What changed in SCWorx Corp.'s 2023 10-K compared to 2022?

Across the narrative sections we track, SCWorx Corp. (WORX) added 164 paragraphs, removed 192, and edited 138 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+71/−78), Item 1A. Risk Factors (+52/−60), Item 3. Legal Proceedings (+12/−23).

Did SCWorx Corp. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 52 new/edited paragraphs and 60 removed paragraphs versus the 2022 10-K.

What changed in SCWorx Corp.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 71 new/edited paragraphs and 78 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did SCWorx Corp.'s Legal Proceedings (Item 3) change in 2023?

Item 3 shows 12 added/edited paragraphs and 23 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this WORX 10-K diff come from?

The source filings are SCWorx Corp.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in SCWorx Corp.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of SCWorx Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+164 added−192 removedSource: 10-K (2024-09-24) vs 10-K (2023-04-17)

Top changes in SCWorx Corp.'s 2023 10-K

164 paragraphs added · 192 removed · 138 edited across 7 sections

Item 7. Management's Discussion & Analysis+71 / −78 · 61 edited
Item 1A. Risk Factors+52 / −60 · 47 edited
Item 3. Legal Proceedings+12 / −23 · 6 edited
Item 1. Business+21 / −25 · 19 edited
Item 5. Market for Registrant's Common Equity+4 / −3 · 2 edited

Item 1. Business

Business — how the company describes what it does

19 edited+2 added−6 removed66 unchanged

2022 filing

2023 filing

Biggest changeThe outbreak adversely impacted new customer acquisition. The Company has followed the recommendations of local health authorities to minimize exposure risk for its team members since the outbreak. In addition, the Company’s customers (hospitals) also experienced extraordinary disruptions to their businesses and supply chains, while experiencing unprecedented demand for health care services related to COVID-19.

Biggest changeImpact of the COVID-19 Pandemic The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic which spread throughout the United States and the world. The outbreak adversely impacted new customer acquisition. The Company has followed the recommendations of local health authorities to minimize exposure risk for its team members since the outbreak.

The SCWorx EMR management system creates one vernacular for each hospital so they see the data in a manner that suits them — and then creates a universal vernacular so they can see their performance against other like institutions. 2 ● Charge Description Master Management — The Charge Description Master (CDM) Management module assists healthcare providers by integrating the CDM data into the workflow of the hospitals purchasing systems so that the latest costs can be automatically updated against the hospitals charging systems.

The SCWorx EMR management system creates one vernacular for each hospital so they see the data in a manner that suits them — and then creates a universal vernacular so they can see their performance against other like institutions. ● Charge Description Master Management — The Charge Description Master (CDM) Management module assists healthcare providers by integrating the CDM data into the workflow of the hospitals purchasing systems so that the latest costs can be automatically updated against the hospitals charging systems.

Clients are geographically dispersed throughout the country and the continued focus is to assist healthcare providers with issues they have pertaining to data interoperability. SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners. 5 Competition SCWorx competes against a variety of vendors and smaller companies which provide solutions in the specific markets we address.

Clients are geographically dispersed throughout the country and the continued focus is to assist healthcare providers with issues they have pertaining to data interoperability. SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners. Competition SCWorx competes against a variety of vendors and smaller companies which provide solutions in the specific markets we address.

SCWorx licenses these software products and pays the required license fees when such software is delivered to clients. Government Regulation Management believes that governmental regulation is not material to our current core data management business. Intellectual Property We protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.

SCWorx licenses these software products and pays the required license fees when such software is delivered to clients. Government Regulation Management believes that governmental regulation is not material to our current core data management business. 6 Intellectual Property We protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.

SCWorx provides real-time integration, automation and management of Item Master File, Clinical Information Systems and the Charge Description Master. ● Contract Management — SCWorx’s Contract Management Module assists healthcare providers to establish an efficient contract management system and to provide first class care to patients, while reducing operating costs, assuring adherence to compliance requirements, and mitigating risk.

SCWorx provides real-time integration, automation and management of Item Master File, Clinical Information Systems and the Charge Description Master. 2 ● Contract Management — SCWorx’s Contract Management Module assists healthcare providers to establish an efficient contract management system and to provide first class care to patients, while reducing operating costs, assuring adherence to compliance requirements, and mitigating risk.

We primarily utilize independent contractors and third-party vendors for software, maintenance of our database and customer software installation. 7 Available Information Our website address is www.SCWorx.com.

We primarily utilize independent contractors and third-party vendors for software, maintenance of our database and customer software installation. Available Information Our website address is www.SCWorx.com.

Any significant impairment of our intellectual property rights may harm our business or our ability to compete. Seasonality We do not believe that SCWorx’s revenues are impacted by seasonality. Employees As of December 31, 2022, we had 9 employees, of which 2 were management and finance and the rest in operations.

Any significant impairment of our intellectual property rights may harm our business or our ability to compete. Seasonality We do not believe that SCWorx’s revenues are impacted by seasonality. Employees As of December 31, 2023, we had 7 employees, of which 2 were management and finance and the rest in operations.

The commencement of revenue recognition varies depending on the size and complexity of the system and/or services involved, the implementation or performance schedule requested by the client and usage by clients of SaaS for software-based components.

Payment typically occurs upon completion of the applicable normalization project. The commencement of revenue recognition varies depending on the size and complexity of the system and/or services involved, the implementation or performance schedule requested by the client and usage by clients of SaaS for software-based components.

SCWorx continues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the United States. Clients are geographically dispersed throughout the country. The Company’s focus is to assist healthcare providers with issues they have pertaining to data interoperability.

On March 16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC to endeavor to source and provide critical, difficult-to-find items for the healthcare industry. Items had become difficult to source due to unexpected disruptions within the supply chain due to the COVID-19 pandemic.

These services can either be included at the time the related SaaS solution is licensed as part of the initial purchase agreement or added on afterward as an addendum to the existing agreement for services required after the initial implementation. 6 For one-time data normalization services clients, these normalization services are provided either through a stand-alone services agreement or services addendum to an existing master agreement with the client.

SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners. 4 SCWorx’s software solutions are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by the client through a secure connection in a software as a service (“SaaS”) delivery method.

SCWorx’s software solutions are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by the client through a secure connection in a software as a service (“SaaS”) delivery method. 4 SCWorx currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller partnerships.

Contracts, License and Service Fees SCWorx enters into agreements with its clients that specify the scope of the solution to be installed and/or services to be provided by SCWorx, as well as the agreed-upon aggregate price, applicable duration and the timetable for the associated licenses and services.

For example, besides our agnostic interoperability, additional key strengths include the SCWorx data warehouse, which exceeds 12 million items, SCWorx Big Data analytics and benchmarking. 5 Contracts, License and Service Fees SCWorx enters into agreements with its clients that specify the scope of the solution to be installed and/or services to be provided by SCWorx, as well as the agreed-upon aggregate price, applicable duration and the timetable for the associated licenses and services.

(n/k/a SCW FL Corp.) in a stock-for-stock exchange transaction and changed Alliance’s name to SCWorx Corp., which is the Company’s current name, with SCW FL Corp. becoming the Company’s subsidiary. On March 16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC.

As a result of these extraordinary disruptions to the Company’s customers’ business, the Company’s customers were focused on meeting the nation’s health care needs in response to the COVID-19 pandemic.

In addition, the Company’s customers (hospitals) also experienced extraordinary disruptions to their businesses and supply chains, while experiencing unprecedented demand for health care services related to COVID-19. As a result of these extraordinary disruptions to the Company’s customers’ business, the Company’s customers were focused on meeting the nation’s health care needs in response to the COVID-19 pandemic.

In addition, the financial impact of COVID-19 on the Company’s hospital customers could cause the hospitals to delay payments due to the Company for services, which could negatively impact the Company’s cash flows. Clients and Strategic Partners SCWorx continues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the United States.

These normalization services are available as either a one-time service or recurring monthly, quarterly or annual review structure. These services are typically provided on a per item basis. Payment typically occurs upon completion of the applicable normalization project.

