SCWorx Corp.
| Company Name | SCWorx Corp. |
| Stock Symbol | WORX |
| Class Period | April 13, 2020 to April 17, 2020 |
| Lead Plaintiff Motion Deadline | June 29, 2020 |
On April 13, 2020, before the market opened, SCWorx announced that it had received a committed purchase order of 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, the Company’s share price increased by $9.77, to close at $12.02 per share on April 13, 2020.
On April 17, 2020, Hindenburg Research issued a report doubting the validity of the deal, calling it “completely bogus.” Hindenburg Research alleged that the COVID-19 test supplier that SCWorx is buying from, Promedical, has a Chief Executive Officer “who 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 claimed to the FDA and regulators in Australia to be offering COVID-19 test kits manufactured by Wondfo, but Wondfo “disavowed any relationship” and the buyer that SCWorx claimed to have lined up does not appear to be “capable of handling hundreds of millions of dollars in orders.”
On this news, the Company’s share price fell $1.19, or more than 17%, over three consecutive trading sessions to close at $5.76 per share on April 21, 2020, on unusually heavy trading volume.
On April 22, 2020, the SEC halted trading of the Company’s stock.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that SCWorx’s supplier for COVID-19 tests had previously misrepresented its operations; (2) that SCWorx’s buyer was a small company that was unlikely to adequately support the purported volume of orders for COVID-19 tests; (3) that, as a result, the Company’s purchase order for COVID-19 tests had been overstated or entirely fabricated; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.
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