Core Viewpoint - SCWorx Corp has successfully completed an equity financing round, raising a total of $200,000 through the sale of common stock and warrants to institutional investors [1][2]. Group 1: Financing Details - The company sold an aggregate of 232,558 shares of common stock along with warrants to purchase the same number of shares [1]. - The gross proceeds from this financing round amount to $200,000 [1]. Group 2: Use of Proceeds - SCWorx plans to utilize the net proceeds from the financing for working capital and general corporate purposes to support future growth [2]. Group 3: Company Overview - SCWorx has developed an advanced virtualized item data warehouse that leverages machine learning and artificial intelligence to provide software-as-a-service solutions for healthcare providers [4]. - The company's solutions aim to integrate various modules with its data platform, focusing on cost savings, operational efficiency, and accurate benchmarking and reporting [4]. - Key solution modules include Virtual Item Master, data cleansing and normalization, contract management, automated rebate management, and data analytics [4].

Revenue Performance - Revenue for the three months ended September 30, 2024 was $759,724, a decrease of 16% from $906,099 for the same period in 2023, primarily due to the expiration and non-renewal of certain customer contracts [124]. - For the nine months ended September 30, 2024, revenue was $2,313,850, down 20% from $2,894,647 in 2023, primarily due to contract expirations [129]. Cost of Revenues - Cost of revenues for the three months ended September 30, 2024 was $627,148, down from $666,808 in 2023, attributed mainly to staffing reductions [125]. - Cost of revenues for the nine months ended September 30, 2024 was $1,726,314, a decrease from $1,972,300 in 2023, also due to staffing reductions [129]. Operating Expenses - Operating expenses decreased by $571,199 to $526,074 for the three months ended September 30, 2024, compared to $1,097,273 in the same period of 2023, due to reductions in legal fees and a one-time legal settlement accrual [126]. - Operating expenses for the nine months ended September 30, 2024 decreased by $861,572 to $1,466,637, compared to $2,328,209 in 2023, driven by reductions in salaries and a one-time legal settlement [129]. Net Loss - Net loss for the three months ended September 30, 2024 was $424,963, an improvement from a net loss of $858,258 in 2023 [128]. - Net loss for the nine months ended September 30, 2024 was $940,935, compared to a net loss of $1,412,070 in 2023, reflecting improved financial performance [131]. Cash Flow - Cash used in operating activities was approximately $950,000 for the nine months ended September 30, 2024, compared to $701,000 in 2023, primarily due to net losses and changes in accounts receivable [131]. - Cash provided by financing activities was approximately $946,000 for the nine months ended September 30, 2024, an increase from $524,000 in 2023, indicating improved financing efforts [135]. Regulatory Classification - The company is classified as a smaller reporting company and is not required to provide detailed market risk disclosures [139].

Revenue Performance - Revenue for the three months ended June 30, 2024, was $742,027, a decrease of 25.2% from $991,099 for the same period in 2023, primarily due to the expiration and non-renewal of certain customer contracts [100]. - Revenue for the six months ended June 30, 2024, was $1,554,126, a decrease of 21.7% from $1,988,548 for the same period in 2023, primarily due to contract expirations [105]. Cost of Revenues - Cost of revenues for the three months ended June 30, 2024, was $495,701, down 19.5% from $616,030 in the same period of 2023, attributed to staffing reductions [101]. - Cost of revenues for the six months ended June 30, 2024, was $1,099,166, down 15.8% from $1,305,492 in the same period of 2023, also due to staffing reductions [105]. Operating Expenses - Operating expenses increased by $29,941 to $553,473 for the three months ended June 30, 2024, compared to $523,532 in the same period of 2023, mainly due to increased legal and professional fees [102]. - Operating expenses decreased by $290,373 to $940,563 for the six months ended June 30, 2024, compared to $1,230,936 in the same period of 2023, primarily due to reductions in salaries and stock-based compensation [106]. Net Loss - The net loss for the three months ended June 30, 2024, was $337,313, compared to a net loss of $153,922 for the same period in 2023, reflecting a deterioration of 118.5% [103]. Cash Flow - Cash used in operating activities was approximately $587,000 for the six months ended June 30, 2024, mainly related to the net loss and increases in accounts receivable [107]. - Cash provided by financing activities was $513,081 for the six months ended June 30, 2024, consisting of proceeds from loans payable [111]. Going Concern - Management has raised substantial doubt about the company's ability to continue as a going concern due to insufficient capital resources and ongoing operating losses [112].