For one-time data normalization services clients, these normalization services are provided either through a stand-alone services agreement or services addendum to an existing master agreement with the client. These normalization services are available as either a one-time service or recurring monthly, quarterly or annual review structure. These services are typically provided on a per item basis.

SCWorx has developed and markets health care information technology solutions and associated services that improve healthcare processes and information flow within hospitals and other healthcare facilities.

Our Business SCWorx is a provider of data content and services related to the repair, normalization and interoperability of information for healthcare providers, as well as big data analytics for the healthcare industry. SCWorx has developed and markets health care information technology solutions and associated services that improve healthcare processes and information flow within hospitals and other healthcare facilities.

Our principal executive offices are located at 590 Madison Avenue, 21 st Floor, New York, New York, 10022. Our telephone number is (844) 472-9679. In this Annual Report, the terms “SCWorx”, “Alliance,” “Alliance MMA,” the “Company,” “we,” “us” and “our” refer to SCWorx, Corp. (f/k/a Alliance MMA, Inc.).

In this Annual Report, the terms “SCWorx”, “Alliance,” “Alliance MMA,” the “Company,” “we,” “us” and “our” refer to SCWorx, Corp. (f/k/a Alliance MMA, Inc.). Unless specified otherwise, the historical financial results in this Annual Report are those of SCWorx and its subsidiaries on a consolidated basis.

Removed

Unless specified otherwise, the historical financial results in this Annual Report are those of SCWorx and its subsidiaries on a consolidated basis. Our Business SCWorx is a provider of data content and services related to the repair, normalization and interoperability of information for healthcare providers, as well as big data analytics for the healthcare industry.

Added

On October 6, 2023, following stockholder approval at the Company’s annual meeting, the Company amended its certificate of incorporation to implement a 1 for 15 reverse split of its common stock. The effect of the reverse stock split was to combine every 15 shares of outstanding common stock into one share of common stock.

Removed

SCWorx currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller partnerships. Impact of the COVID-19 Pandemic The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic which spread throughout the United States and the world.

Added

The reverse stock split was effective at the opening of the trading day on October 11, 2023. The effects of the reverse stock split have been reflected in this Annual Report on Form 10-K for all periods presented. Our principal executive offices are located at 100 S Ashley Dr, Suite 100 Tampa, FL 33602. Our telephone number is (844) 472-9679.

Removed

The Company sought to mitigate these impacts to revenue through the sale of personal protective equipment (“PPE”) and COVID-19 rapid test kits to the health care industry, including many of the Company’s hospital customers.

Removed

The products the Company sought to source included: ● Test Kits — the Company currently has no contracted supply of Rapid Test Kits. ● PPE — Personal Protective Equipment (PPE) includes items such as masks, gloves, gowns, shields, etc. Currently the Company has no contracted supply of PPE.

Removed

Regarding PPE and Test Kits, the Company’s Board of Directors determined during the second quarter of 2020 to limit the Company’s role to acting as an intermediary between buyers and sellers with commission-based compensation. Clients and Strategic Partners SCWorx continues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the United States.

Removed

For example, besides our agnostic interoperability, additional key strengths include the SCWorx data warehouse, which exceeds 12 million items, SCWorx Big Data analytics and benchmarking.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

47 edited+5 added−13 removed123 unchanged

2022 filing

2023 filing

Biggest changeExaminations of our tax returns could result in significant proposed adjustments and assessment of additional taxes that could adversely affect our tax provision and net income in the period or periods for which that determination is made. 15 Risks Related to our Common Stock We may not be able to maintain the minimum $1.00 bid price per share of our Common Stock, as required by the Nasdaq Stock Market, which could force us to implement a reverse stock split of our Common Stock.

Factors that could cause the market price of our common stock to fluctuate significantly include: ● the results of operating and financial performance and prospects of other companies in our industry; ● strategic actions by us or our competitors, such as acquisitions or restructurings; ● announcements of innovations, increased service capabilities, new or terminated customers or new, amended or terminated contracts by our competitors; ● the public’s reaction to our press releases, media coverage and other public announcements, and filings with the SEC; ● market conditions for providers of services to the medical industry; ● lack of securities analyst coverage or speculation in the press or investment community about us or opportunities in the markets in which we compete; 16 ● changes in government policies in the United States; ● changes in earnings estimates or recommendations by any securities or research analysts who track our common stock or failure of our actual results of operations to meet any such expectations; ● dilution caused by the conversion into common stock of convertible securities or by the exercise of outstanding warrants or options; ● market and industry perception of our success, or lack thereof, in pursuing our growth strategy; ● changes in accounting standards, policies, guidance, interpretations or principles; ● any lawsuit involving us, our services or our products; ● arrival and departure of key personnel; ● government investigations of our business activities; ● sales of common stock by us, our investors or members of our management team; and ● changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.

Factors that could cause the market price of our common stock to fluctuate significantly include: ● the results of operating and financial performance and prospects of other companies in our industry; ● strategic actions by us or our competitors, such as acquisitions or restructurings; ● announcements of innovations, increased service capabilities, new or terminated customers or new, amended or terminated contracts by our competitors; 14 ● the public’s reaction to our press releases, media coverage and other public announcements, and filings with the SEC; ● market conditions for providers of services to the medical industry; ● lack of securities analyst coverage or speculation in the press or investment community about us or opportunities in the markets in which we compete; ● changes in government policies in the United States; ● changes in earnings estimates or recommendations by any securities or research analysts who track our common stock or failure of our actual results of operations to meet any such expectations; ● dilution caused by the conversion into common stock of convertible securities or by the exercise of outstanding warrants or options; ● market and industry perception of our success, or lack thereof, in pursuing our growth strategy; ● changes in accounting standards, policies, guidance, interpretations or principles; ● any lawsuit involving us, our services or our products; ● arrival and departure of key personnel; ● government investigations of our business activities; ● sales of common stock by us, our investors or members of our management team; and ● changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.

In addition, any completed acquisition may not result in the intended benefits for other reasons and our acquisitions will involve a number of other risks, including: ● We may have difficulty integrating the acquired companies; ● Our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; ● We may not realize the anticipated cost savings or other financial benefits we anticipated; ● We may have difficulty retaining or hiring key personnel, customers and suppliers to maintain expanded operations; ● Our internal resources may not be adequate to support our operations as we expand, particularly if we are awarded a significant number of contracts in a short time period; ● We may have difficulty retaining and obtaining any required regulatory approvals, licenses and permits; 10 ● We may not be able to obtain additional equity or debt financing on terms acceptable to us or at all, and any such financing could result in dilution to our stockholders, impact our ability to service our debt within the scheduled repayment terms and include covenants or other restrictions that would impede our ability to manage our operations; ● We may have failed to, or be unable to, discover liabilities of the acquired companies during the course of performing our due diligence; and ● We may be required to record additional goodwill as a result of an acquisition, which will reduce our tangible net worth.

In addition, any completed acquisition may not result in the intended benefits for other reasons and our acquisitions will involve a number of other risks, including: ● We may have difficulty integrating the acquired companies; ● Our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; ● We may not realize the anticipated cost savings or other financial benefits we anticipated; ● We may have difficulty retaining or hiring key personnel, customers and suppliers to maintain expanded operations; ● Our internal resources may not be adequate to support our operations as we expand, particularly if we are awarded a significant number of contracts in a short time period; 9 ● We may have difficulty retaining and obtaining any required regulatory approvals, licenses and permits; ● We may not be able to obtain additional equity or debt financing on terms acceptable to us or at all, and any such financing could result in dilution to our stockholders, impact our ability to service our debt within the scheduled repayment terms and include covenants or other restrictions that would impede our ability to manage our operations; ● We may have failed to, or be unable to, discover liabilities of the acquired companies during the course of performing our due diligence; and ● We may be required to record additional goodwill as a result of an acquisition, which will reduce our tangible net worth.

We have implemented a policy whereby any external communications need to be reviewed and approved by a member of our Board of Directors, as well as our outside legal counsel. 18 Complying with the laws and regulations affecting public companies will increase our costs and the demands on management and could harm our operating results.

