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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported) June 29, 2022
SCWorx Corp.
(Exact name of registrant
as specified in its charter)
| Delaware |
|
001-37899 |
|
47-5412331 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
590
Madison Avenue, 21st Floor,
New York, New
York 10022
(Address
of principal executive offices) (Zip Code)
(844) 472-9679
Registrant’s telephone
number, including area code
Not Applicable
(Former name or former address, if changed since
last report.)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4)) |
Securities registered or to be registered pursuant to Section 12(b)
of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| Common stock, par value $0.001 per share |
|
WORX |
|
The Nasdaq Capital Market |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the
Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Item 8.01. Other Events
Final
Court Approval of Derivative Litigation
Background
As
previously disclosed, on June 15, August 21, September 30, 2020 and April 8, 2022, a series of shareholder derivative cases were filed
against us (as nominal defendant) and certain of our directors (Marc S. Schessel, Charles K. Miller, Steven Wallitt and Robert Christie
(the “Director Defendants”)) in the United States District Court for the Southern District of New York, New York State Supreme
Court and the Chancery Court in Delaware. Each of the lawsuits alleged that the Director Defendants named therein breached their fiduciary
duties to the Company, including by misleading investors in connection with our April 13, 2020 press release with respect to the sale
of COVID-19 rapid test kits, failing to correct false and misleading statements and failing to implement proper disclosure and internal
controls.
Settlement
Agreement
On December
24, 2021, the Company and the Director Defendants entered into a binding agreement with the shareholder derivative plaintiffs to settle
the derivative litigation (the “Settlement”). Under the terms of this agreement, (i) the insurers for the Director Defendants
will make a cash payment to legal counsel for the shareholder derivative Plaintiffs to cover their legal fees and (ii) the Company will
adopt certain corporate governance reforms, including adopting resolutions to address corporate transparency, further enhancing board
independence, further enhancement of the CFO position, amendment of the audit committee charter, revisions to nominating committee and
compensation committee charters and other similar enhancements, and addressing Company polices, within 60 days of court approval of the
settlement, in exchange for which all parties will be released from all claims related to the derivative class action litigation. This
agreement provides that the parties will negotiate in good faith to enter into a definitive settlement agreement within thirty days, which
agreement will be subject to court approval. On February 15, 2022, the Company and the Director Defendants entered into a stipulation
of settlement (subject to Court approval) with the shareholder derivative plaintiffs to settle the Consolidated Derivative Action as well
as another derivative action,
Class
Action Settlement Agreement
On
December 20, 2021, the Company and Mr. Schessel entered into a binding agreement with the Plaintiff to settle the litigation. Under the
terms of this agreement, (i) the insurers for the Company and Schessel will make a cash payment to the Plaintiff and (ii) the Company
will issue $600,000 worth of common stock to the class Plaintiffs, in exchange for which all parties will be released from all claims
related to the securities class action litigation. This agreement provides that the parties will negotiate in good faith to enter into
a definitive settlement agreement within thirty days, which agreement will be subject to court approval. Once the Company issues the $600,000
worth of stock, the Company believes it will have satisfied its obligations with respect to the payment of the $750,000 accrued retention
liability applicable to its D&O insurance policy.
Final
Court Approval
On June 29, 2022, the
U.S. District Court for the Southern District of New York (the “Court”) gave final approval of the Settlement resolving three
shareholder derivative lawsuits involving the Company. In accordance with the Court’s Order Approving Settlement, the Company is
issuing this Form 8-K and making disclosure of the Settlement and related documents to its shareholders. The terms of the derivative settlement
are described in the Settlement documents which are filed as Exhibits to this Current Reports on Form 8-K as filed with the SEC on April
8, 2022.
Final
Court Approval of Class Action Litigation
Background
As
previously disclosed, on April 29, May 27, June 23, 2020 and December 27, 2021, a series of securities class action cases were filed in
the United States District Court for the Southern District of New York against us and our former CEO. All three lawsuits alleged that
our company and our former CEO misled investors in connection with our April 13, 2020 press release with respect to the sale of COVID-19
rapid test kits. These three class actions were consolidated on September 18, 2020 and Daniel Yannes was designated lead plaintiff.
A consolidated Amended Complaint was filed on October 19, 2020. The action was captioned Daniel Yannes, individually and on behalf
of all others similarly situated, Plaintiff (“Plaintiff”) vs. SCWorx Corp. and Marc S. Schessel (“Schessel”),
Defendants.
Settlement
Agreement
On
December 20, 2021, the Company and Mr. Schessel entered into a binding agreement with the Plaintiff to settle the litigation. Under the
terms of this agreement, (i) the insurers for the Company and Schessel will make a cash payment to the Plaintiff and (ii) the Company
will issue $600,000 worth of common stock to the class Plaintiffs, in exchange for which all parties will be released from all claims
related to the securities class action litigation. This agreement provides that the parties will negotiate in good faith to enter into
a definitive settlement agreement within thirty days, which agreement will be subject to court approval. Once the Company issues the $600,000
worth of stock, the Company believes it will have satisfied its obligations with respect to the payment of the $750,000 accrued retention
liability applicable to its D&O insurance policy.
