What changed in this filing

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Item 1. Business

2022-03-31 compared with 2021-05-19 · 460 added, 542 removed, 32 unchanged (97% of the section changed)

Corporate Information

SCWorx, LLC (n/k/a SCW FL

Corp.) (“SCW LLC”) was a privately held limited liability company which was organized in Florida on November 17, 2016.

December 31, 2017, SCW LLC acquired Primrose Solutions, LLC (“Primrose”), a Delaware limited liability company, which became

Corp.) (“SCW LLC”) was a privately held limited liability company which was organized in Florida on November 17, 2016.

December 31, 2017, SCW LLC acquired Primrose Solutions, LLC (“Primrose”), a Delaware limited liability company, which became

its wholly-owned subsidiary and focused on developing functionality for the software now used and sold by SCWorx Corp.

(the “Company”

or “SCWorx”).

(the “Company”

or “SCWorx”).

The majority interest holders of Primrose were interest holders of SCW LLC and based upon Staff Accounting Bulletin

1 unchanged sentence

To facilitate the planned acquisition by Alliance

MMA, Inc., a Delaware corporation (“Alliance”), on June 27, 2018, SCW LLC merged with and into a newly-formed entity, SCWorx

Acquisition Corp., a Delaware corporation (“SCW Acquisition”), with SCW Acquisition being the surviving entity.

MMA, Inc., a Delaware corporation (“Alliance”), on June 27, 2018, SCW LLC merged with and into a newly-formed entity, SCWorx

Acquisition Corp., a Delaware corporation (“SCW Acquisition”), with SCW Acquisition being the surviving entity.

Subsequently,

9 unchanged sentences

(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

and changed Alliance’s name to SCWorx Corp., which is the Company’s current name, with SCW FL Corp.

becoming the Company’s

On March 16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC.

principal executive offices are located at 590 Madison Avenue, 21 st Floor, New York, New York, 10022.

Our telephone

number is (844) 472-9679.

this Annual Report, the terms “SCWorx”, “Alliance,”

“Alliance MMA,”

the “Company,”

“we,”

“us”

and “our”

refer to SCWorx, Corp.

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.).

Unless specified otherwise,

the historical financial results in this Annual Report are those of SCWorx and its subsidiaries on a consolidated basis.

Business Combination and Related Transactions

On February 1, 2019, Alliance

MMA completed the acquisition of SCWorx, changed its name to SCWorx Corp., changed its ticker symbol to “WORX”, and effected

a one-for-nineteen reverse stock split of its common stock, which combined the 100,000,000 Alliance shares of common stock issued to the

Company’s shareholders into 5,263,158 shares of common stock of the newly combined company.

From a legal perspective,

Alliance MMA acquired SCWorx FL Corp, and as a result, historical equity awards including stock options and warrants are carried forward

at their historical basis.

From an accounting perspective,

Alliance MMA was acquired by SCWorx FL Corp in a reverse merger and as a result, the Company has completed purchase accounting for the

is a leading 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.

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.

SCWorx’s software enables a healthcare provider to

simplify and organize its data (“data normalization”), allows the data to be utilized across multiple internal software

applications (“interoperability”) and provides the basis for sophisticated data analytics (“big data”).

Customers use our software to achieve multiple operational benefits, such as supply chain cost reductions, decreased accounts

receivables aging, accelerated and completed patient billing in less than 72 hours, contract optimization, increased supply chain

management and total cost visibility via dynamic AI connections that automatically structures, repairs, synchronizes and maintains

purchasing (“MMIS”), Clinical (“EMR”) and finance (“CDM”) systems.

SCWorx’s customers

include some of the most prestigious healthcare organizations in the United States.

SCWorx offers an advanced software solution

for the management of health care providers’

foundational business applications, empowering its customers to significantly

reduce costs, drive better clinical outcomes and enhance their revenue.

SCWorx supports the interrelationship between the three

core healthcare provider systems:

Unless specified otherwise, the historical financial results

in this Annual Report are those of SCWorx and its subsidiaries on a consolidated basis.

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.

SCWorx’s software enables a healthcare provider to simplify and organize its data (“data

normalization”), allows the data to be utilized across multiple internal software applications (“interoperability”)

and provides the basis for sophisticated data analytics (“big data”).

Customers use our software to achieve multiple operational

benefits, such as supply chain cost reductions, decreased accounts receivables aging, accelerated and completed patient billing in less

than 72 hours, contract optimization, increased supply chain management and total cost visibility via dynamic AI connections that automatically

structures, repairs, synchronizes and maintains purchasing (“MMIS”), Clinical (“EMR”) and finance (“CDM”)

SCWorx’s customers include some of the most prestigious healthcare organizations in the United States.

SCWorx offers an

advanced software solution for the management of health care providers’ foundational business applications, empowering its customers

to significantly reduce costs, drive better clinical outcomes and enhance their revenue.

SCWorx supports the interrelationship between

the three core healthcare provider systems:

Supply Chain, Financial and Clinical.

This solution integrates common keys within distinct and

variable databases that allows the repaired foundational data to move seamlessly from one application to another enabling our

Customers to drive supply chain cost reductions, optimize contracts, increase supply chain management (“SCM”), cost

visibility, control rebates and contract administration fees.

the business systems of hospitals are frequently deficient and often unconnected from each other.

These deficiencies in part result

from the vast amount of unstructured, manually created and managed data that proliferates within the hospital’s supply chain,

clinical and billing systems.

SCWorx’s solutions are designed to improve the flow of information quickly and accurately

between the buy-side (supply chain purchasing systems), the consumption-side (clinical documentation systems like the electronic

medical records (“EMR”)) and billing and collection systems (patient billing systems).

The currently poor state of

interoperability limits the potential value of each independent system and requires significant expense and extensive human resource

commitments from senior personnel to stay ahead of problems and complete basic administrative tasks.

SCWorx provides an information

service that ultimately leads to safer, more cost effective and financially efficient patient care.

has demonstrated that in order for the core hospital systems to function properly there must be a Single Source of Truth (“SSOT”)

for all products utilized and ultimately billed for.

The Item Master File (“IMF”), which is a database of all known

products used in hospital and health care settings, must be accurate at all times and expanded upon to hold both clinical and

financial attributes.

An accurate and expanded Item Master File supports interoperability between the supply chain, clinical and

financial systems by delivering, on demand, reports detailing the purchasing, utilization and revenue associated with each and

every item used, allowing hospitals to better manage their business.

The Single Source of Truth establishes a common vernacular

and syntax, while assigning a consistent meaning across the healthcare provider’s core systems and accurately migrating

data from one application to another and removing disconnects between critical business systems.