We have implemented a policy whereby any external communications need to be reviewed and approved by a member of our Board of Directors, as well as our outside legal counsel. Complying with the laws and regulations affecting public companies will increase our costs and the demands on management and could harm our operating results.

These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or as executive officers. If we do not manage our planned growth effectively, our revenue, business and operating results may be harmed.

These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or as executive officers. 16 If we do not manage our planned growth effectively, our revenue, business and operating results may be harmed.

Please refer to Item 3. Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions and investigations. Economic uncertainty impacts our business and financial results, and a renewed recession could materially affect us in the future.

Please refer to Item 3. Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions and investigations. 17 Economic uncertainty impacts our business and financial results, and a renewed recession could materially affect us in the future.

Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions and investigations. 12 Any defects or errors, or failures to meet our customers’ expectations could result in large damage claims against us.

Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions and investigations. Any defects or errors, or failures to meet our customers’ expectations could result in large damage claims against us.

If our reserves are inadequate or insurance coverage proves to be inadequate or unavailable, our business, financial condition, results of operations and prospects may suffer. If we are required to reclassify independent contractors as employees, we may incur additional costs and taxes which could adversely affect our business, financial condition, results of operations and prospects.

If our reserves are inadequate or insurance coverage proves to be inadequate or unavailable, our business, financial condition, results of operations and prospects may suffer. 11 If we are required to reclassify independent contractors as employees, we may incur additional costs and taxes which could adversely affect our business, financial condition, results of operations and prospects.

A downturn in overall economic conditions also affects the priorities placed on various projects funded by governmental entities and federal, state and local spending levels. 14 In general, economic uncertainty makes it difficult to estimate our customers’ requirements for our services.

A downturn in overall economic conditions also affects the priorities placed on various projects funded by governmental entities and federal, state and local spending levels. In general, economic uncertainty makes it difficult to estimate our customers’ requirements for our services.

Changes to these laws could have a material adverse impact on the revenue, profit or the operation of our business. Disruptions in our information technology systems or security breaches of confidential customer information or personal employee information could have an adverse impact on our operations.

Changes to these laws could have a material adverse impact on the revenue, profit or the operation of our business. 19 Disruptions in our information technology systems or security breaches of confidential customer information or personal employee information could have an adverse impact on our operations.

Such difficulties could lead to significant expenses or to losses due to disruption in our business operations. 22 In addition, our information technology systems are subject to the risk of infiltration or data theft.

Such difficulties could lead to significant expenses or to losses due to disruption in our business operations. In addition, our information technology systems are subject to the risk of infiltration or data theft.

Due to the size and nature of our contracts, one or a few customers have during any given year, as well as over a period of consecutive years, represented a substantial portion of our consolidated revenues and gross profits, see Note 2, Summary of Significant Accounting Policies for further detail.

Due to the size and nature of our contracts, one or a few customers have during any given year, as well as over a period of consecutive years, represented a substantial portion of our consolidated revenues and gross profits, see Note 3, Summary of Significant Accounting Policies for further detail.

The market price of our common stock also may be adversely affected by our issuance of shares of our capital stock or convertible securities in connection with future acquisitions, or in connection with our financing efforts. 17 We have never paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock.

The market price of our common stock also may be adversely affected by our issuance of shares of our capital stock or convertible securities in connection with future acquisitions, or in connection with our financing efforts. 15 We have never paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock.

For the year ended December 31, 2022, we did not have effective controls over financial reporting. Our management has identified material weaknesses in our internal controls related to deficiency in our ability to have proper segregation of duties.

For the year ended December 31, 2023, we did not have effective controls over financial reporting. Our management has identified material weaknesses in our internal controls related to deficiency in our ability to have proper segregation of duties.

Our common stock price has fluctuated substantially, and the trading price of our common stock is likely to continue to be volatile, which could result in losses to investors and litigation.

Risks Related to our Common Stock Our common stock price has fluctuated substantially, and the trading price of our common stock is likely to continue to be volatile, which could result in losses to investors and litigation.

We could lose business from a significant customer for a variety of reasons, including: ● the consolidation, merger or acquisition of an existing customer, resulting in a change in procurement strategies employed by the surviving entity that could reduce the amount of work we receive; ● our performance on individual contracts or relationships with one or more significant customers could become impaired due to another reason, which may cause us to lose future business with such customers and, as a result, our ability to generate income would be adversely impacted; ● key customers could slow or stop spending on initiatives related to projects we are performing for them due to increased difficulty in the markets as a result of economic downturns or other reasons.

Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the various actions and investigations for which we are obligated to indemnify our officers and directors. 23 Item 1B. Unresolved Staff Comments None.

Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the various actions and investigations for which we are obligated to indemnify our officers and directors.

As of December 31, 2022, there were outstanding options to purchase an aggregate of 118,388 shares of our common stock at a weighted-average exercise price of $3.25 per share, all of which were exercisable as of such date.

As of December 31, 2023, there were outstanding options to purchase an aggregate of 3,333 shares of our common stock at a weighted-average exercise price of $39.60 per share, all of which were exercisable as of such date.

Actual results could differ from the estimates and assumptions that we use to prepare our financial statements. To prepare financial statements in conformity with GAAP, management is required to make estimates and assumptions as of the date of the financial statements that affect the reported values of assets and liabilities, revenues and expenses, and disclosures of contingent assets and liabilities.

To prepare financial statements in conformity with GAAP, management is required to make estimates and assumptions as of the date of the financial statements that affect the reported values of assets and liabilities, revenues and expenses, and disclosures of contingent assets and liabilities.

If we are unable to develop sufficient revenues and additional customers for our products and services, we may not generate enough revenue to sustain our business, and we may fail, in which case our stockholders would suffer a total loss of their investment.

As of December 31, 2022, there were outstanding warrants to purchase an aggregate of 1,567,720 shares of our common stock at a weighted-average exercise price of $1.35 per share, all of which were exercisable as of such date.

As of December 31, 2023, there were outstanding warrants to purchase an aggregate of 11,394 shares of our common stock at a weighted-average exercise price of $58.72 per share, all of which were exercisable as of such date.

Our auditors have indicated in their report on our financial statements for the year ended December 31, 2022 that conditions exist that raise substantial doubt about our ability to continue as a going concern since we may not have sufficient capital resources from operations and existing financing arrangements to meet our operating expenses and working capital requirements.

Our auditors have indicated in their report on our financial statements for the year ended December 31, 2023 that conditions exist that raise substantial doubt about our ability to continue as a going concern since we may not have sufficient capital resources from operations and existing financing arrangements to meet our operating expenses and working capital requirements. 8 As of December 31, 2023, we had only limited cash on hand, a working capital deficit of $1,898,625 and accumulated deficit of $29,839,841.

There can be no assurance that we will be able to continue as a going concern. 9 We currently have an immediate need for additional capital. If we are unable to obtain additional capital, we will not be able to implement our business strategy or successfully operate our business; however, additional financings will subject our existing stockholders to dilution.

We currently have an immediate need for additional capital. If we are unable to obtain additional capital, we will not be able to implement our business strategy or successfully operate our business; however, additional financings will subject our existing stockholders to dilution.

In addition, the financial impact of COVID-19 on the Company’s hospital customers could cause the hospitals to delay payments due to the Company for services, which could negatively impact the Company’s cash flows. We have a history of losses and may continue to incur losses in the future.

We have a history of losses and may continue to incur losses in the future. We have a history of losses and may continue to incur losses in the future, which could negatively impact the trading value of our common stock. For the year ended December 31, 2022, our revenues were $4,038,188, and we had a net loss of $1,847,406.

We have a history of losses and may continue to incur losses in the future, which could negatively impact the trading value of our common stock. For the year ended December 31, 2023, our revenues were $3,804,943, and we had a net loss of $3,981,144.

Revenues under our contracts with significant customers may continue to vary from period to period depending on the timing or volume of work that those customers contract from us.

Revenues under our contracts with significant customers may continue to vary from period to period depending on the timing or volume of work that those customers contract from us. A limited number of customers may continue to comprise a substantial portion of our revenue for the foreseeable future.