Final
Court Approval
On June 29, 2022, the
U.S. District Court for the Southern District of New York (the “Court”) gave final approval of the Settlement resolving the
class action litigation involving the Company. In accordance with the Court’s Order Approving Settlement, the Company is issuing
this Form 8-K and making disclosure of the Settlement and related documents to its shareholders.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
SCWorx Corp. |
| |
|
|
| Dated: July 6, 2022 |
By: |
/s/ Timothy A. Hannibal |
| |
|
Timothy A. Hannibal |
| |
|
President and Chief Executive Officer |
3
Exhibit 99.1
July 6, 2022
SCWorx Announces
Final Approval of Previously Disclosed Securities Class Action and Derivative Action Lawsuits
July 5, 2022 New York,
NY, (GLOBE NEWSWIRE) -- SCWorx Corp. (Nasdaq: WORX) today announced that it has received final court approval to settle both the securities
class action and derivative action lawsuits which were commenced in 2020.
The class action was
consolidated under the caption Yannes v. SCWorx Corp. (1:20-cv-03349).
The settlement resolves all claims asserted against SCWorx and the other named defendant without any admission of liability or wrongdoing
by the Company or any defendant. Under the terms of the class action agreement, (i) the insurers for the Company and Marc Schessel (former
CEO) will make a cash payment to the class plaintiffs and (ii) the Company will issue $600,000 worth of common stock to the
class Plaintiffs, in exchange for which all parties will be released from all claims related to the securities class action litigation.
In addition, the Company and the Director Defendants
(Marc Schessel, Steven Wallitt, Charles Miller and Robert Christie) entered into a settlement with the shareholder derivative plaintiffs
to settle the derivative litigation in which SCWorx was a nominal defendant. Under the terms of this agreement, (i) the insurers for the
Director Defendants will make a cash payment to legal counsel for the shareholder derivative Plaintiffs to cover their legal fees and
(ii) the Company will adopt certain corporate governance reforms, including adopting resolutions to address corporate transparency, further
enhancing board independence, further enhancement of the CFO position, amendment of the audit committee charters, revisions to nominating
committee and compensation committee charter and other similar enhancements, and addressing company policies, within 60 days of court
approval of the settlement. In exchange for which all parties will be released from all claims related to the derivative class action
litigation. Some of these enhancements have already been achieved.
“This settlement
represents the progress we have made as a company,” said SCWorx President and Chief Executive Officer Tim Hannibal. “With the
support of our Board and the dedicated employees of SCWorx , the Company put another issue from the past behind us.”
"Over the past
two years, SCWorx has successfully negotiated a number of significant legal obstacles resulting from a press release in April 2020,"
said Hannibal. "The final court approval of the class and derivative settlements -- together with our final agreement with the Securities
and Exchange Commission in 2022 -- will put the legal issues relating to press release behind us and allow us to move forward. We look
forward to continuing to deliver our SaaS service offerings to help hospitals solve the challenges they experience within their supply
chain.”
About SCWorx Corp.
SCWorx has created an advanced attributed
virtualized item data warehouse utilizing machine learning and artificial intelligence to offer a suite of software-as-a-service-based
solutions for healthcare providers. The value proposition for customers revolves around the full integration of all solution modules with
the company’s data platform for cost savings, operational efficiency and accurate benchmarking and reporting. The solution modules
include Virtual Item Master, data cleanse and normalization, contract management and request for pricing (RFP) module, automated rebate
management module, data interoperability (EMR, MMIS, finance) module, Automated Item Add Portal, Virtual General Ledger, and the data
analytics module. SCWorx creates a single source for information for the healthcare provider’s data governance and analytics requirements.
Forward-Looking Statements
This press release contains “forward-looking
statements” that involve substantial risks and uncertainties for purposes of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release regarding strategy,
future operations, future contract renewals and terminations, future financial position, prospects, plans and objectives of management
are forward-looking statements. You can identify many (but not all) such forward-looking statements by looking for words such as “assumes,”
“approximates,” “believes,” “expects,” “anticipates,” “estimates,” “projects,”
“seeks,” “intends,” “plans,” “could,” “would,” “may” or other
similar expressions. You should not place undue reliance on these forward-looking statements. Such statements are based on management’s
current expectations and involve risks and uncertainties. Actual results and performance could differ materially from those projected
in the forward-looking statements as a result of many factors, including, without limitation, economic disruptions affecting our customers,
unexpected contract terminations, securing future contracts and orders, future product sourcing, supply disruptions, containing costs,
the ability to project future cash utilization and reserves needed for contingent future liabilities and business operations, the availability
of sufficient resources of the company to meet its business objectives and operational requirements and other important factors that are
detailed in filings with the Securities and Exchange Commission made from time to time by SCWorx, including its Annual Report on Form
10-K for the year ended December 31, 2021, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Matters described in forward-looking
statements may also be affected by other known and unknown risks, trends, uncertainties and factors, many of which are beyond the Company’s
ability to control or predict. SCWorx undertakes no obligation to release publicly any revisions to any forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Contacts:
ir@scworx.com
###
Source: SCWorx Corp.
Released July 6, 2022