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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

EUGENE E. STEARNS (Fla. Bar No. 0149335) 

[Pro hac vice to be submitted] 

estearns@stearnsweaver.com 

JASON P. HERNANDEZ (Cal. Bar No. 308959; Fla. Bar No. 18598) 

jhernandez@stearnsweaver.com 

STEARNS WEAVER MILLER 

WEISSLER ALHADEFF & SITTERSON, P.A.

150 West Flagler Street, Suite 2200 

Miami, FL 33130 

Telephone: (305) 789-3200 

Facsimile: (305) 789-3395 

 -andJONATHAN A. PATCHEN (SBN 237346) 

jpatchen@taylorpatchen.com 

MAX BABA TWINE (SBN 296128) 

mtwine@taylorpatchen.com 

TAYLOR & PATCHEN, LLP

One Ferry Building, Suite 355 

San Francisco, CA 94111 

Telephone: (415) 788-8200 

Facsimile: (415) 788-8208 

Attorneys for Plaintiffs 

JOHN E. ABDO, as Trustee of the JOHN E. ABDO 

TRUST DATED JUNE 11, 2014, and JOHN E. ABDO, 

as Trustee of the JOHN E. ABDO TRUST 

DATED MARCH 15, 1976 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

JOHN E. ABDO, as Trustee of the JOHN E. 

ABDO TRUST DATED JUNE 11, 2014, and 

JOHN E. ABDO, as Trustee of the JOHN E. 

ABDO TRUST DATED MARCH 15, 1976, 

 Plaintiffs, 

 v. 

MICHAEL R. FITZSIMMONS, PETER LAI, 

CHRISTOPHER G. POWER, PETER J. 

GOETNER, CHRISTIAN BORCHER, 

ERNEST D. DEL, MARC S. YI, JAMES C. 

PETERS, and SOUHEIL S. BADRAN, 

 Defendants. 

 Case No.: 

COMPLAINT FOR VIOLATION OF 

FEDERAL SECURITIES LAWS, 

INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

DEMAND FOR JURY TRIAL

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 2. 

COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

INTRODUCTION

1. This is a securities fraud action against Delivery Agent, Inc.’s (“Delivery Agent”) 

Chief Executive Officer, Michael R. Fitzsimmons (“Fitzsimmons”), and other of Delivery 

Agent’s former and current officers/directors. This civil action is brought pursuant to Sections 

10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 

10b-5 (17 C.F.R. § 240.10b-5). Plaintiffs also assert causes of action for intentional and 

negligent misrepresentation. 

2. Delivery Agent is a company in the burgeoning television-commerce space, 

known as “t-commerce.” Delivery Agent claimed that it developed proprietary, interactive 

technology to connect television viewers to the products they see on TV so that they can 

instantly purchase those products through their smart TV using the TV’s remote control or 

another device. 

3. From at least May 2014 through and including April 2016, Delivery Agent 

directly issued and sold securities to investors, including Plaintiffs, in the form of preferred 

stock, stock warrants, convertible promissory notes, and other securities, all with the goal of 

covering what was represented as short-term cash-flow negatives (a “burn rate”) that was to end 

by both positive cash flow from operations and an Initial Public Offering (“IPO”). 

4. At all times relevant, Delivery Agent claimed through its officers and/or directors 

that Delivery Agent’s interactive technology worked, that it had been proven to be accepted by 

and used in market tests, and was proprietary. Relying on those representations, Plaintiffs 

purchased $18 million in securities from Delivery Agent from May 2014 through and including 

April 2016. 

5. In truth and fact, Delivery Agent’s officers and/or directors concealed and failed 

to timely disclose to Plaintiffs highly damaging information about the functionality and 

proprietary nature of Delivery Agent’s core technology and the trustworthiness of its most senior 

executives. Specifically, 

a) Delivery Agent’s officers and directors failed to timely disclose to 

Plaintiffs that the first-ever live demonstration of its core technology in 

a television commercial during the February 2014 Super Bowl was a 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

complete failure because viewers were unable to use Delivery Agent’s 

technology to purchase products featured in the commercial directly 

from their TVs as Delivery Agent intended and represented they 

would; 

b) Compounding the technological failure, Delivery Agent’s officers and 

directors failed to timely disclose that Fitzsimmons, Delivery Agent’s 

CEO, directed corporate officers and others to purchase the products 

featured in the Super Bowl commercial and subsequently disseminated 

false and fabricated sales reports claiming that the Super Bowl 

advertising campaign was a success, when it was actually an abject 

failure; 

c) As a result of the Super Bowl advertisement fraud perpetrated by 

Fitzsimmons and the other defendants, Delivery Agent’s then-auditor 

informed Delivery Agent that it could no longer rely on the 

representations of certain senior officers in its audits of the company’s 

books, which led Delivery Agent to fire the auditor and all but ensure 

that Delivery Agent could never complete an IPO and become a 

publicly traded company; and 

d) Representations that Delivery Agent’s technology was proprietary 

were false and/or misleading. 

6. In furtherance of their fraudulent scheme, the Defendants continued raising cash 

through securities offerings even though the Defendants knew that the Super Bowl ad failure and 

the subsequent corporate cover-up all but ensured that Delivery Agent could never sell stock to 

the public in an IPO. 

7. As a result of the Super Bowl failure and subsequent omissions and/or false and 

misleading statements made by the Defendants, Delivery Agent never went public. Without a 

public offering and without functioning, proprietary technology, Delivery Agent was unable to 

attract a buyer or raise more cash, leading Delivery Agent to file for Chapter 11 bankruptcy 

protection in September 2016. 

8. As a direct and proximate result of this fraudulent scheme, Plaintiffs’ securities 

are now worthless. 

PARTIES

9. Plaintiff John E. Abdo brings this lawsuit as the Trustee of the John E. Abdo 

Trust Dated June 11, 2014 (the “Abdo 2014 Trust”). The Abdo 2014 Trust is an express, legal 

trust that purchased $15 million in securities from Delivery Agent. 

10. Plaintiff John E. Abdo brings this lawsuit as the Trustee of the John E. Abdo 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

Trust Dated March 15, 1976 (the “Abdo 1976 Trust”). The Abdo 1976 Trust is an express, legal 

trust that purchased $3 million in securities from Delivery Agent. 

11. John E. Abdo is domiciled in and is a citizen of Florida. 

12. The Abdo 2014 Trust and the Abdo 1976 Trust are collectively referred to herein 

as “the Plaintiffs.” 

