What changed in this filing

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Item 9A. Controls and Procedures

2022-03-31 compared with 2021-05-19 · 1476 added, 1733 removed, 197 unchanged (94% of the section changed)

Controls and Procedures

Management’s

Conclusions Regarding Effectiveness of Disclosure Controls and Procedures

conducted an evaluation of the effectiveness of our “disclosure controls and procedures”

(“Disclosure Controls”),

as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange

Act”), as of December 31, 2020, the end of the period covered by this Annual Report on Form 10-K, as required

by Rules 13a-15(b) and 15d-15(b) of the Exchange Act.

The Disclosure Controls evaluation was done under the supervision and with

the participation of management, including our President/COO and Chief Financial Officer, based on the 2013 framework and criteria

established by the Committee of Sponsoring Organizations of the Treadway Commission.

There are inherent limitations to the effectiveness

of any system of disclosure controls and procedures.

Accordingly, even effective disclosure controls and procedures can only provide

reasonable assurance of achieving their control objectives.

Based upon this evaluation, our President and Chief Financial Officer

concluded that, due to deficiencies in the design of internal controls and lack of segregation of duties, our Disclosure Controls

were not effective as of December 31, 2020, such that the information required to be disclosed by us in reports filed under

the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s

rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal

financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.

Report on Internal Controls over Financial Reporting

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

and segregation of duties.

Management is planning to meet with the Audit Committee to discuss remediation efforts, which are expected

to be resolved during 2021, or until such time as management is able to conclude that its remediation efforts are designed and

operating effectively.

Our management is actively looking for additional accounting and finance personnel to assist in the remediation

Notwithstanding

the foregoing, our management, including our President and Chief Financial Officer, have concluded that the consolidated financial

statements included in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results

of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United

may in the future identify other material weaknesses or significant deficiencies in connection with our internal control over

Management’s Conclusions Regarding Effectiveness

of Disclosure Controls and Procedures

Management conducted an evaluation

of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and

15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2021, the

end of the period covered by this Annual Report on Form 10-K, as required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act.

Disclosure Controls evaluation was done under the supervision and with the participation of management, including our Chief Executive

Officer and Chief Financial Officer, based on the 2013 framework and criteria established by the Committee of Sponsoring Organizations

of the Treadway Commission.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures.

even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to deficiencies caused by a lack of segregation

of duties, our Disclosure Controls were not effective as of December 31, 2021, such that the information required to be disclosed

by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified

in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive

and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosure.

Management Report on Internal Controls over

Financial Reporting

Material weaknesses and significant deficiencies that may be identified in the future will need to be addressed

as part of our quarterly and annual evaluations of our internal controls over financial reporting under Sections 302 and 404

of the Sarbanes-Oxley Act.

Any future disclosures of a material weakness, or errors as a result of a material weakness, could

result in a negative reaction in the financial markets and a decrease in the price of our common stock.

in Internal Control over Financial Reporting.

the year ended December 31, 2020, the Company hired a new CFO to manage financial reporting, increase the segregation of

duties, and implement increased financial controls.

Our management has identified

material weaknesses in our internal controls related to a lack of segregation of duties.

Management continues to work with the Audit Committee

to discuss remediation efforts, which are expected to be resolved during 2022,.

Our management is actively looking

for additional accounting and finance personnel to assist in the remediation efforts.

Notwithstanding the foregoing,

our management, including our Chief Executive Officer and Chief Financial Officer, have concluded that the consolidated financial statements

included in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations and

cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

We may in the future identify

other material weaknesses or significant deficiencies in connection with our internal control over financial reporting.

Material weaknesses

and significant deficiencies that may be identified in the future will need to be addressed as part of our quarterly and annual evaluations

of our internal controls over financial reporting under Sections 302 and 404 of the Sarbanes-Oxley Act.

Any future disclosures of

a material weakness, or errors as a result of a material weakness, could result in a negative reaction in the financial markets and a

decrease in the price of our common stock.

Changes in Internal Control over Financial

Other Information

Directors, Executive Officers and Corporate Governance

following table presents information with respect to our officers, directors and significant employees as of the date of filing

of this Report:

& Chief Operating Officer

Financial Officer

of Officers and Directors

following is a brief account of the education and business experience during at least the past five years of our officers and

directors, indicating each person’s principal occupation during that period, and the name and principal business of the

organization in which such occupation and employment were carried out.

Hannibal has over 29 years’

experience in SaaS and cloud technology, driving revenue, go-to-market strategies, mergers and

acquisitions and executive management.

Hannibal Joined the Company in January 2019 as our Chief Revenue Officer.

He was appointed

interim Chief Financial Officer on June 10, 2020.

On August 10, 2020, Mr.

Hannibal was appointed President, Chief Operating Officer

and a member of the Board of Directors.

Disclosure Regarding

Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and

Corporate Governance

The following table presents

information with respect to our officers, directors and significant employees as of the date of filing of this Report:

President & Chief Executive Officer

Chief Financial Officer

Steven Horowitz

Steven Wallitt

Background of Officers and Directors

The following is a brief account

of the education and business experience during at least the past five years of our officers and directors, indicating each person’s

principal occupation during that period, and the name and principal business of the organization in which such occupation and employment

were carried out.

Hannibal is a seasoned

technology executive and entrepreneur, with nearly 30 years’ experience in SaaS and cloud technology, driving revenue, go-to-market strategies,

business development and mergers and acquisitions.

Hannibal joined the Company in January 2019 and currently serves as its

Chief Executive Officer.

Prior to joining the Company, Mr.

Hannibal was an executive at Primrose Solutions (the

predecessor to the SCWorx) which he joined in September of 2016.

Hannibal was an employee at Primrose Solutions (the predecessor to SCWorx) which

he joined in September of 2016.

At Primrose, Mr.

Hannibal was responsible for overseeing marketing,

sales and operations, including executing the Company’s business plan.

Hannibal has a successful track record of growth

and management at both startup and national companies.

Prior to joining Primrose, Mr.

Hannibal was the President and CEO of VaultLogix,

a company he founded, for thirteen years.

VaultLogix was a leading SaaS company in the cloud backup industry before being acquired

by J2 Global.

Kohler was appointed CFO on November 1, 2020, at which time Mr.

Hannibal was responsible for overseeing marketing, sales and operations, including

executing the Company’s business plan.

Hannibal has a successful track record of growth and management at both startup

and national companies.

Prior to joining Primrose,

Hannibal was the President and CEO of VaultLogix for thirteen years, a company he founded.

VaultLogix was a private equity

sponsored leading SaaS company in the cloud backup industry before being acquired by J2 Global, a publicly traded technology company ($3.2b

market cap) focused on cloud services and digital media.

Kohler was appointed CFO

on November 1, 2020, at which time Mr.