Financial Performance - Revenue for the three months ended March 31, 2024, was $812,099, a decrease of 18.6% from $997,449 in the same period of 2023[96] - Cost of revenues decreased to $603,465 for the three months ended March 31, 2024, down 12.5% from $689,462 in 2023[99] - Operating expenses significantly decreased by $320,314 to $387,090 for the three months ended March 31, 2024, compared to $707,404 in 2023[99] - Net loss for the three months ended March 31, 2024, was $178,659, improving from a net loss of $399,890 in the same period of 2023, representing a reduction of 55.4%[100] Cash Flow - Cash used in operating activities was approximately $59,000 for the three months ended March 31, 2024, compared to cash provided of approximately $19,000 in the same period of 2023[100] - Cash provided by financing activities was $7,647 for the three months ended March 31, 2024, contrasting with cash used of $19,090 in the same period of 2023[104] Going Concern - The company has raised substantial doubt about its ability to continue as a going concern due to insufficient capital resources to meet operating expenses and working capital requirements[105] Operational Challenges - The company experienced disruptions in operations and customer acquisition due to the COVID-19 pandemic, impacting growth prospects[94] Business Model - SCWorx's software solutions are delivered through a SaaS model, typically under three-to-five-year contracts, enhancing data interoperability for healthcare providers[93] Investment Activities - The company has not engaged in any investing activities during the three months ended March 31, 2024, and 2023[103]

Revenue Performance - Revenue for the three months ended September 30, 2023 was $906,099, a decrease of 8.2% from $986,949 in the same period of 2022[143] - Revenue for the nine months ended September 30, 2023 was $2,894,647, a decrease of 3.8% from $3,010,322 in the same period of 2022[149] Cost of Revenues - Cost of revenues decreased to $666,808 for the three months ended September 30, 2023, down 3.8% from $693,353 in the prior year[144] - Cost of revenues for the nine months ended September 30, 2023 was $1,972,300, down 2.1% from $2,014,537 in the prior year[150] General and Administrative Expenses - General and administrative expenses increased by $264,558 to $1,097,273 for the three months ended September 30, 2023, primarily due to a one-time legal judgment of $461,856[145] - General and administrative expenses decreased by $536,199 to $2,328,209 for the nine months ended September 30, 2023, mainly due to decreases in stock-based compensation and other expenses[151] Net Loss - Net loss for the three months ended September 30, 2023 was $858,258, compared to a net loss of $399,523 for the same period in 2022, representing a 114.8% increase in losses[147] - Net loss for the nine months ended September 30, 2023 was $1,412,070, an improvement of 11.1% compared to a net loss of $1,589,432 for the same period in 2022[153] Cash Flow from Operating Activities - Net cash used in operating activities was $701,282 for the nine months ended September 30, 2023, compared to $434,399 in the prior year[155] - Cash used in operating activities was approximately $701,000 for the nine months ended September 30, 2023, primarily due to a net loss of approximately $1,412,000[156] - Cash used in operating activities for the nine months ended September 30, 2022, was approximately $434,000, with a net loss of approximately $1,589,000[157] Cash Flow from Financing Activities - Cash provided by financing activities was approximately $524,000 for the nine months ended September 30, 2023, including proceeds from the sale of common stock of approximately $573,000[159] - Cash provided by financing activities for the nine months ended September 30, 2022, was $725,050, consisting of net proceeds from a common stock placement[161] Other Financial Information - There were no investing activities reported for the nine months ended September 30, 2023, and 2022[158] - As of September 30, 2023, and December 31, 2022, the company did not have any off-balance sheet arrangements[162] - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[163] Impact of COVID-19 - The company experienced disruptions in operations and customer acquisition due to the COVID-19 pandemic, impacting growth prospects[140]

[Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements subject to significant risks and uncertainties - The report contains forward-looking statements identified by terms such as "anticipate," "believe," "expect," "intend," "may," "plan," and "will"[7](index=7&type=chunk) - Operations involve risks and uncertainties, many outside the Company's control, which could materially affect results and cause actual outcomes to differ from forward-looking statements[8](index=8&type=chunk) - Specific risks include potential revenue decline, ongoing litigation, the need for additional financing, dependence on third-party subcontractors, regulatory changes, the impact of the COVID-19 pandemic, and general economic conditions[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's analysis of financial performance [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show a slight decrease in total assets and stockholders' equity from year-end 2022 Condensed Consolidated