13. Defendant Michael R. Fitzsimmons (“Fitzsimmons”) was at all relevant times 

Delivery Agent’s Chief Executive Officer and a member of Delivery Agent’s Board of 

Directors. Fitzsimmons is domiciled in and is a citizen of California. 

14. Defendant Peter Lai (“Lai”) was at all relevant times Delivery Agent’s President 

and Chief Operating Officer until approximately January 2015 and thereafter was Delivery 

Agent’s President of Ecommerce. Upon information and belief, Lai is currently domiciled in 

and is a citizen of California, but his last known address is in the State of Washington. 

15. Defendant Christopher G. Power (“Power”) was at all relevant times a member of 

Delivery Agent’s Board of Directors and the Chairman of the Audit Committee. Power is 

domiciled in and is a citizen of Colorado. 

16. Defendant Peter J. Goetner (“Goetner”) was at all relevant times a member of 

Delivery Agent’s Board of Directors, a member of the Audit Committee, and a member of the 

Nominating and Governance Committee. Goetner is domiciled in and is a citizen of California. 

17. Defendant Christian Borcher (“Borcher”) was at all relevant times a member of 

Delivery Agent’s Board of Directors, a member of the Audit Committee, and Chairman of the 

Nominating and Governance Committee. Borcher is domiciled in and is a citizen of California. 

18. Defendant Ernest D. Del (“Del”) was at all relevant times a member of Delivery 

Agent’s Board of Directors. Del is domiciled in and is a citizen of California. 

19. Defendant Marc S. Yi (“Yi”) was at all relevant times a member of Delivery 

Agent’s Board of Directors and a member of the Nominating and Governance Committee. Yi is 

domiciled in and is a citizen of California. 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

20. Defendant James C. Peters (“Peters”) was at all relevant times a member of 

Delivery Agent’s Board of Directors and Delivery Agent’s Chief Operating Officer beginning 

January 7, 2015. Peters is domiciled in and is a citizen of California. 

21. Defendant Souheil S. Badran (“Badran”) was at all relevant times a member of 

Delivery Agent’s Board of Directors. Badran is domiciled in and is a citizen of Wisconsin. 

22. Fitzsimmons, Lai, Power, Goetner, Borcher, Del, Yi, Peters, and Badran are 

herein referred to collectively as “the Defendants.” 

23. The Defendants, because of their positions in Delivery Agent, had the power and 

authority to control the content of any of Delivery Agent’s securities offerings. Because of their 

positions in Delivery Agent and their access to the facts recited in this Complaint, the 

Defendants knew that the securities offerings that are the subject of this Complaint contained 

material omissions of fact that were required to be disclosed and/or contained false and 

misleading statements. The Defendants are thus liable for the omissions and false statements 

pleaded in this Complaint. 

JURISDICTION

24. This Court has jurisdiction over this matter pursuant to Section 27 of the 

Exchange Act and 28 U.S.C. § 1331. The federal securities law claims asserted herein arise 

under Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5. 

25. This Court has supplemental jurisdiction over the common-law claims asserted in 

this Complaint pursuant to 28 U.S.C. § 1367. This Court also has jurisdiction because there is 

complete diversity between the parties and the amount in controversy exceeds the jurisdictional 

amount as set forth in 28 U.S.C. § 1332. 

26. In connection with the acts, transactions, and conduct alleged in this Complaint, 

the Defendants, directly or indirectly, used the means and instrumentalities of interstate 

commerce, including, but not limited to, the mails and interstate wire and telephone 

communications. 

/// 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

VENUE

27. At all times relevant, Delivery Agent maintained its principal office and place of 

business in San Francisco, California. 

28. Venue is proper in this District pursuant to Section 27 of the Exchange Act and 

28 U.S.C. § 1391(b). The securities that are the subject of this lawsuit and the alleged omissions 

of material fact, as well as false and misleading statements, were made in or issued from this 

District. In addition, upon information and belief, at least one of the Defendants resides in this 

District. 

INTRADISTRICT ASSIGNMENT

29. A substantial part of the events and omissions giving rise to this action occurred 

in San Francisco, California. This action should therefore be assigned to the San Francisco 

Division pursuant to Civil Local Rules 3-2(c) and (d). 

SUBSTANTIVE ALLEGATIONS

Background

30. Delivery Agent is a “t-commerce,” or television-commerce, company founded in 

2005 that claimed to interactively connect TV viewers to the products they see on their smart 

televisions. The core of Delivery Agent’s purportedly groundbreaking business is an allegedly 

proprietary technology that allows a TV viewer to instantly and directly purchase goods, such as 

an article of clothing appearing in a TV commercial or worn by an actor in a TV show, using a 

smart television’s remote control or a mobile device. 

31. Super Bowl XLVIII, which was played on February 2, 2014, was the first time 

that Delivery Agent’s interactive technology was used in a TV commercial broadcast to the 

general public. Delivery Agent partnered with popular clothing retailer H&M for the Super 

Bowl commercial that featured international soccer star David Beckham’s clothing line. 

According to Delivery Agent, anyone watching that commercial would be able to use Delivery 

Agent’s interactive technology to order the clothing items in the commercial directly from their 

smart TV using their remote control. 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

32. In a press release issued prior to the Super Bowl, Fitzsimmons described Delivery 

Agent’s interactive technology as a “game-changer for the advertising industry.” (Delivery 

Agent Press Release, Delivery Agent Powers the First Shoppable TV Commercial Bringing TCommerce to Life at CES 2014, Jan. 6, 2014, available at http://www.deliveryagent.com/pressreleases/hm-and-david-beckham-are-back-in-action-at-the-super-bowl-with-groundbreakingcampaign). 

33. Fitzsimmons further described the Super Bowl commercial as an “industry first” 

and groundbreaking: “Years ago, the world talked about the potential associated with buying 

Jennifer Aniston’s sweater. H&M, in an industry first, will now realize that potential by making 

their Super Bowl XLVIII ad actionable and directly measurable.” (Delivery Agent Press 

Release, Delivery Agent Powers the First Shoppable TV Commercial Bringing T-Commerce to 

Life at CES 2014, Jan. 6, 2014, available at http://www.deliveryagent.com/press-releases/hmand-david-beckham-are-back-in-action-at-the-super-bowl-with-groundbreaking-campaign). 

