What changed in this filing

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Item 1A. Risk Factors

2022-03-31 compared with 2021-05-19 · 737 added, 704 removed, 19 unchanged (99% of the section changed)

factors could have a material adverse effect on our business, financial condition, results of operations and prospects.

carefully consider the risks and uncertainties described below, in addition to other information contained in this Annual Report

on Form 10-K, including our consolidated financial statements and related notes.

The risks and uncertainties described below are

not the only ones we face.

Additional risks and uncertainties of which we are unaware, or that we currently believe are not material,

may also become important factors that adversely affect our business, financial condition, results of operations and prospects.

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

and adversely affected.

In that event, the trading price of our common stock could decline, and you could lose part or all of

your investment.

Related to Our Financial Results and Financing Plans

COVID-19 pandemic has disrupted our business and the business of our hospital customers.

operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic which

spread throughout the United States and the world.

The New York and New Jersey area, where the Company is headquartered, was at

one of the epicenters of the coronavirus outbreak in the United States.

The Company has followed the recommendations of local

health authorities to minimize exposure risk for its team members since the outbreak.

addition, the Company’s customers (hospitals) have 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 our customers’

business, our customers have been focused on meeting the nation’s health care needs

in response to the COVID-19 pandemic.

As a result, there is a significant risk that our customers will not be able to focus any

resources on expanding the utilization of our services, which could adversely impact our future growth prospects, at least until

the adverse effects of the pandemic subside.

In addition, the financial impact of COVID-19 on our hospital customers could cause

the hospital to delay payments due to us for services, which could negatively impact our cash flows.

have attempted to mitigate these risks through the sale of personal protective equipment (“PPE”) and COVID-19 rapid

test kits to the health care industry, including many of our hospital customers.

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.

Certain factors could have

a material adverse effect on our business, financial condition, results of operations and prospects.

You should carefully consider the

risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our

consolidated financial statements and related notes.

The risks and uncertainties described below are not the only ones we face.

risks and uncertainties of which we are unaware, or that we currently believe are not material, may also become important factors that

adversely affect our business, financial condition, results of operations and prospects.

If any of the following risks occurs, our business,

financial condition, results of operations and prospects could be materially and adversely affected.

In that event, the trading price

of our common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Financial Results and

Financing Plans

The COVID-19 pandemic has disrupted our

business and the business of our hospital customers.

The Company’s operations and business have experienced disruption

due to the unprecedented conditions surrounding the COVID-19 pandemic which spread throughout the United States and the world.

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.

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.

have a history of losses and may continue to incur losses in the future.

have a history of losses and may continue to incur losses in the future, which could negatively impact the trading value of our common

For the year ended December 31, 2020, our revenues were $5,213,118, and we had a net loss of $7,402,350.

For the year ended December

31, 2019, our revenues were $5,548,119, and we had a net loss of $11,312,500.

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.

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.

We have a history of losses and may continue

to incur losses in the future.

We have a history of losses

and may continue to incur losses in the future, which could negatively impact the trading value of our common stock.

For the year ended

December 31, 2021, our revenues were $4,632,529, and we had a net loss of $3,814,468.

For the year ended December 31, 2020, our revenues

were $5,213,118, and we had a net loss of $7,402,350.

At December 31, 2021, we had an accumulated deficit of $24,011,291.

incurred losses from operations of $6,045,011 for the year ended December 31, 2020 and $11,897,491 for the year ended December

We may continue to incur operating and net losses in future periods.

These losses may increase, and we may never achieve

profitability for a variety of reasons, including increased competition, decreased growth in our target market and other factors

described elsewhere in this “Risk Factors”

If we cannot achieve sustained profitability, our stockholders

may lose all or a portion of their investment in our company.

we are unable to grow our revenue, we may never achieve or sustain profitability.

become profitable, we must, among other things, increase our revenues.

Our total revenues stayed relatively flat at $5,213,118

in the year ended December 31, 2020 as compared to $5,548,119 in the year ended December 31, 2019.

However, the COVID-19 pandemic

may continue to adversely affect our near-term revenue growth.

In order to become profitable and then maintain profitability,

we must, among other things, increase our revenues while dealing with the COVID-19 pandemic.

This adverse effect on revenue will

be exacerbated if we are unable to develop and market new products, which could help us increase our sales to existing customers

or develop new customers.

Even if we are able to grow our revenues, they may not be sufficient to exceed increases in our operating

expenses or to enable us to achieve or sustain profitability.

Related to Our Business

inability to obtain additional capital may prevent us from completing our business strategy and successfully operating our business;

however, additional financings may subject our existing stockholders to substantial dilution.

continue our growth path, we expect to finance our future expansion plans through public or private equity offerings or debt financings.

Additional funds may not be available when we need them on terms that are acceptable to us, or at all.

If adequate funds are not

available, we may be required to delay or reduce the scope of our business plans.

To the extent that we raise additional funds

by issuing equity securities, our stockholders may experience significant dilution.

In addition, debt financing, if available,

may involve restrictive covenants.

We may seek to access the public or private capital markets whenever conditions are favorable,

even if we do not have an immediate need for additional capital at that time.

Our access to the financial markets and the pricing

and terms we receive in the financial markets could be adversely impacted by various factors, including changes in financial markets

and interest rates.

future funding requirements will depend on many factors, including, but not limited to, the costs and timing of our future acquisitions.

failure to successfully execute our growth strategy could adversely affect our business, financial condition, results of operations

and prospects.

intend to continue pursuing growth through expanding our product offerings, project skill-sets and capabilities, and increase

critical mass to enable us to bid on larger contracts.

We may also consider potential acquisitions if conditions permit.

we may be unable to find suitable acquisition candidates or to complete acquisitions on favorable terms, if at all.

any completed acquisition may not result in the intended benefits.

For example, while the historical financial and operating performance

of an acquisition target are among the criteria we evaluate in determining which acquisition targets we will pursue, there can

be no assurance that any business or assets we acquire will continue to perform in accordance with past practices or will achieve

financial or operating results that are consistent with or exceed past results.

Any such failure could adversely affect our business,

financial condition or results of operations.

In addition, any completed acquisition may not result in the intended benefits for

other reasons and our acquisitions will involve a number of other risks, including:

may have difficulty integrating the acquired companies;

ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the

complexity of managing geographically or culturally diverse enterprises;

may not realize the anticipated cost savings or other financial benefits we anticipated;

may have difficulty retaining or hiring key personnel, customers and suppliers to maintain expanded operations;

internal resources may not be adequate to support our operations as we expand, particularly if we are awarded a significant

number of contracts in a short time period;

may have difficulty retaining and obtaining any required regulatory approvals, licenses and permits;

may not be able to obtain additional equity or debt financing on terms acceptable to us or at all, and any such financing

could result in dilution to our stockholders, impact our ability to service our debt within the scheduled repayment terms

and include covenants or other restrictions that would impede our ability to manage our operations;

may have failed to, or be unable to, discover liabilities of the acquired companies during the course of performing our due

may be required to record additional goodwill as a result of an acquisition, which will reduce our tangible net worth.

of these risks could prevent us from executing our acquisition growth strategy, which could adversely affect our business, financial

condition, results of operations and prospects.

contracts may require us to perform extra or change order work, which can result in disputes and adversely affect our business,

financial condition, results of operations and prospects.

contracts generally require us to perform extra or change order work as directed by the customer, even if the customer has not

agreed in advance on the scope or price of the extra work to be performed.

This process may result in disputes over whether the

work performed is beyond the scope of the work included in the original project plans and specifications or, if the customer agrees

that the work performed qualifies as extra work, the price that the customer is willing to pay for the extra work.

Even when the

customer agrees to pay for the extra work, we may be required to fund the cost of such work for a lengthy period of time until

the change order is approved by the customer and we are paid by the customer.

derive a significant portion of our revenue from a few customers and the loss of one of these customers, or a reduction in their

demand for our services, could adversely affect our business, financial condition, results of operations and prospects.

customer base is highly concentrated.

Due to the size and nature of our contracts, one or a few customers have represented a substantial

portion of our consolidated revenues and gross profits in any one year or over a period of consecutive years.

Two customers accounted

for approximately 22% and 17%, respectively, of our revenue in the year ended December 31, 2020.

Two customers accounted for approximately

19% and 10%, respectively, of our revenue in the year ended December 31, 2019.

Revenues under our contracts with significant customers

may continue to vary from period to period depending on the timing or volume of work that those customers contract from us.

limited number of customers may continue to comprise a substantial portion of our revenue for the foreseeable future.

we do not maintain any reserves for payment defaults, a default or delay in payment on a significant scale could adversely affect

our business, financial condition, results of operations and prospects.

We could lose business from a significant customer for

a variety of reasons, including:

consolidation, merger or acquisition of an existing customer, resulting in a change in procurement strategies employed by

the surviving entity that could reduce the amount of work we receive;

performance on individual contracts or relationships with one or more significant customers could become impaired due to another

reason, which may cause us to lose future business with such customers and, as a result, our ability to generate income would

be adversely impacted;

customers could slow or stop spending on initiatives related to projects we are performing for them due to increased difficulty

in the markets as a result of economic downturns or other reasons.

many of our customer contracts allow our customers to terminate the contract without cause, our customers may terminate their

contracts with us at will, which could impair our business, financial condition, results of operations and prospects.

is substantial doubt about our ability to continue as a going concern.

auditors have indicated in their report on our financial statements for the year ended December 31, 2020 that conditions exist

that raise substantial doubt about our ability to continue as a going concern since we may not have sufficient capital resources

from operations and existing financing arrangements to meet our operating expenses and working capital requirements.