Balance Sheets (Unaudited) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total assets | $9,048,832 | $9,247,142 | | Total liabilities | $2,454,524 | $2,470,622 | | Total stockholders' equity | $6,594,308 | $6,776,520 | | Cash | $133,034 | $249,462 | | Accounts receivable - net | $458,798 | $336,033 | | Prepaid expenses and other assets | $90,533 | $295,180 | | Total current assets | $682,365 | $880,675 | | Total current liabilities | $2,340,226 | $2,322,873 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company significantly reduced its net loss in Q2 and H1 2023 compared to the prior year Condensed Consolidated Statements of Operations (Unaudited) **For the three months ended June 30:** | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $991,099 | $992,424 | | Cost of revenues | $616,030 | $623,548 | | General and administrative | $523,532 | $932,239 | | Loss from operations | $(148,463) | $(563,363) | | Net loss | $(153,922) | $(563,363) | | Net loss per share, basic and diluted | $(0.01) | $(0.05) | **For the six months ended June 30:** | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $1,988,548 | $2,023,373 | | Cost of revenues | $1,305,492 | $1,321,184 | | General and administrative | $1,230,936 | $2,031,693 | | Loss from operations | $(547,880) | $(1,329,504) | | Net loss | $(553,812) | $(1,189,909) | | Net loss per share, basic and diluted | $(0.04) | $(0.10) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity decreased slightly due to net loss, offset by new common stock issuances Changes in Stockholders' Equity (Six Months Ended June 30, 2023) | Metric | December 31, 2022 Balance | June 30, 2023 Balance | | :--- | :--- | :--- | | Common stock (shares) | 13,010,409 | 16,159,878 | | Common stock ($) | $13,011 | $16,160 | | Additional paid-in capital | $32,022,166 | $32,990,617 | | Accumulated deficit | $(25,858,697) | $(26,412,509) | | Total stockholders' equity | $6,776,520 | $6,594,308 | - During the six months ended June 30, 2023, the Company issued common stock for settlement of accounts payable, under an equity line of credit, for vested restricted stock units, for settlement of class action, and for cashless exercise of warrants[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operations increased while financing activities provided a net cash inflow in H1 2023 Condensed Consolidated Statements of Cash Flows (Unaudited) **For the six months ended June 30:** | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(328,475) | $(47,584) | | Net cash from investing activities | $0 | $0 | | Net cash provided by financing activities | $212,047 | $0 | | Net decrease in cash | $(116,428) | $(47,584) | | Cash, end of period | $133,034 | $23,491 | - Cash used in operating activities **significantly increased in 2023**, primarily due to the net loss and increases in accounts receivable and prepaid expenses, partially offset by non-cash stock-based compensation and increases in accounts payable and deferred revenue[27](index=27&type=chunk)[149](index=149&type=chunk) - Financing activities provided **$212,047 in cash in 2023**, mainly from common stock sales, contrasting with no financing activities in 2022[27](index=27&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's business, accounting policies, and specific financial items [Note 1. Description of Business](index=10&type=section&id=Note%201.%20Description%20of%20Business) The company provides healthcare data content and services through a SaaS model - SCWorx is a provider of data content and services related to the repair, normalization, and interoperability of information for healthcare providers and big data analytics for the healthcare industry[30](index=30&type=chunk)[31](index=31&type=chunk) - The Company's software solutions are delivered via a **Software-as-a-Service (SaaS) model**, hosted in SCWorx data centers (AWS or RackSpace), typically under three-to-five-year contracted terms[34](index=34&type=chunk) - The **COVID-19 pandemic adversely impacted** new customer acquisition and growth prospects, as hospital customers prioritized pandemic response over expanding the Company's services[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=11&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting policies used in preparing the financial statements [Cash](index=12&type=section&id=Cash) Cash deposits are maintained with various financial institutions and insured by the FDIC - Cash deposits are maintained with various financial institutions and are insured by the FDIC up to **$250,000**; the Company did not exceed this limit as of June 30, 2023, and December 31, 2022[41](index=41&type=chunk) [Fair Value of Financial Instruments](index=12&type=section&id=Fair%20Value%20of%20Financial%20Instruments) Fair value is based on the price received to sell an asset or paid to transfer a liability - Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants[42](index=42&type=chunk) - The Company uses a **three-level hierarchy (Level 1, 2, and 3)** to prioritize inputs used to measure fair value, based on the observability and significance of those inputs[42](index=42&type=chunk) [Concentration of Credit and Other Risks](index=12&type=section&id=Concentration%20of%20Credit%20and%20Other%20Risks) The company has significant customer concentration in both