In Preparing to Go Public, Delivery Agent Directly Sold Securities to Plaintiffs

34. In or about 2014, the same year that the Super Bowl H&M commercial aired to 

the public, Fitzsimmons represented to Plaintiffs and others that Delivery Agent planned on 

going public before the end of 2014. To that end, Delivery Agent directly sold securities to 

Plaintiffs and others to raise funds to establish a viable business that would be attractive to 

public investors in the planned IPO. This action arises from Delivery Agent’s sale of Series F 

Preferred Stock, Series G Preferred Stock, Stock Warrants, and Convertible Promissory Notes 

(collectively, the “Securities”) to Plaintiffs from 2014 through and including 2016. 

35. Preferred Stock is kind of stock or equity that gives the holder certain rights 

superior to those of common stock owners. The Series F and Series G Preferred Stock sold by 

Delivery Agent to Plaintiffs are securities. 

36. A Stock Warrant is a security that allows the holder of the warrant to buy stock of 

the underlying company at a fixed price during a fixed time period. The Stock Warrants sold by 

Delivery Agent to Plaintiff Abdo 2014 Trust are securities. 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

37. A Convertible Promissory Note is a debt instrument that is convertible into equity 

securities upon the occurrence of certain defined events. The Convertible Promissory Notes sold 

by Delivery Agent to Plaintiffs are securities. 

38. Delivery Agent sold the Securities to Plaintiffs pursuant to Rule 506 of 

Regulation D of the Securities Act of 1933 (“Securities Act”), which creates an exemption to 

registration requirements for the sale of securities. Securities offerings under Rule 506 are 

commonly referred to a “private placements.” 

39. Specifically, Plaintiffs purchased securities totaling $18,000,000 from Delivery 

Agent as set forth below: 

Purchase 

Date 

Purchaser Amount 

Paid 

No. of 

Shares 

Security Purchased 

6/18/14 Abdo 2014 

Trust 

$5 million 5,504,789 Series F Preferred Stock and 

Warrant Purchase Agreement 

9/24/14 Abdo 2014 

Trust 

$5 million 5,504,789 Series F Preferred Stock 

1/13/15 Abdo 2014 

Trust 

$5 million 5,504,789 Series F Preferred Stock 

with 120-Day Warrant 

5/13/15 Abdo 1976 

Trust 

$1 million 1,320,132 Series G Preferred Stock and 

Warrant Purchase Agreement 

7/20/15 Abdo 1976 

Trust 

$1 million N/A Convertible Promissory Note 

4/20/16 Abdo 1976 

Trust 

$1 million N/A Convertible Promissory Note 

40. All of the Securities were issued by Delivery Agent pursuant to a vote of the 

Board of Directors. 

41. The Series F Preferred Stock offerings were approved by a vote of Delivery 

Agent’s Board of Directors on or about March 14, 2014. 

42. The Series G Preferred Stock and Convertible Promissory Note offerings were 

approved by a vote of Delivery Agent’s Board of Directors subsequent to the Series F Preferred 

Stock offerings. 

/// 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

Delivery Agent and the Defendants Represented 

to Plaintiffs That Its Core Technology Worked

43. In connection with the first sale of securities to Plaintiff Abdo 2014 Trust on June 

18, 2014, and subsequent sales of securities to Plaintiffs, the Defendants prepared and 

disseminated or caused to be disseminated in interstate commerce certain written materials to 

Plaintiffs and others on or about May 12, 2014. Among those written materials was a 

PowerPoint presentation (the “PowerPoint”) describing Delivery Agent and its technology. 

44. The PowerPoint prominently featured portions of articles from AdAge and 

Variety published in January 2014 that described how Delivery Agent’s technology would 

appear in a televised Super Bowl commercial the following month. The articles explained that 

Delivery Agent had partnered with H&M to use Delivery Agent’s technology in connection with 

the sale of an H&M clothing line featuring products associated with international soccer star 

David Beckham. The articles said that TV viewers would be able to use their television’s remote 

control to purchase items from David Beckham’s clothing line from H&M. 

45. The PowerPoint also explicitly linked Delivery Agent’s desire to raise capital to 

preparing for the impending IPO. Under the heading “Capital Raise,” the PowerPoint said that 

“Delivery Agent is seeking to raise $35 million in a pre-IPO round to fund its key growth 

initiatives.” Under the heading “Use of Proceeds,” Delivery Agent listed the first item as “IPO 

readiness.” 

46. Also in connection with the first sale of securities to Plaintiff Abdo 2014 Trust on 

June 18, 2014, the Defendants prepared and/or approved a draft S-1 statement (the “Draft S-1”) 

and disseminated a portion of it or caused it to be disseminated in interstate commerce to 

potential investors, including Plaintiffs. 

47. “S-1” refers to Form S-1, a filing with the U.S. Securities and Exchange 

Commission (“SEC”) required of companies that plan on an IPO. Form S-1 is also known as the 

registration statement. 

/// 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

48. The Draft S-1 says, among other things, that Delivery Agent’s “technology and 

relationships enable viewers to engage with, and transact in response to television content 

anytime, anywhere and on any connected device.” 

49. The Defendants claimed in the Draft S-1 that through Delivery Agent’s “end-toend engagement and commerce solution, we handle the entire transaction process for our 

partners on a white-label basis, enabling viewers to . . . purchase products seen on TV shows, 

sporting events, commercials and infomercials.” 

50. In 2013, Delivery Agent’s technology “drove more than 75 million viewer 

engagements with products and information from our partners’ content,” according to the Draft 

S-1. 

51. The Draft S-1 goes on to identify five examples of “how viewers interact and 

engage with television content” through Delivery Agent’s “platform.” The first example was the 

February 2014 Super Bowl campaign with H&M. 

52. The Draft S-1 also says that the Super Bowl ad with H&M was a success and it 

fails to mention any technical problems encountered with the technology: “[D]uring Super Bowl 

XLVIII, viewers of H&M’s Super Bowl advertisement featuring David Beckham were able to 

buy the clothing featured in the advertisement directly from their remote control on enabled 

TV’s.” (Emphasis added). 

53. In several places throughout the PowerPoint and the Draft S-1, the Defendants 

claimed that Delivery Agent’s technology was proprietary. For example, the Draft S-1 described 

Delivery Agent’s technology as its “proprietary omni-screen technology platform” and an 

“integrated proprietary technology platform.” Delivery Agent even listed “[a]dvanced 

proprietary technology” as one of its “Competitive Strengths” in the Draft S-1. The Draft S-1 

further says, “Our solutions leverage proprietary technologies and data to enable real-time 

transactions, engagements and optimizations across devices and platforms.” 

