SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP announces that a securities class action lawsuit has been filed in the Southern District of New York on behalf of purchasers and acquirers of SCWorx Corp. (NASDAQ:WORX) securities between April 13, 2020 and April 17, 2020 (the “Class Period”). The case is captioned Yannes v. SCWorx Corp., No. 20-cv-03349, and is assigned to Judge John G. Koeltl. The SCWorx securities class action lawsuit charges SCWorx and certain of its officers with violations of the Securities Exchange Act of 1934.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased SCWorx securities during the Class Period to seek appointment as lead plaintiff in the SCWorx securities class action lawsuit. A lead plaintiff acts on behalf of all other class members in directing the SCWorx securities class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the SCWorx securities class action lawsuit. An investor’s ability to share in any potential future recovery of the SCWorx securities class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff of the SCWorx securities class action lawsuit or have questions concerning your rights regarding the SCWorx securities class action lawsuit, please visit our website by clicking here or contact Michael Albert at 800/449-4900 or 619/231-1058, or via e-mail at firstname.lastname@example.org. Lead plaintiff motions for the SCWorx securities class action lawsuit must be filed with the court no later than June 29, 2020.
SCWorx was incorporated in Delaware on February 15, 2015 under the name “Alliance MMA, Inc.” The Company began its operations as a sports media company operating a regional mixed martial arts promotion business under the Alliance MMA name, as well as under the trade names of the regional promoters it acquired. As of December 31, 2018, the Company has disposed of all mixed martial arts promotion businesses and the sports management business. SCWorx now purports to offer an advanced software solution for the management of health care providers’ foundational business applications.
On April 13, 2020, before the market opened, SCWorx announced it had received a committed purchase order for two million COVID-19 rapid testing kits, “with provision for additional weekly orders of 2 million units for 23 weeks, valued at $35M per week.” On this news, SCWorx’s share price increased by $9.77 per share, or more than 500%, to close at $12.02 per share on April 13, 2020.
The SCWorx class action lawsuit alleges that during the Class Period, defendants failed to disclose that SCWorx’s supplier for the COVID-19 tests had previously misrepresented its operations, that the buyer SCWorx was working with was a small company that was unlikely to adequately support the purported volume of orders for the COVID-19 tests, and that, as a result, SCWorx’s purchase order for COVID-19 tests had been overstated or entirely fabricated.
On April 17, 2020, Hindenburg Research issued a report questioning the validity of the deal and calling it “completely bogus.” The report alleged that the CEO of the COVID-19 test supplier that SCWorx was buying from, Promedical, “formerly ran another business accused of defrauding its investors and customers” and “was also alleged to have falsified his medical credentials.” According to the report, Promedical had made claims to the FDA and regulators in Australia that it was offering COVID-19 test kits manufactured by large, well-respected Chinese firm Wondfo, but Wondfo “disavowed any relationship” with Promedical. In addition, the report stated that “the buyer that SCWorx had lined up for up to $840 million . . . in tests is a virtual healthcare company started by a 25-year-old in August 2018 that looks modestly sized, with only 3 employees and 3 consultants/advisors listed on its team page – hardly the major partner that we believe would be capable of handling hundreds of millions of dollars in orders.” On this news, the price of SCWorx stock fell $1.19 per share, or more than 17%, over three consecutive trading days to close at $5.76 per share on April 21, 2020 – representing a 50% decline in the stock’s price since its Class Period high of $12.02 per share just a week before.
On April 22, 2020, the SEC halted trading in SCWorx stock.
On April 30, 2020, the Company issued a release stating that its previously announced purchase order for two million COVID-19 rapid testing kits (with provision for additional weekly orders of 2 million units for 23 weeks) was cancelled by the buyer due to the supplier’s inability to fulfill its obligations to secure requisite approval from the FDA to permit commercialization.
On May 5, 2020, the Company announced that the employment of its Chief Operating Officer had been terminated by mutual agreement.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations, and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.