SCWorx Signs Letter of Intent to Acquire an Environmental Services Company

Rhea-AI Summary

SCWorx Corp announces letter of intent to acquire American Environmental Partners, Inc.

Positive

• SCWorx anticipates a share-for-share exchange with shareholders retaining 17% of the combined company.
• The proposed transaction is expected to close in the first quarter of CY 2024.
• The acquisition of American Environmental will substantially increase the consolidated revenue of SCWorx.

Negative

• None.

New York, NY, Oct. 23, 2023 (GLOBE NEWSWIRE) -- SCWorx Corp (the "Company" or “SCWorx”)) (Nasdaq: WORX) is pleased to announce that on October 20, 2023 it entered into a letter of intent to acquire American Environmental Partners, Inc (Formerly American Energy Partners, Inc) ("American Environmental") (OTC: AEPT) (the "LOI"). 

The LOI sets forth the proposed terms and conditions pursuant to which the Company and American Environmental intend to effect a business combination, as a result of which American Environmental and the Company’s healthcare data management business will each be conducted through wholly-owned subsidiaries of the Company (“Proposed Transaction”).

The Company anticipates that Proposed Transaction will be structured as a share-for-share exchange with SCWorx shareholders retaining 17% of the combined Company, after giving effect to a $6 million capital raise by American Environmental, which is a condition to completion of the Proposed Transaction. The LOI has binding and non-binding components.  The binding components require among other things that American Environmental Partners provide the Company $150,000 of working capital, as well as cover its costs to complete the transaction.   In addition, both parties are restricted from engaging in discussions with other parties about an acquisition or similar transaction.  Upon execution of a definitive agreement, the Company intends to issue a subsequent news release with more details regarding the Proposed Transaction, including the proposed capitalization of the Company upon the closing of the Proposed Transaction.  The Company previously engaged Stanton Park, a boutique investment bank, to advise it in connection with the process of reviewing strategic opportunities available to the Company, including the Proposed Transaction.

The Proposed Transaction has been approved by the Boards of Directors of both SCWorx and American Environmental and is expected to close in the first quarter of CY 2024. The Transaction will be considered a “reverse merger” because the shareholders of American Environmental will own more than a majority of the outstanding common stock of the Company following completion of the Proposed Transaction.  As such, the Proposed Transaction is subject to NASDAQ approving a listing application based on initial inclusion standards.  In addition, the closing of the Proposed Transaction is subject to satisfaction of the following conditions: (i) satisfactory completion of due diligence review by both parties, (ii) the negotiation, execution and delivery of definitive agreements, (iii) American Environmental raising $6 Million of equity, concurrently with the closing, (iv) satisfactory completion of an audit of American Environmental’s financial statements, (v) approval by both SCWorx and American Environmental shareholders, as well as other customary closing conditions. There can be no assurance that the Proposed Transaction will be completed as currently contemplated, or at all.

Tim Hannibal, SCWorx’s CEO, stated that “This is an exciting and critically important time at the Company.  With the expected infusion of capital in connection with the completion of the Proposed Transaction, SCWorx should be well positioned to accelerate new revenue opportunities as it continues to pursue data management services for its healthcare customers.”

The Company has endeavored to meet the challenges of the Covid impact on its hospital customers and the cost and distraction of the legal proceedings which were tied to the April 13, 2020 press release, but remains challenged by a lack of financial resources.  The SCWorx Board and management team believe that the proposed transaction with American Environmental Partners is in the best interest of the Company’s shareholders, customers and employees. Over the past few years, with only limited resources, American Environmental has successfully executed on an aggressive plan of strategic acquisitions.  Through skillful integration of these acquisitions, American Environmental has experienced tremendous revenue growth and delivered considerable shareholder value. The Company believes that the proposed business combination should enable both companies to focus on revenue growth. The acquisition of American Environmental will substantially increase the consolidated revenue of the Company, better enabling it to absorb public company costs, while improving cashflow which should enable both SCWorx and American Environmental to grow their respective client bases and revenue.”

About American Environmental

American Environmental is an environmental services company whose core service offerings include radioactive and mixed waste management solutions, well-site environmental services to upstream energy companies, transloading, environmental cleaning, plugging and abandonment, and remediation services. The Company services private, state, and federal customers through its three operating locations in Pennsylvania, Ohio, and West Virginia.

About SCWorx

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, 2022, 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
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Source: SCWorx Corp.

FAQ

What is SCWorx Corp's latest announcement?

SCWorx Corp announced a letter of intent to acquire American Environmental Partners, Inc.

What is the structure of the proposed transaction?

The proposed transaction is expected to be a share-for-share exchange.

When is the expected closing date for the proposed transaction?

The proposed transaction is expected to close in the first quarter of CY 2024.

How will the acquisition of American Environmental impact SCWorx's revenue?

The acquisition of American Environmental is expected to substantially increase SCWorx's consolidated revenue.