We incurred losses from operations

of $3,814,468 for the year ended December 31, 2021 and $6,045,011 for the year ended December 31, 2020.

We may continue to incur operating

and net losses in future periods.

These losses may increase, and we may never achieve profitability for a variety of reasons, including

increased competition, decreased growth in our target market and other factors described elsewhere in this “Risk Factors”

If we cannot achieve sustained profitability, our stockholders may lose all or a portion of their investment in our company.

If we are unable to grow our revenue, we

may never achieve or sustain profitability.

To become profitable, we must, among other things, increase our revenues.

Our total revenues declined approximately $580,000 (11%) to $4,632,529 in the year ended December 31, 2021 as compared to $5,213,118 in

the year ended December 31, 2020.

In order to become profitable and then maintain profitability, we must, among other things, increase

our revenues while dealing with the ongoing impacts of the COVID-19 pandemic.

This decline in revenue will be exacerbated

if we are unable to develop and market new products, which could help us increase our sales to existing customers or develop new customers.

Even if we are able to grow our revenues, they may not be sufficient to exceed increases in our operating expenses or to enable us to

achieve or sustain profitability.

Risks Related to Our Business

There is substantial doubt about our ability

to continue as a going concern.

Our auditors have indicated

in their report on our financial statements for the year ended December 31, 2021 that conditions exist that raise substantial doubt about

our ability to continue as a going concern since we may not have sufficient capital resources from operations and existing financing arrangements

to meet our operating expenses and working capital requirements.

As of December 31, 2021, we

6 unchanged sentences

ability to continue as a going concern.

This may hinder our future ability to obtain financing or may force us to obtain financing on

less favorable terms than would otherwise be available.

If we are unable to develop sufficient revenues and additional customers for our

products and services, we may not generate enough revenue to sustain our business, and we may fail, in which case our stockholders would

suffer a total loss of their investment.

This may hinder our ability to obtain financing or may force us to obtain financing on less favorable

terms than would otherwise be available.

If we are unable to develop sufficient revenues and additional customers for our products and

services, we may not generate enough revenue to sustain our business, and we may fail, in which case our stockholders would suffer a total

loss of their investment.

There can be no assurance that we will be able to continue as a going concern.

the extent that actual recoveries with respect to change orders or amounts subject to contract disputes or claims are less than

the estimates used in our financial statements, the amount of any shortfall will reduce our future revenues and profits, and this

could adversely affect our reported working capital and results of operations.

In addition, any delay caused by the extra work

may adversely impact the timely scheduling of other project work and our ability to meet specified contract milestone dates.

failure to adequately expand our direct sales force will impede our growth.

will need to expand and optimize our sales infrastructure in order to grow our customer base and our business.

We plan to expand

our account management/sales force when we have sufficient capital to do so.

Identifying and recruiting qualified personnel and

training them requires significant time, expense and attention.

If we are unable to hire, develop and retain talented account

management/sales personnel or if the personnel are unable to achieve desired productivity levels in a reasonable period of time,

we may not be able to realize the intended benefits of this investment or increase our revenue.

we are unable to attract and retain qualified executive officers and managers, we will be unable to operate efficiently, which

could adversely affect our business, financial condition, results of operations and prospects.

depend on the continued efforts and abilities of our management, to establish and maintain our customer relationships and identify

strategic opportunities.

The loss of any one of them could negatively affect our ability to execute our business strategy and

adversely affect our business, financial condition, results of operations and prospects.

Competition for managerial talent with

significant industry experience is high, and we may lose access to executive officers for a variety of reasons, including more

attractive compensation packages offered by our competitors.

Although we have entered into employment agreements with certain

of our senior level management, we cannot guarantee that any of them or other key management personnel will remain employed by

us for any length of time.

judgments and other consequences resulting from our failure to comply with regulations or adverse outcomes in litigation proceedings

could adversely affect our business, financial condition, results of operations and prospects.

time to time, we may be involved in lawsuits and regulatory actions, including class action lawsuits that are brought or threatened

against us in the ordinary course of business.

These actions may seek, among other things, compensation for alleged personal injury,

workers’

compensation, violations of the Fair Labor Standards Act and state wage and hour laws, employment discrimination,

breach of contract, property damage, punitive damages, civil penalties, and consequential damages or other losses, or injunctive

or declaratory relief.

refer to Item 3.

Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions

and investigations.

defects or errors, or failures to meet our customers’

expectations could result in large damage claims against us.

may seek large damage awards and, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome

of any such proceedings.

Any failure to properly estimate or manage cost, or delay in the completion of projects, could subject

us to penalties.

ultimate resolution of these matters through settlement, mediation or court judgment could have a material adverse effect on our

financial condition, results of operations and cash flows.

Regardless of the outcome of any litigation, these proceedings could

result in substantial cost and may require us to devote substantial resources to defend ourselves.

When appropriate, we establish

reserves for litigation and claims that we believe to be adequate in light of current information, legal advice and professional

indemnity insurance coverage, and we adjust such reserves from time to time according to developments.

If our reserves are inadequate

or insurance coverage proves to be inadequate or unavailable, our business, financial condition, results of operations and prospects

we are required to reclassify independent contractors as employees, we may incur additional costs and taxes which could adversely

affect our business, financial condition, results of operations and prospects.

use a significant number of independent contractors in our operations for whom we do not pay or withhold any federal or state

employment tax.

There are a number of different tests used in determining whether an individual is an employee or an independent

contractor and such tests generally take into account multiple factors.

There can be no assurance that legislative, judicial or

regulatory (including tax) authorities will not introduce proposals or assert interpretations of existing rules and regulations

that would change, or at least challenge, the classification of our independent contractors.

Although we believe we have properly

classified our independent contractors, the U.S.

Internal Revenue Service or other U.S.

federal or state authorities or similar

authorities of a foreign government may determine that we have misclassified our independent contractors for employment tax or

other purposes and, as a result, seek additional taxes from us or attempt to impose fines and penalties.

If we are required to

pay employer taxes or pay backup withholding with respect to prior periods with respect to or on behalf of our independent contractors,

our operating costs will increase, which could adversely impact our business, financial condition, results of operations and prospects.

dependence on subcontractors and suppliers could increase our cost and impair our ability to complete contracts on a timely basis

rely on third-party subcontractors to perform some of the work on our contracts.

We also rely on third-party suppliers to provide

materials needed to perform our obligations under those contracts.

We generally do not bid on contracts unless we have the necessary

subcontractors and suppliers committed for the anticipated scope of the contract and at prices that we have included in our bid.

Therefore, to the extent that we cannot engage subcontractors or suppliers, our ability to bid for contracts may be impaired.

In addition, if a subcontractor or third-party supplier is unable to deliver its goods or services according to the negotiated

terms for any reason, we may suffer delays and be required to purchase the services from another source at a higher price.

sometimes pay our subcontractors and suppliers before our customers pay us for the related services.

If customers fail to pay

us and we choose, or are required, to pay our subcontractors for work performed or pay our suppliers for goods received, we could

suffer an adverse effect on our business, financial condition, results of operations and prospects.

insurance coverage may be inadequate to cover all significant risk exposures.

will be exposed to liabilities that are unique to the services we provide.

While we intend to maintain insurance for certain risks,

the amount of our insurance coverage may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial

costs resulting from risks and uncertainties of our business.

It is also not possible to obtain insurance to protect against all

operational risks and liabilities.

The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could

have a material adverse effect on our business, financial condition, results of operations and prospects.

Related to Our Industry

industry is highly competitive, with a variety of larger companies with greater resources competing with us, and our failure to

compete effectively could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial

contracts on which we bid are generally awarded through a competitive bid process, with awards generally being made to the lowest

bidder, but sometimes based on other factors, such as shorter contract schedules, larger scale to complete projects or prior experience

with the customer.

Within our markets, we compete with many other service providers.

Price is often the principal factor in determining

which service provider is selected by our customers, especially on smaller, less complex projects.

As a result, any organization

with adequate financial resources and access to technical expertise may become a competitor.

Smaller competitors are sometimes

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

Additionally,

our competitors may develop the expertise, experience and resources to provide services that are equal or superior in price to

our services, and we may not be able to maintain or enhance our competitive position.

of our competitors have already achieved greater market penetration than we have in the markets in which we compete, and some

have greater financial and other resources than we do.

A number of national companies in our industry are larger than we are and,

if they so desire, could establish a presence in our markets and compete with us for contracts.

As a result of this competition,

we may need to accept lower contract margins in order to compete against competitors that have the ability to accept awards at

lower prices or have a pre-existing relationship with a customer.

If we are unable to compete successfully in our markets, our

business, financial condition, results of operations and prospects could be adversely affected.

of the customers we serve are subject to consolidation and rapid technological and regulatory change, and our inability or failure

to adjust to our customers’

changing needs could reduce demand for our services.

derive, and anticipate that we will continue to derive, a substantial portion of our revenue from customers in the medical industry.