Hannibal resigned as Interim CFO.

Kohler has over 15 years

of experience serving in a wide variety roles in the finance and accounting sectors.

Kohler is the founder and CEO of Kohler

Consulting, Inc., which he founded in 2012.

Kohler has over 15 years of experience serving in a wide

variety roles in the finance and accounting sectors.

Kohler is the founder and CEO of Kohler Consulting, Inc., which he founded in

The firm, through Mr.

Kohler, provides outsourced CFO and advisory services to private

and public companies, with a focus on small cap and start-up businesses.

Irby is a co-founder of London Bay Capital and has been Chairman of the firm Since 2006.

London Bay Capital makes investments

in private companies, and also provides business advisory services.

Irby is a seasoned executive with a highly successful

track record in the financial services and investment banking industries in both the UK and the US from 1982 to the present.

Irby has served on the boards on several public and private companies including 17 years as a director of The McKesson Corporation

chairing both the Compensation and Finance Committees.

Schessel, is SCWorx’s founder and former Chief Executive Officer.

He continues to serve on the Board of Directors, though

he has not been renominated to serve on the Board after the Special Meeting in lieu of 2020 Annual Meeting to be held in May 2021.

He also serves as a consultant to the Company.

He founded SCWorx’s predecessor (Primrose LLC) in 2012 and has been Chairman

and CEO of SCWorx since then.

Commencing his work in supply chain during his ten years in the Marine Corps, Mr.

Schessel was awarded

the Naval Achievement medal along with the Naval Commendation medal for services rendered in creating the first automated supply

and logistics software (M triple S) which was ultimately put in service at leading corporations such as Sears and IBM.

Since leaving

the Marine Corps, Mr.

Schessel has continued his work in refining programmatic solutions for the most complex and critical supply

chains in the country — the healthcare industry.

Working in all facets of the Healthcare Supply Chain, Mr.

Schessel spent over ten years as a Vice President of Supply Chain for a large NYC based Integrated Delivery Network before forming

his own consultancy — focused on delivering automated solutions to Providers, Business-to-Business (B2B) e-commerce

companies (GHX), tier one consulting firms, GPOs, distributors, payors and manufacturers.

Schessel also served as a consultant

to the United Nations — developing an automated Emergency Medical Response program that, based on the event,

forecasts the items, quantities and logistical delivery networks crucial for responders, allowing countries by region to better

plan, stock and store critical supplies.

Shefts, has served as a director and a member of our audit committee, compensation committee and nominating committee since May

Shefts was a member of the board of directors and chairman of the audit committee of Alliance MMA, Inc.

2016 to October 2017.

Kohler, provides outsourced CFO and advisory services to private and public companies, with a focus on small

cap and start-up businesses.

Irby was appointed

to the Board of Directors on March 10, 2021.

Alton Irby is a co-founder of London Bay Capital and has been Chairman of the firm

London Bay Capital makes investments in private companies, and also provides business advisory services.

a seasoned executive with a highly successful track record in the financial services and investment banking industries in both the UK

and the US from 1982 to the present.

Irby has served on the boards of several public and private companies including 17 years

as a director of The McKesson Corporation chairing both the Compensation and Finance Committees.

Mr Ferrara was appointed to

the Board of Directors in August 2021.

Ferrara has been the CFO of several public, private and private equity portfolio

companies primarily in media, technology, financial and information services.

John is also an experienced Corporate Director, having served

on the Boards and Audit Committees of several publicly traded companies and a Not-For-Profit.

Since 2017, John has been

a partner at CFO Performance Partners, a professional services firm that provides CFO services, strategic and financial consulting and

project management services.

From 2019 to 2020, he was CFO of Wild Sky Media a PE owned digital media company.

Prior to joining CFO Performance

Partners, John was the CFO of Cartesian, Inc., a Nasdaq company, from 2015 to 2017.

From 2013 to 2015, he was CFO of the Street, Inc.,

a Nasdaq Company.

John has an MBA in Finance

from Columbia University and a BS in Accounting from the University of Maryland and began his career at a Big 4 public accounting firm

before moving on to financial positions at two Fortune 500 companies.

John is a member of Financial Executives Institute (FEI) and Executive

Forum and a former member of the National Association of Corporate Directors (NACD) and the American Institute of Certified Public Accountants

Steven Horowitz

Horowitz was appointed

to the Board of Directors in August 2021.

Since 2012, Mr.

Shefts has served as the Chief Executive Officer of The Rushcap Group, Inc., a privately

held investment and consulting firm.

Horowitz has served as Chief Financial Officer of CareCentrix, a multi-billion dollar

health care services company.

Horowitz directs all of CareCentrix’s financial activities, including financial planning,

accounting and financial reporting.

Prior to joining CareCentrix,

Steve was the Vice President of business planning for Medco Health Solutions, a Fortune 50 pharmacy benefit manager.

In this role, Steve

was the CFO for three key U.S.-based divisions as well as all international markets, which together generated over $2 billion

in annual revenue.

Previously, Steve held the position of controller at National Medical Health Card Systems, a pharmacy benefit manager,

and at The Fantastic Corporation, a global broadband multimedia corporation.

Earlier, Steve was CFO at the Mount Vernon Neighborhood Health

Steve received his MBA from

Adelphi University and earned his BS in business management from Cornell University.

He is a licensed CPA and Chartered Global Management

Accountant (CGMA).

Steve is a member of the American Institute of Certified Public Accountants (AICPA), the National Association of Corporate

Directors (NACD) and the Wall Street Journal CFO Network.

Steven Wallitt

Wallitt, has worked as

owner and director of a packaging materials company since 1981.

He is responsible for decision making in all areas of the company, including

sourcing the best and most efficient methods for achieving maximum profitability and the highest quality standards.

He has extensive knowledge

in evaluating sales and marketing proposals.

Beginning in 2008, he has been an investor in both private and public companies, as well

as early-stage public companies with personal investments of $50,000 to more than $3,000,000.

He has consulted for many of these companies

in areas ranging from public market strategies, growth strategies, evaluating contract proposals, cost control and evaluating employee

responsibilities in order to achieve maximum efficiencies.

Since 2014, Mr.

Shefts has served as a Trustee of The Onyx & Breezy Foundation, a non-profit

organization.

Previously, Mr.

Shefts was the Director, President and co-owner of All-Tech Investment Group Inc., from 1987 to

2001, and Domestic Securities, Inc., from 1993 to 2011, each an SEC-registered broker dealer.

Shefts has previously owned

seats on both the New York Stock Exchange and the Chicago Stock Exchange.

Shefts has been an arbitrator for the American Arbitration

Association and FINRA Dispute Resolution, Inc.

with an area of specialization in the field of financial services.

held FINRA Series 7, 24 and 63 licenses and a Series 27 qualification as a Financial and Operations Principal.

