Item 3. Legal Proceedings
Item 3. Legal Proceedings
In conducting our business,
we may become involved in legal proceedings. We will accrue a liability for such matters when it is probable that a liability has been
incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in
the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in
the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside
legal fees and other directly related costs expected to be incurred.
CorProminence d/b/a Core IR v. SCWorx
AAA Arbitration Case 01-22-0001-5709
As previously disclosed in the Company’s periodic reports filed
with the SEC, on April 25, 2022, the Company received a Demand for Arbitration along with a Statement of Claim filed by Core IR with the
American Arbitration Association seeking damages in the amount of approximately $190,000. arising out of a marketing and consulting
agreement. The Company filed its answer, affirmative defenses and counterclaims on May 16, 2022. By order of the arbitrator dated November
1, 2022, Core IR received permission to amend its Statement of Claim to increase its request for damages to $257,546. The Company received
the final decision of the Arbitrator on October 16, 2023, awarding Core IR $461,856 including unpaid compensation, indemnification for
legal fees and costs, prevailing party legal fees and interest (the “Award”). Core IR has since obtained a judgement in the
amount of approximately $502,000 (including interest) (“Judgement”). The Company and Core IR entered into a settlement agreement
dated July 12, 2024 under which the Company agreed to issue Core IR shares of its common stock with a value of $502,000 (determined based
on sales proceeds realized by Core IR), in full and complete satisfaction of the Judgement. The settlement agreement is filed as exhibit
10.5 to this annual report on Form 10-K.
Hadrian Equities Partners, LLC et ano. v. SCWorx Corp,
Case No. 22-cv-07096 (JLR) (S.D.N.Y)
On August 19, 2022, Hadrian
Equities Partners, LLC and the Phillip W. Caprio, Jr. 2007 Irrevocable Trust filed a complaint in the United States District Court for
the Southern District of New York alleging that SCWorx was dilatory and did not comply with its alleged contractual duties to remove the
restrictions from Plaintiffs’ converted AMMA stock to SCWorx stock until August 10 and August 11, 2020. Plaintiffs allege that as
a result, they were unable to sell their SCWorx stock when SCWorx was trading at its highest price on April 13, 2020. The Complaint sought
$500,000 in damages. Plaintiffs filed an Amended Complaint on November 28, 2022. On February 6, 2023, SCWorx filed its answer to the Amended
Complaint interposing numerous defenses. Plaintiff have since entered into a settlement agreement dated December 1, 2023 (effective as
of October 23, 2023) (as amended April 29, 2024), under which the Company agreed to pay Plaintiffs $20,000 and issue them 37,500 shares
of common stock, all in full settlement of the claims made in the lawsuit. The cash payment was made in July 2024, and the shares were
issued in May 2024.
Carole R. Bernstein, Esq. v. SCWorx Corp.
As previously disclosed in
the Company’s Form 10-Q for the quarter ended June 30, 2023, on June 7, 2023, Carole R. Bernstein, Esq. filed a complaint in the
United States District Court for the Southern District of New York against the Company. The complaint alleged that the Company breached
its engagement agreement with Ms. Bernstein by failing to pay legal fees when due. Ms. Bernstein sought to recover $69,164 fees
owing for services, plus interest, costs, including her attorney’s fees. The Company and the Plaintiff have since entered into
a settlement agreement dated July 12, 2024, under which the Company agreed to pay Plaintiffs $80,000 in two equal installments of $40,000,
the first of which was paid August 9, 2024, and the second of which is payable on or about October 9, 2024.
Item 4. Mine Safety Disclosures
Not applicable.
21
PART II
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.