revenue and accounts receivable - Financial instruments potentially subject to significant concentrations of credit risk include cash, accounts receivable, and warrants[43](index=43&type=chunk) - Credit risk in accounts receivable is mitigated by the Company's evaluation process, relatively short collection terms, and the high creditworthiness of its customers[43](index=43&type=chunk) Significant Customers (Revenue & Accounts Receivable %) | Customers | Revenue (6 months ended June 30, 2023) | Revenue (6 months ended June 30, 2022) | Accounts Receivable (June 30, 2023) | Accounts Receivable (June 30, 2022) | | :--- | :--- | :--- | :--- | :--- | | Customer A | 11% | 13% | 13% | 13% | | Customer B | 10% | 10% | 44% | 11% | | Customer C | 15% | 12% | 8% | 18% | | Customer D | 11% | 12% | 4% | 6% | | Customer E | 2% | 2% | 14% | -% | | Customer F | 0% | 3% | 0% | 19% | [Allowance for Doubtful Accounts](index=12&type=section&id=Allowance%20for%20Doubtful%20Accounts) No allowance for doubtful accounts was recorded as of June 30, 2023 - The Company did not have a recorded allowance for doubtful accounts as of June 30, 2023, and December 31, 2022[45](index=45&type=chunk) [Inventory](index=13&type=section&id=Inventory) The company's inventory has been fully written off and has a net value of zero Net Inventory Value | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Inventory | $523,440 | $523,440 | | Allowance for obsolescence | $(523,440) | $(523,440) | | Net inventory value | $0 | $0 | - The Company **wrote off the remaining value of its inventory** as unsellable during the year ended December 31, 2022, and is in the process of disposal[47](index=47&type=chunk) [Goodwill and Purchased Identified Intangible Assets](index=13&type=section&id=Goodwill%20and%20Purchased%20Identified%20Intangible%20Assets) Goodwill is reviewed for impairment annually or more frequently if impairment indicators exist - Goodwill is reviewed for impairment annually in the fourth quarter, or more frequently if events or circumstances indicate potential impairment[48](index=48&type=chunk) [Property and Equipment](index=13&type=section&id=Property%20and%20Equipment) No depreciation expense was recorded for property and equipment in H1 2023 or H1 2022 - **No depreciation expense** was recorded for property and equipment for the three and six months ended June 30, 2023, and 2022[51](index=51&type=chunk) [Revenue Recognition](index=13&type=section&id=Revenue%20Recognition) Revenue is recognized based on performance obligations in contracts under Topic 606 - The Company recognizes revenue in accordance with **Topic 606**, identifying performance obligations and allocating transaction price based on stand-alone selling price[52](index=52&type=chunk)[54](index=54&type=chunk) - Key performance obligations in SaaS contracts include Data Normalization, SaaS, Maintenance, and Professional Services, with revenue recognized ratably over contract terms for SaaS and Maintenance[54](index=54&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - Revenue from PPE inventory sales is recognized upon shipment, and brokered PPE sales are recognized net of related costs once the customer obtains physical possession[62](index=62&type=chunk)[63](index=63&type=chunk) [Costs to Obtain and Fulfill a Contract](index=15&type=section&id=Costs%20to%20Obtain%20and%20Fulfill%20a%20Contract) Costs to fulfill contracts are expensed as incurred - Costs to fulfill a contract, including those related to satisfying performance obligations and general and administrative costs not explicitly chargeable to customer contracts, are recognized and expensed as incurred[65](index=65&type=chunk) [Cost of Revenues](index=15&type=section&id=Cost%20of%20Revenues) Cost of revenues primarily consists of data center hosting and consulting services - Cost of revenues primarily represents data center hosting costs, consulting services, and maintenance of the Company's large data array[66](index=66&type=chunk) [Contract Balances](index=16&type=section&id=Contract%20Balances) Deferred revenue represents the company's contract liabilities from customer prepayments Contract Liabilities (Deferred Revenue) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Deferred revenue | $586,083 | $579,833 | - The Company expects to recognize the majority of revenue relating to current performance obligations during the following 12-month period[64](index=64&type=chunk) [Income Taxes](index=16&type=section&id=Income%20Taxes) A full valuation allowance has been established for deferred tax assets - A **valuation allowance** has been established for deferred tax assets, as the Company concluded it may not realize all the benefits[71](index=71&type=chunk) - **No income tax expense** was recorded for the three and six months ended June 30, 2023, and 2022[74](index=74&type=chunk) [Stock-Based Compensation](index=16&type=section&id=Stock-Based%20Compensation) Stock-based compensation is measured using a Black-Scholes model and recognized over the vesting period - Stock-based compensation expense is measured at the grant date fair value using a **Black-Scholes option pricing model** and recognized on a straight-line basis over the vesting period[75](index=75&type=chunk) - Highly subjective assumptions, including expected term, stock price