SCWorx (WORX) - 2025 Q4 - Annual Report

Revenue Recognition - Revenue from Data Normalization and Professional Services is recognized as services are rendered and when contractual milestones are achieved[167]. - SaaS and Maintenance revenues are recognized ratably over the contract terms starting from the commencement date of each contract[168]. - Revenue for the year ended December 31, 2025 was $2,877,629, a decrease of $111,970 or approximately 3.75% compared to $2,989,599 in 2024, primarily due to the expiration and non-renewal of certain customer contracts[192]. Customer Information - Significant customers include Customer A (15% revenue, 32% accounts receivable), Customer B (14% revenue, 0% accounts receivable), Customer C (19% revenue, 8% accounts receivable), and Customer D (7% revenue, 11% accounts receivable) for the year ended December 31, 2025[156]. Financial Performance - Cost of revenues decreased by $285,691 to $1,957,923 for the year ended December 31, 2025, resulting in an overall gross profit increase of approximately 23% from the prior year[193]. - Operating expenses decreased by $126,986 to $1,878,425 for the year ended December 31, 2025, primarily due to reductions in legal and professional fees[194]. - Other expense for the year ended December 31, 2025 was $3,485,390, which included non-cash interest expense and amortization of debt discounts of approximately $2,985,000[195]. Cash Flow - The company experienced negative cash flows from operations of $1,543,610 for the year ended December 31, 2025, but had a net increase in cash of $1,537,785, resulting in cash of $1,644,439 at year-end[198]. - For the year ended December 31, 2025, cash used in operating activities was approximately $1,544,000, primarily due to a net loss of approximately $4,444,000[200]. - Net cash used in operating activities for the year ended December 31, 2024, was approximately $1,084,000, mainly related to a net loss of approximately $1,136,000[201]. - Net cash used in investment activities was approximately $31,000 for the year ended December 31, 2025, due to capitalization of internal development costs related to new software assets[202]. - Net cash provided by financing activities was approximately $3,112,000 for the year ended December 31, 2025, consisting of proceeds from loans payable of $1,385,000 and warrant exercises of $1,822,000[204]. - Net cash provided by financing activities was approximately $1,100,000 for the year ended December 31, 2024, primarily from proceeds of loans payable of $995,000[205]. Deferred Revenue and Performance Obligations - As of December 31, 2025, the company had remaining performance obligations recorded as deferred revenue of $158,750, expected to be recognized throughout 2026[170]. - As of December 31, 2025, there were no contract assets recorded, and deferred revenue for contract liabilities decreased from $354,083 in 2024 to $158,750[175]. Impairment and Valuation - Management reviews goodwill for impairment annually, with qualitative assessments determining the necessity of quantitative tests[161]. - The company has established a valuation allowance for deferred tax assets due to the likelihood of not realizing all benefits[178]. Strategic Focus and Future Plans - SCWorx's solutions aim to improve supply chain cost reductions, decrease accounts receivables aging, and accelerate billing processes[144]. - The company focuses on data interoperability issues faced by healthcare providers, utilizing a combination of direct sales and strategic partnerships[145]. - The company plans to utilize available funds to pursue growth through the expansion of its sales force, product offerings, and project capabilities[196]. - The company intends to use current cash reserves to acquire new customers and aims to generate positive operating cash flows by the end of 2026, though there is no assurance of achieving this[199]. - The company anticipates using approximately $600,000 in cash over the next twelve months based on its current business plan[197]. Insurance and Risk - The company maintains cash deposits insured by the Federal Deposit Insurance Corporation up to $250,000 per institution[153]. - As of December 31, 2025, the company did not have any off-balance sheet arrangements[207]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[208]. Software Solutions - SCWorx's software solutions are typically delivered through a three-to-five-year contracted term, hosted in data centers like AWS or RackSpace[146]. - SCWorx's software platform enables data normalization and interoperability, facilitating big data analytics for healthcare providers[144].