountant appointed by Scrips shall also prepare a tax return and constituent schedules for Pharmacy for the fiscal year then ended, for use by Implex in filing a consolidated tax return to the IRS. The costs and expenses of such preparation will be borne by Scrips.

10. TERMINATION. This Agreement may be terminated by any of the parties as follows:

(a) Upon failure of the other party to cure a default under, or a breach of, this agreement within thirty (30) days after written notice is given as to such default or breach by the terminating party;

(b) Upon the bankruptcy or liquidation of the terminated party; whether voluntary or involuntary;

(d) Upon the termionated party having, or applying to have, a receiver appointed for all or a substantial part of such party's assets or business.

MISCELLANEOUS

10. Should a party default in the terms or conditions of this Agreement and suit be filed as a result of such default, the prevailing party shall be entitled to recover all costs incurred as a result of such default including all costs and reasonable attorney fees, expenses and court costs through trial and appeal.

11. The failure of either party to object to, or to take affirmative action with respect to, any conduct of another party which is in violation of the terms of this Agreement shall not be construed as a waiver of such violation or breach, or of any future breach, violation, or wrongful conduct. No delay or failure by any party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein.

12. The rights and obligations of the parties under this Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the parties. This Agreement may not be assigned by any party or by operation of law or otherwise, except by the express prior written consent of the other parties.

13. All notices or other communications to be sent as provided for in this Agreement shall be in writing and shall be sent by certified mail, postage prepaid, to the persons and addresses herein designated or such other persons and/or addresses as may hereafter be designated in writing by the parties:

If to Pharmacy:

If to Scrips:

If to Implex:

A copy of any notice may be sent by e-mail or fax, but shall not be deemed served until three (3) days after the date of mailing.

14. This instrument contains the entire agreement of the parties and all prior negotiations, memoranda, understandings and interim agreements have been merged herein. It may be modified only by an amendment in writing, signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. No representations were made or relied upon by any party other than those expressly set forth in this Agreement.

15. If any provision of this Agreement is declared void, such provision shall be deemed severed from this Agreement, which shall otherwise remain in full force and effect.

16. This Agreement shall be a contract made in the State of New Jersey and shall be interpreted and governed by, and construed in accordance with, the laws of the State of New Jersey.

17. Any and all taxes, excises, assessments, levies, interest and penalties, which may be assessed, levied, demanded, or imposed by any governmental agency in connection with this Agreement, shall be paid by the party upon which they are imposed and shall be the sole obligation of such party.

18. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Agreement.

MAIN AVENUE PHARMACY, INC..

By: /s/ Dmitriy Naydenko

Dmitriy Naydenko, Pres

SCRIPSAMERICA, INC.

By: /s/ Robert Schneiderman

Robert Schneiderman, Pres

IMPLEX CORPORATION

By: /s/ Richard C. Fox

Richard C. Fox, Pres

EX-10.25 8 scrips_10k-ex1025.htm WORLDWIDE LICENSING AGREEMENT

Exhibit 10.25

WORLDWIDE LICENSING AGREEMENT

This agreement (“Agreement”) is between SCRIPSAMERICA, INC. (“Licensor”), a corporation doing business at CORPORATE OFFICE CENTRE TYSONS IL 1650 TYSONS BOULEVARD, SUITE 1580, TYSONS CORNER, ZIP 22102 in the State of VIRGINIA and GLOBAL PHARMA HUB (“Licensee”), a corporation doing business at 200 SOUTH KNOWLES AVENUE, WINTER PARK, ZIP 32789 in the State of FLORIDA for a license to market and distribute RapiMed products.

A description of RapiMed is as follows:

The target market for RapiMed is all OTC and prescription drugs, and we anticipate great success because our of our its NEW oral delivery technology (ODT) that is more effective than existing products due to its ability to melt faster, taste better and provide more accurate dosing.