volatility, and pre-vesting option forfeiture rate, are used in calculating stock-based compensation expense[78](index=78&type=chunk) [Loss Per Share](index=17&type=section&id=Loss%20Per%20Share) Diluted net loss per share excludes anti-dilutive potential shares - Diluted net loss per share excludes all dilutive potential shares if their effect is anti-dilutive[79](index=79&type=chunk) [Indemnification](index=17&type=section&id=Indemnification) The company indemnifies its officers and directors, with costs covered by liability insurance - The Company indemnifies its officers and directors for costs incurred in defending against claims and investigations, with the directors' and officers' liability insurance carrier covering these costs due to the Company's current resource limitations[81](index=81&type=chunk)[82](index=82&type=chunk)[102](index=102&type=chunk) [Contingencies](index=17&type=section&id=Contingencies) A liability is recorded for probable losses that can be reasonably estimated - A liability is recorded when a loss is probable and the amount can be reasonably estimated; if only reasonably possible, the potential loss is disclosed[83](index=83&type=chunk) [Use of Estimates](index=18&type=section&id=Use%20of%20Estimates) Financial statement preparation requires management to make estimates and assumptions - The preparation of financial statements requires management to make estimates and assumptions, which are based on current facts, historical experience, and various other factors, and actual results may differ materially[85](index=85&type=chunk) [Recently Issued Accounting Pronouncements](index=18&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Recently issued accounting standards are not expected to have a material impact - Management believes that recently issued accounting standards not yet effective will not have a material impact on the Company's financial statements upon adoption[86](index=86&type=chunk) [Note 3. Loans Payable](index=18&type=section&id=Note%203.%20Loans%20Payable) A portion of the company's PPP loan was forgiven, with the remainder's maturity extended - The Company obtained a **$293,972 Paycheck Protection Program (PPP) loan** in May 2020[87](index=87&type=chunk) - A portion of the PPP loan, amounting to **$139,569, was forgiven** in September 2022[87](index=87&type=chunk) - The maturity date for the unforgiven balance of the PPP loan was extended to March 5, 2025[87](index=87&type=chunk) [Note 4. Leases](index=18&type=section&id=Note%204.%20Leases) The company's principal executive office is under a month-to-month operating lease - The Company's principal executive office in New York City is under a **month-to-month operating lease** arrangement[88](index=88&type=chunk)[89](index=89&type=chunk) Total Lease Cost | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three months ended June 30 | $435 | $434 | | Six months ended June 30 | $870 | $921 | [Note 5. Commitments and Contingencies](index=19&type=section&id=Note%205.%20Commitments%20and%20Contingencies) The company has settled major litigation but faces several ongoing legal proceedings - The Company has fulfilled all obligations under the Consolidated Securities Class Action settlement by issuing **$600,000 worth of common stock** to class plaintiffs on June 5, 2023[94](index=94&type=chunk) - The SEC investigation regarding the April 13, 2020 press release was resolved with a **$125,000 civil monetary penalty** and disgorgement satisfied by the $600,000 stock issuance, with all financial obligations under the Consent Judgment fulfilled[99](index=99&type=chunk)[100](index=100&type=chunk) - Ongoing legal proceedings include an arbitration with CorProminence d/b/a Core IR seeking approximately **$257,545.63**, a complaint from Hadrian Equities Partners, LLC seeking **$500,000**, and a complaint from Carole R. Bernstein, Esq. seeking **$69,163.98** in unpaid legal fees[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) [Note 6. Stockholders' Equity](index=21&type=section&id=Note%206.%20Stockholders%27%20Equity) The company issued common stock for various purposes and has significant unvested equity awards - The Company issued **227,999 shares** for vested restricted stock units, **151,044 shares** for accounts payable settlement, **600,000 shares** under an equity line of credit, and **228,568 shares** for cashless exercise of warrants during the six months ended June 30, 2023[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) - Total unrecognized expense for unvested stock options and restricted stock awards was approximately **$148,240** as of June 30, 2023, to be recognized over a twelve-month period[111](index=111&type=chunk) Stock Incentive Plan Balances (June 30, 2023) | Metric | Warrants | Stock Options | Restricted Stock Units | | :--- | :--- | :--- | :--- | | Balance at December 31, 2022 | 1,567,720 | 118,388 | 2,409,759 | | Granted | - | - | 491,044 | | Exercised | (823,078) | - | (379,043) | | Cancelled/Expired | (44,614) | (14,441) | - | | Balance at June 30, 2023 | 700,028 | 103,947 | 2,521,760 | [Note 7. Net Loss per Share](index=23&type=section&id=Note%207.