Shefts is also

certified as Financial Services Auditor and a Certified Fraud Examiner.

Shefts has been a Director, EVP & Chief Financial

officer of Arbor Entech Corp.

and Solar Products Sun-Tank, Inc., each a publicly traded company.

Shefts holds a BS in accounting

from Brooklyn College of The City University of New York.

Wallitt, has worked as owner and director of a packaging materials company since 1981.

He is responsible for decision making in

all areas of the company, including sourcing the best and most efficient methods for achieving maximum profitability and the highest

quality standards.

He has extensive knowledge in evaluating sales and marketing proposals.

Beginning in 2008, he has been an investor

in both private and public companies, as well as early-stage public companies with personal investments of $50,000 to more than

He has consulted for many of these companies in areas ranging from public market strategies, growth strategies, evaluating

contract proposals, cost control and evaluating employee responsibilities in order to achieve maximum efficiencies.

Wallitt has been an advisory board member to Redtower Capital, a California-based investment firm where he advises on all

aspects of client identification, sales and marketing strategies and profit maximization.

Since 2017, he has been a significant

investor in Alliance MMA and SCWorx.

Wallitt has been an advisory board member to Redtower Capital,

a California-based investment firm where he advises on all aspects of client identification, sales and marketing strategies and profit

maximization.

Wallitt holds a BA degree in communications from Rider College, Lawrenceville, NJ.

of Business Conduct and Ethics

have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer,

principal accounting officer or controller or persons performing similar functions and also to other employees.

Our Code of Business

Conduct can be found on our website at www.SCWorx.com.

Relationships

are no family relationships between any of our directors, executive officers or significant employees, except that Mr.

who is currently a director, is the father-in-law of Chad Otens and Theodore Dembowski, two of our significant software developers.

in Certain Legal Proceedings

the past ten years, none of our officers, directors, significant employees or control persons have been involved in any legal

proceedings as described in Item 401(f) of Regulation S-K.

Board of Directors currently consists of five directors.

Each director will serve in office until the Special Meeting in lieu

of 2020 annual meeting of stockholders (to be held in May 2021) or until their successors have been duly elected and qualified,

or until the earlier of their respective death, resignation or removal

certificate of incorporation provides that that the number of authorized directors will be determined in accordance with our bylaws.

Our bylaws provide that the number of authorized directors shall be determined from time to time by a resolution of the Board

of Directors, and any vacancies in our board and newly created directorships may be filled only by our Board of Directors.

of our directors are elected on an annual basis to serve until the next annual meeting of shareholders or until the earlier of

their death, resignation or removal.

of the Board of Directors

Board of Directors has established an audit committee, a compensation committee and a nominating and governance committee.

of these committees will operate under a charter that has been approved by our Board of Directors.

have a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

The Audit Committee has authority to review our financial records, engage with our independent auditors, recommend policies with

respect to financial reporting to the Board of Directors and investigate all aspects of our business.

The members of the audit

committee are Mr.

Wallitt and Mr.

The audit committee consists exclusively of directors who are financially

In addition, Mr.

Shefts will be considered an “audit committee financial expert”

as defined by the SEC’s

rules and regulations.

All members of the Audit Committee currently satisfy the independence requirements and other established

criteria of Nasdaq.

Compensation Committee oversees our executive compensation and recommends various incentives for key employees to encourage and

reward increased corporate financial performance, productivity and innovation.

Code of Business Conduct and Ethics

We have adopted a Code of

Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer

or controller or persons performing similar functions and also to other employees.

Our Code of Business Conduct can be found on our website

at www.SCWorx.com.

Family Relationships

There are no family relationships

between any of our directors, executive officers or significant employees.

Involvement in Certain Legal Proceedings

During the past ten years,

none of our officers, directors, significant employees or control persons have been involved in any legal proceedings as described in

Item 401(f) of Regulation S-K.

Board Composition

The Board of Directors currently

consists of five directors.

Each director will serve in office until the next annual meeting of stockholders or until their successors

have been duly elected and qualified, or until the earlier of their death, resignation or removal.

Our certificate of incorporation

provides that that the number of authorized directors will be determined in accordance with our bylaws.

Our bylaws provide that the number

of authorized directors shall be determined from time to time by a resolution of the Board of Directors, and any vacancies in our board

and newly created directorships may be filled only by our Board of Directors.

Term of Office

All of our directors are elected

on an annual basis to serve until the next annual meeting of shareholders or until the earlier of their death, resignation or removal.

Committees of the Board of Directors

Our Board of Directors has

established an audit committee, a compensation committee and a nominating and governance committee.

Each of these committees operates

under a charter that has been approved by our Board of Directors.

Audit Committee

We have a separately-designated

standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.

The Audit Committee has authority to

review our financial records, engage with our independent auditors, recommend policies with respect to financial reporting to the Board

of Directors and investigate all aspects of our business.

The members of the audit committee are Mr.

Horowitz (chair), Mr.

The audit committee consists exclusively of directors who are financially literate.

In addition, each of Mr.

Ferrara is considered an “audit committee financial expert” as defined by the SEC’s rules and regulations.

of the Audit Committee currently satisfy the independence requirements and other established criteria of Nasdaq.

Compensation Committee

The Compensation Committee

oversees our executive compensation and recommends various incentives for key employees to encourage and reward increased corporate financial

performance, productivity and innovation.

The members of the compensation committee are Mr.

Shefts and Mr.

and Governance Committee

Nominating and Corporate Governance Committee identifies and nominates candidates for membership on the Board of Directors, oversees

Board of Directors’

committees, advises the Board of Directors on corporate governance matters and any related matters required

by the federal securities laws.

Irby (chair), Mr.

Horowitz and Mr.

Nominating and Governance Committee

The Nominating and Corporate

Governance Committee identifies and nominates candidates for membership on the Board of Directors, oversees Board of Directors’

committees, advises the Board of Directors on corporate governance matters and any related matters required by the federal securities

The members of the Nominating Committee are Mr.

Shefts and Mr.

Wallitt, and all currently satisfy

the independence requirements and other established criteria of Nasdaq.

Nominating and Governance Committee will consider stockholder recommendations for candidates for the Board of Directors.

bylaws provide that, in order for a stockholder’s nomination of a candidate for the board to be properly brought before

an annual meeting of the stockholders, the stockholder’s nomination must be delivered to the Secretary of our company no

later than 120 days prior to the one-year anniversary date of the prior year’s annual meeting.

for all three committees are available on our website at www.SCWorx.com.

in Nominating Procedures

16(a) Beneficial Ownership Reporting Compliance

16(a) of the Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of a registered

class of our equity securities to file with the SEC initial statements of beneficial ownership, statements of changes in beneficial

ownership and annual statements of changes in beneficial ownership with respect to their ownership of our securities, on Forms

3, 4 and 5, respectively.

Executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish

us with copies of all Section 16(a) reports they file.

solely on our review of the copies of such reports received by us, and on written representations by our officers and directors

regarding their compliance with the applicable reporting requirements under Section 16(a) of the Exchange Act, and without conducting

an independent investigation of our own, we believe that with respect to the fiscal year ended December 31, 2020, our officers

and directors, and all of the persons known to us to beneficially own more than 10% of our common stock filed all required reports

on a timely basis except for an initial Form 4 filing by our newly appointed CFO due to his needing to apply for Edgar codes.

Ferrara (chair), Mr.

Horowitz and Mr.

Hannibal, and all except for Mr.

Hannibal currently satisfy the independence requirements and other established criteria of Nasdaq.

The Nominating and Governance

Committee will consider stockholder recommendations for candidates for the Board of Directors.

Our bylaws provide that, in

order for a stockholder’s nomination of a candidate for the board to be properly brought before an annual meeting of the stockholders,

the stockholder’s nomination must be delivered to the Secretary of our company no later than 120 days prior to the one-year anniversary

date of the prior year’s annual meeting.

Charters for all three committees

are available on our website at www.SCWorx.com.

Changes in Nominating Procedures

Section 16(a) Beneficial Ownership Reporting

Section 16(a) of the Exchange

Act requires our executive officers and directors and persons who beneficially own more than 10% of a registered class of our equity securities

to file with the SEC initial statements of beneficial ownership, statements of changes in beneficial ownership and annual statements of

changes in beneficial ownership with respect to their ownership of our securities, on Forms 3, 4 and 5, respectively.

Executive officers,

directors and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they

Based solely on our review

of the copies of such reports received by us, and on written representations by our officers and directors regarding their compliance

with the applicable reporting requirements under Section 16(a) of the Exchange Act, and without conducting an independent investigation

of our own, we believe that with respect to the fiscal year ended December 31, 2021, our officers and directors, and all of the persons

known to us to beneficially own more than 10% of our common stock filed all required reports on a timely basis except for initial Form

4 filings by our newly appointed directors Alton Irby, Steven Horowitz and John Ferrara due to their needing to apply for Edgar codes.

Executive Compensation

following summary compensation table sets forth information concerning compensation for services rendered in all capacities during

2020 and 2019 awarded to, earned by or paid to our executive officers.

The value attributable to any option awards and stock awards

reflects the grant date fair values of stock awards calculated in accordance with FASB Accounting Standards Codification Topic

As described further in Note 9, Stockholders’

Equity, to our consolidated year-end financial statements, the assumptions

made in the valuation of these option awards and stock awards is set forth therein.

and Principal

Pension Value

Non-Qualified

Deferred Compensation

Other Compensation

and Former Chief Executive Officer

Chief Operating Officer and director

Financial Officer

Schweikert (4)

Chief Operating Officer

The following summary compensation

table sets forth information concerning compensation for services rendered in all capacities during 2021 and 2020 awarded to, earned by

or paid to our executive officers.

The value attributable to any option awards and stock awards reflects the grant date fair values of

stock awards calculated in accordance with FASB Accounting Standards Codification Topic 718.

As described further in Note 9, Stockholders’

Equity, to our consolidated year-end financial statements, the assumptions made in the valuation of these option awards and stock awards

is set forth therein.

Incentive Plan

Name and Principal Position

Timothy Hannibal (2)

President, Chief Executive Officer and

Chris Kohler (3)

Chief Financial Officer

Marc Schessel (1)

Former Chairman and

Chief Executive Officer

Schessel was appointed Chairman and Chief Executive Officer of SCWorx Corp (f/k/a Alliance MMA, Inc.) on February 1, 2019.

On January 19, 2020 Mr.

Schessel resigned as Chief Executive Officer but remains as Chairman.

Schessel resigned as Chief Executive Officer.

Hannibal was hired as Chief Revenue Officer on February 1, 2019 and was appointed Interim Chief Financial Officer on June 10, 2020.

1 unchanged sentence

Hannibal was appointed President and Chief Operating Officer.

On May 28, 2021 Mr.

Hannibal was appointed President and Chief Executive Officer.

Kohler was hired as Chief Financial Officer on November 1, 2020.

Schweikert was appointed Chief Operating Officer on May 31, 2019.

Schweikert’s employment was terminated by mutual

agreement on April 29, 2020.

Price was President and Chief Financial Officer of Alliance MMA, until the acquisition on February 1, 2019, at which time

he was appointed our Chief Financial Officer.

He resigned on October 25, 2019.

Directors’

following summary compensation table sets forth information concerning compensation for services rendered in all capacities during

2020 and 2019 awarded to, earned by or paid to our directors.

The value attributable to any stock option awards reflects the grant

date fair values of stock awards calculated in accordance with ASC Topic 718.

Incentive Plan Compensation

Non-qualified

Deferred Compensation Earnings

Other Compensation

Gamberale (6)

Shefts was appointed as a Director on May 15, 2020.

Wallitt was appointed as a Director on October 4, 2019.

Irby was appointed as a Director on March 16, 2021.

Knuettel was appointed as a Director on February 1, 2019 and resigned on December 31, 2019.

Ritter was appointed as a Director on February 1, 2019 and resigned on December 31, 2019.

Gamberale was appointed as a Director on February 12, 2015 and resigned on February 1, 2019.

His other compensation includes

the costs of health insurance premiums paid on his behalf.

K Miller was appointed as a Director on October 24, 2018 and resigned September 25, 2020.

Christie was appointed as a Director on February 1, 2019 and resigned April 29, 2020.

Tracy was appointed as a Director on September 30, 2016 and resigned February 1, 2019.

His other compensation includes

the costs of health insurance premiums paid on his behalf.

Watson was appointed as a Director on September 30, 2016 and resigned February 1, 2019.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding beneficial

ownership of our common stock as of May 15, 2021:

(i) by each of our directors, (ii) by each of the named executive officers, (iii) by

all of our executive officers and directors as a group, and (iv) by each person or entity known by us to beneficially own more than five

percent (5%) of any class of our outstanding shares.

As of May 15, 2021, there were 10,029,433 shares of our common stock outstanding.

and Nature of Beneficial Ownership as of May 15, 2021 (1)

Executive Officers and Directors

and Executive Officers as a Group (6 persons)

beneficial ownership of less than 1% of our outstanding stock.

determining beneficial ownership of our common stock as of a given date,

the number of shares shown includes shares of common stock that may be acquired upon the exercise of stock options within 60 days

of May 15, 2021.