54. The vast majority of Delivery Agent’s revenue for 2013 and 2014 was generated 

by what Delivery Agent called “e-Commerce” or selling goods to TV viewers. According to the 

PowerPoint, in 2013 and 2014, Delivery Agent generated 79.2% and 76.5% of its revenue from 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

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e-commerce respectively, compared to 20.8% and 23.5% of revenue for those same years, 

respectively, from advertising. 

55. On January 9, 2015, the Defendants disseminated or caused to be disseminated to 

two Delivery Agent investors an updated draft S-1 (the “Updated Draft S-1”) that continued to 

claim that the February 2014 Super Bowl advertising demonstration was a success. 

56. That same day, Plaintiff Abdo 2014 Trust received a copy of the Updated Draft S1 and relied upon the representations therein before purchasing $5 million in securities from 

Delivery Agent on January 13, 2015. 

57. Plaintiffs reasonably relied on the statements in the PowerPoint, the Draft S-1, the 

Updated Draft S-1, and other representations made by the Defendants through Delivery Agent. 

Delivery Agent and the Defendants Failed to Disclose and 

Concealed from Plaintiffs Material Information about the Failed 

Super Bowl Commercial and a Subsequent Attempted Cover-up

58. The day after the Super Bowl, Delivery Agent issued a press release in which 

Fitzsimmons claimed that the H&M ad was a success: “‘H&M kicked-off a great campaign 

during Super Bowl XLVIII to promote their David Beckham Bodywear Collection,’ said Mike 

Fitzsimmons, Delivery Agent CEO. ‘That same campaign kicked-off a new paradigm for 

advertising, fundamentally changing the discipline by making television advertising actionable 

and measureable.’” (Delivery Agent Press Release, Delivery Agent Extends Partnership with 

H&M to Shop-enable Ad Campaign, Feb. 3, 2104, available at

http://www.deliveryagent.com/press-releases/delivery-agent-extends-partnership-with-hm-toshop-enable-ad-campaign). 

59. Unbeknownst to Plaintiffs, Delivery Agent’s high-profile demonstration of its 

technology during Super Bowl XLVIII on February 2, 2014, more than four months before 

Plaintiff Abdo 2014 Trust’s first investment in Delivery Agent, was a complete failure. 

Fitzsimmons’s claim the day after the Super Bowl that the ad campaign was a success was 

intentionally false. Even worse, Delivery Agent and its most senior officers were directly 

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involved in a substantial corporate fraud and cover-up designed to hide the truth about the Super 

Bowl ad campaign from Plaintiffs and others to induce Plaintiffs to purchase the Securities. 

60. A few days after the Super Bowl, a whistleblower (the “Whistleblower”) came 

forward to Delivery Agent’s then-auditor (the “Auditor”) with the truth about the H&M 

commercial. 

61. The Auditor is one of the “Big Four” accounting firms. 

62. At the time, Delivery Agent had engaged the Auditor to audit Delivery Agent’s 

consolidated financial statements as of December 31, 2012. The Auditor issued its report on 

February 5, 2014, three days after Super Bowl XLVIII. 

63. Among other things, the Whistleblower told the Auditor that: 

a) The Super Bowl H&M campaign failed because TV viewers were 

unable to buy items from David Beckham’s clothing line through their 

TVs; 

b) Fitzsimmons directed high-ranking Delivery Agent officers to 

purchase the items featured in the commercial to give the appearance 

that Delivery Agent’s technology had worked, when it had not; and 

c) False and fabricated sales reports touting the H&M commercial a 

success were generated and disseminated to third parties by Delivery 

Agent and its officers and directors. 

64. The Auditor subsequently informed Delivery Agent’s Audit Committee of the 

allegations. The Audit Committee conducted an investigation and retained an outside law firm 

(the “Law Firm”) to investigate the allegations. The Audit Committee’s and the Law Firm’s 

findings were presented to the Audit Committee and the Board of Directors. 

65. The Audit Committee and the Board of Directors agreed with the gravamen of the 

Whistleblower’s allegations, finding that Delivery Agent’s senior management, including 

Fitzsimmons and Lai, instructed other employees to purchase the items featured in the Super 

Bowl ad because Delivery Agent’s interactive technology did not function properly. They also 

agreed with the Whistleblower that Delivery Agent executives were involved in or aware of the 

preparation of information containing fabricated data regarding the Super Bowl ad, including 

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information about performance and sales, which was provided to an advertising campaign 

partner and third parties. 

66. Although the Audit Committee and the Board of Directors basically substantiated 

the Whistleblower’s allegations, the Audit Committee and the Board of Directors concluded that 

“the financial impact of the purchases was not material from a financial standpoint and had no 

material adverse impact on the business or operations of the company,” “there was no impact on 

the integrity of our financial statements as a result of the matter” and “our current Chief 

Executive Officer was not involved in the fabrication of data . . . .” 

67. The Board of Directors also implemented the Audit Committee’s recommended 

remediation plan, which included “the adoption of more stringent business practices, policies 

and procedures, including an ethics policy,” “the establishment of stricter internal controls,” “the 

initiation of additional employee training,” and “other personnel remedial measures, including 

written warnings and/or the demotion or reduction in responsibilities for certain employees, lost 

bonus awards for certain employees, and the termination of our then head of internet 

advertising.” 

68. The Auditor was subsequently presented with reports of the Audit Committee’s 

and Law Firm’s investigations and Delivery Agent’s remedial actions. 

69. The Auditor, however, rejected the Defendants’ and Delivery Agent’s attempt to 

make light of a material breach of ethics by senior corporate officers. The ability of the Auditor 

to rely on those officers ended, and with it, the willingness of the Auditor to provide the 

accounting and auditing functions necessary to issue the audit opinions in connection with an 

IPO also ended. The Auditor concluded in writing that it was “not willing to rely on the 

representations” of Delivery Agent management involved in the Super Bowl debacle, including 

Fitzsimmons and Lai, “for purposes of [the Auditor’s] previously-completed audit” of Delivery 

Agent’s consolidated financial statements. 

70. The Auditor further informed Delivery Agent that it would not be able to reissue 

its previously issued audit report or continue with the December 31, 2013 audit if the persons 

involved in fabricating data were involved with the accounting or internal controls, were in a 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

financial role at Delivery Agent, or in a supervisory role or a position to influence those in such 

roles. 

71. The Auditor also informed Delivery Agent that to complete its audit as of and for 

the year ended in December 31, 2103, it would need to significantly expand the scope of its 

previously completed 2012 audit and the incomplete 2013 audit to determine if any Delivery 

Agent personnel inappropriately influenced the accounting or financial reporting. 