Unlike other products available, ScripsAmerica’s initial pediatric remedy is much smaller and dissolves in the child's mouth in 25 seconds, therefore entering their system faster. RapiMed for children's pain and fever relief contains Acetaminophen (main ingredient in Tylenol), however the bitter taste of this active ingredient is masked. The cherry and wild grape flavors that our product will come in are most appealing to children. Additionally, RapiMed for children pain and fever reliefs dosage is controlled, not like the syringe based competing products and we offer the 80 mg for 2-6 year olds, and 160 mg for the 6-11 year olds.

RapiMed's children's pain and fever relief packaging is convenient, portable, child resistant and easy to use as well as eye-catching. The contents are aspirin free, ibuprofen free, sugar free and gluten free as well. Since the numerous Tylenol recalls in the recent past, there is a clear need for a better controlled, more efficient product to fill the void. We believe our RapiMed for children's pain and fever relief is that product.

www.rapimeds.com

Trade-marks that Fall Under the License Agreement:

Trademark:RAPIMED

Class:OOS

Our ref.: 77722

Trademark: MELTS IN YOUR CHILD'S MOUTH

Trademark Serial Number: 85932286

USPTO Number: 4472782

In consideration of the foregoing premises and the mutual covenants set forth in this agreement and other valuable considerations, the parties agree as follows:

1. License: Licensor hereby grants Licensee the Exclusive Worldwide License, excluding the territory of the United States of America ("United States"), to use RapiMed Products for the permitted uses as set forth in this agreement only. All other rights in and to the Products, including but not limited to all copyright and other intellectual property rights relating to the Product are retained by Licensor.

2. Permitted Uses: Licensee may only use the Product as follows:

Licensee may display Product either physically or electronically;

Licensee may extract or use information contained in Product for educational or research purposes, including extraction and manipulation of information for the purpose of illustration, explanation, example, comment, criticism, teaching, research, or analysis;

licensee may enter into marketing and distribution contracts with third party companies outside of United States;

licensee may enter into distribution agreements with online distributors, as long as on-line distribution does not enter into United States;

Licensee may, in conjunction with and approval from Licensor, utilize the RapiMed ODT in other product formulation categories provided by the licensor besides Acetaminophen. These product formulation categories may include Vitamins, Minerals, Over-the-Counter and Prescription applications;

licensee may enter into sub-license agreements with third parties for the purpose of market expansion and revenue generation.

All license fees collected by the Licensee from any third party shall be paid as follows:

percent of the total fees collected will be paid to licensor

The remaining 75 percent of fees collected will be retained by the licensee

3. Prohibited Uses: Licensee is prohibited from the use of Product not expressly permitted in the preceding section. Prohibited uses include but are not limited to:

Using any aspect of the Product as part of a trade-mark, design-mark, and trade name;

Incorporating the Product in any way that results in a re-distribution or reuse of the Product or is otherwise made available in a manner such that a third party can extract or access or reproduce Product;

Using the Product in a manner that is considered under applicable law to be infringing, defamatory or libelous in nature, or that would be reasonably likely cause any person or property reflected in the Product to be·seen in a false light;

Removing any notice of copyright, trade-mark or other proprietary right from any place where it is on or embedded in the Product;

Engaging in sales of RapiMed, both physical and on-line, in the territory of the United States;

4. Term: The grant of this license is effective as of the signing of this agreement for a period of three (3) years and shall renew automatically for additional one (1) year periods unless terminated by one of the parties with ninety (90) days notice. . The license may be terminated without notice from licensor if at any time licensee fails to comply with any of its terms of use as stated in this agreement. Upon termination, Licensee must immediately cease all use of Product and if requested, confirm to Licensor in writing compliance with these requirements.

5. Minimum Quotas:

During the first 12 months after the Effective Date herein the Licensee will deliver to the licensor a minimum dollar value of orders in excess of $500,000 of the licensor's Pediatric RapiMed product.