In determining the percent of common stock owned by a person or entity on May 15, 2021, (a) the numerator is

the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days

of May 15, 2021 upon the exercise of stock options, and (b) the denominator is the sum of (i) the total shares of common stock

outstanding on May 15, 2021 and (ii) the total number of shares that the beneficial owner may acquire upon exercise of stock options within

60 days of May 15, 2021.

Unless otherwise indicated, the address of each of the individuals and entities named below is c/o SCWorx

Corp., 590 Madison Avenue, 21st Floor, New York, New York 10022.

addition to the 11,131 shares of common stock held directly, also includes 7,895 shares

of common stock held by a relation of Mr.

Tracy has voting and disposition

power over the shares.

Total holdings also includes 63,435 Common Shares issuable upon

conversion of Series A Preferred Stock

addition to the 11,704 shares of common stock held directly, also includes 7,968 shares

held by the Rushcap Group, Inc., of which Mr.

Shefts and his spouse, Wanda Shefts,

are the sole stockholders.

Shefts has voting and dispositive power over the

shares held by the Rushcap Group, Inc.

holdings includes 13,158 Common Shares issuable upon conversion of Series A Preferred

Schessel resigned as Chief Executive Officer on January 9, 2021 but remains as Chairman

as of the date of this filing.

Grants of Plan Based Awards and Outstanding Equity Awards at Fiscal Year-End

to the completion of our initial public offering, our Board of Directors adopted the Alliance MMA 2016 Equity Incentive Plan (the

“2016 Plan”) pursuant to which we may grant shares of our common stock to our directors, officers, employees or consultants.

Our stockholders approved the 2016 Plan at our annual meeting of stockholders held September 1, 2017, and on January 30, 2019

approved the Amended and Restated 2016 Plan, which permits the issuance of up to 3,000,000 shares.

Unless earlier terminated by

the Board of Directors, the 2016 plan will terminate, and no further awards may be granted, after July 30, 2026.

following sets forth the stock option awards to our officers and directors as of December 31, 2020.

Equity Awards at December 31, 2020

of securities underlying unexercised options exercisable

of securities underlying unexercised options unexercisable

incentive plan awards:

Number of securities underlying unexercised unearned options

exercise price

expiration date

of shares or units of stock that have not vested

value of shares or units of stock that have not vested

incentive plan awards:

Number of unearned shares, units or other rights that have not vested

incentive plan awards:

Market or payout value of unearned shares, units or other rights that have not vested

Certain Relationships and Related Transactions, and Director Independence

Relationships and Related Transactions

Company incurred interest expense of $23,720 to Mark Munro, a related party during the year ended December 31, 2019, which was

accrued and converted to Series A Preferred Stock in 2019.

July 24, 2020, the Company’s then Chief Executive Officer, Marc Schessel, transferred 20,000 of his personally held common

shares to Mark Shefts, a Director as compensation for acting as a director.

The company deemed this transfer to be in consideration

for services and recorded a non-cash expense of $115,100 for the fair value of the shares transferred.

in accounts payable at December 31, 2020 are amounts due to officers of the Company in the amount of $153,838.

in accounts receivable at December 31, 2020 are amounts due from a former officer and director of the Company in the amount of

Directors’ Compensation

The following summary compensation

table sets forth information concerning compensation for services rendered in all capacities during 2021 and 2020 awarded to, earned by

or paid to our directors.

The value attributable to any stock option awards reflects the grant date fair values of stock awards calculated

in accordance with ASC Topic 718.

and Principal Position

Alton Irby (3)

Chairman and Director

John Ferrara (5)

Steven Horowitz (6)

Steven Wallitt (2)

Mark Shefts (1)

Former Director

Mark Shefts was appointed as a Director on May 15, 2020 and resigned on June 25, 2021

Steven Wallitt was appointed as a Director on October 4, 2019.

Alton Irby was appointed as a Director on March 16, 2021.

Charles K Miller was appointed as a Director on October 24, 2018 and resigned September 25, 2020.

John Ferrara was appointed as a Director on August 11, 2021.

Steven Horowitz was appointed as a Director on August 11, 2021.

Security Ownership of Certain Beneficial

Owners and Management and Related Stockholder Matters

The following table sets forth

certain information regarding beneficial ownership of our common stock as of March 31, 2022:

(i) by each of our directors, (ii) by each

of the named executive officers, (iii) by all of our executive officers and directors as a group, and (iv) by each person or entity known

by us to beneficially own more than five percent (5%) of any class of our outstanding shares.

As of March 31, 2022, there were 11,383,454

shares of our common stock outstanding.

Amount and Nature of Beneficial Ownership as

of March 31, 2022 (1)

Named Executive Officers and Directors

Timothy Hannibal

Steven Horowitz

Steven Wallitt

Directors and Executive Officers as a Group (6 persons)

Marc Schesse1

Represents beneficial ownership of less than 1% of our outstanding stock.

In determining beneficial ownership of our common stock as of a given date, the number of shares shown includes shares of common stock that may be acquired upon the exercise of stock options within 60 days of March 31, 2022.

In determining the percent of common stock owned by a person or entity on March 31, 2022, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days of March 31, 2022 upon the exercise of stock options, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on March 31, 2022 and (ii) the total number of shares that the beneficial owner may acquire upon exercise of stock options within 60 days of March 31, 2022.

Unless otherwise indicated, the address of each of the individuals and entities named below is c/o SCWorx Corp., 590 Madison Avenue, 21st Floor, New York, New York 10022.

Employee Grants of Plan Based Awards and Outstanding

Equity Awards at Fiscal Year-End

Prior to the completion of

our initial public offering, our Board of Directors adopted the Alliance MMA 2016 Equity Incentive Plan (the “2016 Plan”)

pursuant to which we may grant shares of our common stock to our directors, officers, employees or consultants.

Our stockholders approved

the 2016 Plan at our annual meeting of stockholders held September 1, 2017, and on March 25, 2021 approved the Amended and Restated 2016

Plan, which permits the issuance of up to 5,000,000 shares.

Unless earlier terminated by the Board of Directors, the 2016 plan will terminate,

and no further awards may be granted, after July 30, 2026.

The following sets forth the

stock option awards to our officers and directors as of December 31, 2021.

Outstanding Equity Awards at December 31, 2021

Number of shares

or units of stock

that have not

Market value of

shares or units of

stock that have not

Equity incentive

unearned shares,

units or other

rights that have not

Equity incentive

Market or payout

value of unearned

shares, units or

other rights that

have not vested

Current Officers

Timothy Hannibal

Certain Relationships and Related

Transactions, and Director Independence

Certain Relationships and Related Transactions

At December 31, 2021 and 2020

Company had amounts due to officers in the amount of $153,838.

During April, 2020, a company

affiliated with a shareholder advanced $475,000 in cash, on our behalf, to the supplier of test kits for their purchase.

the company returned the test kits pursuant to its sales contract in full satisfaction of the $475,000 previously advanced.