This industry is subject to rapid changes in technology and governmental regulation.

Changes in technology may reduce the demand

for the services we provide.

Additionally, the medical industry has been characterized by a high level of consolidation that may

result in the loss of one or more of our customers.

Our failure to rapidly adopt and master new technologies as they are developed

in any of the industries we serve or the consolidation of one or more of our significant customers could adversely affect our

We currently have an immediate need for

additional capital.

If we are unable to obtain additional capital, we will not be able to implement our business strategy or successfully

operate our business;

however, additional financings will subject our existing stockholders to dilution.

To continue our growth path, we expect to finance our future expansion

plans through public or private equity offerings or debt financings.

Additional funds may not be available when we need them on terms

that are acceptable to us, or at all.

We have recently encountered some difficulty in raising funds from external sources.

funds are not available, we may be required to further delay or reduce the scope of our business plans.

To the extent that we raise additional

funds by issuing equity securities, our stockholders will experience dilution.

In addition, debt financing, if available, may involve

restrictive covenants.

We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not

have an immediate need for additional capital at that time.

Our access to the financial markets and the pricing and terms we receive in

the financial markets could be adversely impacted by various factors, including changes in financial markets and interest rates.

Our future funding requirements

will depend on many factors, including, but not limited to, the costs and timing of our future acquisitions.

A failure to successfully execute our growth

strategy could adversely affect our business, financial condition, results of operations and prospects.

Subject to the receipt of

sufficient funding, which we currently do not have, we intend to pursue growth through expanding our [sales force], product offerings

and project skill-sets and capabilities, as well as increasing critical mass to enable us to bid on larger contracts.

We may also consider potential acquisitions if conditions permit.

However, we may be unable to find suitable acquisition

candidates or to complete acquisitions on favorable terms, if at all.

Moreover, any completed acquisition may not result in the intended

For example, while the historical financial and operating performance of an acquisition target are among the criteria we evaluate

in determining which acquisition targets we will pursue, there can be no assurance that any business or assets we acquire will continue

to perform in accordance with past practices or will achieve financial or operating results that are consistent with or exceed past results.

Any such failure could adversely affect our business, financial condition or results of operations.

In addition, any completed acquisition

may not result in the intended benefits for other reasons and our acquisitions will involve a number of other risks, including:

We may have difficulty integrating the acquired companies;

Our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises;

We may not realize the anticipated cost savings or other financial benefits we anticipated;

We may have difficulty retaining or hiring key personnel, customers and suppliers to maintain expanded operations;

Our internal resources may not be adequate to support our operations as we expand, particularly if we are awarded a significant number of contracts in a short time period;

We may have difficulty retaining and obtaining any required regulatory approvals, licenses and permits;

We may not be able to obtain additional equity or debt financing on terms acceptable to us or at all, and any such financing could result in dilution to our stockholders, impact our ability to service our debt within the scheduled repayment terms and include covenants or other restrictions that would impede our ability to manage our operations;

We may have failed to, or be unable to, discover liabilities of the acquired companies during the course of performing our due diligence;

We may be required to record additional goodwill as a result of an acquisition, which will reduce our tangible net worth.

Any of these risks could prevent us from executing on any acquisition

we might complete, which could adversely affect our business, financial condition, results of operations and prospects.

At this time,

we are not considering any acquisition.

Our contracts may require us to perform

extra or change order work, which can result in disputes and adversely affect our business, financial condition, results of operations

and prospects.

Our contracts generally require

us to perform extra or change order work as directed by the customer, even if the customer has not agreed in advance on the scope or price

of the extra work to be performed.

This process may result in disputes over whether the work performed is beyond the scope of the work

included in the original project plans and specifications or, if the customer agrees that the work performed qualifies as extra work,

the price that the customer is willing to pay for the extra work.

Even when the customer agrees to pay for the extra work, we may be required

to fund the cost of such work for a lengthy period of time until the change order is approved by the customer and we are paid by the customer.

To the extent that actual

recoveries with respect to change orders or amounts subject to contract disputes or claims are less than the estimates used in our financial

statements, the amount of any shortfall will reduce our future revenues and profits, and this could adversely affect our reported working

capital and results of operations.

In addition, any delay caused by the extra work may adversely impact the timely scheduling of other

project work and our ability to meet specified contract milestone dates.

We derive a significant portion of our revenue

from a few customers and the loss of one of these customers, or a reduction in their demand for our services, could adversely affect our

business, financial condition, results of operations and prospects.

customers are regulated by the Department of Health and Human Services and other regulators.

These regulators may interpret the

application of their regulations in a manner that is different than the way such regulations are currently interpreted and may

impose additional regulations, either of which could reduce demand for our services and adversely affect our business and results

of operations.

downturns could cause capital expenditures in the industries we serve to decrease, which may adversely affect our business, financial

Our customer base is highly

concentrated.

Due to the size and nature of our contracts, one or a few customers have during any given year, as well as over a period

of consecutive years, represented a substantial portion of our consolidated revenues and gross profits.

Two customers accounted for approximately

19% and 13%, respectively, of our revenue in the year ended December 31, 2021.

Two customers accounted for approximately 22% and 17%,

respectively, of our revenue in the year ended December 31, 2020.

Revenues under our contracts with significant customers may continue

to vary from period to period depending on the timing or volume of work that those customers contract from us.

A limited number of customers

may continue to comprise a substantial portion of our revenue for the foreseeable future.

A default or delay in payment

on a significant scale could adversely affect our business, financial condition, results of operations and prospects.

We could lose business

from a significant customer for a variety of reasons, including:

the consolidation, merger or acquisition of an existing customer, resulting in a change in procurement strategies employed by the surviving entity that could reduce the amount of work we receive;

our performance on individual contracts or relationships with one or more significant customers could become impaired due to another reason, which may cause us to lose future business with such customers and, as a result, our ability to generate income would be adversely impacted;

key customers could slow or stop spending on initiatives related to projects we are performing for them due to increased difficulty in the markets as a result of economic downturns or other reasons.

Since many of our customer

contracts allow our customers to terminate the contract without cause, our customers may terminate their contracts with us at will, which

could impair our business, financial condition, results of operations and prospects.

Our failure to adequately expand our direct

sales force will impede our growth.

We will need to expand and optimize our sales infrastructure in order

to grow our customer base and our business.

We plan to expand our account management/sales force when and if we have sufficient capital

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

unable to hire, develop and retain talented account management/sales personnel or if the personnel are unable to achieve desired productivity

levels in a reasonable period of time, we may not be able to realize the intended benefits of this investment or increase our revenue.

If we are unable to attract and retain qualified

executive officers and managers and consultants, we will be unable to operate efficiently, which could adversely affect our business,

financial condition, results of operations and prospects.

We depend on the continued

efforts and abilities of our management and consultants, to establish and maintain our customer relationships and identify strategic opportunities.

The loss of any one of them could negatively affect our ability to execute our business strategy and adversely affect our business, financial

condition, results of operations and prospects.

demand for our services has been and may be vulnerable to general downturns in the United States economy.

The current election

cycle may cause economic uncertainty.

Our customers are affected by economic changes that decrease the need for or the profitability

of their services.

This can result in a decrease in the demand for our services and potentially result in the delay or cancellation

of projects by our customers.

As a result, some of our customers may opt to defer or cancel pending projects.

A downturn in overall

economic conditions also affects the priorities placed on various projects funded by governmental entities and federal, state

and local spending levels.

general, economic uncertainty makes it difficult to estimate our customers’

requirements for our services.

growth depends on expanding our company.

Competition for managerial talent with significant industry experience is high, and we

may lose access to executive officers/consultants for a variety of reasons, including more attractive compensation packages offered by

our competitors.

Although we have entered into employment agreements with certain of our senior level management, we cannot guarantee

that any of them or other key management/consulting personnel will remain employed by us for any length of time.

Fines, judgments and other consequences

resulting from our failure to comply with regulations or adverse outcomes in litigation proceedings could adversely affect our business,

financial condition, results of operations and prospects.

From time to time, we may

be involved in lawsuits and regulatory actions, including class action lawsuits that are brought or threatened against us in the ordinary

course of business.

These actions may seek, among other things, compensation for alleged personal injury, workers’ compensation,

violations of the Fair Labor Standards Act and state wage and hour laws, employment discrimination, breach of contract, property damage,

punitive damages, civil penalties, and consequential damages or other losses, or injunctive or declaratory relief.

Please refer to Item 3.

Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions and investigations.

Any defects or errors, or

failures to meet our customers’ expectations could result in large damage claims against us.

Claimants may seek large damage awards

and, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of any such proceedings.

to properly estimate or manage cost, or delay in the completion of projects, could subject us to penalties.

The ultimate resolution of

these matters through settlement, mediation or court judgment could have a material adverse effect on our financial condition, results

of operations and cash flows.

Regardless of the outcome of any litigation, these proceedings could result in substantial cost and may

require us to devote substantial resources to defend ourselves.

When appropriate, we establish reserves for litigation and claims that

we believe to be adequate in light of current information, legal advice and professional indemnity insurance coverage, and we adjust such

reserves from time to time according to developments.

If our reserves are inadequate or insurance coverage proves to be inadequate or

unavailable, our business, financial condition, results of operations and prospects may suffer.