SCWorx’s

software solutions are delivered to clients within a fixed term period, where such software is hosted in SCWorx’s data center

and accessed by the client through a secure connection in a software as a service (“SaaS”) delivery method.

sells its solutions and services in the United States to hospitals and health systems through its distribution and reseller partnerships.

SCWorx’s

Software Solutions/Services

empowers healthcare providers to maintain comprehensive access and visibility to an advanced business intelligence that enables

better decision-making and reductions in product costs and utilization, ultimately leading to accelerated and accurate patient

SCWorx’s software modules perform separate functions as follows.

Item Master File repair, expansion and automation —

The process begins with data normalization —

data is put into

a simplified and normalized structure and location for use throughout the enterprise.

The SCWorx software normalizes, automates

and builds interoperability via advanced attribution, vendor and contract mapping, product categorization, repairing the unit

of measure and establishing revenue codes and flags.

SCWorx improves the healthcare providers’

business processes through

the establishment of a clean and normalized Item Master File that improves efficiencies, eliminates cumbersome and error-prone

manual processes, and provides an integrated cloud-based suite of services that enhances the productivity of operating room

staff, supply chain margins and billing revenue through the seamless sharing and accuracy of critical business data.

Medical Record Management —

The Electronic Medical Record (EMR) module integrates the advanced data attributes created

by SCWorx in the Item Master into the EMR.

The EMR serves as the database that hospitals use to document all clinical procedures

in terms of the products used and the costs that should be charged.

What makes this module special is that prior to its creation

there was no mechanism that tied product purchases to actual utilization.

Hospitals, being mass consumption businesses, had

no way to identify excess ordering that always accompanies mass consumption organizations.

In addition, the automation and

consistency of delivered attributes dramatically reduces the administrative burden as today these additional attributes are

being created by expensive clinical resources manually —

over and over again by each hospital.

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.

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 CDM data provided by SCWorx is made more accurate, and the resulting data

is integrated to the Item Master for real-time delivery to the EMR —

this data is the last remaining piece of information

that is consumed by the EMR and passed ultimately to the patient billing systems.

SCWorx provides real-time integration, automation

and management of Item Master File, Clinical Information Systems and the Charge Description Master.

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.

By linking the Item Master File to the healthcare providers contract management system

and procedures, SCWorx simplifies the way contracts are managed from start to finish by streamlining the processes of creating,

routing, reviewing and approving contracts.

SCWorx delivers a data warehouse platform which integrates item master management,

spend analysis, and contract management.

These solutions enable financial staff across the healthcare provider to drill down

quickly and deeply into actionable and real-time financial data and key performance indicators to improve revenue realization

and staff efficiency.

This suite of solutions includes the ability to automatically push price changes to a contract, compliance

for standard and non-standard products, contract compliance and optimization reporting, reliable cost data for current and

alternate products, cost performance metrics, matching purchase order price to contract and contract repository.

for Proposal (“RFP”) Automation —

With the reality of shrinking operating margins, increasing operating

expenses and decreasing insurance reimbursements, hospitals must evaluate all major expenditures.

In addition, requirements

for provable quality of service supported by trackable metrics now frequently necessitate the search for better options available

in the marketplace.

Since hospital-based provider subsidies are often a major expense item and since there are often perceived

opportunities for quality improvement, it is a reasonable practice for hospital leadership to carefully evaluate all of their

current hospital-based services and associated financial support before each contract renegotiation.

The proliferation of

large regional and national providers, with their ability to derive benefits from economies of scale, have made RFPs much

more of a competitive process.

This solution integrates common keys within distinct

and variable databases that allows the repaired foundational data to move seamlessly from one application to another enabling our Customers

to drive supply chain cost reductions, optimize contracts, increase supply chain management (“SCM”), cost visibility, control

rebates and contract administration fees.

Currently, the business systems

of hospitals are frequently deficient and often unconnected from each other.

These deficiencies in part result from the vast amount of

unstructured, manually created and managed data that proliferates within the hospital’s supply chain, clinical and billing systems.

SCWorx’s solutions are designed to improve the flow of information quickly and accurately between the buy-side (supply chain purchasing

systems), the consumption-side (clinical documentation systems like the electronic medical records (“EMR”)) and billing and

collection systems (patient billing systems).

The currently poor state of interoperability limits the potential value of each independent

system and requires significant expense and extensive human resource commitments from senior personnel to stay ahead of problems and complete

basic administrative tasks.

SCWorx provides an information service that ultimately leads to safer, more cost effective and financially

efficient patient care.

SCWorx has demonstrated that

in order for the core hospital systems to function properly there must be a Single Source of Truth (“SSOT”) for all products

utilized and ultimately billed for.

The Item Master File (“IMF”), which is a database of all known products used in hospital

and health care settings, must be accurate at all times and expanded upon to hold both clinical and financial attributes.

and expanded Item Master File supports interoperability between the supply chain, clinical and financial systems by delivering, on demand,

reports detailing the purchasing, utilization and revenue associated with each and every item used, allowing hospitals to better manage

their business.

The Single Source of Truth establishes a common vernacular and syntax, while assigning a consistent meaning across the

healthcare provider’s core systems and accurately migrating data from one application to another and removing disconnects between

critical business systems.

SCWorx’s Software Solutions/Services

SCWorx empowers healthcare

providers to maintain comprehensive access and visibility to an advanced business intelligence that enables better decision-making and

reductions in product costs and utilization, ultimately leading to accelerated and accurate patient billing.

SCWorx’s software modules

perform separate functions as follows:

Virtualized Item Master File repair, expansion and automation — The process begins with data normalization — data is put into a simplified and normalized structure and location for use throughout the enterprise.

The SCWorx software normalizes, automates and builds interoperability via advanced attribution, vendor and contract mapping, product categorization, repairing the unit of measure and establishing revenue codes and flags.

SCWorx improves the healthcare providers’ business processes through the establishment of a clean and normalized Item Master File that improves efficiencies, eliminates cumbersome and error-prone manual processes, and provides an integrated cloud-based suite of services that enhances the productivity of operating room staff, supply chain margins and billing revenue through the seamless sharing and accuracy of critical business data.

Electronic Medical Record Management — The Electronic Medical Record (EMR) module integrates the advanced data attributes created by SCWorx in the Item Master into the EMR.

The EMR serves as the database that hospitals use to document all clinical procedures in terms of the products used and the costs that should be charged.

What makes this module special is that prior to its creation there was no mechanism that tied product purchases to actual utilization.

Hospitals, being mass consumption businesses, had no way to identify excess ordering that always accompanies mass consumption organizations.

In addition, the automation and consistency of delivered attributes dramatically reduces the administrative burden as today these additional attributes are being created by expensive clinical resources manually — over and over again by each hospital.

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.