During September 2021, the

Company’s former CEO (also a significant shareholder) advanced $100,000 in cash to the Company for short term capital requirements.

This amount is non-interest bearing and payable upon demand and included in Shareholder advance on the Company’s consolidated balance

sheet as of December 31, 2021.

On January 19, 2021, Marc.

Schessel’s employment as CEO

of SCWorx, Corp., a Delaware corporation, ceased by mutual agreement, and the Company and Mr.

Schessel concurrently entered into a consulting

agreement under which Mr.

Schessel’s employment as CEO of SCWorx, Corp., a Delaware corporation, ceased by mutual agreement, and the Company and Mr.

concurrently entered into a consulting agreement under which Mr.

Schessel will provide consulting services to the Company.

The Consulting Agreement provides for annual consulting

fees of $295,000.

In addition, such agreement provides for cash and equity bonuses based on revenue generation.

The Consulting Agreement

is for a term of two years, but may be terminated by the Company for “cause”

(as defined) or by either party for any reason

or no reason upon sixty days prior notice.

The Consulting Agreement also contains non-competition and non-solicitation provisions which

are applicable during the term of the Consulting Agreement and for a period of two years thereafter.

rules of the Nasdaq Capital Market, or the Nasdaq Rules, require a majority of a listed company’s board of directors to

be composed of independent directors within one year of listing.

In addition, the Nasdaq Rules require that, subject to specified

exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent.

Under the Nasdaq Rules, a director will qualify as an independent director only if, in the opinion of our Board of Directors,

that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities

of a director.

The Nasdaq Rules also require that audit committee members satisfy independence criteria set forth in Rule 10A-3

under the Exchange Act, as amended.

In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee

of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or

any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed

company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.

In considering

the independence of compensation committee members, the Nasdaq Rules require that our Board of Directors must consider additional

factors relevant to the duties of a compensation committee member, including the source of any compensation we pay to the director

The Consulting

Agreement provides for annual consulting fees of $295,000.

In addition, such agreement provides for cash and equity bonuses based on revenue

The Consulting Agreement is for a term of two years, but may be terminated by the Company for “cause” (as defined)

or by either party for any reason or no reason upon sixty days prior notice.

The Consulting Agreement also contains non-competition and

non-solicitation provisions which are applicable during the term of the Consulting Agreement and for a period of two years thereafter.

Director Independence

The rules of the Nasdaq Capital

Market, or the Nasdaq Rules, require a majority of a listed company’s board of directors to be composed of independent directors

within one year of listing.

In addition, the Nasdaq Rules require that, subject to specified exceptions, each member of a listed company’s

audit, compensation and nominating and governance committees be independent.

Under the Nasdaq Rules, a director will qualify as an independent

director only if, in the opinion of our Board of Directors, that person does not have a relationship that would interfere with the exercise

of independent judgment in carrying out the responsibilities of a director.

The Nasdaq Rules also require that audit committee members

satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act, as amended.

In order to be considered independent for purposes

of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit

committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory

fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.

In considering the independence of compensation committee members, the Nasdaq Rules require that our Board of Directors must consider

additional factors relevant to the duties of a compensation committee member, including the source of any compensation we pay to the director

and any affiliations with our company.

Board of Directors undertook a review of the composition of our Board of Directors and its committees and the independence of

each director.

Based upon information requested from and provided by each director concerning his background, employment and affiliations,

including family relationships, our Board of Directors has determined that each of our directors other than Mark Schessel, and

Tim Hannibal, is independent based on the definition of independence in the Nasdaq listing standards.

Our Board of Directors undertook

a review of the composition of our Board of Directors and its committees and the independence of each director.

Based upon information

requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our

Board of Directors has determined that each of our directors other than Tim Hannibal, is independent based on the definition of independence

in the Nasdaq listing standards.

Principal Accountant Fees and Services

The Audit Committee of the Board of Directors has selected BF Borgers

CPA PC, an independent registered public accounting firm, to audit our financial statements for the year ending December 31, 2020.

Borgers CPA PC has served as our independent registered public accounting firm since April 2021.

Prior to April 2021, the Company’s

independent registered public accounting firm was Sadler Gibb & Associates, LLC, and for the year ending December 31, 2019, Withum

served as the Company’s independent registered public accounting firm.

Accountant Fees and Services

2020 and 2019, fees for services provided by Sadler Gibb were as follows:

the year ended December 31,

Audit-Related

2020 and 2019, fees for services provided by Withum were as follows:

the year ended December 31,

Audit-Related

fees for 2020 and 2019 include amounts related to the audit of our annual consolidated financial statements and quarterly review

of the consolidated financial statements included in our Quarterly Reports on Form 10-Q.

Related Fees include amounts related to accounting consultations and services.

Fees include fees billed for tax compliance, tax advice and tax planning services.

were no other fees billed for services rendered to our company, other than the services described above, in 2020 and 2019.

Audit Committee pre-approves all audit and permissible non-audit services provided by our independent registered public accounting

These services may include audit services, audit-related services, tax and other services.

Pre-approval is generally provided

for up to one year, and any pre-approval is detailed as to the particular service or category of services.

The independent registered

public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services

provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services

performed to date.

The Audit Committee may also pre-approve particular services on a case-by-case basis.

The Audit Committee of the

Board of Directors has selected BF Borgers CPA PC, an independent registered public accounting firm, to audit our financial statements

for the year ending December 31, 2021.

BF Borgers CPA PC has served as our independent registered public accounting firm since April 2021.

Prior to April 2021, the Company’s independent registered public accounting firm was Sadler Gibb & Associates, LLC, and for

the year ending December 31, 2019, Withum served as the Company’s independent registered public accounting firm.

Principal Accountant Fees and Services

During 2021 and 2020, fees

for services provided by BF Borgers CPA PC were as follows:

For the year ended

Audit-Related Fees

All Other Fees

During 2021 and 2020, fees

for services provided by Sadler Gibb were as follows:

For the year ended

Audit-Related Fees

All Other Fees

During 2021 and 2020, fees

for services provided by Withum were as follows:

For the year ended

Audit-Related Fees

All Other Fees

Audit fees for 2021 and 2020

include amounts related to the audit of our annual consolidated financial statements and quarterly review of the consolidated financial

statements included in our Quarterly Reports on Form 10-Q.

Audit Related Fees

Audit Related Fees include

amounts related to accounting consultations and services.

Tax Fees include fees billed

for tax compliance, tax advice and tax planning services.

All Other Fees

Other Fees include fees billed

for consents to file prior period reports as part of our 2020 Form 10-K

The Audit Committee pre-approves

all audit and permissible non-audit services provided by our independent registered public accounting firm.