72. Power, the Chairman of the Audit Committee, subsequently discussed the 

Auditor’s position with the Auditor. After that discussion, it was apparent that the Auditor 

would not pay any heed to the conclusions of Delivery Agent’s internal and external 

“investigations.” 

73. The response of the Board of Directors was unanimous. It terminated the Auditor 

on July 29, 2014. Delivery Agent subsequently dismissed the Auditor as its independent auditor 

on August 4, 2014. 

74. The obvious consequence of the termination of the Auditor was that Delivery 

Agent could not complete an IPO. By terminating the Auditor, Delivery Agent triggered an 

obligation under the federal securities laws for the company to explain the circumstances and 

bases for terminating the Auditor. That explanation, known as Item 304, is required of all 

companies that intend to go public. Even worse for Delivery Agent, the law governing Item 304 

disclosures requires the dismissed auditor to write a response to the company’s Item 304 

disclosure. Both Item 304 and the Auditor’s response are filed with and reviewed by the SEC 

prior to an IPO. 

75. Fitzsimmons, however, intentionally misled Plaintiffs about the reason the IPO 

was continually delayed to fraudulently induce Plaintiffs to purchase the Securities. On October 

13, 2014, eight months after the Super Bowl, Trustee for the Plaintiffs wrote an email to 

Fitzsimmons to inquire if Delivery Agent intended to file the S-1 in November 2014 so that the 

IPO could proceed in February 2015. That same day, Fitzsimmons replied as follows: “We are 

having to do a carve-out audit of Music Today from Live Nation which is taking some time but 

all good. The current plan is to confidential file in December [2014] and go out in March.” 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

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76. Fitzsimmons’s response was intentionally false and misleading because it was 

calculated to lead Plaintiffs to believe that an audit for Music Today that was “all good” was the 

reason the IPO was delayed, when the truthful reason was that the IPO was effectively dead after 

the disastrous H&M Super Bowl commercial and ensuing attempt to cover up the failure. 

77. Even though the Defendants knew that an IPO was all but impossible, Delivery 

Agent prepared a draft Item 304 (the “Draft Item 304”) in July 2015 and sent it to the Auditor for 

its response. In an email dated August 5, 2015, Fitzsimmons wrote to Plaintiffs that Delivery 

Agent would be able to file for the IPO as soon as August 12th, “[a]ssuming [the Auditor] plays 

along . . . .” 

78. But the Auditor did not play along. Instead, the true extent of the fraud 

perpetrated by Delivery Agent and the Defendants came to light. The Auditor’s draft response 

to Delivery Agent’s Draft Item 304 filing was highly critical of Delivery Agent’s portrayal of the 

facts and its omission of several key facts. 

79. Delivery Agent’s Draft Item 304 attempted to downplay the significance of the 

Super Bowl failure and subsequent acts by senior management that were intended to cover it up. 

The Draft Item 304 said, in relevant part, only the following: 

In February 2014, in connection with an interactive advertising campaign 

involving the Company’s technology, certain current and former employees, 

and members of our senior management (including our current Chief 

Executive Officer, our current President of eCommerce and our former head 

of interactive advertising) instructed other employees to purchase, or make 

purchases themselves, of merchandise that was offered for sale online as part 

of the interactive advertising campaign on behalf of our advertising campaign 

partner. These purchases involved merchandise owned by and held in 

inventory of the Company, were in the amount of less than $10,000, had no 

financial impact, and were never recorded in the Company’s books and 

records. 

In addition, within two business days, it was determined that some of the 

Company’s current and former employees and members of our senior 

management also prepared information, or were involved in or aware of the 

preparation of information, that contained fabricated data regarding the 

performance of the advertising campaign, including regarding the sales of 

merchandise during the campaign. The fabricated data was provided to one of 

our advertising campaign partners and certain other third parties. When our 

Chief Executive Officer learned that the data had been fabricated, he retracted 

it from all recipients and instructed them that the data should not be relied 

upon for any purposes. The Company believes that the data was not relied 

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& NEGLIGENT MISREPRESENTATION 

upon by its advertising campaign partner or any third party, and the Company 

maintains an ongoing business relationship with this advertising campaign 

partner. 

80. The Auditor’s response to the Draft Item 304, by contrast, provided much more 

damaging information describing an intentional effort by Delivery Agent’s most senior officers 

to conceal a catastrophic failure of Delivery Agent’s core interactive technology, an effort to 

falsify and fabricate data to make that failure appear like a success, and repeated attempts by 

Fitzsimmons to obstruct the internal and external investigations into the Super Bowl fiasco. 

81. The Auditor’s response also made clear that several high-ranking corporate 

officers purchased nearly all of the items advertised during the Super Bowl and did so to conceal 

the fact that Delivery Agent’s technology had failed and that TV viewers were unable to buy 

nearly any of the advertised items: 

In February 2014, in connection with the first interactive advertising 

campaign to market merchandise offered for sale online on behalf of one of 

the Company’s advertising partners on super bowl Sunday, certain current and 

former employees of the Company, and certain members of the Company’s 

senior management (including the current Chief Executive Officer (CEO), the 

Company’s current President of eCommerce and the Company’s former head 

of interactive advertising), instructed other employees of the Company to 

purchase, or made purchases themselves, of 585 of 600 pieces of the 

advertising partners’ merchandise that was offered for sale as part of the 

campaign. After receiving an update that only 15 pieces of merchandise had 

been purchased hours into the super bowl, the current CEO directed the 

former President and COO to “buy all remaining” merchandise. 

Further, the CEO received an email during super bowl Sunday indicating the 

advertising partners’ representatives tried but could not access technology to 

purchase their merchandise. The next day, the Chief Executive Officer agreed 

to have the former President and COO email the advertising partner that they 

sold out of all 1,100 pieces of merchandise (600 pieces of merchandise 

offered for sale and 500 pieces of the same merchandise available for 

giveaway). The same day, the CEO emailed the Board communicating 

purchases of 711 pieces of their advertising partners’ merchandise (which 

unknown to the Board included the 585 of 600 merchandise pieces bought by 

employees directed to do so by the CEO and other members of Senior 

Management and 139 of 500 merchandise pieces available for the giveaway). 

Two days after the advertising campaign, the CEO gave an update at a Board 

meeting communicating the advertising campaign was a great success with no 

discussion of the technology problems encountered or the 585 of 600 pieces 

sold being acquired by Company personnel at the CEO’s direction. 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

82. Upon information and belief, Lai is the “the former President and COO” 

referenced in the Auditor’s response above. Lai is also referred to as the “current President of 

eCommerce” in the Draft Item 304. 