During the following 12 months after the effective date herein the Licensee will deliver to the Licensor a minimum dollar value of orders in excess of $1,400,000 of the Licensor's Pediatric RapiMed product.

During the following 12 months after the effective date herein the licensee will deliver to the Licensor a minimum dollar value of orders in excess of $2,400,000 of the licensor's Pediatric RapiMed product.

Failure to comply with the stated minimums shall be grounds for termination of the license by the Licensor. Notice of termination with 10 days notice will be delivered by mail from the Licensor to the licensee via U S mail with a return receipt proof of delivery.

The quotas commence 90 days after the acceptance of the registration (the Effective Date) in Hong Kong, China of the licensor's Pediatric RapiMed product.

6. Warranties: Licensor grants no rights and makes no warranties regarding the use of names, people, trademarks, trade dress, patented or copyrighted designs or works of art or architecture or other forms of intellectual property represented in any Product.

THE PRODUCT IS PROVIDED "AS IS" WITHOUT REPRESENTATION, WARRANTY OR CONDITION OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED REPRESENTATIONS, WARRANTIES OR CONDITIONS OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. LICENSOR DOES NOT REPRESENT OR WARRANT THAT THE PRODUCT WILL MEET LICENSEE'S REQUIREMENTS OR THAT ITS USE WILL BE UNINTERRUPTED OR ERROR FREE. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PRODUCT IS WITH THE MANUFACTURER AND LICENSOR. SHOULD THE PRODUCT PROVE DEFECTIVE, MANUFACTURER AND LICENSOR ASSUMES THE ENTIRE RISK AND COST OF ALL NECESSARY CORRECTIONS.

7. Indemnification: Each party shall indemnify, assume the defense of, and hold harmless the other party and its directors, officers, employees, and agents from every claim, loss, damage, injury, expense (including attorney's fees), judgment, and liability of every kind, nature, and description arising in whole or in part from the indemnifying party's negligent, fraudulent, or illegal acts or omissions except, as to the party requesting indemnification, to the extent such Liability results in whole or in part from the unauthorized, negligent, fraudulent, or illegal act or omission of the party requesting indemnification.

8. Amendments to License: This license may only be amended by a writing signed by Licensee and authorized by Licensor.

9. Legal Disputes: This Agreement has been negotiated and is being contracted for in the State of Delaware. It shall be governed by and interpreted in accordance with the laws of the State of Delaware, regardless of any conflict-of-law provision to the contrary. In any dispute arising out of or connected with this Agreement, each party consents to the exclusive jurisdiction of the courts of the State of Delaware or the federal district court for Delaware; each Party consents to the personal jurisdiction of such courts; and each Party waives any objection to personal jurisdiction or venue.

The parties waive any right to argue conflict of law principles. The Parties agree that any claim or dispute between them or against any agent, employee, successor, or assign of the other, whether related to this agreement or otherwise, and any claim or dispute related to this agreement shall be first taken to mediation. If mediation efforts prove unsuccessful, the parties dispute moves to Federal District Court of Delaware. Any award of the court may be entered as a judgment in any court of competent jurisdiction. Further, should either party, successor or assign of either party bring leading proceedings in connection with this agreement the party or parties prevailing in such proceeding shall be entitled to their reasonable attorney's fees and costs from the non-prevailing party in addition to any other such relief as may be granted.

10. Non-waiver: No failure or neglect of either party hereto in any instance to exercise any right, power or privilege under this agreement or under applicable law shall constitute a waiver of any other right, power or privilege in any other instance. All waivers by either party must be in wiring and signed by the party to be charged.

11. Entire Agreement: This Agreement contains the entire agreement and understanding between the parties and supersedes any prior or contemporaneous written or oral agreements, representations and warranties between them respecting the subject matter of this Agreement. This Agreement may be amended only by a writing signed by Licensee and by a duly authorized representative of the Licensor. If any term, provision, covenant or condition of this Agreement, or the application to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect.