If we are required to reclassify independent

contractors as employees, we may incur additional costs and taxes which could adversely affect our business, financial condition, results

of operations and prospects.

We use a significant number

of independent contractors in our operations for whom we do not pay or withhold any federal or state employment tax.

There are a number

of different tests used in determining whether an individual is an employee or an independent contractor and such tests generally take

into account multiple factors.

There can be no assurance that legislative, judicial or regulatory (including tax) authorities will not

introduce proposals or assert interpretations of existing rules and regulations that would change, or at least challenge, the classification

of our independent contractors.

Although we believe we have properly classified our independent contractors, the U.S.

Internal Revenue

Service or other U.S.

federal or state authorities or similar authorities of a foreign government may determine that we have misclassified

our independent contractors for employment tax or other purposes and, as a result, seek additional taxes from us or attempt to impose

fines and penalties.

If we are required to pay employer taxes or pay backup withholding with respect to prior periods with respect to

or on behalf of our independent contractors, our operating costs will increase, which could adversely impact our business, financial condition,

results of operations and prospects.

Our dependence on subcontractors and suppliers

could increase our cost and impair our ability to complete contracts on a timely basis or at all.

We rely on third-party subcontractors

to perform some of the work on our contracts.

We also rely on third-party suppliers to provide materials needed to perform our obligations

under those contracts.

We generally do not bid on contracts unless we have the necessary subcontractors and suppliers committed for the

anticipated scope of the contract and at prices that we have included in our bid.

Therefore, to the extent that we cannot engage subcontractors

or suppliers, our ability to bid for contracts may be impaired.

In addition, if a subcontractor or third-party supplier is unable to deliver

its goods or services according to the negotiated terms for any reason, we may suffer delays and be required to purchase the services

from another source at a higher price.

We sometimes pay our subcontractors and suppliers before our customers pay us for the related services.

If customers fail to pay us and we choose, or are required, to pay our subcontractors for work performed or pay our suppliers for goods

received, we could suffer an adverse effect on our business, financial condition, results of operations and prospects.

Our insurance coverage may be inadequate

to cover all significant risk exposures.

We will be exposed to liabilities

that are unique to the services we provide.

While we intend to maintain insurance for certain risks, the amount of our insurance coverage

may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial costs resulting from risks and uncertainties

of our business.

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

The failure to

obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverse effect on our business, financial

condition, results of operations and prospects.

Risks Related to Our Industry

Our industry is highly competitive, with

a variety of larger companies with greater resources competing with us, and our failure to compete effectively could reduce the number

of new contracts awarded to us or adversely affect our market share and harm our financial performance.

The contracts on which we

bid are generally awarded through a competitive bid process, with awards generally being made to the lowest bidder, but sometimes based

on other factors, such as shorter contract schedules, larger scale to complete projects or prior experience with the customer.

our markets, we compete with many other service providers.

Price is often the principal factor in determining which service provider is

selected by our customers, especially on smaller, less complex projects.

As a result, any organization with adequate financial resources

and access to technical expertise may become a competitor.

Smaller competitors are sometimes able to win bids for these projects based

on price alone because of their lower costs and financial return requirements.

Additionally, our competitors may develop the expertise,

experience and resources to provide services that are equal or superior in price to our services, and we may not be able to maintain or

enhance our competitive position.

Some of our competitors have

already achieved greater market penetration than we have in the markets in which we compete, and some have greater financial and other

resources than we do.

A number of national companies in our industry are larger than we are and, if they so desire, could establish a

presence in our markets and compete with us for contracts.

As a result of this competition, we may need to accept lower contract margins

in order to compete against competitors that have the ability to accept awards at lower prices or have a pre-existing relationship with

If we are unable to compete successfully in our markets, our business, financial condition, results of operations and prospects

could be adversely affected.

Many of the customers we serve are subject

to consolidation and rapid technological and regulatory change, and our inability or failure to adjust to our customers’ changing

needs could reduce demand for our services.

We derive, and anticipate

that we will continue to derive, a substantial portion of our revenue from customers in the medical industry.

This industry is subject

to rapid changes in technology and governmental regulation.

Changes in technology may reduce the demand for the services we provide.

Additionally,

the medical industry has been characterized by a high level of consolidation that may result in the loss of one or more of our customers.

Our failure to rapidly adopt and master new technologies as they are developed in any of the industries we serve or the consolidation

of one or more of our significant customers could adversely affect our business, financial condition, results of operations and prospects.

Further, our customers are

regulated by the Department of Health and Human Services and other regulators.

These regulators may interpret the application of their

regulations in a manner that is different than the way such regulations are currently interpreted and may impose additional regulations,

either of which could reduce demand for our services and adversely affect our business and results of operations.

Economic downturns could cause capital expenditures

in the industries we serve to decrease, which may adversely affect our business, financial condition, results of operations and prospects.

The demand for our services

has been and may be vulnerable to general downturns in the United States economy.

Our customers are affected by economic changes that

decrease the need for or the profitability of their services.

This can result in a decrease in the demand for our services and potentially

result in the delay or cancellation of projects by our customers.

As a result, some of our customers may opt to defer or cancel pending

A downturn in overall economic conditions also affects the priorities placed on various projects funded by governmental entities

and federal, state and local spending levels.

In general, economic uncertainty makes it difficult to estimate our

customers’ requirements for our services.

Subject to receipt of sufficient funding, which we currently do not have, we plan to expand

our sales force to enable us to grow our revenues.

If economic factors in any of the regions in which we plan to expand are not favorable

to the growth and development of the medical industry, we may not be able to carry out our growth strategy, which could adversely

affect our business, financial condition, results of operations and prospects.

Risks Relating to Our Company and Results of Operations

operating results may fluctuate due to factors that are difficult to forecast and not within our control.

past operating results may not be accurate indicators of future performance, and you should not rely on such results to predict

our future performance.

operating results have fluctuated and could fluctuate in the future.

to the growth and development of the medical industry, we may not be able to carry out our growth strategy, which could adversely affect

our business, financial condition, results of operations and prospects.

Other Risks Relating to Our Company and Results

of Operations

Our operating results may fluctuate due

to factors that are difficult to forecast and not within our control.

Our past operating results

may not be accurate indicators of future performance, and you should not rely on such results to predict our future performance.

Our operating results have

fluctuated and could fluctuate in the future.

Factors that may contribute to fluctuations include:

ability to effectively manage our working capital;

ability to satisfy customer demands in a timely and cost-effective manner;

and availability of labor.

results could differ from the estimates and assumptions that we use to prepare our financial statements.

prepare financial statements in conformity with GAAP, management is required to make estimates and assumptions as of the date

of the financial statements that affect the reported values of assets and liabilities, revenues and expenses, and disclosures

of contingent assets and liabilities.

Areas requiring significant estimates by our management include:

costs and profits and revenue recognition of contract change order claims;

for uncollectible receivables and customer claims and recoveries of costs from subcontractors, suppliers and others;

of assets acquired and liabilities assumed in connection with business combinations;

for estimated liabilities, including litigation and insurance reserves;

and intangible asset impairment assessment.

the time the estimates and assumptions are made, we believe they are accurate based on the information available.

actual results could differ from, and could require adjustments to, those estimates.

exercise judgment in determining our provision for taxes in the United States that are subject to tax authority audit review that

could result in additional tax liability and potential penalties that would negatively affect our net income.

amounts we record in intercompany transactions for services, licenses, funding and other items affects our potential tax liabilities.

Our tax filings are subject to review or audit by the U.S.

our ability to effectively manage our working capital;

our ability to satisfy customer demands in a timely and cost-effective manner;

pricing and availability of labor.

Actual results could differ from the estimates

and assumptions that we use to prepare our financial statements.

To prepare financial statements

in conformity with GAAP, management is required to make estimates and assumptions as of the date of the financial statements that affect

the reported values of assets and liabilities, revenues and expenses, and disclosures of contingent assets and liabilities.

Areas requiring

significant estimates by our management include:

contract costs and profits and revenue recognition of contract change order claims;

for uncollectible receivables and customer claims;

● recoveries of costs from subcontractors, suppliers and others;

valuation of assets acquired and liabilities assumed in connection with business combinations;

accruals for estimated liabilities, including litigation and insurance reserves;

goodwill and intangible asset impairment assessment.

At the time the estimates

and assumptions are made, we believe they are accurate based on the information available.

However, our actual results could differ from,

and could require adjustments to, those estimates.

We exercise judgment in determining our

provision for taxes in the United States that are subject to tax authority audit review that could result in additional tax liability

and potential penalties that would negatively affect our net income.

The amounts we record in intercompany

transactions for services, licenses, funding and other items affects our potential tax liabilities.

Our tax filings are subject to review

or audit by the U.S.

Internal Revenue Service and state, local and foreign taxing authorities.

We exercise judgment in determining our worldwide provision for income and other taxes and, in the ordinary course of our business,

there may be transactions and calculations where the ultimate tax determination is uncertain.

Examinations of our tax returns

could result in significant proposed adjustments and assessment of additional taxes that could adversely affect our tax provision

and net income in the period or periods for which that determination is made.