%20Net%20Loss%20per%20Share) Over 3.3 million common stock equivalents were excluded from the EPS calculation Anti-Dilutive Securities Excluded from EPS Calculation (June 30) | Security Type | 2023 | 2022 | | :--- | :--- | :--- | | Stock options | 103,947 | 118,388 | | Warrants | 700,028 | 1,043,525 | | Restricted stock units | 2,521,760 | 2,449,091 | | Total common stock equivalents | 3,325,735 | 3,611,004 | [Note 8. Related Party Transactions](index=23&type=section&id=Note%208.%20Related%20Party%20Transactions) The company has payables to an officer and a receivable from its former CEO - As of June 30, 2023, the Company had a payable of **$153,838** due to an officer for contract work performed prior to becoming an officer[116](index=116&type=chunk) - A shareholder advance from the Company's former CEO decreased from $100,000 at December 31, 2022, to **$83,811** at June 30, 2023[117](index=117&type=chunk) - The Company's CFO advanced an aggregate of **$160,085** in cash for short-term capital requirements between May 24, 2023, and June 8, 2023, which was fully repaid by June 30, 2023[118](index=118&type=chunk) [Note 9. Subsequent Events](index=23&type=section&id=Note%209.%20Subsequent%20Events) No reportable subsequent events occurred after the balance sheet date - Management has evaluated all events that occurred after the balance sheet date through the financial statement issuance date and determined there were no additional reportable subsequent events[119](index=119&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's business, operational results, and liquidity and capital resources [Corporate Information](index=24&type=section&id=Corporate%20Information) The company's current name was adopted in 2019, and a subsidiary was formed in 2020 - SCWorx Corp. was formed through a series of mergers and name changes, with its current name adopted on February 1, 2019[121](index=121&type=chunk) - Direct-Worx, LLC, a wholly-owned subsidiary, was established on March 16, 2020, in response to the COVID-19 pandemic[121](index=121&type=chunk) [Our Business](index=24&type=section&id=Our%20Business) SCWorx provides SaaS-based health information technology solutions to US healthcare providers - SCWorx provides health information technology solutions and services for healthcare providers, focusing on data repair, normalization, interoperability, and big data analytics[124](index=124&type=chunk)[125](index=125&type=chunk) - The Company's software aims to improve healthcare processes, reduce supply chain costs, decrease accounts receivable aging, accelerate patient billing, and optimize contracts[125](index=125&type=chunk) - SCWorx's solutions are delivered as **Software-as-a-Service (SaaS)** from third-party data centers (AWS or RackSpace) and are sold to hospitals and health systems in the United States[130](index=130&type=chunk) - The Company's operations are dependent on the integrity, security, and consistent operation of its information technology systems and data centers, which are subject to risks of infiltration or data theft[131](index=131&type=chunk)[132](index=132&type=chunk) [Impact of the COVID-19 Pandemic](index=26&type=section&id=Impact%20of%20the%20COVID-19%20Pandemic) The COVID-19 pandemic adversely impacted new customer acquisition and growth prospects - The COVID-19 pandemic caused **significant disruption** to the Company's operations and business, adversely impacting new customer acquisition[133](index=133&type=chunk) - Hospital customers focused on meeting COVID-19 related healthcare needs, which limited their ability to focus resources on expanding the utilization of the Company's services, negatively affecting growth prospects[134](index=134&type=chunk) [Results of Operations – Three Months Ended June 30, 2023](index=26&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20June%2030%2C%202023) The company significantly reduced its net loss in Q2 2023 due to lower operating expenses [Revenues](index=26&type=section&id=Revenues%20(3%20months)) Revenue remained stable with a slight decrease of 0.13% in Q2 2023 - Revenue for the three months ended June 30, 2023, was **$991,099**, a slight decrease of $1,325 (0.13%) compared to $992,424 for the same period in 2022, primarily due to normal fluctuations in the billing cycle[136](index=136&type=chunk) [Operating Expenses](index=27&type=section&id=Operating%20Expenses%20(3%20months)) General and administrative expenses decreased significantly by 43.8% in Q2 2023 - General and administrative expenses **decreased by $408,707 (43.8%)** to $523,532 for the three months ended June 30, 2023, from $932,239 in the prior year[138](index=138&type=chunk) - The decrease in G&A expenses was primarily attributable to approximate decreases in stock-based compensation ($150,000), legal and professional fees ($79,000), bad debt reserve expense ($31,000), and inventory write-downs ($112,000)[138](index=138&type=chunk) - Cost of revenues slightly decreased by $7,518 to $616,030 for the three months ended June 30, 2023, compared to $623,548 in the same period in 2022[137](index=137&type=chunk) [Other Income](index=27&type=section&id=Other%20Income%20(3%20months)) The company incurred a small other expense from interest in Q2 2023 - The Company incurred other expense of **$5,459** during the three months ended June 30, 2023, entirely comprised of interest expense[139](index=139&type=chunk) [Net Loss](index=27&type=section&id=Net%20Loss%20(3%20months)) Net loss for Q2 2023 improved