SCWorx Corp. Receives Notice from NASDAQ Stock Market Pertaining to its 10-Q for the quarter ended March 31, 2024
On May 17, 2024, SCWorx Corp received a notice from Nasdaq regarding the company's failure to file its Form 10-Q for the quarter ended March 31, 2024, and its Form 10-K for the year ended December 31, 2023. This failure breaches Nasdaq Listing Rule 5250(c)(1), which mandates timely filing of required reports. The delay follows the SEC's order against their previous auditor, BF Borgers CPA PC, leading to its dismissal and the hiring of Astra Audit & Advisory, on May 21, 2024. SCWorx plans to re-audit its 2022 financial statements and submit the overdue filings promptly. The company aims to regain compliance and will submit a plan to Nasdaq by June 17, 2024. Acceptance of their compliance plan by Nasdaq is not guaranteed, and any granted exception will not extend beyond October 14, 2024.
- SCWorx has engaged a new auditor, Astra Audit & Advisory, , to address financial reporting issues.
- The company plans to re-audit the 2022 financial statements, indicating a commitment to accuracy.
- SCWorx intends to file overdue reports promptly to regain compliance with Nasdaq listing standards.
- SCWorx failed to file Form 10-Q for Q1 2024 and Form 10-K for 2023 on time.
- Non-compliance with Nasdaq Listing Rule 5250(c)(1) could lead to delisting if not resolved.
- The re-auditing process and filing delays create uncertainty about the company’s financial status.
- There is no assurance that Nasdaq will accept SCWorx's plan to regain compliance.
- Any staff exception granted by Nasdaq will only last until October 14, 2024, adding time pressure.
Insights
SCWorx Corp.'s recent notice from Nasdaq due to non-compliance with timely filings of its quarterly and annual reports can have significant ramifications for investors. Timely financial reporting is a key metric for maintaining investor confidence and fulfilling regulatory requirements. The delay and the subsequent change in auditors, following the SEC's action against the previous auditor, BF Borgers CPA PC, raises questions about the company's financial controls and governance.
A key concern here is the potential impact on stock price stability. Delays in filing necessary reports can lead to increased volatility as investors react to the uncertainty. Moreover, the need to re-audit the 2022 financial statements introduces additional costs and delays, potentially straining the company's resources.
From a short-term perspective, the immediate reaction might be negative due to the perceived risk of delisting. However, if the company successfully implements its compliance plan and regains timely filing status, it could stabilize. Investors should closely monitor the company's progress in filing the overdue reports and any feedback from Nasdaq regarding their compliance plan.
In the long-term, consistent and transparent financial reporting will be important for the company's recovery and investor trust. If SCWorx can demonstrate improved financial management and governance, it might mitigate some of the current concerns and align with industry standards.
The involvement of the SEC and Nasdaq in SCWorx Corp.'s filing delays underscores the importance of strict adherence to regulatory requirements. The dismissal of BF Borgers CPA PC, following the SEC’s order, suggests severe deficiencies in the accountant’s previous audits. It imposes additional scrutiny on SCWorx's financial practices.
Engaging Astra Audit & Advisory, LLC to re-audit the 2022 financial statements is a step towards compliance, but it also emphasizes the magnitude of prior missteps. Legal implications could extend beyond mere compliance issues, potentially involving scrutiny over past financial disclosures and internal controls.
Investors should be mindful of the legal risks tied to these events. Prolonged non-compliance can lead to severe penalties, including delisting, which would substantially impact shareholder value. Additionally, any findings from the re-audit process that indicate past inaccuracies might lead to shareholder lawsuits or further regulatory actions.
In this context, the company's legal and regulatory strategy will be critical. Their ability to effectively communicate progress and navigate the compliance process will be essential in managing investor relations and mitigating legal risks.
NEW YORK, N.Y., May 21, 2024 (GLOBE NEWSWIRE) -- On May 17, 2024, SCWorx Corp. (the “Company”) received a further notice (the “Notice”) from The Nasdaq Stock Market, LLC (“Nasdaq”) indicating that, as a result of not having timely filed its Form 10-Q for the period ended March 31, 2024, and because it remains delinquent in filing its Form 10-K for the year ended December 31, 2023, the Company has failed to satisfy a standard for continued listing, namely Nasdaq Listing Rule 5250(c)(1), which requires timely filing of all required periodic reports with the SEC.
As previously disclosed, due to the SEC’s Order denying BF Borgers CPA PC (“BF Borgers”) the privilege of appearing or practicing before the Commission as an accountant, on May 7, 2024, the board of directors of the Company dismissed BF Borgers CPA PC as the Company’s independent registered public accounting firm.
On May 21, 2024, the Company filed a Form 8-K announcing that it has engaged a new auditor, Astra Audit & Advisory, LLC. In accordance with the SEC’s guidance to companies affected by the suspension of BF Borgers, the new auditor engagement includes re-auditing the 2022 financial statements previously audited by BF Borgers. The Company intends to complete the audit of its financial statements and file its 10K and 10Q as quickly as possible to regain compliance with its periodic disclosure obligations.
The Company intends to submit to Nasdaq a plan to regain compliance with respect to these delinquent reports no later than June 17, 2024, the due date for submitting such plan.
There is no assurance that the Nasdaq Staff will accept the Company’s plan to regain compliance. Any Staff exception to allow the Company to regain compliance, if granted, will be limited to a maximum of 180 calendar days from the due date of the Company’s 10K, or October 14, 2024.
Contacts:
ir@scworx.com
###
Source: SCWorx Corp.
FAQ
Why did SCWorx receive a notice from Nasdaq on May 17, 2024?
What is Nasdaq Listing Rule 5250(c)(1)?
Who is the new auditor for SCWorx as of May 21, 2024?
What actions is SCWorx taking to regain compliance with Nasdaq?
What is the deadline for SCWorx to regain compliance with Nasdaq?