Our total revenues declined approximately $590,000 (12%) to $4,038,188 in the year ended December 31, 2022 as compared to $4,632,529 in the year ended December 31, 2021. This decline in revenue will be exacerbated if we are unable to develop and market new products, which could help us increase our sales to existing customers or develop new customers.

Our total revenues declined approximately $233,000 (5.7%) to $3,804,943 in the year ended December 31, 2023 as compared to $4,038,188 in the year ended December 31, 2022. This decline in revenue may continue if we are unable to develop and market new products, which could help us increase our sales to existing customers or develop new customers.

If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support the operation or growth of our business could be significantly impaired and our operating results may be harmed. 20 Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock and our ability to grow our business.

In addition, the securities markets from time to time experience significant price and volume fluctuations that are unrelated to the operating performance of particular companies.

In addition, the securities markets from time to time experience significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

These market fluctuations may also materially and adversely affect the market price of our common stock. 21 Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

As of December 31, 2022, there was goodwill of $8,366,467. We evaluate goodwill at least annually, and will do so more frequently if events or circumstances indicate that impairment may have occurred.

As of December 31, 2023, the Company had goodwill of $5,842,433. We evaluate goodwill at least annually, and will do so more frequently if events or circumstances indicate that impairment may have occurred.

The determination of whether goodwill or acquired intangible assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of our reporting unit. Changes in our strategy or market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets.

The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition, results of operations and prospects. 13 Risks Related to Our Industry Our industry is highly competitive, with a variety of larger companies with greater resources competing with us, and our failure to compete effectively could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance.

Risks Related to Our Industry Our industry is highly competitive, with a variety of larger companies with greater resources competing with us, and our failure to compete effectively could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance.

Our operating results have fluctuated and could fluctuate in the future. Factors that may contribute to fluctuations include: ● our ability to effectively manage our working capital; ● our ability to satisfy customer demands in a timely and cost-effective manner; and ● pricing and availability of labor.

Factors that may contribute to fluctuations include: ● our ability to effectively manage our working capital; ● our ability to satisfy customer demands in a timely and cost-effective manner; and ● pricing and availability of labor. 13 Actual results could differ from the estimates and assumptions that we use to prepare our financial statements.

We will need to expand and optimize our sales infrastructure in order to grow our customer base and our business. We plan to expand our account management/sales force when and if we have sufficient capital to do so. Identifying and recruiting qualified personnel and training them requires significant time, expense and attention.

Our failure to adequately expand our direct sales force will impede our growth. We will need to expand and optimize our sales infrastructure in order to grow our customer base and our business. We plan to expand our account management/sales force when and if we have sufficient capital to do so.

A limited number of customers may continue to comprise a substantial portion of our revenue for the foreseeable future. 11 A default or delay in payment on a significant scale could adversely affect our business, financial condition, results of operations and prospects.

A default or delay in payment on a significant scale could adversely affect our business, financial condition, results of operations and prospects.

These fluctuations may also cause short sellers to enter the market periodically in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or that our share price will appreciate over time.

We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or that our share price will appreciate over time. 18 Our stock price has been volatile .

For the year ended December 31, 2021, our revenues were $4,632,529, and we had a net loss of $3,814,468. At December 31, 2022, we had an accumulated deficit of $25,858,697. We incurred losses from operations of $2,126,597 for the year ended December 31, 2022 and $3,814,468 for the year ended December 31, 2020.

For the year ended December 31, 2022, our revenues were $4,038,188, and we had a net loss of $1,847,406. At December 31, 2023, we had an accumulated deficit of $29,839,841. We incurred losses from operations of $1,450,662 for the year ended December 31, 2023 and $2,126,597 for the year ended December 31, 2022.

There has been limited trading in our common stock, and there can be no assurance that an active trading market in our common stock will either develop or be maintained.

Our common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock and our ability to grow our business. There has been limited trading in our common stock, and there can be no assurance that an active trading market in our common stock will either develop or be maintained.

If any of the following risks occurs, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the trading price of our common stock could decline, and you could lose part or all of your investment.

If any of the following risks occurs, our business, financial condition, results of operations and prospects could be materially and adversely affected.

Risks Related to Our Financial Results and Financing Plans The COVID-19 pandemic has disrupted our business and the business of our hospital customers. The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic which spread throughout the United States and the world. The outbreak adversely impacted new customer acquisition.

The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic which spread throughout the United States and the world. The outbreak adversely impacted new customer acquisition. The Company has followed the recommendations of local health authorities to minimize exposure risk for its team members since the outbreak.

Smaller competitors are sometimes able to win bids for these projects based on price alone because of their lower costs and financial return requirements. Additionally, our competitors may develop the expertise, experience and resources to provide services that are equal or superior in price to our services, and we may not be able to maintain or enhance our competitive position.

Smaller competitors are sometimes able to win bids for these projects based on price alone because of their lower costs and financial return requirements.

Some of our competitors have already achieved greater market penetration than we have in the markets in which we compete, and some have greater financial and other resources than we do.

Additionally, our competitors may develop the expertise, experience and resources to provide services that are equal or superior in price to our services, and we may not be able to maintain or enhance our competitive position. 12 Some of our competitors have already achieved greater market penetration than we have in the markets in which we compete, and some have greater financial and other resources than we do.

Changes in our strategy or market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets. 19 Any future acquisitions may result in potentially dilutive issuances of equity securities, the incurrence of indebtedness and increased amortization expense.

Any future acquisitions may result in potentially dilutive issuances of equity securities, the incurrence of indebtedness and increased amortization expense.

We have historically incurred operating losses and may continue to incur operating losses for the foreseeable future. We believe that these conditions raise substantial doubt about our ability to continue as a going concern. This may hinder our ability to obtain financing or may force us to obtain financing on less favorable terms than would otherwise be available.

During the year ended December 31, 2023, we had a net loss of $3,981,144 and used $806,164 of cash in operations. We have historically incurred operating losses and may continue to incur operating losses for the foreseeable future. We believe that these conditions raise substantial doubt about our ability to continue as a going concern.

It is also not possible to obtain insurance to protect against all operational risks and liabilities.

It is also not possible to obtain insurance to protect against all operational risks and liabilities. The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition, results of operations and prospects.

Removed

The Company has followed the recommendations of local health authorities to minimize exposure risk for its team members since the outbreak. In addition, the Company’s customers (hospitals) also experienced extraordinary disruptions to their businesses and supply chains, while experiencing unprecedented demand for health care services related to COVID-19.

Added

In that event, the trading price of our common stock could decline, and you could lose part or all of your investment. 7 Risks Related to Our Financial Results and Financing Plans The COVID-19 pandemic has disrupted our business and the business of our hospital customers.

Removed

Added

This may hinder our ability to obtain financing or may force us to obtain financing on less favorable terms than would otherwise be available.

Removed

Added

Identifying and recruiting qualified personnel and training them requires significant time, expense and attention.

Removed

Added

Our operating results have fluctuated and could fluctuate in the future.

Removed

Currently the Company has no contracted supply of PPE. 8 Regarding PPE and Test Kits, the Company’s Board of Directors determined during the second quarter of 2020 to limit the Company’s role to acting as an intermediary between buyers and sellers with commission-based compensation. However, there is no assurance the Company will realize any material revenue from these activities.

Added

These fluctuations may also cause short sellers to enter the market periodically in the belief that we will have poor results in the future.

Removed

As of December 31, 2022, we had only limited cash on hand, a working capital deficit of $1,442,198 and accumulated deficit of $25,858,697. During the year ended December 31, 2022, we had a net loss of $1,847,406 and used $546,663 of cash in operations.

Removed

Since many of our customer contracts allow our customers to terminate the contract without cause, our customers may terminate their contracts with us at will, which could impair our business, financial condition, results of operations and prospects. Our failure to adequately expand our direct sales force will impede our growth.

Removed

On June 8, 2022, Nasdaq notified the Company that based upon the Company’s closing bid price for the last 30 consecutive business days (April 26, 2022 through June 7, 2022), the Company no longer meets the listed securities requirement to maintain minimum bid price of $1 per share pursuant to Nasdaq Rules 5550(a)(2) and 5810(c)(3)(A).