significantly, reducing by over $400,000 - Net loss for the three months ended June 30, 2023, **significantly improved to $153,922**, compared to a net loss of $563,363 for the same period in 2022, representing a reduction of $409,441[140](index=140&type=chunk) [Results of Operations – Six Months Ended June 30, 2023](index=27&type=section&id=Results%20of%20Operations%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202023) The company's net loss improved by over $636,000 in H1 2023 compared to the prior year [Revenues](index=27&type=section&id=Revenues%20(6%20months)) Revenue for H1 2023 saw a slight decrease of 1.72% - Revenue for the six months ended June 30, 2023, was **$1,988,548**, a slight decrease of $34,825 (1.72%) compared to $2,023,373 for the same period in 2022, attributed to normal fluctuations in the billing cycle[142](index=142&type=chunk) [Operating Expenses](index=27&type=section&id=Operating%20Expenses%20(6%20months)) General and administrative expenses decreased by 39.4% in H1 2023 - General and administrative expenses **decreased by $800,757 (39.4%)** to $1,230,936 for the six months ended June 30, 2023, from $2,031,693 in the prior year[145](index=145&type=chunk) - The decrease in G&A expenses was primarily attributable to approximate reductions in stock-based compensation ($350,000), legal and professional fees ($101,000), bad debt reserve expense ($78,000), and inventory write-downs ($112,000)[145](index=145&type=chunk) - Cost of revenues slightly decreased by $15,692 to $1,305,492 for the six months ended June 30, 2023, compared to $1,321,184 in the same period in 2022[143](index=143&type=chunk) [Other Income](index=28&type=section&id=Other%20Income%20(6%20months)) The company reported a small other expense in H1 2023 versus other income in H1 2022 - The Company reported other expense of **$5,932** during the six months ended June 30, 2023, due to interest expense, contrasting with other income of $139,596 in the prior year from the forgiveness of a PPP Loan[146](index=146&type=chunk) [Net Loss](index=28&type=section&id=Net%20Loss%20(6%20months)) Net loss for H1 2023 was more than halved compared to the prior year - Net loss for the six months ended June 30, 2023, **significantly improved to $553,812**, compared to a net loss of $1,189,909 for the same period in 2022, representing a reduction of $636,097[147](index=147&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Cash used in operations increased, while financing activities provided a net cash inflow [Cash Flows Summary](index=28&type=section&id=Cash%20Flows%20Summary) Financing activities provided cash inflow, offsetting increased cash use in operations Cash Flows Summary (Six Months Ended June 30) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(328,475) | $(47,584) | | Net cash used in investing activities | $0 | $0 | | Net cash provided by financing activities | $372,132 | $0 | | Change in cash | $43,657 | $(47,584) | [Operating Activities](index=28&type=section&id=Operating%20Activities%20(Cash%20Flow)) Cash used in operating activities increased significantly in H1 2023 - Cash used in operating activities **increased significantly to $328,475** for the six months ended June 30, 2023, compared to $47,584 in the prior year[149](index=149&type=chunk)[150](index=150&type=chunk) - The increase in cash used was mainly due to the net loss of approximately $554,000, a $123,000 increase in accounts receivable, and a $25,000 increase in prepaid expenses, partially offset by non-cash stock-based compensation of $296,000 and increases in accounts payable and deferred revenue[149](index=149&type=chunk) [Investing Activities](index=28&type=section&id=Investing%20Activities%20(Cash%20Flow)) The company had no investing activities in H1 2023 or H1 2022 - The Company did not have any investing activities during the six months ended June 30, 2023, and 2022[151](index=151&type=chunk) [Financing Activities](index=29&type=section&id=Financing%20Activities%20(Cash%20Flow)) Financing activities provided approximately $372,000 in cash during H1 2023 - Cash provided by financing activities was approximately **$372,000** for the six months ended June 30, 2023, primarily from $262,000 in proceeds from the sale of common stock, offset by repayments of notes payable and shareholder advances[153](index=153&type=chunk) - The Company did not have any financing activities during the six months ended June 30, 2022[154](index=154&type=chunk) [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) The company had no off-balance sheet arrangements - As of June 30, 2023, and December 31, 2022, the Company did not have any off-balance sheet arrangements[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from market risk disclosures as a smaller reporting company - The Company is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to internal control deficiencies [Evaluation of Disclosure Controls and Procedures](index=29&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls were deemed not effective as of June 30, 2023 - Management concluded that the Company's disclosure controls and procedures were **not effective** as of June 30, 2023, due to deficiencies in the design of internal controls and lack of segregation of duties[157](index=157&type=chunk) [Changes in Internal