Related to our Common Stock

common stock price has fluctuated substantially, and the trading price of our common stock is likely to continue to be volatile,

which could result in losses to investors and litigation.

addition to changes to market prices based on our results of operations and the factors discussed elsewhere in this “Risk

Factors”

section, the market price of and trading volume for our common stock may change for a variety of other reasons,

not necessarily related to our actual operating performance.

The capital markets have experienced extreme volatility that has

often been unrelated to the operating performance of particular companies.

These broad market fluctuations may adversely affect

the trading price of our common stock.

In addition, the average daily trading volume of the securities of small companies can

be very low, which may contribute to future volatility.

Factors that could cause the market price of our common stock to fluctuate

significantly include:

results of operating and financial performance and prospects of other companies in our industry;

actions by us or our competitors, such as acquisitions or restructurings;

announcements

of innovations, increased service capabilities, new or terminated customers or new, amended or terminated contracts by our

public’s reaction to our press releases, media coverage and other public announcements, and filings with the SEC;

conditions for providers of services to the medical industry;

of securities analyst coverage or speculation in the press or investment community about us or opportunities in the markets

in which we compete;

in government policies in the United States and, if our international business increases, in other foreign countries;

in earnings estimates or recommendations by securities or research analysts who track our common stock or failure of our actual

results of operations to meet those expectations;

caused by the conversion into common stock of convertible debt securities or by the exercise of outstanding warrants;

and industry perception of our success, or lack thereof, in pursuing our growth strategy;

in accounting standards, policies, guidance, interpretations or principles;

lawsuit involving us, our services or our products;

and departure of key personnel;

investigations of our business activities;

of common stock by us, our investors or members of our management team;

in general market, economic and political conditions in the United States and global economies or financial markets, including

those resulting from natural or man-made disasters.

of these factors, as well as broader market and industry factors, may result in large and sudden changes in the trading volume

of our common stock and could seriously harm the market price of our common stock, regardless of our operating performance.

may prevent stockholders from being able to sell their shares at or above the price they paid for shares of our common stock,

In addition, following periods of volatility in the market price of a company’s securities, stockholders often

institute securities class action litigation against that company.

Our involvement in any class action suit or other legal proceeding,

including the existing lawsuits filed against us and described elsewhere in this report, could divert our senior management’s

attention and could adversely affect our business, financial condition, results of operations and prospects.

sale or availability for sale of substantial amounts of our common stock could adversely affect the market price of our common

of substantial amounts of shares of our common stock, or the perception that these sales could occur, could adversely affect the

market price of our common stock and could impair our future ability to raise capital through common stock offerings.

As of December

31, 2020 and May 15, 2021, we had 9,895,600 and 10,029,433 shares of common stock issued and outstanding, respectively, of which

2,296,832 and 2,170,056 shares, respectively, were restricted securities pursuant to Rule 144 promulgated by the SEC.

of these shares into the open market may adversely affect the market price of our common stock.

of December 31, 2020 and May 15, 2021, there were outstanding warrants to purchase an aggregate of 675,091 and 765,552 shares

of our common stock, respectively, at a weighted-average exercise price of $8.95 and $8.37 per share, respectively, all of which

were exercisable as of such date.

The market price of our common stock also may be adversely affected by our issuance of shares

of our capital stock or convertible securities in connection with future acquisitions, or in connection with other financing efforts.

have never paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock.

have never paid cash dividends and do not anticipate paying any cash dividends on our common stock in the foreseeable future.

We currently intend to retain any earnings to finance our operations and growth.

As a result, any short-term return on your investment

will depend on the market price of our common stock, and only appreciation of the price of our common stock, which may never occur,

will provide a return to stockholders.

The decision whether to pay dividends will be made by our board of directors in light of

conditions then existing, including, but not limited to, factors such as our financial condition, results of operations, capital

requirements, business conditions, and covenants under any applicable contractual arrangements.

Investors seeking cash dividends

should not invest in our common stock.

equity research analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgrade

our common stock, the market price of our common stock will likely decline.

trading market for our common stock will rely in part on the research and reports that equity research analysts, over whom we

have no control, publish about us and our business.

We exercise judgment in determining our

worldwide provision for income and other taxes and, in the ordinary course of our business, there may be transactions and calculations

where the ultimate tax determination is uncertain.

Examinations of our tax returns could result in significant proposed adjustments and

assessment of additional taxes that could adversely affect our tax provision and net income in the period or periods for which that determination

Risks Related to our Common Stock

We may not be able to maintain the minimum $1.00 bid price per

share of our Common Stock, as required by the Nasdaq Stock Market, which could force us to implement a reverse stock split of our Common

From February 17, 2022 through

March 21, 2022 (22 trading days), our common stock traded below $1.00 per share, the minimum bid price per share required for continued

inclusion on the Nasdaq Stock Market.

There is a risk that the price per share of our Common Stock trades below $1.00 for thirty consecutive

days, in which case we will not be in compliance with the Nasdaq Stock Market’s requirements for continued inclusion, as a result

of which our common stock could be subject to delisting from Nasdaq.

In such an event, we would, subject to shareholder approval, implement

a reverse stock split so as to increase the price per share of our common stock on a post-split adjusted basis.

In such a case, there

is a risk that the price of our common stock could decline on a split-adjusted basis.

For example, if our common stock were trading at

$.80 per share and we implemented a 5/1 reverse stock split, there is a risk that our common stock could trade below $4.00 per share on

a split-adjusted basis.

Our common stock price has fluctuated substantially,

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

In addition to changes to

market prices based on our results of operations and the factors discussed elsewhere in this “Risk Factors” section, the market

price of and trading volume for our common stock may change for a variety of other reasons, not necessarily related to our actual operating

The capital markets have experienced extreme volatility that has often been unrelated to the operating performance of particular

These broad market fluctuations may adversely affect the trading price of our common stock.

In addition, the average daily

trading volume of the securities of small companies can be very low, which may contribute to future volatility.

Recently , the average

daily trading volume of our common stock has decreased.

Factors that could cause the market price of our common stock to fluctuate significantly

the results of operating and financial performance and prospects of other companies in our industry;

strategic actions by us or our competitors, such as acquisitions or restructurings;

announcements of innovations, increased service capabilities, new or terminated customers or new, amended or terminated contracts by our competitors;

the public’s reaction to our press releases, media coverage and other public announcements, and filings with the SEC;

market conditions for providers of services to the medical industry;

lack of securities analyst coverage or speculation in the press or investment community about us or opportunities in the markets in which we compete;

changes in government policies in the United States;

changes in earnings estimates or recommendations by any securities or research analysts who track our common stock or failure of our actual results of operations to meet any such expectations;

dilution caused by the conversion into common stock of convertible securities

or by the exercise of outstanding warrants or options;

market and industry perception of our success, or lack thereof, in pursuing our growth strategy;

changes in accounting standards, policies, guidance, interpretations or principles;

any lawsuit involving us, our services or our products;

arrival and departure of key personnel;

government investigations of our business activities;

sales of common stock by us, our investors or members of our management team;

changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.

Any of these factors, as well

as broader market and industry factors, may result in large and sudden changes in the trading volume of our common stock and could seriously

harm the market price of our common stock, regardless of our operating performance.

This may prevent stockholders from being able to sell

their shares at or above the price they paid for shares of our common stock, if at all.

In addition, following periods of volatility in

the market price of a company’s securities, stockholders often institute securities class action litigation against that company.

Our involvement in any class action suit or other legal proceeding, , could divert our senior management’s attention and could adversely

affect our business, financial condition, results of operations and prospects.

The sale or availability for sale of substantial

amounts of our common stock could adversely affect the market price of our common stock.

Sales of substantial amounts

of shares of our common stock, or the perception that these sales could occur, would likely adversely affect the market price of our common

stock and could impair our future ability to raise capital through common stock offerings.

As of December 31, 2021 we had 11,293,030 shares

of common stock issued and outstanding, of which 1,706,652 shares were restricted securities and eligible for sale pursuant

to Rule 144 promulgated by the SEC.

The sale of these shares into the open market may adversely affect the market price of our common

As of December 31, 2021, there

were outstanding warrants to purchase an aggregate of 1,043,525 shares of our common stock at a weighted-average exercise price of $2.57

per share, all of which were exercisable as of such date.

As of December 31, 2021, there were outstanding options to purchase an aggregate

of 118,388 shares of our common stock at a weighted-average exercise price of $3.25 per share, all of which were exercisable as of such

The market price of our common stock also may be adversely affected by our issuance of shares of our capital stock or convertible

securities in connection with future acquisitions, or in connection with our financing efforts.

We have never paid cash dividends on our

common stock and do not anticipate paying any cash dividends on our common stock.

We have never paid cash dividends

and do not anticipate paying any cash dividends on our common stock in the foreseeable future.

We currently intend to retain any earnings

to finance our operations and growth.

As a result, any short-term return on your investment will depend on the market price of our common

stock, and only appreciation of the price of our common stock, which may never occur, will provide a return to stockholders.

whether to pay dividends will be made by our board of directors in light of conditions then existing, including, but not limited to, factors

such as our financial condition, results of operations, capital requirements, business conditions, and covenants under any applicable

contractual arrangements.

Investors seeking cash dividends should not invest in our common stock.

If equity research analysts do not publish

research or reports about our business, or if they issue unfavorable commentary or downgrade our common stock, the market price of our

common stock will likely decline.