The CDM data provided by SCWorx is made more accurate, and the resulting data is integrated to the Item Master for real-time delivery to the EMR — this data is the last remaining piece of information that is consumed by the EMR and passed ultimately to the patient billing systems.

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.

By linking the Item Master File to the healthcare providers contract management system and procedures, SCWorx simplifies the way contracts are managed from start to finish by streamlining the processes of creating, routing, reviewing and approving contracts.

SCWorx delivers a data warehouse platform which integrates item master management, spend analysis, and contract management.

These solutions enable financial staff across the healthcare provider to drill down quickly and deeply into actionable and real-time financial data and key performance indicators to improve revenue realization and staff efficiency.

This suite of solutions includes the ability to automatically push price changes to a contract, compliance for standard and non-standard products, contract compliance and optimization reporting, reliable cost data for current and alternate products, cost performance metrics, matching purchase order price to contract and contract repository.

Request for Proposal (“RFP”) Automation — With the reality of shrinking operating margins, increasing operating expenses and decreasing insurance reimbursements, hospitals must evaluate all major expenditures.

In addition, requirements for provable quality of service supported by trackable metrics now frequently necessitate the search for better options available in the marketplace.

Since hospital-based provider subsidies are often a major expense item and since there are often perceived opportunities for quality improvement, it is a reasonable practice for hospital leadership to carefully evaluate all of their current hospital-based services and associated financial support before each contract renegotiation.

The proliferation of large regional and national providers, with their ability to derive benefits from economies of scale, have made RFPs much more of a competitive process.

Hospital administrators, however, often rely on poor or conflicting data when creating an RFP.

Through the integration and utilization of the SSOT SCWorx automates the RFP process and makes it more accurate.

SCWorx automates

the core sourcing processes with the intention to accelerate cycle times, surveys and confirms business preferred processes,

designs and builds a flow chart for the current and desired workflows, cross references bid analysis, implements bid scoring,

customizes software to support automation and customizes the report writer and output documents.

of Acquired Businesses —

The agnostic design of the SCWorx solution enables rapid deployment of a virtual Item Master

File to quickly and easily allow combining healthcare providers to share information and achieve cost synergies and interoperability

without large and cumbersome upgrades or implementations.

During the consolidation of healthcare providers, SCWorx cleans

the data and makes the data available to the disparate systems.

In addition, M&A activity requires in-depth reporting

for comparison of Group Purchasing Organization (“GPO”) contract overlap.

When healthcare providers that use different

GPOs merge, or are acquired, there is a lack of information to compare contracts.

SCWorx provides information for comparative

purposes to solve these issues rapidly.

Management —

Frequently, vendors use rebates and incentives as a key part of their pricing strategy and structure when

selling to hospitals.

SCWorx automates the core sourcing processes with the intention to accelerate cycle times, surveys and confirms business preferred processes, designs and builds a flow chart for the current and desired workflows, cross references bid analysis, implements bid scoring, customizes software to support automation and customizes the report writer and output documents.

Integration of Acquired Businesses — The agnostic design of the SCWorx solution enables rapid deployment of a virtual Item Master File to quickly and easily allow combining healthcare providers to share information and achieve cost synergies and interoperability without large and cumbersome upgrades or implementations.

During the consolidation of healthcare providers, SCWorx cleans the data and makes the data available to the disparate systems.

In addition, M&A activity requires in-depth reporting for comparison of Group Purchasing Organization (“GPO”) contract overlap.

When healthcare providers that use different GPOs merge, or are acquired, there is a lack of information to compare contracts.

SCWorx provides information for comparative purposes to solve these issues rapidly.

Rebate Management — Frequently, vendors use rebates and incentives as a key part of their pricing strategy and structure when selling to hospitals.

This tactic makes pricing more attractive to healthcare providers.

When tracked through Accounts Payable,

and issued correctly, rebates can help healthcare organizations save money.

At any large healthcare provider, vendor rebates

can be difficult to manage since they require a multi-step process to track dollars earned, credits issued, and monies paid.

When tracked through Accounts Payable, and issued correctly, rebates can help healthcare organizations save money.

At any large healthcare provider, vendor rebates can be difficult to manage since they require a multi-step process to track dollars earned, credits issued, and monies paid.

Rebates frequently cause tracking challenges for Accounts Payable departments.

Inconsistent tracking is the primary problem

for loss of savings with vendor rebate programs.

SCWorx’s Rebate Management Module enables healthcare providers to correctly

calculate and track rebates provided by healthcare provider vendors.

Purchasing or Contracting departments monitor rebates

by creating and maintaining a Rebates Master List which is provided to the Accounts Payable department.

To assist in this

cumbersome process, SCWorx provides information from the SSOT, such as historical data, frequent updates, advanced administrative

fee reporting, purchase rebate tracking, early payment/discount management and Vendor Master Data alignment.

Data Analytics Model —

SCWorx provides an in-depth, easy-to-use web portal for display, reporting and analysis of the

information contained within the SCWorx data warehouse.

SCWorx’s analytics solution enables healthcare providers to

view benchmarking information, quickly add new items to the SSOT and identify cost savings through this real-time and on-demand

In addition to simplifying the item add process, SCWorx provides peer comparison reporting against similar healthcare

providers and a list of informative reports for business measurement, such as spend trend analysis, contract gap analysis,

market price comparison, etc.

The SCWorx product line is a simplified user experience and visual display for the hospital

employee which does not require access to the SCWorx application.

Integration and Warehousing —

Healthcare providers maintain a significant amount of data.

In many cases the data is

not useful for analytics since the data is held within an individual “silo.”

SCWorx establishes an expandable,

data warehouse of items that have been normalized, repaired and enriched as the SSOT for useful benchmarking, interoperability

and analytics.

SCWorx’s data warehouse allows healthcare providers to effectively use the data contained in their environment

and efficiently establish the supply chain as a leading driver of revenue cycle management.

The data warehouse is updated

as frequently as every five minutes without intervention.

Our mobile perioperative closed loop scanning solution is driven by the SCWorx foundational data structure, and utilizes

interoperable data exchanges to push and secure the customer’s enriched item master, all built around the customer’s

internal business rules and chart of account requirements offering the following:

hosted mobile scanning solution, which automates the consumption of known and unknown implant device utilization during surgical

procedures via intuitive Scanning or smart searching features.

scanned device utilization will capture all available attributes, such as Global Trade Item Number, Lot, Serial numbers, expiration

will establish the following connections with existing Enterprise Resource Planning (“ERP”) and Electronic Medical

Record (“EMR”) enterprise systems for the following:

Daily scheduling feeds with case information

Bill-Only electronic purchase orders

Case closure with device utilization integration

has the ability to consume additional product utilization per case when provided by the EMR for surgical preference cards,

central sterile processing products, and anesthesia gas.

will identify and automate the Item-Add process for unknown items introduced during surgical procedures based on customer’s

existing business rules.