83. The Auditor’s response established that Fitzsimmons personally directed other 

employees to make the purchases, that Fitzsimmons knew that the subsequent sales reports were 

false, that the fabricated data was provided to an advertising partner, and that there was no 

evidence that the fabricated data was withdrawn after it was disseminated: 

We disagree with the implication in the third sentence in the fourth paragraph 

where the Company’s disclosure states that “When our Chief Executive 

Officer was advised that some of the data had been fabricated[,]” as he would 

have known that data was fabricated in that it would either include employee 

purchases he directed or included purchases to the advertising partner, Board 

of Directors and later a potential investor or have required alteration to 

remove the effect of these and he was made aware of the technology issues 

from the advertising partner. As previously noted, subsequent to the 

conclusion of the campaign the Chief Executive Officer reported the Board 

that the campaign was a success, no mention of him directing employees to 

make purchases or the inability of advertising partners and some employees to 

access technology to purchase merchandise was mentioned. 

Further, we understand that the Audit Committee’s external investigation team 

later obtained evidence indicating that the CEO and others in Senior 

Management directed the metrics to be altered further as 361 of 500 free units 

offered in the campaign were not given away and sent the altered metrics to 

the advertiser and potential investors. It was subsequently determined that 

some of the Company’s current and former employees and certain members of 

the Company’s senior management had prepared, or were aware of the 

preparation of, information that contained fabricated data regarding the 

performance of the above-referenced interactive advertising campaign, 

including fabricated data regarding the amount of merchandise purchased 

during the campaign. The fabricated data was provided to the advertising 

campaign partner and to certain other third parties at the direction of the Chief 

Executive Officer and others in Senior Management. Days after the campaign, 

the CEO sent a potential investor the same report sent to the advertising 

partner originally and stated ‘campaign massive success and is leading to an 

extension[.] 

We disagree with the statement that “When our Chief Executive Officer was 

advised that some of the data had been fabricated, the data was promptly 

retracted from the recipients[.]” The investigation found no evidence that such 

data was retracted and our Partner was told such had not been prior to our 

termination. We have no basis to agree or disagree as to what has been 

communicated since our termination, or whether the fabricated data was relied 

upon by its advertising campaign partner or any third party or if the Company 

maintains an ongoing business relationship with this advertising campaign 

partner. We were told that that the investigation found that at the time of the 

advertising campaign the CEO and members of Senior Management’s actions 

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demonstrated that the success of the super bowl Sunday advertising campaign 

from a technological feasibility perspective was very important to the Board, 

advertising campaign partners and potential investors at that time. 

84. The Auditor went on to explain that the Draft Item 304 omitted that Fitzsimmons 

improperly interfered with Delivery Agent’s internal and external investigations into the Super 

Bowl matter: 

The allegation of fabricated data was brought to the attention of [the Auditor] 

by an employee in senior management, and we in turn informed the Audit 

Committee Chairman. Omitted from the Disclosure in fifth paragraph is that, 

the Audit Committee investigated the matter, initially using internal resources 

however, the internal investigation team experienced repeated interference 

from the Chief Executive Officer. Despite clear communication from the 

Audit committee of who was responsible for the investigation, the Chief 

Executive Officer wanted certain individuals not to be a part of the internal 

investigation team, tried to influence the scope of the investigation and caused 

there to be delays in conducting email and other electronic searches. 

Subsequently, the Audit Committee engaged an outside law firm to conduct 

an independent investigation and prepare a report to the Audit Committee 

regarding its findings. The scope of the Audit Committee’s investigation was 

(a) to investigate management’s actions and conduct during the advertising 

campaign, and also specifically (b) to investigate allegations of interference 

with the audit committee’s internal investigation by the Chief Executive 

Officer and Senior management. Based upon the external investigation team, 

we understand that the Audit Committee concluded that (a) the Chief 

Executive Officer acknowledged his involvement in the purchase of products 

by employees along with other members of Senior Management. While there 

was evidence indicating the Chief Executive Officer’s involvement in further 

manipulation of data provided to advertising partners and others to make the 

employee purchases appear as though they had come from customers the 

Audit Committee believes such was inconclusive. 

However, the Audit Committee believed conclusive evidence indicated that 

certain members of senior management and employees were found to have 

knowledge and involvement in the further manipulation of the advertising data 

beyond the purchase of products and initial reporting of those purchases and 

(iv) The Chief Executive Officer made repeated attempts to influence the 

scope and composition of the Audit Committee’s original internal 

investigation prior to the Audit Committee engaging an external investigation 

team and we were informed the CEO even tried to influence the scope with 

the external investigation team. 

85. All of the foregoing facts were material to any reasonable investor, including 

Plaintiffs, engaged in making a decision to invest or not invest in Delivery Agent. 

/// 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

86. The Defendants either directly concealed from Plaintiffs these facts or 

participated in encouraging the additional investments in Delivery Agent knowing that these 

facts were being concealed. 

87. Had Plaintiffs known that the Super Bowl ad was a failure, that the Auditor had 

been terminated because it refused to go along with the Defendants’ fraud and declined to accept 

the representations of managers who participated in it, or had Plaintiffs learned that an IPO could 

not proceed under these circumstances, Plaintiffs would not have invested the first dollar into the 

purchase of the Securities. 

In Furtherance of the Scheme, Delivery Agent and the Defendants 

Made Misleading and Incomplete Disclosure of the Super Bowl Incident 

to Induce Plaintiffs to Buy More Securities

88. Plaintiffs first learned of a potential dispute with the Auditor on or about March 9, 

2015, after Plaintiff Abdo 2014 Trust had already purchased $15 million in securities from 

Delivery Agent. But even then, neither Delivery Agent nor the Defendants made a complete and 

fair disclosure to Plaintiffs about the true nature and extent of the Super Bowl advertising failure 

or the conduct of senior management following it. For example, on March 9, 2015, Fitzsimmons 

falsely represented to Plaintiffs in a telephone call that the Super Bowl debacle was immaterial 

and that the Auditor’s position was unreasonable. 

89. Instead of fully and fairly disclosing the relevant facts to Plaintiffs, Delivery 

Agent and the Defendants embarked on a campaign to continue raising funds through the sale of 

securities to Plaintiffs by falsely and fraudulently continuing to claim that Delivery Agent’s IPO 

was imminent. 