12. Confidentiality.

Licensee acknowledges that it may have access to confidential information regarding the Licensor and its business. Licensee agrees that it will not, during or subsequent to the term of this Agreement, divulge, furnish or make accessible to any person (other than with the written permission of Licensor) any knowledge or information or plans of Licensor with respect to Licensor or its business, including, but not by way of limitation, the products of the Licensor, whether in the concept or development stage, or being marketed by Licensor on the effective date of this Agreement or during the term hereof.

13. Covenant Not To Compete.

During the term of this Agreement, Licensee warrants, represents and agrees that it will not directly participate in the information developed for and by Licensor, and will not compete directly with Licensor in Licensor 's primary industry or related fields.

By signing this agreement the parties acknowledges they have read the entire agreement and fully understand the terms, conditions and obligations of this agreement.

EX-10.26 9 scrips_10k-ex1026.htm CANADA LICENSING AGREEMENT

Exhibit 10.26

CANADA LICENSING AGREEMENT

This agreement (“Agreement”) is between GLOBAL PHARMA HUB (“Sub-Licensor”), a corporation doing business at 200 South Knowles Avenue, Winter Park, FL 32789 and SHEEN BOOM INVESTMENTS, LTD. a corporation doing business at 4703 Central Plaza, 18 Harbour Road, WanChai, Hong Kong, and JETSAW PHARMACEUTICAL, INC. a corporation doing business at U6 Saddlemead Way, Neucalgary, Alberta, T3J 4J5, collectively known as “Sub-licensees”, for a sub-license to market and distribute RapiMed products.

A description of RapiMed is as follows:

The target market for RapiMed is all OTC and prescription drugs, and we anticipate great success because our of our its NEW oral delivery technology (CDT) that is more effective than existing products due to its ability to melt faster, taste better and provide more accurate dosing.

Unlike other products available, ScripsAmerica's initial pediatric remedy is much smaller and dissolves in the child's mouth in 25 seconds, therefore entering their system faster. RapiMed for children's pain and fever relief contains Acetaminophen (main ingredient in Tylenol), however the bitter taste of this active ingredient is masked. The cherry and wild grape flavors that our product will come in are most appealing to children. Additionally, RapiMed for children pain and fever relief's dosage is controlled, not like the syringe based competing products and we offer the 80 mg for 2-6 year olds, and 160 mg for the 6-11 year olds.

www.rapimeds.com

Trade-marks that Fall Under the License Agreement:

Trademark:RAPIMED

Class:005

Our ref.: 77722

Trademark: MELTS IN YOUR CHILD'S MOUTH

Trademark Serial Number: 85932286

USPTO Number: 4472782

In consideration of the foregoing premises and the mutual covenants set forth in this agreement and other valuable considerations, the parties agree as follows:

1. License: Sub-Licensor hereby grants Sub-Licensees the Exclusive Canada Sub-License to use RapiMed Products for the permitted uses as set forth in this agreement only. All other rights in and to the Products, including but not limited to all copyright and other intellectual property rights relating to the Product are retained by Master Licensor, ScripsAmerica, Inc.

2. Permitted Uses: Sub-Licensees may only use the Product as follows:

Sub-Licensees may display Product either physically or electronically;

Sub-Licensees may extract or use information contained in Product for educational or research purposes, including extraction and manipulation of information for the purpose of illustration, explanation, example, comment, criticism, teaching, research, or analysis;

Sub-Licensees may enter into marketing and distribution contracts with third party companies in Canada;

3. Prohibited Uses: Sub-Licensees is prohibited from the use of Product not expressly permitted in the preceding section. Prohibited uses include but are not limited to:

Using any aspect of the Product as part of a trade-mark, design-mark, trade name;

Removing any notice of copyright, trade-mark or other proprietary right from any place where it is on or embedded in the Product;

Engaging in sales of Product, both physical and on-line, in the territory outside of Canada;

Entering into distribution agreements with online distributors, as that right is solely held by Sub-Licensor;

Sub-Licensing, gifting, assigning, transferring Product rights to any third party

4. Term: The grant of this sub-license is effective as of the signing of this agreement for a period of three (3) years and shall renew automatically for additional one (1) year periods unless terminated by one of the parties with ninety (90) days notice. The sub-license may be terminated without notice from Sub-Licensor if at any time Sub-Licensee fails to comply with any of its terms of use as stated in this agreement. Upon termination, Sub-Licensees must immediately cease all use of Product and if requested, confirm to Sub-Licensor in writing compliance wills these requirements.