Removed

On December 6, 2022, the Company received written notification from the Listing Qualifications Department of Nasdaq, granting the Company’s request for a 180-day extension to regain compliance with the Bid Price Rule. The Company now has until June 5, 2023 to meet the requirement.

Removed

If at any time prior to June 5, 2023, the bid price of the Company’s ordinary shares closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Company will regain compliance with the Bid Price Rule.

Removed

Under the Nasdaq Rules, if at any time during this second extension 180 day period the closing bid price of the Company’s securities is at least $1 for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance and the matter would be closed.

Removed

If we do not regain compliance by the end of the second extension period, we could, subject to shareholder approval, implement a reverse stock split so as to increase the price per share of our common stock on a post-split adjusted basis.

Removed

In such a case, there is a risk that the price of our common stock could decline on a split-adjusted basis. For example, if our common stock were trading at $.80 per share and we implemented a 5/1 reverse stock split, there is a risk that our common stock could trade below $4.00 per share on a split-adjusted basis.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease had an original one-year term that commenced on December 1, 2015, which was renewed until November 30, 2018 and now is under a month-to-month lease agreement. The lease allows for the limited use of private offices, conference rooms, mail handling, videoconferencing, and certain other business services. We believe that our facilities are adequate for our current needs.

Biggest changeThe lease allows for the limited use of private offices, conference rooms, mail handling, videoconferencing, and certain other business services. We believe that our facilities are adequate for our current needs.

Item 2. Properties The Company does not own any real property. The principal executive offices are located at an office complex in New York, New York, consisting of shared office space that we are leasing.

Item 2. Properties The Company does not own any real property. The principal executive offices are located at an office complex in Tampa, Florida, consisting of shared office space that we are leasing. The lease is under a month-to-month lease agreement.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePlaintiffs 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 seeks $500,000 in damages. To date, the Complaint has not been served.

Biggest changePlaintiffs 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.

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 $257,545.63.

SCWorx AAA Arbitration Case 01-22-0001-5709 As previously disclosed, 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 $190,000.00 arising out of a marketing and consulting agreement.

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.

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.

Mine Safety Disclosures Not applicable. 25 PART II

Mine Safety Disclosures Not applicable. 21 PART II

The arbitration hearing commences on March 20, 2023 and will continue through March 24, 2023. 24 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.

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.

Removed

Settlement of Consolidated Securities Class Action As previously disclosed, on April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New York against us and our former CEO. The action is captioned Daniel Yannes, individually and on behalf of all others similarly situated vs. SCWorx Corp. and Marc S.

Added

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”).

Removed

Schessel. Subsequently, two additional class actions were filed in the same court (Leeburn v. SCWorx, et ano. and Leonard v. SCWorx et ano.) and thereafter, the three class actions were consolidated (the “Consolidated Class Action”).

Added

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.

Removed

The Consolidated Class Action alleged that our company and our former CEO misled investors in connection with our April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits. As previously disclosed, on February 11, 2022, the parties entered into a Stipulation of Settlement (subject to Court approval) to settle the Consolidated Class Action.

Added

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.

Removed

The settlement resolves all claims asserted against SCWorx and the other named defendant without any admission, concession or finding of any fault, liability or wrongdoing by the Company or any defendant.

Added

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.

Removed

Under the terms of this agreement, (i) the insurers for the Company and Marc Schessel (former CEO) will make a cash payment to the class plaintiffs (ii) the former CEO will transfer 100,000 shares of company common stock to the class plaintiffs, and (iii) the Company will issue $600,000 worth of common stock to the class plaintiffs, in exchange for which all parties will be released from all claims related to the securities class action litigation.

Added

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.

Removed

After giving effect to the share issuance by the Company, the Company believes that it will have satisfied the accrued retention liability of $700,000. By order dated March 22, 2022, the Court granted preliminary approval of the class action. After a fairness hearing held on June 29, 2022, the Court approved the Stipulation of Settlement. CorProminence d/b/a Core IR v.

Added

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.

Removed

Upon review of the Complaint, SCWorx counsel provided Plaintiffs’ counsel with a “safe harbor” Notice of Motion for sanctions pursuant to Fed. R. Civ.

Removed

Pro. 11 and letter explaining that the material allegations in the Complaint are false inasmuch as the restrictions on Plaintiffs’ SCWorx shares were removed on April 21, 2020– after months of waiting for Plaintiffs to supply the correct documents with accurate information so that outside counsel could provide an opinion and clear the stocks for trading.

Removed

The “safe harbor” letter and Notice of Motion gave Plaintiffs 21 days to withdraw the Complaint. After asking for and receiving several extensions in addition to the 21 days, Plaintiffs have not withdrawn the Complaint and thus, a Motion for Sanctions was filed by SCWorx on November 4, 2022.

Removed

After the motion for sanctions was filed, Plaintiffs filed an Amended Complaint on November 28, 2022. On February 6, 2023, SCWorx filed its answer to the Amended Complaint interposing numerous defenses. SCWorx is awaiting a decision from the Court on its Motion for Sanctions.

Removed

Other Investigations As previously disclosed, on or about April 6, 2022, the Company reached a settlement in principle with the SEC Staff which, subject to a few changes, was subsequently approved by the Commission in which the Company agreed to resolve the SEC’s investigation regarding the April 13, 2020 press release and related disclosures (related to Covid-19 rapid test kits) through the Company’s payment of (a) a civil monetary penalty of $125,000, payable in 4 equal installments over 12 months and (b) disgorgement of $471,000 and prejudgment interest in the amount of $32,761.56 which payment is to be deemed satisfied by the transfer by the Company, no later than 30 days after the entry of the Class Distribution Order in the class action entitled Yannes v.

Removed

SCWorx Corp. of shares of SCWorx’s common stock, valued at $600,000 at the time of issuance to authorized claimants in the Yannes settlement, provided that the Class Distribution Order is entered within 365 days from the entry of the Final Judgment in the SEC action.

Removed

In the event that the Company does not transfer shares of its common stock, valued at $600,000 at the time of issuance to authorized claimants in the class action settlement within 365 days from the entry of a Final Judgment, the Company will be required to remit to the SEC the full amount of disgorgement within 395 days from entry of a Final Judgment.

Removed

On May 31, 2022, the Commission filed a complaint against Marc Schessel and the Company in the United States District Court for the District of New Jersey alleging violations of Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act of 1933 (the “Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rules 10b-5(a), 10b-5(b), and 10b-5(c) thereunder relating to the April 13, 2020 press release and related disclosures we made in relation to the transaction involving COVID-19 test kits.

Removed

At the same time, on May 31, 2022, the Commission filed a motion for approval of the Consent Judgment which contained the aforementioned fine, disgorgement requirement as well as an agreement by the Company to an injunction permanently restraining and enjoining the Company from violating Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R § 240.10b .. 5(a), (b), (c)]; and Section 17(a) of the Securities Act of 1933 (“Securities Act’’) [15 U.S.C. § 77q(a)].

Removed

On June 2, 2022, the Court granted the motion, approved the settlement and entered a final judgment. SCWorx has thus far paid 3 of 4 installments on the monetary penalty of $125,000. In connection with these actions and investigations, the Company is obligated to indemnify its officers and directors for costs incurred in defending against these claims and investigations.

Removed

Because the Company currently does not have the resources to pay for these costs, its directors and officers liability insurance carrier has agreed to indemnify these persons. Upon consummation of the settlement of the Consolidated Class Action, the Company believes it will have satisfied its accrued retention obligations with respect to the insurance coverage. Item 4.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 25 PART II 26 Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. [Reserved] 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38 Item 8.

Biggest changeItem 4. Mine Safety Disclosures 21 PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6. [Reserved] 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 34 Item 8.

Added

Financial Statements and Supplementary Data 34 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 34 Item 9A. Controls and Procedures 34

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth for the indicated periods the high and low closing prices for SCWorx’s common stock as reported on the NASDAQ Capital Market. 2022 2021 High Low High Low First Quarter $ 1.38 $ 0.70 $ 3.08 $ 1.28 Second Quarter $ 1.13 $ 0.65 $ 2.49 $ 1.28 Third Quarter $ 0.86 $ 0.60 $ 5.00 $ 1.45 Fourth Quarter $ 0.73 $ 0.38 $ 2.28 $ 1.16 Holders of Record As of March 20, 2023, there were 13,010,409 outstanding shares of common stock held by 86 stockholders of record.