In March 2020, in response to the COVID-19 pandemic,

SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC, with the intention of

utilizing the SCWorx database to identify trends within the purchasing supply chain and

then use this information to assist the Company in its endeavors to provide critical,

difficult-to-find items for the healthcare industry.

Company sought to provide COVID-19 Rapid Test Kits and PPE —

Personal Protective

Equipment to the healthcare industry.

PPE includes items such as masks, gloves, gowns,

shields, etc.

Company has extensive experience in the healthcare industry and industry contacts, and a database of items specifically designated

to assist the healthcare industry in fulfilling its inventory demands.

sale of PPE and rapid test kits for COVID-19 represented a new business for the Company and is subject to the myriad risks associated

with any new venture.

The Company encountered great difficulty in attempting to secure reliable sources of supply for both COVID-19

Rapid Test Kits and PPE The Company currently has no contracted supply of Rapid Test Kits or PPE.

During the year ended December

31, 2020, the Company has completed only minimal sales of COVID-19 rapid test kits and PPE.

In addition, changes in market conditions

and FDA processes governing the sale of COVID-19 serology tests could have the effect of rendering the COVID-19 serology tests

held by the Company not saleable in the United States, which could have a material adverse effect on the Company’s financial

condition and results of operations.

There can be no assurance that the Company will be able to generate any significant revenue

from the sale of PPE products or rapid test kits, and as of the date of this report, the Company has not generated any material

revenue from the sale of PPE or rapid test kits.

Company is no longer actively seeking to procure and sell Test Kits or PPE.

Instead, the Company is focused on selling its current inventory

of PPE and Test Kits.

The Company may receive commissions for acting as an intermediary with respect to the sale of PPE and/or Test Kits.

However, there is no assurance the Company will realize any material revenue from these activities.

and Strategic Partners

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 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.

competes against a variety of vendors and smaller companies which provide solutions in the specific markets we address.

Our principal

competitors include:

departments that have limited budgets and may be attempting to manually repair the item master file;

companies with a long list of products and services and small companies which may provide item master normalization and data

cleanse services;

companies or service providers, as well as small, specialized vendors, that provide complementary or competitive solutions

in benchmarking or data analytics and data warehousing that may compete with our offerings;

national medical supply companies which distribute PPE products and rapid test kits, such as Medline Industries, Inc.

of our actual and perceived competitors have advantages over us, such as longer operating histories, greater financial, technical,

marketing or other resources, stronger brand and business user recognition, larger intellectual property portfolios, broader distribution

and presence, and competitive pricing.

Inconsistent tracking is the primary problem for loss of savings with vendor rebate programs.

SCWorx’s Rebate Management Module enables healthcare providers to correctly calculate and track rebates provided by healthcare provider vendors.

Purchasing or Contracting departments monitor rebates by creating and maintaining a Rebates Master List which is provided to the Accounts Payable department.

To assist in this cumbersome process, SCWorx provides information from the SSOT, such as historical data, frequent updates, advanced administrative fee reporting, purchase rebate tracking, early payment/discount management and Vendor Master Data alignment.

Big Data Analytics Model — SCWorx provides an in-depth, easy-to-use web portal for display, reporting and analysis of the information contained within the SCWorx data warehouse.

SCWorx’s analytics solution enables healthcare providers to view benchmarking information, quickly add new items to the SSOT and identify cost savings through this real-time and on-demand solution.

In addition to simplifying the item add process, SCWorx provides peer comparison reporting against similar healthcare providers and a list of informative reports for business measurement, such as spend trend analysis, contract gap analysis, market price comparison, etc.

The SCWorx product line is a simplified user experience and visual display for the hospital employee which does not require access to the SCWorx application.

Data Integration and Warehousing — Healthcare providers maintain a significant amount of data.

In many cases the data is not useful for analytics since the data is held within an individual “silo.” SCWorx establishes an expandable, data warehouse of items that have been normalized, repaired and enriched as the SSOT for useful benchmarking, interoperability and analytics.

SCWorx’s data warehouse allows healthcare providers to effectively use the data contained in their environment and efficiently establish the supply chain as a leading driver of revenue cycle management.

The data warehouse is updated as frequently as every five minutes without intervention.

ScanWorx — Our mobile perioperative closed loop scanning solution is driven by the SCWorx foundational data structure, and utilizes interoperable data exchanges to push and secure the customer’s enriched item master, all built around the customer’s internal business rules and chart of account requirements offering the following:

Cloud hosted mobile scanning solution, which automates the consumption of known and unknown implant device utilization during surgical procedures via intuitive Scanning or smart searching features.

All scanned device utilization will capture all available attributes, such as Global Trade Item Number, Lot, Serial numbers, expiration dates.

ScanWorx will establish the following connections with existing Enterprise Resource Planning (“ERP”) and Electronic Medical Record (“EMR”) enterprise systems for the following:

EMR — Daily scheduling feeds with case information

ERP — Bill-Only electronic purchase orders

EMR — Case closure with device utilization integration

ScanWorx has the ability to consume additional product utilization per case when provided by the EMR for surgical preference cards, central sterile processing products, and anesthesia gas.

ScanWorx will identify and automate the Item-Add process for unknown items introduced during surgical procedures based on customer’s existing business rules.

SCWorx continues to provide

transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the United States.

geographically dispersed throughout the country.

The Company’s 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.

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 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.

SCWorx, as part of the acquisition

of Alliance MMA, acquired an online event ticketing platform focused on serving regional MMA (“mixed martial arts”) promotions.

Due to the Covid restrictions which were put in place for large gatherings, SCWorx has paused this business activity.

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.

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.

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.

As a result, the Company believes that its customers were not able to focus resources on expanding the utilization of the Company’s

services, which has adversely impacted the Company’s growth prospects, at least until the adverse effects of the pandemic subside.

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.

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.

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

Items had become difficult to source due to unexpected disruptions within the supply chain due to the COVID-19 pandemic.

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.

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.

We are endeavoring to sell our existing inventory of PPE products

primarily through use of our internal and external sales personnel.

The sale of PPE and rapid

test kits for COVID-19 represented a new business for the Company and was subject to the myriad risks associated with any new venture.

The Company encountered great difficulty in attempting to secure reliable sources of supply for both COVID-19 Rapid Test Kits and PPE.

The Company currently has no contracted supply of Rapid Test Kits or PPE.

Since the inception of this business, the Company completed

only minimal sales of COVID-19 rapid test kits and PPE.

The Company does not expect to generate any significant revenue from the sale

of PPE products or rapid test kits, and as of the date of this report, the Company has not generated any material revenue from the sale

of PPE or rapid test kits.

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.

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.