These services may include

audit services, audit-related services, tax and other services.

Pre-approval is generally provided for up to one year, and any pre-approval

is detailed as to the particular service or category of services.

The independent registered public accounting firm and management are

required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public

accounting firm in accordance with this pre-approval, and the fees for the services performed to date.

The Audit Committee may also pre-approve

particular services on a case-by-case basis.

Exhibits and Financial Statement Schedules

following documents are filed as a part of this report:

(1) Financial

The following documents are filed as a part of this report:

Financial Statements .

See Index to Consolidated Financial Statements, which appears on page F-1 hereof.

The consolidated financial statements

listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item.

(2) Financial

Statement Schedules .

Schedules are omitted because the required information is not present or is not present in amounts sufficient

to require submission of the schedule or because the information required is given in the consolidated financial statements or

the notes thereto.

(3) Exhibits .

The information required by this Item 15 is incorporated by reference to the Index to Exhibits accompanying this Annual Report

on Form 10-K.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

The consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements are filed herewith in response to this Item.

Financial Statement Schedules .

Schedules are omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is given in the consolidated financial statements or the notes thereto.

The information required by this Item 15 is incorporated by reference to the Index to Exhibits accompanying this Annual Report on Form 10-K.

Pursuant to the requirements

of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by

the undersigned, thereunto duly authorized.

/s/ Timothy Hannibal

Timothy Hannibal

Chief Operating Officer

Financial Officer

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the Registrant in the capacities and on the dates indicated.

President, Chief Executive Officer

March 31, 2022

/s/ Chris Kohler

Chief Financial Officer

March 31, 2022

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the

capacities and on the dates indicated.

/s/ Timothy Hannibal

Timothy Hannibal

Chief Operating Officer

Financial Officer

President, Chief Executive Officer

March 31, 2022

/s/ Chris Kohler

Chief Financial Officer

March 31, 2022

/s/ Alton Irby

March 31, 2022

/s/ Steven Wallitt

Steven Wallitt,

to Consolidated Financial Statements

Financial Statements

balance sheets as of December 31, 2020 and 2019

statements of operations for the years ended December 31, 2020 and 2019

statements of changes in stockholders’

equity for the years ended December 31, 2020 and 2019

statements of cash flows for the years ended December 31, 2020 and 2019

to consolidated financial statements

of Independent Registered Public Accounting Firm

the shareholders and the board of directors of SCWorx Corp.

on the Financial Statements

have audited the accompanying consolidated balance sheet of SCWorx Corp.

(the "Company") as of December 31, 2020, the related

statement of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively

referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then

ended, in conformity with accounting principles generally accepted in the United States.

Doubt about the Company’s Ability to Continue as a Going Concern

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue

as a going concern.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

BF Borgers CPA PC

Borgers CPA PC

have served as the Company's auditor since 2021

March 31, 2022

/s/ John Ferrara

March 31, 2022

/s/ Steven Horowitz

Steven Horowitz

March 31, 2022

Index to Consolidated Financial Statements

Consolidated Financial Statements

Report of Independent Registered Accounting Firm (PCAOB ID Number 5041 ) F-2

Consolidated balance sheets as of December 31, 2021 and 202 0 F-3

Consolidated statements of operations for the years ended December 31, 2021 and 2020 F-4

Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2021 and 2020 F-5

Consolidated statements of cash flows for the years ended December 31, 2021 and 2020 F-6

Notes to consolidated financial statements F-7

of Independent Registered Public Accounting Firm

To the Stockholders’

and the Board of Directors

To the shareholders and the board of directors

of SCWorx Corp.

1 unchanged sentence

We have audited the accompanying consolidated

balance sheet of SCWorx Corp.

(the "Company") as of December 31, 2019, and the related consolidated statements of operations,

changes in stockholders’

equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred

to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all

material respects, the consolidated financial position of the Company as of December 31, 2019, and the results of their operations and

their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt Regarding Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements,

the entity has suffered recurring losses from operations, has negative cash flows from operations, and has an accumulated deficit, that

raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also

described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

balance sheets of SCWorx Corp.

(the “Company”) as of December 31, 2021 and 2020, the related statement of operations, stockholders’

equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States.

Substantial Doubt about the Company’s

Ability to Continue as a Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company’s

significant operating losses raise substantial doubt about its ability to continue as a going concern.

The financial statements do not

include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)

(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws

and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required

to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we were

required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on

the effectiveness of the Company’s internal control over financial reporting.

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged

to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

We have served as the Company's auditor since

/s/ WithumSmith+Brown, PC

East Brunswick, NJ

June 12, 2020

Balance Sheets

receivable - net

expenses and other assets

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BF Borgers CPA PC

BF Borgers CPA PC

We have served as the Company’s auditor

March 31, 2022

Consolidated Balance Sheets

Current assets:

LIABILITIES AND

STOCKHOLDERS’

payable and accrued liabilities

Accounts payable and accrued liabilities –

related party

Accounts receivable - net

Prepaid expenses and other assets

Total current assets

Fixed assets - net

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities - related party

Shareholder advance

Deferred revenue

current liabilities

Equity financing

Total current liabilities

Long-term liabilities:

and contingencies

Stockholders’

A Convertible Preferred stock, $0.001 par value;

Loans payable

Total long-term liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Series A Convertible Preferred stock, $ 0.001 par value;

900,000 shares authorized;

84,872 and 578,567 shares issued and outstanding,

stock, $0.001 par value;

39,810 and 84,872 shares issued and outstanding, respectively

Common stock, $ 0.001 par value;

45,000,000 shares authorized;

11,293,030 and 9,895,600 shares issued and outstanding, respectively

paid-in capital

Additional paid-in capital

Subscriptions payable

Accumulated deficit

( 24,011,291 )

( 20,196,823 )

stockholders’

liabilities and stockholders’

accompanying notes are an integral part of these consolidated financial statements.

Statements of Operations

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part

of these consolidated financial statements.

Consolidated Statements of Operations

For the years ended

5 unchanged sentences

( 3,814,468 )

Other income (expenses):

Interest expense

Interest income

Gain on fair value of convertible notes receivable

Gain on fair value of warrant asset

( 6,045,011 )

Other income (expense)

Loss on settlement of accounts payable

Other expense

Gain on exchange of debt for common

stock –

related party

Total other income (expense)

( 1,357,339 )

Net loss before income taxes

( 3,814,468 )

( 7,402,350 )

Provision for (benefit from) income taxes

3 unchanged sentences

Weighted average common shares outstanding, basic and diluted

accompanying notes are an integral part of these consolidated financial statements.

Statements of Changes in Stockholders’

ended December 31, 2020

December 31, 2019

The accompanying notes are an integral part

of these consolidated financial statements.