Control over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes to internal controls occurred during the quarter - During the quarter ended June 30, 2023, there was **no change** in the Company's internal control over financial reporting that materially affected, or is reasonably likely to materially affect, its internal control over financial reporting[158](index=158&type=chunk) [PART II - OTHER INFORMATION](index=30&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part covers legal proceedings, equity sales, and other required disclosures [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company has settled major litigation but faces several ongoing legal proceedings - The Company fulfilled all obligations under the Consolidated Securities Class Action settlement and SEC Consent Judgment by issuing **$600,000 worth of common stock** and paying a **$125,000 civil penalty**[162](index=162&type=chunk)[167](index=167&type=chunk) - Ongoing legal proceedings include an arbitration with CorProminence d/b/a Core IR seeking approximately **$257,545.63**, a complaint from Hadrian Equities Partners, LLC seeking **$500,000**, and a complaint from Carole R. Bernstein, Esq. seeking **$69,163.98** in unpaid legal fees[163](index=163&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - The Company is obligated to indemnify its officers and directors for costs incurred in defending against these claims, with the directors' and officers' liability insurance carrier agreeing to cover these costs[168](index=168&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company is not required to provide risk factor disclosures under this item - The Company is a smaller reporting company and is not required to provide risk factor information under this item[170](index=170&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No previously unreported unregistered sales of equity securities occurred during the period - No unregistered equity securities were sold since the beginning of the six-month period ended June 30, 2023, that were not previously reported in a current report on Form 8-K[171](index=171&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company - This item is not applicable[171](index=171&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This item is not applicable[172](index=172&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - None[173](index=173&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q - Exhibits include the Certificate of Incorporation, Amended and Restated By-laws, CEO and CFO certifications (pursuant to Sections 302 and 1350 of the Sarbanes-Oxley Act), and Inline XBRL documents[177](index=177&type=chunk) - Representations and warranties in filed agreements are solely for the benefit of the parties to such agreements and may not describe the Company's actual state of affairs[176](index=176&type=chunk) [Signatures](index=34&type=section&id=Signatures) The report was duly signed by the CEO and CFO on August 14, 2023 - The report was signed by Timothy A. Hannibal, President and Chief Executive Officer, and Christopher J. Kohler, Chief Financial Officer, on August 14, 2023[181](index=181&type=chunk)[183](index=183&type=chunk)

Revenue and Financial Performance - Revenue for the three months ended March 31, 2023, was $997,449, a decrease of 3.25% from $1,030,949 in the same period of 2022[131]. - Net loss for the three months ended March 31, 2023, was $399,890, an improvement of 36.3% compared to a net loss of $626,546 in the same period of 2022[136]. - Cash provided by operating activities was approximately $19,346 for the three months ended March 31, 2023, compared to a cash outflow of $62,782 in the same period of 2022[137]. Cost Management - Cost of revenues decreased to $689,462 for the three months ended March 31, 2023, compared to $697,636 in 2022, reflecting normal business fluctuations[133]. - General and administrative expenses decreased by $391,577 to $707,877 for the three months ended March 31, 2023, primarily due to reductions in stock-based compensation and legal fees[134]. - Cash used in financing activities was $19,090 for the three months ended March 31, 2023, consisting of net repayments on notes payable[141]. Operational Challenges - The company experienced disruptions in operations due to the COVID-19 pandemic, impacting new customer acquisition and service utilization[130]. Business Model and Partnerships - SCWorx's software solutions are delivered through a SaaS model, typically under three-to-five-year contracts, enhancing data interoperability for healthcare providers[125]. - The company maintains its operations in the U.S. through a partnership with RackSpace for hosting and infrastructure services[127]. Investing Activities - The company did not have any investing activities during the three months ended March 31, 2023, and 2022[140].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37899 SCWORX CORP. (Exact Name of Registrant as Specified in Its Charter) | Delaware | 47-5412331 | | --- | --- | | (State or Other Jurisdiction of | (I.R.S. Employer | | Incorpor ...

SCWORX CORP. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commissio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number: 001-37899 SCWORX CORP. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R.S. Emp ...