Biggest changeThe effects of the reverse stock split have been reflected in this Annual Report on Form 10-K for all periods presented. 2023 2022 High Low High Low First Quarter $ 7.38 $ 4.80 $ 20.70 $ 10.50 Second Quarter $ 9.90 $ 3.18 $ 16.95 $ 9.75 Third Quarter $ 5.70 $ 2.72 $ 12.92 $ 9.03 Fourth Quarter $ 3.23 $ 1.65 $ 10.95 $ 5.70 Holders of Record As of September 23, 2024, there were 1,599,367 outstanding shares of common stock held by 433 stockholders of record.

Our symbol was changed to “WORX” on February 4, 2019 in connection with the closing of the SCWorx acquisition.

Our symbol was changed to “WORX” on February 4, 2019 in connection with the closing of the SCWorx acquisition. The following table sets forth for the indicated periods the high and low closing prices for SCWorx’s common stock as reported on the NASDAQ Capital Market.

Removed

Refer to Note 8, Stockholders’ Equity, in the accompanying consolidated financial statements, for a non–cash dividend related to the decrease in the exercise price of certain warrants.

Added

The reverse stock split was effective at the opening of the trading day on October 11, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIf we are unable to generate positive cash flows from operations, and/or raise additional funds (either through debt or equity), we will be unable to fund our software development expenditures, in which case, there could be an adverse effect on our business and results of operations. 32 Cash Flows Years ended December 31, 2023 2022 Net cash used in operating activities $ (806,164 ) $ (540,036 ) Net cash provided by investing activities 165,000 - Net cash provided by financing activities 483,138 718,423 Change in cash $ (158,026 ) $ 178,387 Our operations through December 31, 2023 have resulted in negative cash flows from operations of $806,164.

To determine revenue recognition for arrangements within the scope of Topic 606 we perform the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation We follow the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation.

To determine revenue recognition for arrangements within the scope of Topic 606 we perform the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation 26 We follow the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation.

SCWorx currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller partnerships. We currently host our solutions, serve our customers, and support our operations in the United States through an agreement with a third party hosting and infrastructure provider, RackSpace.

SCWorx currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller partnerships. 23 We currently host our solutions, serve our customers, and support our operations in the United States through an agreement with a third party hosting and infrastructure provider, RackSpace.

If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. Results of Operations The COVID-19 Pandemic has disrupted our business and the business of our hospital customers.

If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. 30 Results of Operations The COVID-19 Pandemic has disrupted our business and the business of our hospital customers.

Contract Balances Contract assets arise when the revenue associated prior to our unconditional right to receive a payment under a contract with a customer ( i.e ., unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received. There were no contract assets as of December 31, 2022 and 2021.

During the years ended December 31, 2022 and 2021, we completed the accounting for tax effects of the Tax Act under ASC 740. There were no impacts to the years ended December 31, 2022 and 2021. Stock-based Compensation Expense The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments.

During the years ended December 31, 2023 and 2022, we completed the accounting for tax effects of the Tax Act under ASC 740. There were no impacts to the years ended December 31, 2023 and 2022. Stock-based Compensation Expense The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments.

If we are able to secure sufficient funding in the first half of 2023 to fully implement our business plan, we expect that our operations could begin to generate positive cash flows by the end of 2023, which should ameliorate our liquidity deficiency.

If we are able to secure sufficient funding in the first half of 2024 to fully implement our business plan, we expect that our operations could begin to generate positive cash flows by the end of 2024, which should ameliorate our liquidity deficiency.

If we are able to raise additional capital during first half of 2023 and generate additional revenue through the acquisition of new customers, we believe we may begin to generate positive operating cash flows by the end of 2023.

If we are able to raise additional capital during first half of 2024 and generate additional revenue through the acquisition of new customers, we believe we may begin to generate positive operating cash flows by the end of 2024.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the years ended December 31, 2022 and 2021.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the years ended December 31, 2023 and 2022.

We use the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns.

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns.

Refer to Note 8, Stockholders’ Equity, for additional detail. 33 Loss Per Share We compute earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement.

Refer to Note 9, Stockholders’ Equity, for additional detail. Loss Per Share We compute earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement.

If, after assessing the totality of events or circumstances, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. For further discussion of goodwill, refer to Note 4, Business Combinations.

The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances.

The Company regularly evaluates estimates and assumptions related to allowance for credit losses, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances.

Off-Balance Sheet Arrangements As of December 31, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Off-Balance Sheet Arrangements As of December 31, 2023 and 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. 33

Our internal sources of funds will consist of cash flows from operations, but not until we begin to realize substantial additional revenues from the sale of our products and services. As previously stated, our operations are generating negative cash flows, and thus adversely affecting our liquidity.

Ultimately, we will need to generate substantial positive operating cash flows. Our internal sources of funds will consist of cash flows from operations, but not until we begin to realize substantial additional revenues from the sale of our products and services. As previously stated, our operations are generating negative cash flows, and thus adversely affecting our liquidity.

We do not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. As of December 31, 2021, we had $579,833 of remaining performance obligations recorded as deferred revenue.

We do not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. As of December 31, 2023, we had $378,583 of remaining performance obligations recorded as deferred revenue.

Operating Activities Net cash used in operating activities was $546,663 for the year ended December 31, 2022, mainly related to the net loss of $1,847,406 and a gain on forgiveness of PPP Loans of $285,818, partially offset by non-cash stock-based compensation of $1,141,932 related to various equity awards to employees and non-employees, $78,125 in bad debt expense, and a $156,600 decrease in inventory valuation.

Net cash used in operating activities was $540,036 for the year ended December 31, 2022, mainly related to the net loss of $1,847,406 and a gain on forgiveness of PPP Loans of $279,191, partially offset by non-cash stock-based compensation of $1,141,932 related to various equity awards to employees and non-employees, $78,125 in bad debt expense, and a $156,600 decrease in inventory valuation.

Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. 28 Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis.

Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. 24 Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements.

If we are unable to raise additional funds in the near term, we will not be able to fully implement our business plan, in which case there could be a material adverse effect on our results of operations and financial condition. 36 In the event we do not generate sufficient funds from revenues or financing through the issuance of common stock or from debt financing, we will be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition, and results of operations.

In the event we do not generate sufficient funds from revenues or financing through the issuance of common stock or from debt financing, we will be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition, and results of operations.

SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners. 27 SCWorx’s software solutions are delivered to its clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by such clients through a secure connection in a software as a service (“SaaS”) delivery method.

SCWorx’s software solutions are delivered to its clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by such clients through a secure connection in a software as a service (“SaaS”) delivery method.

Liquidity and Capital Resources Going Concern Management has concluded on our consolidated financial statements for the year ended December 31, 2022 that conditions exist that raise substantial doubt about our ability to continue as a going concern since we may not have sufficient capital resources from operations and existing financing arrangements to meet our operating expenses and working capital requirements.

We had other income of $276,036 during the year ended December 31, 2022 related primarily to the forgiveness of PPP loans. 31 Liquidity and Capital Resources Going Concern Management has concluded on our consolidated financial statements for the year ended December 31, 2023 that conditions exist that raise substantial doubt about our ability to continue as a going concern since we may not have sufficient capital resources from operations and existing financing arrangements to meet our operating expenses and working capital requirements.

Actual results could differ from those estimates, and material effects on our consolidated operating results and consolidated financial position may result. Refer to Note 2, Summary of Significant Accounting Policies, in the accompanying consolidated financial statements, for a full description of our accounting policies. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance to U.S.

Actual results could differ from those estimates, and material effects on our consolidated operating results and consolidated financial position may result. Refer to Note 3, Summary of Significant Accounting Policies, in the accompanying consolidated financial statements, for a full description of our accounting policies.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

Refer to Note 8, Commitments and Contingencies, for further information. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

We record a liability in our consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. Management reviews these estimates in each accounting period as additional information becomes known and adjusts the loss provision when appropriate.