SCWorx competes against a

variety of vendors and smaller companies which provide solutions in the specific markets we address.

Our principal competitors include:

purchasing departments that have limited budgets and may be attempting to manually repair the item master file;

large companies with a long list of products and services and small companies which may provide item master normalization and data cleanse services;

software companies or service providers, as well as small, specialized vendors, that provide complementary or competitive solutions in benchmarking or data analytics and data warehousing that may compete with our offerings;

Some of our actual and perceived

competitors have advantages over us, such as longer operating histories, greater financial, technical, marketing or other resources, stronger

brand and business user recognition, larger intellectual property portfolios, broader distribution and presence, and competitive pricing.

In addition, our industry is evolving rapidly and is becoming increasingly competitive.

to entry to the data management market include technological and application sophistication, the ability to offer a proven product,

creating and utilizing a well-established client base and distribution channels, brand recognition, the ability to provide agnostic

interoperability and to operate on a variety of MMIS, EMR and financial platforms, the ability to integrate with pre-existing

systems and capital for sustained development and marketing activities.

There are few barriers to entry to the PPE/test kit distribution

believes that these obstacles taken together represent a moderate to high-level barrier to entry on the data management side of

our business.

The principal competitive factors in our markets are product features, functionality and support, product depth

and breadth (number of items in the central data warehouse), flexibility, ease of deployment and use, total cost of ownership

and time to value.

We believe that we generally compete favorably on the basis of these factors.

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.

License and Service Fees

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.

clients purchasing software to be installed locally or provided on a SaaS model, these are multi-element arrangements that include

a term license granting the right to access the applicable software functionality (whether installed locally at the client site

or the right to use our company’s solutions as a part of SaaS services), terms regarding maintenance and support services,

terms for any third-party components such as infrastructure and software, and professional services for implementation, integration,

process engineering, optimization and training, as well as fees and payment terms for each of the foregoing.

If the client purchases

solutions on a long-term license model, the client may be billed the license fee up front or on a monthly or quarterly basis.

Maintenance and support are provided on a term basis for separate fees, with an initial term of typically three to five years.

The license, maintenance and support fee is charged annually in advance, commencing either upon contract execution or deployment

of the solution in live production.

If the client purchases solutions on a term-based model, the client is billed periodically

a combined access fee for a specified term, typically three to five years in length.

also generally provides software and SaaS client’s professional services for implementation, integration, process engineering,

and optimization and training.

Barriers to entry to the data

management market include technological and application sophistication, the ability to offer a proven product, creating and utilizing

a well-established client base and distribution channels, brand recognition, the ability to provide agnostic interoperability and to operate

on a variety of MMIS, EMR and financial platforms, the ability to integrate with pre-existing systems and capital for sustained development

and marketing activities.

There are few barriers to entry to the PPE/test kit distribution business.

SCWorx believes that these

obstacles taken together represent a moderate to high-level barrier to entry on the data management side of our business.

The principal

competitive factors in our markets are product features, functionality and support, product depth and breadth (number of items in the

central data warehouse), flexibility, ease of deployment and use, total cost of ownership and time to value.

We believe that we generally

compete favorably on the basis of these factors.

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.

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 clients purchasing software

to be installed locally or provided on a SaaS model, these are multi-element arrangements that include a term license granting the right

to access the applicable software functionality (whether installed locally at the client site or the right to use our company’s

solutions as a part of SaaS services), terms regarding maintenance and support services, terms for any third-party components such as

infrastructure and software, and professional services for implementation, integration, process engineering, optimization and training,

as well as fees and payment terms for each of the foregoing.

If the client purchases solutions on a long-term license model, the client

may be billed the license fee up front or on a monthly or quarterly basis.

Maintenance and support are provided on a term basis for separate

fees, with an initial term of typically three to five years.

The license, maintenance and support fee is charged annually in advance,

commencing either upon contract execution or deployment of the solution in live production.

If the client purchases solutions on a term-based

model, the client is billed periodically a combined access fee for a specified term, typically three to five years in length.

SCWorx also generally provides

software and SaaS client’s professional services for implementation, integration, process engineering, and optimization and training.

These services and the associated fees are separate from the license, maintenance and access fees.

Professional services are provided on either a fixed-fee or hourly arrangements billable to clients based on agreed-to payment

milestones (fixed fee) or monthly payment structure on hours incurred (hourly).

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.

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.

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’s agreements are generally

non-cancelable but provide that the client may terminate its agreement upon a material breach by SCWorx and/or may delay certain

aspects of the installation or associated payments in such events.

SCWorx does allow for termination for convenience in certain

SCWorx also includes trial or evaluation periods for certain clients, especially for new or modified solutions.

it is difficult for SCWorx to accurately predict the revenue it expects to achieve in any particular period, and a termination

or installation delay of one or more phases of an agreement, or the failure of SCWorx to procure additional agreements, could

have a material adverse effect on SCWorx’s business, financial condition, and results of operations.

Professional services are provided

on either a fixed-fee or hourly arrangements billable to clients based on agreed-to payment milestones (fixed fee) or monthly payment

structure on hours incurred (hourly).

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.

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.

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

SCWorx’s agreements are generally non-cancelable but provide that the client may terminate its agreement upon a material

breach by SCWorx and/or may delay certain aspects of the installation or associated payments in such events.

SCWorx does allow for termination

for convenience in certain situations.

SCWorx also includes trial or evaluation periods for certain clients, especially for new or modified

Therefore, it is difficult for SCWorx to accurately predict the revenue it expects to achieve in any particular period, and

a termination or installation delay of one or more phases of an agreement, or the failure of SCWorx to procure additional agreements,

could have a material adverse effect on SCWorx’s business, financial condition, and results of operations.

Historically, SCWorx

has not experienced a material amount of contract cancellations;

however, SCWorx sometimes experiences delays during contract

implementation, and SCWorx accounts for them accordingly.

Party License Fees

incorporates software licensed from various third-party vendors into its proprietary software.

Stand-alone third-party software

is also required to operate certain of SCWorx’s proprietary software and/or SaaS services.

SCWorx licenses these software

products and pays the required license fees when such software is delivered to clients.

and Rapid Test Kit Products

We are endeavoring to sell our existing inventory of PPE products

primarily through use of our internal and external sales personnel.

Through the date of filing we have not had significant sales of PPE

Ticketing Platform

In 2020, the majority of paid tickets for regional MMA events were

sold by the fighters appearing on the event fight card.

Referred to as “fighter consigned”

tickets, sales are generally made

in face-to-face cash transactions.

The CageTix event ticketing platform allowed regional promoters to control the ticketing sales chain.

The CageTix platform provided benefits to regional promotions, including the security of credit/debit card sales processing, immediate

revenue recognition, and real time sales reporting.