90. On March 11, 2015, a few days after Plaintiffs learned of the potential dispute 

with the Auditor, Delivery Agent released an investor update entitled “Q1 2015 Mid Q Investor 

Update” (the “March 2015 Investor Update”). The March 2015 Investor Update stated that the 

“IPO process [was] progressing with continued audit delays,” but it did not disclose the nature or 

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severity of those “audit delays,” nor did it disclose the Super Bowl ad failure or the subsequent 

cover-up. 

91. More to the point, and in furtherance of the scheme to continue selling securities 

to Plaintiffs without full and fair disclosure of the Super Bowl catastrophe, the March 2015 

Investor Update said that Delivery Agent, “Need[ed] to solve immediate cash issue.” It went on 

to say that Delivery Agent was raising $12 million in “Pre-IPO Bridge” funds. 

92. On April 4, 2015, Fitzsimmons wrote in an email to Plaintiffs and others that 

Delivery Agent “continue[s] to battle through roadblocks heading towards our IPO.” 

Fitzsimmons identified “general market conditions” and the following “3 key issues” holding up 

the IPO: an “SEC ruling on revenue recognition, 2014 audits and 304 disclosure.” Fitzsimmons 

further added, “[t]here is nothing more humanly possible our team could be doing to achieve this 

important milestone and we are working around the clock to resolve.” As a result of the IPO’s 

delay, Fitzsimmons added that Delivery Agent was raising “additional equity financing” in the 

form of Series G Convertible Preferred Stock. 

93. It was not until August 19, 2015, that Plaintiffs obtained a copy of the Draft Item 

304 and the Auditor’s response. By that point, Plaintiffs had purchased $17 million in Securities 

offered by Delivery Agent because Fitzsimmons and Delivery Agent continued to represent that 

the IPO was still achievable and Plaintiffs had no reason to believe at that point that the Super 

Bowl ad catastrophe would all but ensure that Delivery Agent would never go public. 

94. Nonetheless, Delivery Agent continued telling Plaintiffs and others that an IPO 

was still imminent. On January 14, 2016, Delivery Agent sent an update to key investors, 

including Plaintiffs. The update stated that “304 nearing resolution,” meaning that Delivery 

Agent had somehow worked out a solution to the Item 304 problem and that Delivery Agent had 

a meeting with the Auditor the first week of February 2016. The update further stated that 

Delivery Agent needed more cash and that Delivery Agent was exploring selling the company. 

95. Plaintiff Abdo 1976 Trust purchased $1 million in Convertible Note Financing 

from Delivery Agent on April 20, 2016, in reliance on Delivery Agent’s representations that it 

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needed more cash to survive and that it was seeking to sell the company, which if successful 

could have salvaged Plaintiffs’ investments. 

96. But that too was just another step in the scheme to defraud Plaintiffs. The 

Defendants knew that a sale of the company was highly unlikely to generate enough cash to pay 

Plaintiffs because Delivery Agent’s supposedly proprietary technology was not proprietary and 

was therefore far less valuable than the Defendants led Plaintiffs to believe. 

Delivery Agent’s and the Defendants’ Omissions and False Statements 

Caused Plaintiffs to Lose the Entire Value of Their Investments

97. In the end, Delivery Agent was unable to persuade the Auditor to retreat from or 

soften the substance of its response to Delivery Agent’s Draft Item 304. As a direct and 

proximate result, the probability of an IPO was zero. The IPO was dead. Delivery Agent was 

dead. 

98. Delivery Agent employed investment bankers to broker a sale of Delivery Agent, 

but learned that there were no buyers because Delivery Agent had no meaningful intellectual 

property or ongoing business establishing any meaningful value. 

99. Because Delivery Agent and the Defendants were revealed to have misled 

investors who had previously provided Delivery Agent with the capital to meet its burn rate, no 

additional investment was realized and Delivery Agent ran out of cash to operate the business. 

100. On September 15, 2016, Delivery Agent filed for bankruptcy under Chapter 11 of 

the Bankruptcy Code. 

101. Plaintiffs’ $18 million investment in the Securities is now worthless. 

No Safe Harbor

102. The statutory safe harbor provided for forward-looking statements under certain 

circumstances does not apply to any of the allegedly false statements and omissions pleaded in 

this Complaint because those statements and omissions are factual and relate to events in the past 

rather than forward-looking events. 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

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103. None of the statements alleged herein are “forward-looking” statements, and no 

such statement was identified as “forward looking” when it was made. 

104. In the alternative, to the extent that the statutory safe harbor does apply, the 

Defendants are still liable under federal securities laws for any forward-looking statements 

because the speaker actually knew that the forward-looking statement was false, misleading, or 

omitted facts necessary to make statements previously made not materially false or misleading. 

COUNT I

For Violation of § 10(b) of the Exchange Act and Rule 10b-5 

Against All Defendants 

105. Plaintiffs incorporate ¶¶ 1 through 104 by reference. 

106. This Count is asserted against all Defendants pursuant to Section 10(b) of the 

Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated by the SEC under 17 C.F.R. 

§ 240.10b-5. 

107. The Defendants employed devices, schemes, and artifices to defraud. 

108. The Defendants failed to disclose material facts specified above that they had a 

duty to disclose. 

109. The Defendants made or approved the false and misleading statements specified 

above, which they knew were false and misleading in that they contained misrepresentations and 

failed to disclose material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading. 

110. The Defendants, individually and in concert, directly and indirectly, by the use, 

means, or instrumentalities of interstate commerce and/or of the mails, engaged and participated 

in a continuous course of conduct to conceal adverse material information about Delivery Agent, 

its IPO prospects, and the proprietary nature of its intellectual property, as described herein. 

111. The Defendants had actual knowledge of the misrepresentations and omissions of 

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to 

ascertain and to disclose such facts, even though such facts were available to them. The 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

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Defendants’ material misrepresentations and/or omissions were done knowingly and recklessly 

and for the purpose and effect of concealing negative information that assured that Delivery 

Agent could not go public, that no buyer would buy Delivery Agent, and that bankruptcy was 

highly likely. 

112. Plaintiffs would not have purchased the Securities if they had been aware of the 

material information omitted by the Defendants and/or known the truth about the false and 

misleading statements made by the Defendants. 

113. Plaintiffs’ damages were directly and proximately caused by Defendants’ 

wrongful conduct in that the actions that were the subject of Defendants’ omissions and false 

statements ensured that Delivery Agent could not go public and that Delivery Agent would have 

no value to a prospective buyer. 

114. Plaintiffs have suffered damages in that they paid $18 million for the Securities 

that are now worthless. 