Management reviews these estimates in each accounting period as additional information becomes known and adjusts the loss provision when appropriate. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements.

The decline in revenue is primarily related to a slight decrease in revenues from SaaS customer sales during the period. 35 Cost of Revenues Cost of revenues for the year ended December 31, 2022 was $2,624,553, compared to $2,782,509 for the year ended December 31, 2021.

The decline in revenue is primarily related to a slight decrease in overall revenues from SaaS customer sales during the period due to fluctuations in our customer base. Cost of Revenues Cost of revenues for the year ended December 31, 2023 was $2,535,865, compared to $2,624,553 for the year ended December 31, 2022.

Management reviews impairment of goodwill annually in the fourth quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. We first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. Management reviews impairment of goodwill annually in the fourth quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. We first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

We expect to recognize sales relating to these existing performance obligations of during 2023. Costs to Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with ASC 340-40.

We expect to recognize sales relating to these existing performance obligations of during 2024. Costs to Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts.

Contract liabilities arise when customers remit contractual cash payments in advance of our company satisfying our performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied.

Accordingly, we have an immediate need for additional capital to fund our operating activities. In order to remedy this liquidity deficiency, we have cut spending and are actively seeking to raise additional funds through the sale of equity and debt securities. Ultimately, we will need to generate substantial positive operating cash flows.

Currently we have only limited cash on hand, and consequently, we are unable to implement our current business plan. Accordingly, we have an immediate need for additional capital to fund our operating activities. In order to remedy this liquidity deficiency, we have cut spending and are actively seeking to raise additional funds through the sale of equity and debt securities.

Based on our current business plan, if we had sufficient capital resources, we anticipate that our operating activities would use a net of approximately $50,000 in cash per month over the next twelve months, or approximately $600,000. Currently we have only limited cash on hand, and consequently, we are unable to implement our current business plan.

Consequently, we have an immediate need for additional capital to fund our operations and the implementation of our business plan. Based on our current business plan, if we had sufficient capital resources, we anticipate that our operating activities would use a net of approximately $70,000 in cash per month over the next twelve months, or approximately $800,000.

Expenditures that materially increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred. 30 Revenue Recognition We recognize revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

Revenue Recognition We recognize revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

Cost of Revenue Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of our large data array that were incurred in delivering professional services and maintenance of our large data array during the periods presented.

These expenses are recognized and expensed when incurred in accordance with Accounting Standard Codification (“ASC”) 340-40. Cost of Revenue Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of our large data array that were incurred in delivering professional services and maintenance of our large data array during the periods presented.

Legal Proceedings of this Annual Report on Form 10-K, the Company is obligated to indemnify its officers and directors for costs incurred in defending against these claims and investigations. Contingencies From time to time, we may be involved in legal and administrative proceedings and claims of various types.

In connection with the Class Action claims and investigations described in Item 3. Legal Proceedings of this Annual Report on Form 10-K, the Company is obligated to indemnify its officers and directors for costs incurred in defending against these claims and investigations.

As of December 31, 2022, we had a working capital deficit of $1,442,198 and accumulated deficit of $25,858,697. During the year ended December 31, 2022, we had a net loss of $1,847,406 and used $546,673 of cash in operations. We have historically incurred operating losses and may continue to incur operating losses for the foreseeable future.

As of December 31, 2023, we had a working capital deficit of $1,898,625 and accumulated deficit of $29,839,841. During the year ended December 31, 2023, we had a net loss of $3,981,144 and used $806,164 of cash in operations. We have historically incurred operating losses and may continue to incur operating losses for the foreseeable future.

We expect to fund any future software development expenditures through a combination of cash flows from operations and proceeds from equity and/or debt financing.

Based on our current limited availability of funds, we expect to spend minimal amounts on expansion of our sales organization, software development and capital expenditures. We expect to fund any future software development expenditures through a combination of cash flows from operations and proceeds from equity and/or debt financing.

The $157,956 decrease is primarily related to a decrease in labor costs during the current year. Expenses General and administrative expenses decreased $2,124,256 to $3,540,232 for the year ended December 31, 2022, as compared to $5,664,488 in the same period of 2021.

The $88,688 decrease is primarily related to a decrease in labor costs during the current year. Expenses General and administrative expenses decreased $817,337 to $2,719,740 for the year ended December 31, 2023, as compared to $3,537,077 in the same period of 2022.

The Company’s clients are geographically dispersed throughout the country. The Company’s focus is to assist healthcare providers with issues that they have pertaining to data interoperability.

The Company’s clients are geographically dispersed throughout the country. The Company’s focus is to assist healthcare providers with issues that they have pertaining to data interoperability. SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners.

GAAP and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All material intercompany balances and transactions have been eliminated in consolidation. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Cash Cash is maintained with various financial institutions.

When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer. 27 SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which our service is made available to customers.

As of December 31, 2022 and 2021, we had 4,095,867 and 3,322,670, respectively, common stock equivalents outstanding. Indemnification We provide indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of our software. In accordance with authoritative guidance for accounting for guarantees, we evaluate estimated losses for such indemnification.

As of December 31, 2023 and 2022, we had 273,059 and 180,390, respectively, common stock equivalents outstanding. 29 Indemnification We provide indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of our software.

If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements. If a loss is probable but the amount of loss cannot be reasonably estimated, we disclose the loss contingency and an estimate of possible loss or range of loss (unless such an estimate cannot be made).

If a loss is probable but the amount of loss cannot be reasonably estimated, we disclose the loss contingency and an estimate of possible loss or range of loss (unless such an estimate cannot be made). We do not recognize gain contingencies until they are realized. Legal costs incurred in connection with loss contingencies are expensed as incurred.

We expect general and administrative expenses (excluding non-cash compensation expenses) to remain relatively flat during 2023 with the exception of increases in our sales force. We had other income of $279,191 during the year ended December 31, 2022 related to the forgiveness of PPP loans.

We expect general and administrative expenses (excluding non-cash compensation expenses) to remain relatively flat during 2024 with the exception of increases in our sales force. We had other losses of $2,530,482 During the year ended December 31, 2023 consisting of write-down of goodwill of $2,524,034 and interest expense of $6,448.

ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

During the year ended December 31, 2023, we evaluated available evidence and concluded that we may not realize all the benefits of our deferred tax assets; therefore, a valuation allowance was established for our deferred tax assets. 28 ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 34 Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.

Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.

As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our company’s request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited.

To date, no such claims have been filed against our company and no liability has been recorded in our financial statements. As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our company’s request in such capacity.

Goodwill and Identified Intangible Assets Goodwill Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset.

We have lease agreements with lease components only, none with non-lease components, which are generally accounted for separately. Goodwill and Identified Intangible Assets Goodwill Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination.

In addition, we have directors’ and officers’ liability insurance coverage that is intended to reduce our financial exposure and may enable us to recover any payments above the applicable policy retention. In connection with the Class Action claims and investigations described in Item 3.

The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited. In addition, we have directors’ and officers’ liability insurance coverage that is intended to reduce our financial exposure and may enable us to recover any payments above the applicable policy retention.

If it is determined that we have not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied. 31 Revenue recognition for our performance obligations are as follows: Data Normalization and Professional Services Our Data Normalization and Professional Services are typically fixed fee.

Our SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements. If it is determined that we have not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied.

For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue For the years ended Accounts Receivable December 31, December 31, Customers 2022 2021 2022 2021 Customer A 12 % 7 % 12 % 4 % Customer B 10 % 9 % 10 % 7 % Customer C 14 % 5 % 15 % 16 % Customer D 5 % 4 % 30 % - % Customer E 2 % 4 % - % 17 % Customer F 3 % 3 % 3 % 14 % Allowance for Doubtful Accounts Our company continually monitors customer payments and maintains a reserve for estimated losses resulting from our customers’ inability to make required payments.