The trading market for our

common stock will rely in part on the research and reports that equity research analysts, over whom we have no control, publish about

us and our business.

We may never obtain research coverage by securities and industry analysts.

If no securities or industry analysts commence coverage of our company, the market price for price of our common stock could decline

if one or more equity analysts downgrade our common stock or if those our common stock could decline.

In the event we obtain securities

or industry analyst coverage, the market analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing

reports about us or our business.

failure by us to establish and maintain effective internal control over financial reporting could have a material adverse effect

on our business and operating results.

effective internal control over financial reporting is necessary for us to produce accurate and complete financial reports and

to help prevent financial fraud.

In addition, such control is required in order to maintain the listing of our common stock on

the Nasdaq Capital Market.

While we have undertaken remedial steps to improve our financial reporting process, including the implementation

of a firm-wide accounting information system that collects, stores and processes financial and accounting data on a consolidated

basis for use in meeting our reporting obligations, there are no assurances that our internal control over financial reporting

has been effective at any time since then.

For the year ended December 31, 2020, we did not have effective controls over financial

Our management has identified material weaknesses in our internal controls related to deficiency in the design of internal

controls and segregation of duties.

we are unable to maintain adequate internal controls or fail to correct material weaknesses in such controls noted by our management

or our independent registered public accounting firm, our business and operating results could be adversely affected, we could

again fail to meet our obligations to report our operating results accurately and completely and our continued listing on the

Nasdaq Capital Market could be jeopardized.

We have implemented a policy whereby any external communications need to be reviewed

and approved by a member of our Board of Directors, as well as our outside legal counsel.

with the laws and regulations affecting public companies will increase our costs and the demands on management and could harm

our operating results.

a public company and particularly after we cease to be an “emerging growth company,”

we will incur significant legal,

accounting, and other expenses.

In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and the Nasdaq

Capital Market impose various requirements on public companies, including requiring changes in corporate governance practices.

Our management and other personnel devote a substantial amount of time to these compliance initiatives.

Moreover, these rules

and regulations have increased and will continue to increase our legal, accounting, and financial compliance costs and have made

and will continue to make some activities more time-consuming and costly.

For example, these rules and regulations make it more

difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced

policy limits and coverage or to incur substantial costs to maintain the same or similar coverage.

These rules and regulations

could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees

or as executive officers.

we do not manage our planned growth effectively, our revenue, business and operating results may be harmed.

expansion strategy includes the possible acquisitions of other SaaS companies.

We may not be able to identify, secure and manage

future acquisitions successfully.

The acquisition of any future businesses may require a greater than anticipated investment of

operational and financial resources as we seek to institute uniform standards and controls across acquired businesses.

may also result in the diversion of management and resources, increases in administrative costs, including those relating to the

assimilation of new employees, and costs associated with any financings undertaken in connection with such acquisitions.

assure you that any acquisition we undertake, including those we have already made, will be successful.

Future growth will also

place additional demands on our management, sales, and marketing resources, and may require us to hire and train additional employees.

We will need to expand and upgrade our systems and infrastructure to accommodate our growth, and we may not have the resources

to do so in the time frames required.

The failure to manage our growth effectively will materially and adversely affect our business,

financial condition and results of operations.

may explore acquiring additional companies and such acquisitions may subject us to additional unknown risks.

may make future acquisitions of SaaS companies in markets that we do not serve now.

We may not be able to reach agreements with

such companies on favorable terms or at all.

In completing acquisitions, we will rely upon the representations and warranties

and indemnities made by the sellers with respect to each acquisition as well as our own due diligence investigation.

assure you that such representations and warranties will be true and correct or that our due diligence will uncover all materially

adverse facts relating to the operations and financial condition of the acquired companies or their businesses.

To the extent

that we are required to pay for undisclosed obligations of an acquired company, or if material misrepresentations exist, we may

not realize the expected economic benefit from such acquisition and our ability to seek legal recourse from the seller may be

value of our goodwill and other intangible assets may decline.

of December 31, 2020, there was goodwill of $8,366,467.

We evaluate goodwill at least annually,

and will do so more frequently if events or circumstances indicate that impairment may have occurred.

Many of the assumptions

and estimates that we make in order to estimate the fair value of our intangible assets directly impact the results of impairment

testing, including an estimate of future expected revenues, earnings and cash flows, and the discount rates applied to expected

We are able to influence the outcome and ultimate results based on the assumptions and estimates we choose for testing.

If no securities or industry analysts

commence coverage of our company, the market price for price of our common stock could decline .

In the event we obtain securities or

industry analyst coverage, the market analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing reports about

us or our business.

A failure by us to establish and maintain

effective internal control over financial reporting could have a material adverse effect on our business and operating results.

Maintaining effective internal

control over financial reporting is necessary for us to produce accurate and complete financial reports and to help prevent financial

In addition, such control is required in order to maintain the listing of our common stock on the Nasdaq Capital Market.

we have undertaken remedial steps to improve our financial reporting process, including the implementation of a firm-wide accounting information

system that collects, stores and processes financial and accounting data on a consolidated basis for use in meeting our reporting obligations,

our internal control over financial reporting has not been effective .

For the year ended December 31, 2021, we did not have effective

controls over financial reporting.

Our management has identified material weaknesses in our internal controls related to deficiency in

our ability to have proper segregation of duties.

If we are unable to maintain

adequate internal controls or fail to correct material weaknesses in such controls noted by our management or our independent registered

public accounting firm, our business and operating results could be adversely affected, we could again fail to meet our obligations to

report our operating results accurately and completely and our continued listing on the Nasdaq Capital Market could be jeopardized.

have implemented a policy whereby any external communications need to be reviewed and approved by a member of our Board of Directors,

as well as our outside legal counsel.

Complying with the laws and regulations

affecting public companies will increase our costs and the demands on management and could harm our operating results.

As a public company and particularly

after we cease to be an “emerging growth company,” we will incur significant additional legal, accounting, and other expenses.

In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and the Nasdaq Capital Market impose various requirements

on public companies, including requiring changes in corporate governance practices.

Our management and other personnel devote a substantial

amount of time to these compliance initiatives.

Moreover, these rules and regulations have increased and will continue to increase our

legal, accounting, and financial compliance costs and have made and will continue to make some activities more time-consuming and costly.

For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance,

and we may be required to accept reduced policy limits and coverage or to incur substantial costs to maintain the same or similar coverage.

These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of

directors or board committees or as executive officers.

If we do not manage our planned growth effectively,

our revenue, business and operating results may be harmed.

Our future expansion strategy

could include possible acquisitions of other SaaS companies.

We may not be able to identify, secure and manage future acquisitions successfully.

The acquisition of any future businesses may require a greater than anticipated investment of operational and financial resources as we

seek to institute uniform standards and controls across acquired businesses.

Acquisitions may also result in the diversion of management

and resources, increases in administrative costs, including those relating to the assimilation of new employees, and costs associated

with any financings undertaken in connection with such acquisitions.

We cannot assure you that any acquisition we undertake, including

those we have already made, will be successful.

Future growth will also place additional demands on our management, sales, and marketing

resources, and may require us to hire and train additional employees.

We will need to expand and upgrade our systems and infrastructure

to accommodate our growth, and we may not have the resources to do so in the time frames required.

The failure to manage any future growth

effectively will materially and adversely affect our business, financial condition and results of operations.

We may explore acquiring additional companies

and such acquisitions may subject us to additional unknown risks.

We may make future acquisitions

of SaaS or other companies in markets that we do not serve now.

We may not be able to reach agreements with such companies on favorable

terms or at all.

In completing acquisitions, we will rely upon the representations and warranties and indemnities made by the sellers

with respect to each acquisition as well as our own due diligence investigation.

We cannot assure you that such representations and warranties

will be true and correct or that our due diligence will uncover all materially adverse facts relating to the operations and financial

condition of the acquired companies or their businesses.

To the extent that we are required to pay for undisclosed obligations of an acquired

company, or if material misrepresentations exist, we may not realize the expected economic benefit from such acquisition and our ability

to seek legal recourse from the seller may be limited.

The value of our goodwill and other intangible

assets may decline.

As of December 31, 2021,

there was goodwill of $8,366,467.

We evaluate goodwill at least annually, and will do so more frequently if events or circumstances indicate

that impairment may have occurred.

Many of the assumptions and estimates that we make in order to estimate the fair value of our intangible

assets directly impact the results of impairment testing, including an estimate of future expected revenues, earnings and cash flows,

and the discount rates applied to expected cash flows.

We are able to influence the outcome and ultimate results based on the assumptions

and estimates we choose for testing.

To avoid undue influence, we have set criteria that are followed in making assumptions and estimates.

The determination of whether

goodwill or acquired intangible assets have become impaired involves a significant level of judgment in the assumptions underlying

the approach used to determine the value of our reporting unit.

Changes in our strategy or market conditions could significantly

impact these judgments and require adjustments to recorded amounts of intangible assets.

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

amortization expense.

future acquisitions are likely to result in issuances of equity securities, which will be dilutive to the equity interests of

existing stockholders, and may involve the incurrence of debt, which will require us to maintain cash flows sufficient to make

payments of principal and interest, the assumption of known and unknown liabilities, and the amortization of expenses related

to intangible assets, all of which could have an adverse effect on our business, financial condition and results of operations.