Due to the Covid restrictions which were put in place for large gatherings, SCWorx

has paused business activity for Cagetix.

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.

The 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.

company also has a lease for office space in Greenwich, Connecticut which expired in March 2020 and is now Month-to-month.

believes that governmental regulation is not material to our current core data management business.

The sale of tests to identify

antibodies to the SARS-CoV-2 virus in the blood (i.e., COVID-19 serology tests) in the United States is subject to regulation by the US

Food and Drug Administration (FDA).

In order for such COVID-19 serology tests to be sold in the United States, they must be authorized

for sale by the FDA, either by being cleared under FDA’s 510(k) pathway, approved under FDA’s Premarket Approval pathway,

or, more commonly, authorized under the Emergency Use Authorization (EUA) process developed by FDA for COVID-19 serology tests during

the duration of the current public health emergency.

The Company believes that the COVID-19 serology tests held by the

Company will conform with the FDA EUA process for COVID-19 serology tests and therefore can be lawfully distributed in the United States.

Changes in FDA processes governing the sale of COVID-19 serology tests could have the effect of rendering the COVID-19 serology tests

to be sold by the Company not saleable in the United States, which could have a material adverse effect on the Company.

protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions.

We control access to our proprietary technology by entering into confidentiality agreements, invention assignment agreements and

work for hire agreements with our employees and contractors, and confidentiality agreements with third parties.

We further control

the use of our proprietary technology and intellectual property through provisions in our websites’

between the Company and end-users includes a license agreement in which a non-transferable non-sublicensable, non-exclusive, limited

use license to use the licensed products for the duration of the service order.

Customers may not modify, copy, translate, decompile,

disassemble, reverse engineer, loan, rent, lease, sublicense, or create derivative works of the licensed products, in whole or

however, SCWorx sometimes experiences delays during contract implementation,

and SCWorx accounts for them accordingly.

Third Party License Fees

SCWorx incorporates software

licensed from various third-party vendors into its proprietary software.

Stand-alone third-party software is also required to operate

certain of SCWorx’s proprietary software and/or SaaS services.

SCWorx licenses these software products and pays the required license

fees when such software is delivered to clients.

PPE and Rapid Test Kit Products

The Company is no longer actively

seeking to procure and sell Test Kits or PPE.

Instead, the Company is focused on selling its current inventory of PPE.

The Company may

receive commissions for acting as an intermediary with respect to the sale of PPE and/or Test Kits.

However, there is no assurance the

Company will realize any material revenue from these activities.

CageTix Ticketing Platform

In 2020, the majority of paid

tickets for regional MMA events were sold by the fighters appearing on the event fight card.

Referred to as “fighter consigned”

tickets, sales are generally made in face-to-face cash transactions.

The CageTix event ticketing platform allowed regional promoters to

control the ticketing sales chain.

The CageTix platform provided benefits to regional promotions, including the security of credit/debit

card sales processing, immediate revenue recognition, and real time sales reporting.

Due to the Covid restrictions which were put in place

for large gatherings, SCWorx has paused business activity for Cagetix.

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.

The 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.

The Company also had a lease

in Greenwich, CT which expired in March 2020 and became a month to month.

This tenancy was terminated in April 2021.

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.

We control access to our proprietary

technology by entering into confidentiality agreements, invention assignment agreements and work for hire agreements with our employees

and contractors, and confidentiality agreements with third parties.

We further control the use of our proprietary technology and intellectual

property through provisions in our websites’ terms of use.

Agreements between the Company and end-users includes a license agreement

in which a non-transferable non-sublicensable, non-exclusive, limited use license to use the licensed products for the duration of the

service order.

Customers may not modify, copy, translate, decompile, disassemble, reverse engineer, loan, rent, lease, sublicense, or

create derivative works of the licensed products, in whole or in part.

Customer agrees to maintain software and data as Confidential Information.

Company currently hosts our solution, serves our customers, and supports our operations in the United States through an agreement

with a third party hosting and infrastructure provider, Rackspace.

The Company incorporates standard IT security measures, including

but not limited to;

firewalls, disaster recovery, backup, etc.

Circumstances

outside our control could pose a threat to our intellectual property rights.

For example, effective intellectual property protection

may not be available in the United States or other countries in which we seek protection of our marks or our copyrighted works.

Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective.

Any significant impairment

of our intellectual property rights may harm our business or our ability to compete.

do not believe that SCWorx’s revenues are impacted by seasonality.

of December 31, 2020, we had 9 employees, of which 2 were management and finance and the rest in operations.

We primarily utilize

independent contractors and third-part vendors for software, maintenance of our database and customer software installation.

conducting our business, we may become involved in legal proceedings.

We will accrue a liability for such matters when it is probable

that a liability has been incurred and the amount can be reasonably estimated.

When only a range of possible loss can be established,

the most probable amount in the range is accrued.

If no amount within this range is a better estimate than any other amount within

the range, the minimum amount in the range is accrued.

The accrual for a litigation loss contingency might include, for example,

estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

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 CEO.

The action is captioned Daniel Yannes, individually and on behalf of all others similarly situated,

Plaintiff vs.

Schessel, Defendants.

May 27, 2020, a second securities class was filed in the United States District Court for the Southern District of New York against

us and our CEO.

The action is captioned Caitlin Leeburn, individually and on behalf of all others similarly situated, Plaintiff

Schessel, Defendants.

June 23, 2020, a third securities class was filed in the United States District Court for the Southern District of New York against

us and our CEO.

The action is captioned Jonathan Charles Leonard, individually and on behalf of all others similarly situated,

Schessel, Defendants.

three lawsuits allege that our company and our CEO mislead investors in connection with our April 13, 2020 press release with

respect to the sale of COVID-19 rapid test kits.

The plaintiffs in these actions are seeking unspecified monetary damages.

three class actions were consolidated on September 18, 2020 and Daniel Yannes was designated lead plaintiff.

A consolidated Amended

Complaint (“CAC”) was filed on October 19, 2020.

The Defendants filed a motion to dismiss the CAC on November 18,

2020, and the briefing on that motion was complete on January 8, 2021.

We are still awaiting a ruling on the motion, and we intend

to continue vigorously defending against this lawsuit.

June 15, 2020, a shareholder derivative claim was filed in the United States District Court for the Southern District of New York

against Marc S.

Schessel, Steven Wallitt (current directors), and Robert Christie and Charles Miller (former directors) (“Director

Defendants”).

The action is captioned Javier Lozano, derivatively on behalf of SCWorx Corp., Plaintiff, v.

Miller, Steven Wallitt, Defendants, and SCWorx Corp., Nominal Defendant.

This lawsuit alleges that the Director Defendants

breached their fiduciary duties to the Company, including by misleading investors in connection with our April 13, 2020 press

release with respect to the sale of COVID-19 rapid test kits, failing to correct false and misleading statements and failing to

implement proper disclosure and internal controls.