5. Minimum Quotas: During the first 12 months after the Effective Date herein the Sub-Licensees will deliver to the Sub-Licensor a minimum dollar value of orders in excess of $120,000 of the SubLicensor's Pediatric RapiMed product.

During the following 12 months after the effective date herein the Sub-Licensees will deliver to the Sub-Licensor a minimum dollar value of orders in excess of $220,000 of the Sub-Licensor's Pediatric RapiMed product.

During the following 12 months after the effective date herein the Sub-Licensees will deliver to the Sub-Licensor a minimum dollar value of orders in excess of $320,000 of the Sub-Licensor's Pediatric RapiMed product.

Failure to comply with the stated minimums shall be grounds for termination of the Sub-License by the Sub-Licensor. Notice of termination with 10 days notice will be delivered by mail from the Sub-Licensor to the Sub-Licensees via U S mail with a return receipt proof of delivery.

The quotas commence 90 days after the acceptance of the registration (the Effective Date) in Canada of the Sub-Licensor's Pediatric RapiMed product.

6. Stock Compensation: Global Pharma/Assigns and Sheen Boom/Assigns will receive 200,000 Restricted Common Shares of ScripsAmerica (OTC: SCRC) for services rendered in establishing the RapiMed Canada marketing and distribution operation. Global Pharma will receive its shares in the name of Sterling, LLC and Sheen Boom will receive its shares in the name of Forbes Investments, Ltd. Shares will be dated 2/17/2014 and delivered by Federal Express to the addresses listed in the opening section of this agreement on Page 1.

6. Warranties: Sub-Licensor grants no rights and makes no warranties regarding the use of names, people, trademarks, trade dress, patented or copyrighted designs or works of art or architecture or other forms of intellectual property represented in any Product.

THE PRODUCT IS PROVIDED "AS IS" WITHOUT REPRESENTATION, WARRANTY OR CONDITION OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED REPRESENTATIONS, WARRANTIES OR CONDITIONS OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. LICENSOR DOES NOT REPRESENT OR WARRANT THAT THE PRODUCT WILL MEET SUB-LICENSEES REQUIREMENTS OR THAT ITS USE WILL BE UNINTERRUPTED OR ERROR FREE. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PRODUCT IS WITH THE MANUFACTURER AND MASTER LICENSOR. SHOULD THE PRODUCT PROVE DEFECTIVE, MANUFACTURER AND MASTER LICENSOR ASSUMES THE ENTIRE RISK AND COST OF ALL NECESSARY CORRECTIONS.

8. Amendments to Sub-License: This sub-license may only be amended by a writing signed by Sub-Licensees and authorized by Sub-Licensor.

9. Legal Disputes: This Agreement has been negotiated and is being contracted for in the State of Florida. It shall be governed by and interpreted in accordance with the laws of the State of Florida, regardless of any conflict-of-law provision to the contrary. In any dispute arising out of or connected with this Agreement, each party consents to the exclusive jurisdiction of the courts of the State of Florida or the federal district court for Florida; each Party consents to the personal jurisdiction of such courts; and each Party waives any objection to personal jurisdiction or venue.