115. This action was filed within two years of discovery of the fraud and within five 

years of Plaintiffs’ purchases of the Securities. 

COUNT II

For Violation of § 20(a) of the Exchange Act 

Against All Defendants 

116. Plaintiffs incorporate ¶¶ 1 through 104 and 107 through 115 by reference. 

117. This Count is brought against all Defendants pursuant to Section 20(a) of the 

Exchange Act (15 U.S.C. § 78t(a)). 

118. The Defendants exercised their power and authority to engage in the wrongful 

acts alleged herein. The Defendants were “controlling persons” of Delivery Agent within the 

meaning of Section 20(a) of the Exchange Act. In that capacity, they participated in the 

unlawful conduct alleged that caused Plaintiffs the damages alleged herein. Each of the 

Defendants, therefore, acted as a controlling person of Delivery Agent. 

119. By virtue of their high-level positions, their participation in and/or awareness of 

Delivery Agent’s operations, and their ability to influence and control Delivery Agent’s 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

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operations and business, including securities offerings, the Defendants had the ability and 

authority to influence and control, and did influence and control, directly and indirectly, 

decision-making at Delivery Agent, including the content of and dissemination of materials 

containing the statements and omissions described herein in connection with the offer for sale 

and sale of the Securities. 

120. Because of their senior positions at Delivery Agent and/or their direct personal 

involvement in the matters described in the Complaint, Defendants had knowledge of the 

material omissions of fact and false representations described in this Complaint before they were 

disseminated to Plaintiffs and others. 

121. As Delivery Agent’s officers and/or directors, the Defendants had a duty to 

disseminate accurate and truthful information with respect to Delivery Agent’s business and 

affairs. 

122. By reason of their positions as senior management and/or directors of Delivery 

Agent, each of the Defendants had the power to direct the actions of, and exercised the same to 

cause, Delivery Agent to engage in the unlawful acts and conduct complained of herein. Each of 

the Defendants exercised control over the general operations of Delivery Agent and possessed 

the power to control the specific activities that comprise the primary violations described in the 

Complaint. 

COUNT III

Fraud – Intentional Misrepresentation or Omission 

Against All Defendants 

123. Plaintiffs incorporate ¶¶ 1 through 104 by reference. 

124. This Count is brought against all Defendants. 

125. The Defendants made or approved the false and/or misleading statements 

described in the Complaint. The Defendants knew the statements were false and/or misleading 

when they made them in that they contained material misrepresentation, concealed material 

facts, and failed to disclose material facts necessary to make statements that were made, in light 

of the circumstances under which they were made, not misleading. 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

126. The Defendants knowingly and intentionally made the false and/or misleading 

statements described herein. The Defendants also knowingly and intentionally failed to disclose 

material information to Plaintiffs. In the alternative, the Defendants acted recklessly when they 

made the false and/or misleading statements and/or and the omissions described herein. 

127. It was the Defendants’ intent that Plaintiffs would rely on the Defendants’ false 

and/or misleading statements and omissions. Plaintiffs reasonably relied on the Defendants’ 

false and/or misleading statements and omissions. Plaintiffs, as investors, were entitled to rely 

on the Defendants’ representations. Plaintiffs reasonably believed that Defendants’ 

representations were truthful, accurate, and did not omit any material information. 

128. Plaintiffs would not have purchased the Securities if they had known that 

Defendants’ representations were false and/or misleading or that Defendants had omitted 

material facts. Plaintiffs’ reliance on the Defendants’ representations and omitted material facts 

were a substantial factor in causing Plaintiffs’ injuries. 

129. Plaintiffs’ damages were directly and proximately caused by the Defendants’ 

conduct in that the Securities are worthless because Delivery Agent never filed for an IPO and 

attempts to sell Delivery Agent were unsuccessful because the company’s core technology did 

not work and was not proprietary. 

130. Plaintiffs have suffered damages because the $18 million in Securities Plaintiffs 

purchased are now worthless. 

131. The Defendants’ conduct was malicious, fraudulent, and oppressive within the 

meaning of California Civil Code § 3294 and was undertaken by the Defendants with the intent 

to deprive Plaintiffs of property, money, and/or legal rights and constitutes conduct that is 

despicable, subjecting Plaintiffs to a cruel and unjust hardship in conscious disregard of their 

rights, so as to justify an award of exemplary and punitive damages according to proof. 

132. This action was filed within three years of discovery of the fraud. 

/// 

/// 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

COUNT IV

Negligent Misrepresentation 

Against All Defendants 

133. Plaintiffs incorporate ¶¶ 1 through 104 by reference. 

134. This Count is brought against all Defendants. 

135. The Defendants made or approved the false and/or misleading statements 

described in this Complaint. 

136. The Defendants lacked reasonable grounds to believe that the alleged false and/or 

misleading statements were true. 

137. Plaintiffs would not have purchased the Securities if they had known that 

Defendants’ representations were false and/or misleading. 

138. Plaintiffs’ damages were directly and proximately caused by the Defendants’ 

negligent conduct in that the Securities are worthless because Delivery Agent never filed for an 

IPO and attempts to sell Delivery Agent were unsuccessful because the company’s core 

technology did not work and was not proprietary. 

139. Plaintiffs have suffered damages because the $18 million in Securities Plaintiffs 

purchased are now worthless. 

140. This action was filed within three years of discovery of the negligent 

misrepresentations. 

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for judgment as follows: 

A. Awarding Plaintiffs damages, including interest; 

B. Punitive damages in an amount to be determined at trial; and 

C. Awarding such equitable/injunctive or other relief as the Court may deem just and 

proper. 

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COMPLAINT FOR VIOLATION OF FEDERAL SECURITIES LAWS, INTENTIONAL MISREPRESENTATION, 

& NEGLIGENT MISREPRESENTATION 

DEMAND FOR JURY TRIAL

Plaintiffs demand a jury trial. 

DATED: February 21, 2017 TAYLOR & PATCHEN, LLP

 /s/ Jonathan A. Patchen 

Jonathan A. Patchen 

Max Baba Twine 

One Ferry Building, Suite 355 

San Francisco, CA 94111 

Telephone: (415) 788-8200 

Facsimile: (415) 788-8208 

-andSTEARNS WEAVER MILLER 

WEISSLER ALHADEFF & 

SITTERSON, P.A.

 Eugene E. Stearns 

 Jason P. Hernandez 

150 West Flagler Street, Suite 2200 

Miami, FL 33130 

Telephone: (305) 789-3200 

Facsimile: (305) 789-3395 

Attorneys for Plaintiffs 

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