The Plaintiff, on our behalf, is seeking an award of monetary damages, improvements

in our disclosure and internal controls, and legal fees.

The Director Defendants intend to vigorously defend against these proceedings.

This derivative action is also still pending, and the plaintiff in such action has agreed to voluntarily stay the case until a

ruling on a motion to dismiss, which we intend to file in the securities class action case.

August 21, 2020, a shareholder derivative claim was filed in the United States District Court for the Southern District of New

York against Marc S.

Schessel, Steven Wallitt (current directors), and Robert Christie and Charles Miller (former directors) (“Director

Defendants”).

The action is captioned Josstyn Richter, derivatively on behalf of SCWorx Corp., Plaintiff, v.

Miller, Steven Wallitt, Defendants, and SCWorx Corp., Nominal Defendant.

This lawsuit alleges that the Director Defendants

breached their fiduciary duties to the Company, including by misleading investors in connection with our April 13, 2020 press

release with respect to the sale of COVID-19 rapid test kits, failing to correct false and misleading statements and failing to

implement proper disclosure and internal controls.

The Plaintiff, on our behalf, is seeking an award of monetary damages, improvements

in our disclosure and internal controls, and legal fees.

The Director Defendants intend to vigorously defend against these proceedings.

August 27, 2020, the Lozano and Richter derivative actions were consolidated and jointly stayed until a ruling on a motion to

dismiss which we filed in the securities class action case.

September 30, 2020, a shareholder derivative action was filed in the Supreme Court State of New York, New York County against

Schessel and Steven Wallitt (current directors) and Charles Miller (a former director).

The action is captioned Hemrita

Zarins, derivatively on behalf of SCWorx Corp.

Schessel, Charles Miller, Steven Wallitt and SCWorx, Nominal Defendant.

This lawsuit alleges that the Director Defendants breached their fiduciary duties to the Company, including by misleading investors

in connection with the Company’s April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits, failing

to correct false and misleading statements and failing to implement proper disclosure and internal controls.

The Plaintiff, on

our behalf, is seeking an award of monetary damages, improvements in our disclosure and internal controls, and legal fees.

October 28, 2020, Zarins withdrew this action and refiled an action in the Chancery Court in the State of Delaware on October

Zarins named as Defendants Marc S.

Schessel, Robert Christie (a former director), Steven Wallitt and SCWorx, Nominal

The allegations, as well as the relief sought, in the Delaware Chancery Court proceeding are substantially the same

as that filed in the New York State Action.

This action has been stayed pending the ruling on the motion to dismiss in the aforementioned

The Company currently hosts

our solution, serves our customers, and supports our operations in the United States through an agreement with a third-party hosting and

infrastructure provider, Rackspace.

The Company incorporates standard IT security measures, including but not limited to;

firewalls, disaster

recovery, backup, etc.

Circumstances outside our

control could pose a threat to our intellectual property rights.

For example, effective intellectual property protection may not be available

in the United States or other countries in which we seek protection of our marks or our copyrighted works.

Also, the efforts we have taken

to protect our proprietary rights may not be sufficient or effective.

Any significant impairment of our intellectual property rights may

harm our business or our ability to compete.

We do not believe that SCWorx’s

revenues are impacted by seasonality.

As of December 31, 2021, we

had 10 employees, of which 2 were management and finance and the rest in operations.

We primarily utilize independent contractors and

third-party vendors for software, maintenance of our database and customer software installation.

Legal Proceedings

In conducting our business,

we may become involved in legal proceedings.

We will accrue a liability for such matters when it is probable that a liability has been

incurred and the amount can be reasonably estimated.

When only a range of possible loss can be established, the most probable amount in

the range is accrued.

If no amount within this range is a better estimate than any other amount within the range, the minimum amount in

the range is accrued.

The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside

legal fees and other directly related costs expected to be incurred.

Settlement of Consolidated

Securities Class Action

The Director Defendants intend to vigorously defend against these proceedings.

addition, following the April 13, 2020 press release and related disclosures (related to COVID-19 rapid test kits), the Securities

and Exchange Commission made an inquiry regarding the disclosures we made in relation to the transaction involving COVID-19 test

On April 22, 2020, the Securities and Exchange Commission ordered that trading in the securities of our company be suspended

because of “questions and concerns regarding the adequacy and accuracy of publicly available information in the marketplace”

(the “SEC Trading Halt”).

The SEC Trading Halt expired May 5, 2020, at 11:59 PM EDT.

We are fully cooperating with

the SEC’s investigation and are providing documents and other requested information.

April 2020, we received related inquiries from The Nasdaq Stock Market and the Financial Industry Regulatory Authority (FINRA).

We have been fully cooperating with these agencies and providing information and documents, as requested.

On May 5, 2020, the

Nasdaq Stock Market informed us that it had initiated a “T12 trading halt,”

which means the halt will remain in place

until we have fully satisfied Nasdaq’s request for additional information.

We fully cooperated with Nasdaq and responded

to all of Nasdaq’s information requests as they were issued.

The T12 trading halt was lifted on August 10, 2020.

in April 2020, we were contacted by the U.S.

Attorney’s Office for the District of New Jersey, which is seeking information

and documents from our officers and directors relating primarily to the April 13, 2020 press release concerning COVID-19 rapid

We are fully cooperating with the U.S.

Attorney’s Office in its investigation.

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.

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 even though the $750,000 retention

under such policy has not yet been met.

The Company estimates it is currently obligated to pay approximately $700,000 of the retention,

which payments could have a material adverse effect on the Company.

The $700,000 have been accrued in accounts payable and accrued

liabilities in theses financial statements.

f/k/a Alliance MMA, Inc.,

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.

Subsequently, two additional class actions were filed in the same court ( Leeburn v.

and Leonard v.

SCWorx et ano.) and thereafter, the three class actions were consolidated (the “Consolidated Class Action”).

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.

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.

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.

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.

Settlement of Consolidated

Derivative Action

As previously disclosed,

on June 15, 2020, a shareholder derivative claim was filed in the United States District Court for the Southern District of New York against

Steven Wallitt (current director), and Marc S.

Schessel, Robert Christie and Charles Miller (former directors) (“Director Defendants”).

The action is captioned Lozano, derivatively on behalf of SCWorx Corp.

Schessel, Charles K.

Miller, Steven Wallitt, Defendants,

and SCWorx Corp., Nominal Defendant.

The Lozano lawsuit was consolidated with another shareholder derivative lawsuit, Richter, v.

Schessel, Charles K.

Miller, Steven Wallitt, Defendants, and SCWorx Corp., Nominal Defendant.

(the “Consolidated Derivative Action”).