For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue For the years ended Accounts Receivable December 31, December 31, Customers 2023 2022 2023 2022 Customer A 12 % 12 % 7 % 12 % Customer B 11 % 10 % 22 % 10 % Customer C 15 % 14 % 12 % 15 % Customer D 12 % 12 % 7 % 6 % Customer E 1 % - % 15 % - % Customer F 5 % 5 % - % 30 % Allowance for Credit Losses Accounts receivable are comprised of amounts billed and currently due from customers.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The current portion of lease obligations are included in accounts payable and accrued liabilities on the consolidated balance sheets. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities. Based on our current limited availability of funds, we expect to spend minimal amounts on expansion of our sales organization, software development and capital expenditures.

The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities (see Note 2 to the Financial Statements – Liquidity and Going Concern).

All material intercompany balances and transactions have been eliminated in consolidation. Cash Cash is maintained with various financial institutions. Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash deposits.

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash deposits.

Our operating results for the years ended December 31, 2021 and 2020 are summarized as follows: Years ended December 31, 2022 December 31, 2021 Difference Revenue $ 4,038,188 $ 4,632,529 $ (594,341 ) Cost of revenues 2,624,553 2,782,509 (157,956 ) General and administrative 3,540,232 5,664,488 (2,124,256 ) Other income (expense) 279,191 - 279,191 Provision for income taxes - - - Net loss $ (1,847,406 ) $ (3,814,468 ) $ 1,967,062 Revenues Revenue for the year ended December 31, 2022 was $4,038,188, compared to $4,632,529 in revenue for the year ended December 31, 2021.

Our operating results for the years ended December 31, 2023 and 2022 are summarized as follows: Years ended December 31, 2023 December 31, 2022 Difference Revenue $ 3,804,943 $ 4,038,188 $ (233,245 ) Cost of revenues 2,535,865 2,624,553 (88,688 ) General and administrative 2,719,740 3,537,077 (817,337 ) Other income (expense) (2,530,482 ) 276,036 (2,806,518 ) Provision for income taxes - - - Net loss $ (3,981,144 ) $ (1,847,406 ) $ (2,133,738 ) Revenues Revenue for the year ended December 31, 2023 was $3,804,943, compared to $4,038,188 in revenue for the year ended December 31, 2022.

We consider such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against our company and no liability has been recorded in our financial statements.

In accordance with authoritative guidance for accounting for guarantees, we evaluate estimated losses for such indemnification. We consider such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.

Financing Activities Net cash provided by financing activities was $725,050 for the year ended December 31, 2022. This consisted proceeds from a common stock placement. Net cash provided by financing activities was $764,595 for the year ended December 31, 2021.

Net cash provided by financing activities was $718,423 for the year ended December 31, 2022. This consisted of proceeds of $725,050 from a common stock placement partially offset by loan repayments of $6,627. Contractual Cash Obligations Refer to Note 8, Commitments and Contingencies, in the accompanying consolidated financial statements for additional detail.

Net cash used in operating activities was $1,069,945 for the year ended December 31, 2021, mainly related to the net loss of $3,814,46 and decreases of $452,284 in accounts payable and accrued liabilities and $690,083 in deferred revenue, partially offset by non-cash stock-based compensation of $2,687,901 related to various equity awards to employees and non-employees, $163,917 in bad debt expense, and a $475,000 decrease in inventory valuation. 37 Investing Activities The Company did not have any investing activities during the years ended December 31, 2022 and 2021.

Operating Activities Net cash used in operating activities was $806,164 for the year ended December 31, 2023, mainly related to the net loss of $3,981,144, a decrease in deferred revenue obligations of $201,250 and an increase in net accounts receivable of $16,780, partially offset by non-cash stock-based compensation of $361,363 related to various equity awards to employees and non-employees, $48,000 in bad debt expense, a $25,647 decrease in prepaid expenses and an increase of $433,966 in accounts payable and accrued liabilities.

This decrease was primarily due to a decrease in salary expense of approximately $64,000, a decrease in stock-based compensation (non-cash) of approximately $1,546,000, a decrease in accounting fees of $144,000, a decrease in inventory write down expense of $170,000, a decrease in bad debt expense of $204,000, and a decrease in commission expense of $210,000.

This decrease was primarily due decreases in non-cash stock compensation expense of approximately $780,000, legal and professional fees of approximately $87,000, inventory write-downs of approximately $157,000 and bad debt expense of approximately $30,000, partially offset by to an increase in accruals for legal settlement of approximately $462,000.

Deferred revenue for contract liabilities were $579,833 and $472,750 as of December 31, 2022 and 2021, respectively. 32 Income Taxes Our company converted to a corporation from a limited liability company during 2018.

Income Taxes Our company converted to a corporation from a limited liability company during 2018.

Liquidity We are currently experiencing a working capital deficiency, have limited cash on hand, and we are experiencing negative cash flows from operations. Consequently, we have an immediate need for additional capital to fund our operations and the implementation of our business plan.

Recent Fundraising During the year ended December 31, 2023, the Company issued an aggregate 134,056 shares of common stock for aggregate gross proceeds of $572,906 as under its existing equity line of credit. Liquidity We are currently experiencing a working capital deficiency, have limited cash on hand, and we are experiencing negative cash flows from operations.

Removed

In determining the reserve, we evaluate the collectability of our accounts receivable based upon a variety of factors. In cases where we become aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, we record a specific allowance against amounts due.

Added

Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries.

Removed

For all other customers, we recognize allowances for doubtful accounts based on our historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment. Actual future losses from uncollectible accounts may differ from our estimates.

Added

Accounts receivable are amounts related to any unconditional right the Company has for receiving consideration and are presented as accounts receivable in the consolidated balance sheets. The Company maintains an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments.

Removed

The Company recorded an allowance for doubtful accounts as of December 31, 2022 and 2021 of $0 and $421,736, respectively. 29 Leases We determine if an arrangement is a lease at inception. The current portion of lease obligations are included in accounts payable and accrued liabilities on the consolidated balance sheets.

Added

The Company employs an expected credit loss model utilizing historical loss rates and historical trends in credit quality indicators (e.g., delinquency, risk ratings), adjusted to reflect current economic conditions and knowledge or customer relationships.

Removed

We have lease agreements with lease components only, none with non-lease components, which are generally accounted for separately. Business Combinations Our company includes the results of operations of a business we acquire in our consolidated results as of the date of acquisition.

Added

Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current industry trends, changes in customer payment terms, and specific customer situations. The Company’s normal collection cycle ranges between thirty and 60 days. Estimated uncollectible amounts are charged to earnings and a credit to a valuation allowance.

Removed

We allocate the fair value of the purchase consideration of our acquisition to the tangible assets, liabilities and intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Added

Balances which remain outstanding after reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable The Company has assessed all receivables are collectable and did not record an allowance for credit losses as of December 31, 2023 and 2022. 25 Leases We determine if an arrangement is a lease at inception.

Removed

The primary items that generate goodwill include the value of the synergies between the acquired businesses and our company. Intangible assets are amortized over their estimated useful lives. The fair value of contingent consideration (earn out) associated with acquisitions is remeasured each reporting period and adjusted accordingly.

Added

Revenue recognition for our performance obligations are as follows: Data Normalization and Professional Services Our Data Normalization and Professional Services are typically fixed fee.

Removed

Acquisition and integration related costs are recognized separately from the business combination and are expensed as incurred. For additional information regarding our acquisitions, refer to Note 4, Business Combinations.

Added

Contingencies From time to time, we may be involved in legal and administrative proceedings and claims of various types. We record a liability in our consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated.

Removed

Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the related assets’ estimated useful lives. Equipment, furniture and fixtures are being amortized over a period of three years.

Added

Removed

Our SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements.

Added

Investing Activities The Company received $165,000 in investing activities during the year ended December 31, 2023 related to a potential reverse acquisition. Under the terms of the agreement, all funds received by the Company were contributed upon the termination of the acquisition agreement. The Company did not have any investing activities during the year ended December 31, 2022.

Removed

SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which our service is made available to customers.

… 8 more changes not shown on this page.

Top changes in SCWorx Corp.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other WORX 10-K year-over-year comparisons