For example, the acquisition of SCWorx resulted in a change of control of our company involving the issuance of 5,263,158 shares

of common stock and 190,000 shares of Series A Preferred Stock, convertible into 500,000 shares of common stock (subject to adjustment),

and the issuance of warrants to purchase an additional 250,000 shares of common stock, at an exercise price of $5.70 per share.

may become involved in litigation which could harm the value of our business.

of the nature of our business and the exit from lines of business, there is a risk of litigation.

Any litigation could cause us

to incur substantial expenses whether or not we prevail, which would add to our costs and affect the capital available for our

refer to Item 3.

Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions

and investigations.

uncertainty impacts our business and financial results, and a renewed recession could materially affect us in the future.

of economic slowdown or recession could lead to a reduction in demand for our software and services, which in turn could reduce

our revenues and results of operations and adversely affect our financial position.

Our business will be dependent upon business

discretionary spending and therefore is affected by business confidence as well as the future performance of the United States

and global economies.

As a result, our results of operations are susceptible to economic slowdowns and recessions.

depend on the services of key executives, and the loss of these executives could materially harm our business and our strategic

direction if we were unable to replace them with executives of equal experience and capabilities.

future success significantly depends on the continued service and performance of our key management and other personnel, including

our President and COO, Timothy A.

We cannot prevent members of senior management from terminating their employment with

us even if we have an employment agreement with them.

Losing the services of members of senior management could materially harm

our business until a suitable replacement is found, and such replacement may not have equal experience and capabilities.

not purchased life insurance covering any members of our senior management.

markets in which we operate are highly competitive, rapidly changing and increasingly fragmented, and we may not be able to compete

effectively, especially against competitors with greater financial resources or marketplace presence.

face competition from other SaaS companies.

Many of the companies with which we will compete have greater financial and technical

resources than are available to us.

Our failure to compete effectively could result in a significant loss of customers, which

could adversely affect our operating results.

limited operating history makes forecasting our revenues and expenses difficult.

and operating results are difficult to forecast accurately because of our relatively limited operating history as a combined business,

which commenced in February of 2019, and because SCWorx’s results generally depend primarily on our ability to secure term

service/license agreements, which are subject to varying degrees of uncertainty.

As a result, we may be unable to adjust our spending

appropriately to compensate for any unexpected revenue shortfall, which may result in substantial losses and a lower market price

for our common stock.

The Company’s results will also depend on its ability to enter into agreements to acquire and sell

PPE and test kits.

We have encountered difficulty in securing reliable sources of supply of these products.

may need additional capital to support our operations or the growth of our business, and we cannot be certain that this capital

will be available on reasonable terms when required, or at all.

order for us to grow and execute our business plan successfully, we will likely require additional financing which may not be

available on acceptable terms or at all.

If such financing is available, it may be dilutive to the equity interests of existing

stockholders.

Failure to obtain financing will have a material adverse effect on our financial position.

If we are unable to obtain

adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support the operation

or growth of our business could be significantly impaired and our operating results may be harmed.

we fail to meet the continued listing standards and corporate governance requirements for Nasdaq Capital Market companies, we

may be subject to de-listing.

common stock is currently listed on the Nasdaq Capital Market.

In order to maintain this listing, we are required to comply with various

continued listing standards, including corporate governance requirements, set forth in the Nasdaq Listing Rules.

These standards and

requirements include, but are not limited to, maintaining a minimum bid price for our common stock, as well as having a majority of our

Board members qualify as independent.

If we fail to meet any one of these requirements for an extended period of time, we will be subject

to possible de-listing.

In addition, on January 4, 2021, The Nasdaq Stock Market notified us that due to our failure to hold our annual

meeting before December 31, 2020, we were no longer in compliance with their listing rule which requires us to hold our annual meeting

before December 31 of each year.

The Company intends to hold a Special Meeting in lieu of its 2020 Annual Meeting May 24, 2021, which

will have the effect of curing this deficiency.

Further on April 19, 2021 and April 21, 2021, the Nasdaq Stock Market

notified the Company that it was not in compliance with the Nasdaq’s rules for continued listing because the Company has not yet

filed its 10-K for the fiscal year ended December 31, 2020 (“2020 10-K”), as required by Nasdaq Rule 5250(c)(1) (the April

21 notification superseded the April 19 notification).

The most recent Nasdaq notice requires the Company to submit its plan to regain

compliance, no later than May 19, 2021.

The filing of this 10-K will cure this deficiency.

common stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common

stock and our ability to grow our business.

has been limited trading in our common stock, and there can be no assurance that an active trading market in our common stock

will either develop or be maintained.

Our common stock has experienced, and is likely to experience in the future, significant

price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating

In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall

economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially.

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

We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common

stock will be stable or that our share price will appreciate over time.

stock price has been volatile .

market price of our common stock has been highly volatile and could fluctuate widely in price in response to various factors,

many of which are beyond our control, including the following:

ability to obtain working capital financing;

or departures of key personnel;

of our common stock;

ability to execute our business plan;

results that fall below expectations;

developments;

and other external factors.

addition, the securities markets from time to time experience significant price and volume fluctuations that are unrelated to

the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market

price of our common stock.

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

periodic availability of shares for sale upon the expiration of any statutory holding period or lockup agreements, could create

a circumstance commonly referred to as an “overhang”, in anticipation of which the market price of our common stock

The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult

our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and

price that we deem reasonable or appropriate.

may be unable to establish, protect or enforce our intellectual property rights adequately.

success will depend in part on our ability to establish, protect and enforce our intellectual property and other proprietary rights.

Our inability to protect our tradenames, service marks and other intellectual property rights from infringement, piracy, counterfeiting

or other unauthorized use could negatively affect our business.

If we fail to establish, protect or enforce our intellectual property

rights, we may lose an important advantage in the market in which we compete.

Our intellectual property rights may not be sufficient

to help us maintain our position in the market and our competitive advantages.

Monitoring unauthorized uses of and enforcing our

intellectual property rights can be difficult and costly.

Legal intellectual property actions are inherently uncertain and may

not be successful, and may require a substantial amount of resources and management attention.

currently hosts our solution, serve our customers, and support 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.

in laws, regulations and other requirements could adversely affect our business, results of operations or financial condition.

are subject to the laws, regulations and other requirements of the jurisdictions in which we operate.

Changes to these laws could

have a material adverse impact on the revenue, profit or the operation of our business.

in our information technology systems or security breaches of confidential customer information or personal employee information

could have an adverse impact on our operations.

operations are dependent upon the integrity, security and consistent operation of various information technology systems and data

centers that process transactions, communication systems and various other software applications used throughout our operations.

Disruptions in these systems could have an adverse impact on our operations.

We could encounter difficulties in developing new

systems or maintaining and upgrading existing systems.

Such difficulties could lead to significant expenses or to losses due to

disruption in our business operations.

addition, our information technology systems are subject to the risk of infiltration or data theft.

The techniques used to obtain

unauthorized access, disable or degrade service, or sabotage information technology systems change frequently and may be difficult

to detect or prevent over long periods of time.

Moreover, the hardware, software or applications we develop or procure from third

parties may contain defects in design or manufacture or other problems that could unexpectedly compromise the security of our

information systems.

Unauthorized parties may also attempt to gain access to our systems or facilities through fraud or deception

aimed at our employees, contractors or temporary staff.

In the event that the security of our information systems is compromised,

confidential information could be misappropriated, and system disruptions could occur.

Any such misappropriation or disruption

could cause significant harm to our reputation, lead to a loss of sales or profits or cause us to incur significant costs to reimburse

third parties for damages.

current insurance policies may not provide adequate levels of coverage against all claims, and we may incur losses that are not

covered by our insurance.

believe we maintain insurance coverage that is customary for businesses of our size and type;

however, we may be unable to insure

against certain types of losses or claims, or the cost of such insurance may be prohibitive.

For example, although we carry insurance

for breaches of our computer network security, there can be no assurance that such insurance will cover all potential losses or

claims or that the dollar limits of such insurance will be sufficient to provide full coverage against all losses or claims.

losses or claims, if they occur, could have a material adverse effect on our financial condition, business and results of operations.

may be required to pay for the defense of our clients, officers, or directors in accordance with certain indemnification provisions.

company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made

by third parties arising from the use of our services.

In accordance with authoritative guidance for accounting for guarantees,

we evaluate estimated losses for such indemnification.

Management considers such factors as the degree of probability of an unfavorable

outcome and the ability to make a reasonable estimate of the amount of loss.

To date, no such claims have been filed against our

company and, as a result, no liability has been recorded in our financial statements.

permitted under Delaware law, our company has agreements whereby we indemnify our officers and directors for certain events or

occurrences while the officer or director is, or was, serving at our company’s request in such capacity.

The maximum potential

amount of future payments we could be required to make under these indemnification agreements is unlimited;

however, we have directors’

and officers’

liability insurance coverage that is intended to reduce our financial exposure and may enable us to recover

a portion of any such payments.

connection with the Class Action claims and investigations described in Item 3.

Legal Proceedings of this Annual Report on Form

10-K, we are obligated to indemnify our officers and directors for costs incurred in defending against these claims and investigations.