The Consolidated Derivative

Action alleged that the Director Defendants breached their fiduciary duties to the Company, including by misleading investors in connection

with our April 13, 2020 press release with respect to the sale of COVID-19 rapid test kits, failing to correct false and misleading statements

and failing to implement proper disclosure and internal controls.

In addition, on October 29,

2020, Hemrita Zarins filed a shareholder derivative action in the Chancery Court in the State of Delaware against Steven Wallitt (current

director) and Marc S.

Schessel and Charles Miller ( former directors).

The action is captioned Hemrita Zarins, v.

Schessel, Robert

Christie, Steven Wallitt and SCWorx, Nominal Defendant.

The Zarins action contains substantially similar allegations as in the Consolidated

Derivative Action.

On February 15, 2022, the

Company and the Director Defendants (Marc Schessel, Steven Wallitt, Charles Miller and Robert Christie) entered into a stipulation of

settlement (subject to Court approval) with the shareholder derivative plaintiffs to settle the Consolidated Derivative Action as well

as the Zarins action.

Under the terms of the settlement, (i) the insurers for the Director Defendants will make a cash payment to legal

counsel for the shareholder derivative Plaintiffs to cover their legal fees and (ii) the Company will adopt certain corporate governance

reforms within 60 days of court approval of the settlement, in exchange for which all parties will be released from all claims related

to the derivative class action litigation.

The settlement resolves all claims asserted against the defendants without any admission, concession

or finding of any fault, liability or wrongdoing by the Company or any defendant.

Other Investigations

In addition, as previously disclosed, following the April 13, 2020

press release and related disclosures (related to COVID-19 rapid test kits), the Securities and Exchange Commission made an inquiry regarding

the disclosures we made in relation to the transaction involving COVID-19 test kits.

The Company is continuing to cooperate with the SEC

regarding its investigation arising out of the April 13, 2020 press release and the events thereafter.

The Company received a Wells

notice on December 8, 2021 and an amended Wells notice on December 10, 2021.

The Wells Notice states that the staff of the Securities

and Exchange Commission has made a preliminary determination to recommend that the Commission file an enforcement action against the Company

which would allege 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.

The Wells Notice also indicates that the staff would seek fines and disgorgement, including pre and post judgment interest in such enforcement

The Company did not make a Wells submission to the Commission in response to the Wells Notice.

Company has since been actively engaged in discussions with the Staff to settle the claims set forth in the Wells Notice.

In April 2020, we received

related inquiries from The Nasdaq Stock Market and the Financial Industry Regulatory Authority (FINRA).

We cooperated fully with these

agencies, providing information and documents, as requested.

We have not had any requests from these agencies since January 2021.

Also in April 2020, as previously

disclosed, we were contacted by the U.S.

Attorney’s Office for the District of New Jersey, which was seeking information and documents

from our officers and directors relating primarily to the April 13, 2020 press release concerning COVID-19 rapid test kits.

We have cooperated

fully with the U.S.

Attorney’s Office in its investigation.

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.

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.

David Klarman v.

f/k/a Alliance MMA, Inc., Index No.

619536/2019 (N.Y.

Ct., Suffolk County )

October 3, 2019, David Klarman, a former employee of Alliance, served a complaint against SCWorx seeking $400,000.00

for a breach of his employment agreement with Alliance.

Klarman claims that Alliance ceased paying him his salary in March 2018

as well as other alleged contractual benefits.

SCWorx does not believe that it owes the amount demanded and intends to vigorously

defend against these claims.

On March 6, 2020, SCWorx filed an answer and counterclaims against Mr.

On September 18,

2020, the Court granted Klarman’s counsel’s motion to withdraw as counsel due to irreconcilable differences.

“The Court stayed the case for 45 days after service of the Court’s order.

Klarman’s wife, Marie Klarman, Esq.,

filed a Notice of Appearance on November 6, 2020 and filed a motion on November 9, 2020 seeking various forms of relief -- in

violation of the Court’s Individual Rules and the Commercial Division Rules.

We opposed Klarman’s motion on December

31, 2020 and the case was marked fully submitted on January 21, 2021.

By Decision and Order dated March 26, 2021, the Court granted

Klarman’s motion to dismiss four (4) of fourteen (14) defenses, denied Klarman’s motion to dismiss SCWorx’s

counterclaims against him;

denied Klarman’s motion for summary judgment and denied Klarman’s motion to strike allegations

contained in the Affirmative Defenses and Counterclaims based on his contention that such allegations were “scandalous”

or prejudicial.

The Court has scheduled a conference for April 28, 2021 presumably to set a discovery schedule.

this time, we are unable to predict the duration, scope, or possible outcome of these investigations and lawsuits.

website address is www.SCWorx.com.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,

and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (Exchange

Act), are filed with the U.S.

Securities and Exchange Commission (SEC).

We are subject to the informational requirements of the

Exchange Act and file or furnish reports, proxy statements, and other information with the SEC.

Such reports and other information

filed by us with the SEC are available free of charge on our website at www.SCWorx.com when such reports become available on the

SEC’s website.

The public may read and copy any materials filed by SCWorx Corp.

with the SEC at the SEC’s Public Reference

Room at 100 F Street, NE, Room 1580, Washington, DC 20549 on official business days during the hours of 10 a.m.

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that

file electronically with the SEC at www.sec.gov.

The contents of the websites referred to above are not incorporated into this

On October 3, 2019, David Klarman, a former employee of Alliance, served

a complaint against SCWorx seeking $400,000.00 for a breach of his employment agreement with Alliance.

Klarman claims that Alliance ceased

paying him his salary in March 2018 as well as other alleged contractual benefits.

This action was settled on or about December 16, 2021

by the parties without any admission of liability or wrongdoing.

In exchange for a release, the Company agreed to settle with Mr.

with $100,000 of SCWorx shares calculated over a period of 4 months pursuant to an agreed upon schedule with respect to amounts, dates

and a restriction on sales of SCWorx stock to no more than 4,000 shares per trading day.

To date, all shares have been issued pursuant

to this agreement.

Available Information

Our website address is www.SCWorx.com.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant

to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are filed with the U.S.

Securities and

Exchange Commission (SEC).

We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements,

and other information with the SEC.

Such reports and other information filed by us with the SEC are available free of charge on our website

at www.SCWorx.com when such reports become available on the SEC’s website.

The public may read and copy any materials filed by SCWorx

with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549 on official business

days during the hours of 10 a.m.

The public may obtain information on the operation of the Public Reference Room by calling

the SEC at 1-800-SEC-0330.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information

regarding issuers that file electronically with the SEC at www.sec.gov.

The contents of the websites referred to above are not incorporated

into this filing.

Further, our references to the URLs for these websites are intended to be inactive textual references only.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business