The parties waive any right to argue conflict of law principles. The Parties agree that any claim or dispute between them or against any agent, employee, successor, or assign of the other, whether related to this agreement or otherwise, and any claim or dispute related to this agreement shall be first taken to mediation. If mediation efforts prove unsuccessful, the parties dispute moves to Federal District Court of Florida. Any award of the court may be entered as a judgment in any court of competent jurisdiction. Further, should either party, successor or assign of either party bring leading proceedings in connection with this agreement the party or parties prevailing in such proceeding shall be entitled to their reasonable attorney's fees and costs from the non-prevailing party in addition to any other such relief as may be granted.

10. Non-waiver: No failure or neglect of either party hereto in any instance to exercise any right, power or privilege under this agreement or under applicable law shall constitute a waiver of any other right, power or privilege in any other instance. All waivers by either party must be in wiring and signed by the party to be charged.

11. Entire Agreement: This Agreement contains the entire agreement and understanding between the parties and supersedes any prior or contemporaneous written or oral agreements, representations and warranties between them respecting the subject matter of this Agreement. This Agreement may be amended only by a writing signed by Sub-Licensees and by a duly authorized representative of the Sub-Licensor. If any term, provision, covenant or condition of this Agreement, or the application to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect.

12. Confidentiality.

Sub-Licensees acknowledges that it may have access to confidential information regarding the Sub-Licensor and its business. Sub-Licensees agrees that it will not, during or subsequent to the term of this Agreement, divulge, furnish or make accessible to any person (other than with the written permission of Licensor) any knowledge or information or plans of Sub-Licensor with respect to Sub-Licensor or its business, including, but not by way of limitation, the products of the Sub-Licensor, whether in the concept or development stage, or being marketed by Sub-Licensor on the effective date of this Agreement or during the term hereof. Sub-Licensees agrees that all aforementioned terms and conditions additionally apply to Master Licensor, ScripsAmerica, Inc.

13.

Covenant Not To Compete.

During the term of this Agreement, Sub-Licensees warrants, represents and agrees that it will not directly participate in the information developed for and by Sub-Licensor, and will not compete directly with Sub-Licensor in Sub-Licensor 's primary industry or related fields in the United States Market. Sub-Licensees reserves the right to import, market and distribute medicinal and health related products from other vendors into the Canada market, as long as the products are not competing with products licensed by Sub-Licensor to Sub-Licensees.

By signing this agreement the parties acknowledges they have read the entire agreement and fully understand the terms, conditions and obligations of this agreement.

EX-31.1 10 scrips_10k-ex3101.htm CERTIFICATION

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATE OF CHIEF EXECUTIVE OFFICER

I, Robert Schneiderman, certify that:

1. I have reviewed this Annual Report on Form 10-K of ScripsAmerica, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding their reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Robert Schneiderman

Robert Schneiderman, Chief Executive Officer

Date: April 15, 2014

EX-31.2 11 scrips_10k-ex3102.htm CERTIFICATION

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATE OF CHIEF FINANCIAL OFFICER

I, Jeffrey Andrews, certify that:

1. I have reviewed this Annual Report on Form 10-K of ScripsAmerica, Inc.;

(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jeffrey Andrews

Jeffrey Andrews, Chief Financial Officer

Date: April 15, 2014

EX-32.1 12 scrips_10k-ex3201.htm CERTIFICATION

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of ScripsAmerica, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Schneiderman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Robert Schneiderman

Robert Schneiderman, Chief Executive Officer

April 15, 2014

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 13 scrips_10k-ex3202.htm CERTIFICATION

EXHIBIT 32.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of ScripsAmerica, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey Andrews, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey Andrews

Jeffrey Andrews, Chief Financial Officer

April 15, 2014

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Exhibit 99.1

Temporary Hardship Exemption

IN ACCORDANCE WITH THE TEMPORARY HARDSHIP EXEMPTION PROVIDED BY RULE 201 OF REGULATION S-T, THE DATE BY WHICH THE INTERACTIVE DATA FILE IS REQUIRED TO BE SUBMITTED HAS BEEN EXTENDED BY SIX BUSINESS DAYS.