Because we currently do not have the resources to pay for these costs, our 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.

Ultimately, we

will be obligated to pay the amount of the retention to the extent of actual settlement and defense costs, which payments could

have a material adverse effect on the Company.

refer to Item 3.

Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the various actions and investigations

for which we are obligated to indemnify our officers and directors.

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 determination of whether goodwill or acquired intangible assets have become impaired involves a significant level of judgment in the

assumptions underlying the approach used to determine the value of our reporting unit.

Changes in our strategy or market conditions could

significantly impact these judgments and require adjustments to recorded amounts of intangible assets.

Any future acquisitions may result in potentially

dilutive issuances of equity securities, the incurrence of indebtedness and increased amortization expense.

Any future acquisitions are

likely to result in issuances of equity securities, which will be dilutive to the equity interests of existing stockholders, and may involve

the incurrence of debt, which will require us to maintain cash flows sufficient to make payments of principal and interest, the assumption

of known and unknown liabilities, and the amortization of expenses related to intangible assets, all of which could have an adverse effect

on our business, financial condition and results of operations.

For example, the acquisition of SCWorx resulted in a change of control

of our company involving the issuance of 5,263,158 shares of common stock and 190,000 shares of Series A Preferred Stock, convertible

into 500,000 shares of common stock (subject to adjustment), and the issuance of warrants to purchase an additional 250,000 shares of

common stock, at an exercise price of $5.70 per share.

We may become involved in litigation which

could harm the value of our business.

Because of the nature of our

business and the exit from lines of business, there is a risk of litigation.

Any litigation could cause us to incur substantial expenses

whether or not we prevail, which would reduce the capital available for our operations.

Please refer to Item 3.

Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions and investigations.

Economic uncertainty impacts our business

and financial results, and a renewed recession could materially affect us in the future.

Periods of economic slowdown

or recession could lead to a reduction in demand for our software and services, which in turn would reduce our revenues and adversely

affect our results of operations and our financial position.

Our business will be dependent upon business discretionary spending and therefore

is affected by business confidence as well as the future performance of the United States and global economies.

As a result, our results

of operations are susceptible to economic slowdowns and recessions.

We depend on the services of key executives

and consultants, and the loss of these persons could materially harm our business and our strategic direction if we were unable to replace

them with persons of equal experience and capabilities.

Our future success significantly

depends on the continued service and performance of our key management and other personnel.

We cannot prevent members of senior management/consultants

from terminating their employment with us even if we have an employment or consulting agreement with them.

Losing the services of members

of senior management/consultants could materially harm our business until a suitable replacement is found, and such replacement may not

have equal experience and capabilities.

We have not purchased life insurance covering any members of our senior management.

The markets in which we operate are highly

competitive, rapidly changing and increasingly fragmented, and we may not be able to compete effectively, especially against competitors

with greater financial resources or marketplace presence.

We face competition from other

SaaS companies.

Many of the companies with which we will compete have greater financial and technical resources than are available to

Our failure to compete effectively could result in a significant loss of customers, which would adversely affect our operating results.

We need additional capital to support our

operations and the growth of our business, and we cannot be certain that this capital will be available on reasonable terms when required,

In order for us to grow and

execute our business plan successfully, we require additional financing which may not be available on acceptable terms or at all.

If such financing is available, it may be dilutive to the equity interests of existing stockholders.

Failure to obtain financing will

have a material adverse effect on our financial position.

If we are unable to obtain adequate financing or financing on terms satisfactory

to us when we require it, our ability to continue to support the operation or growth of our business could be significantly impaired and

our operating results may be harmed.

If we fail to meet the continued listing

standards and corporate governance requirements for Nasdaq Capital Market companies, we may be subject to de-listing.

Our common stock is currently

listed on the Nasdaq Capital Market.

In order to maintain this listing, we are required to comply with various continued listing standards,

including corporate governance requirements, set forth in the Nasdaq Listing Rules.

These standards and requirements include, but are

not limited to, maintaining a minimum bid price for our common stock, as well as having a majority of our Board members qualify as independent.

If we fail to meet any one of these requirements for an extended period of time, we will be subject to possible de-listing.

Our common stock may be affected by limited

trading volume and price fluctuations, which could adversely impact the value of our common stock and our ability to grow our business.

There has been limited trading

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

Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely

affect the market price of our common stock without regard to our operating performance.

In addition, we believe that factors such as

quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause

the price of our common stock to fluctuate substantially.

These fluctuations may also cause short sellers to enter the market periodically

in the belief that we will have poor results in the future.

We cannot predict the actions of market participants and, therefore, can offer

no assurances that the market for our common stock will be stable or that our share price will appreciate over time.

Our stock price has been volatile .

The market price of our common

stock has been highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control,

including the following:

our ability to obtain working capital financing;

additions or departures of key personnel;

sales of our common stock;

our ability to execute our business plan;

operating results that fall below expectations;

regulatory developments;

economic and other external factors.

In addition, the securities

markets from time to time experience significant price and volume fluctuations that are unrelated to the operating performance of particular

These market fluctuations may also materially and adversely affect the market price of our common stock.

Offers or availability for sale of a substantial

number of shares of our common stock may cause the price of our common stock to decline.

The periodic availability

of shares for sale upon the expiration of any statutory holding period or lockup agreements, could create a circumstance commonly referred

to as an “overhang”, in anticipation of which the market price of our common stock could fall.

The existence of an overhang,

whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through

the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

We may be unable to establish, protect or

enforce our intellectual property rights adequately.

Our success will depend in

part on our ability to establish, protect and enforce our intellectual property and other proprietary rights.

Our inability to protect

our tradenames, service marks and other intellectual property rights from infringement, piracy, counterfeiting or other unauthorized use

could negatively affect our business.

If we fail to establish, protect or enforce our intellectual property rights, we may lose an important

advantage in the market in which we compete.

Our intellectual property rights may not be sufficient to help us maintain our position in

the market and our competitive advantages.

Monitoring unauthorized uses of and enforcing our intellectual property rights can be difficult

Legal intellectual property actions are inherently uncertain and may not be successful, and may require a substantial resources

and management attention.

We currently host our solution,

serve our customers, and support our operations in the United States through an agreement with a third party hosting and infrastructure

provider, Rackspace.

We incorporate standard IT security measures, including but not limited to;

firewalls, disaster recovery,

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.

Changes in laws, regulations and other requirements

could adversely affect our business, results of operations or financial condition.

We are subject to the laws,

regulations and other requirements of the jurisdictions in which we operate.

Changes to these laws could have a material adverse impact

on the revenue, profit or the operation of our business.

Disruptions in our information technology

systems or security breaches of confidential customer information or personal employee information could have an adverse impact on our

Our operations are dependent

upon the integrity, security and consistent operation of various information technology systems and data centers that process transactions,

communication systems and various other software applications used throughout our operations.

Disruptions in these systems could have

an adverse impact on our operations.

We could encounter difficulties in developing new systems or maintaining and upgrading existing systems.

Such difficulties could lead to significant expenses or to losses due to disruption in our business operations.

In addition, our information

technology systems are subject to the risk of infiltration or data theft.

The techniques used to obtain unauthorized access, disable or

degrade service, or sabotage information technology systems change frequently and may be difficult to detect or prevent over long periods

Moreover, the hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture

or other problems that could unexpectedly compromise the security of our information systems.

Unauthorized parties may also attempt to

gain access to our systems or facilities through fraud or deception aimed at our employees, contractors or temporary staff.

that the security of our information systems is compromised, confidential information could be misappropriated, and system disruptions

Any such misappropriation or disruption could cause significant harm to our reputation, lead to a loss of sales or profits

or cause us to incur significant costs to reimburse third parties for damages.

Our current insurance policies may not provide

adequate levels of coverage against all claims, and we may incur losses that are not covered by our insurance.

We believe we maintain insurance

coverage that is customary for businesses of our size and type;

however, we may be unable to insure against certain types of losses or

claims, or the cost of such insurance may be prohibitive.

For example, although we carry insurance for breaches of our computer network

security, there can be no assurance that such insurance will cover all potential losses or claims or that the dollar limits of such insurance

will be sufficient to provide full coverage against all losses or claims.

Uninsured losses or claims, if they occur, could have a material

adverse effect on our financial condition, business and results of operations.

Our Insurance policies may also be subject to substantial

deductibles/retentions.

We may be required to pay for the defense

of our clients, officers, or directors in accordance with certain indemnification provisions.

Our company provides indemnification

of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use

of our services.

In accordance with authoritative guidance for accounting for guarantees, we evaluate estimated losses for such indemnification.

Management considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate

of the amount of loss.

To date, no such claims have been filed against our company and, as a result, no liability has been recorded in

our financial statements.

As permitted under Delaware

law, our company has agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or

director is, or was, serving at our company’s request in such capacity.

The maximum potential amount of future payments we could

be required to make under these indemnification agreements is unlimited;

however, we have directors’ and officers’ liability

insurance coverage that is intended to reduce our financial exposure and may enable us to recover a portion of any such payments.

Please refer to Item 3.

Proceedings of this Annual Report on Form 10-K for a detailed description of the various actions and investigations for which we are obligated

to indemnify our officers and directors.

Unresolved Staff Comments

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 1A. Risk Factors