Consolidated Statements of Changes in Stockholders’

Preferred Stock

Additional paid-in

Subscriptions

Year ended December 31, 2021

Balances, December 31, 2020

$ ( 20,196,823 )

of Series A Convertible Preferred Stock into common stock

of Accounts Payable

issued in cashless exercise of warrants

issued in cashless exercise of options

exercised for cash

issued to current and former employees and directors

based compensation

issued for equity financing

balance, December 31, 2020

Conversion of Series A Convertible Preferred Stock into common stock

Shares issued as settlement of accounts payable

Shares issued for common stock placement

Shares issued for vested restricted stock units

Shares issued for cashless exercise of options

Shares issued for equity financing

Shares issuable for settlement of legal obligations

Stock based compensation

( 3,814,468 )

ended December 31, 2019

December 31, 2018

( 3,814,468 )

of common shares in settlement of due from stockholder balance

A Convertible Preferred share issuance (Alliance MMA)

of common stock in settlement of Series A Convertible Preferred Stock contractual fee

of Series A Convertible Preferred Stock into common stock

of common stock

A Convertible Preferred share issuance

of notes payable - related party into Series A Convertible Preferred share issuance

of disputed contractual claim

of warrants in settlement of lease dispute

issued in cashless exercise of warrants

compensation related to founder’s transfers of common shares to contractors

compensation related to employee and contractor equity awards

stock issued in settlement of litigation

and warrant dividend

Ending balance, December 31, 2021

$ ( 24,011,291 )

Preferred Stock

Additional paid-in

Subscriptions

Year ended December 31, 2020

Balances, December 31, 2019

$ ( 12,794,473 )

balance, December 31, 2019

Conversion of Series A Convertible Preferred Stock into common stock

Shares issued as settlement of accounts payable

Shares issued in cashless exercise of warrants

Shares issued in cashless exercise of options

Warrants exercised for cash

Shares issued to current and former employees and directors

Shares issued for equity financing

Stock based compensation

( 7,402,350 )

accompanying notes are an integral part of these consolidated financial statements.

Statements of Cash Flows

the years ended December 31,

flows from operating activities:

( 7,402,350 )

Ending balance, December 31, 2020

$ ( 20,196,823 )

to reconcile net loss to net cash used in operating activities:

of intangibles

on settlement of accounts payable

(loss) on change in fair value of warrant assets

of disputed contractual claim

of warrants in settlement of lease dispute

stock issued in settlement of litigation

on exchange of debt for common stock

of common stock in settlement of Series A Convertible Preferred Stock contractual fee

(loss) on change in fair value of convertible notes receivable

cash interest income

cash interest expense

in operating assets and liabilities (net of amounts acquired):

expenses and other assets

payable and accrued liabilities

cash used in operating activities

flows from investing activities:

acquired in reverse acquisition

in AMMA warrant

to shareholder

of convertible notes receivable - Alliance MMA

of fixed assets

cash provided by investing activities

flows from financing activities:

from equity financing

from loan payable

from notes payable - related party

from exercise of warrants

cash provided by financing activities

(decrease) increase in cash

beginning of period

end of period

disclosures of cash flow information:

paid for interest

paid for income taxes

investing and financing activities:

exercise of warrant

exercise of options

of accounts payable with issuance of common stock

advances for purchase of inventory

of warrant in settlement of vendor liability

of Series A Convertible Preferred Stock into common shares

stock issued in settlement of litigation

of common stock in settlement of due from shareholder balance

and warrant dividend

issued to company

of preferred stock penalty

receivable converted to common stock

of notes payable-related party into common stock

of notes payable-related party and interest into Series A Convertible Preferred Stock

of preferred and common stock in connection with acquisition of Alliance MMA, net of cash

period goodwill adjustment

of disputed contractual claim with issuance of common stock

accompanying notes are an integral part of these consolidated financial statements.

to Consolidated Financial Statements

The accompanying notes are an integral part

of these consolidated financial statements.

Consolidated Statements of Cash Flows

For the years ended

Cash flows from operating activities:

$ ( 3,814,468 )

$ ( 7,402,350 )

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of intangibles

Change in inventory value

Stock-based compensation

Loss on settlement of accounts payable

Bad debt expense

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other assets

Accounts payable and accrued liabilities

Deferred revenue

Net cash used in operating activities

( 1,069,945 )

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from notes payable

Proceeds from shareholder advance

Proceeds from common stock placement

Proceeds from equity financing

Proceeds from exercise of warrants

Net cash provided by financing activities

Net (decrease) increase in cash

Cash, beginning of period

Cash, end of period

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for income taxes

Non-cash investing and financing activities:

Shares issued for equity financing

Shares issued for vested restricted stock units

Cashless exercise of warrant

Cashless exercise of options

Settlement of accounts payable with issuance of common stock

Shareholder advances for purchase of inventory

The accompanying notes are an integral part

of these consolidated financial statements.

Notes to Consolidated Financial Statements

Description of Business

LLC (n/k/a SCW FL Corp.) (“SCW LLC”) was a privately held limited liability company which was organized in Florida

on November 17, 2016.

On December 31, 2017, SCW LLC acquired Primrose Solutions, LLC (“Primrose”), a Delaware limited

liability company, which became its wholly-owned subsidiary and focused on developing functionality for the software now used

and sold by SCWorx Corp.

(the “Company”

or “SCWorx”).

The majority interest holders of Primrose were interest

holders of SCW LLC and based upon Staff Accounting Bulletin Topic 5G, the technology acquired has been accounted for at predecessor

To facilitate the planned acquisition by Alliance MMA, Inc., a Delaware corporation (“Alliance”), on June

27, 2018, SCW LLC merged with and into a newly-formed entity, SCWorx Acquisition Corp., a Delaware corporation (“SCW Acquisition”),

with SCW Acquisition being the surviving entity.

Subsequently, on August 17, 2018, SCW Acquisition changed its name to SCWorx

On November 30, 2018, the Company and certain of its stockholders agreed to cancel 6,510 shares of common stock.

2018, the Company began to collect subscriptions for common stock.

From June to November 2018, the Company collected $1,250,000

in subscriptions and issued 3,125 shares of common stock to new third-party investors.

In addition, on February 1, 2019, (i) SCWorx

Nature of Business

SCWorx, LLC (n/k/a SCW FL

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

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

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

(the “Company”

or “SCWorx”).

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

Topic 5G, the technology acquired has been accounted for at predecessor cost of $ 0 .

To facilitate the planned acquisition by Alliance

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

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

Subsequently,

on August 17, 2018, SCW Acquisition changed its name to SCWorx Corp.

On November 30, 2018, the Company and certain of its stockholders

agreed to cancel 6,510 shares of common stock.

In June 2018, the Company began to collect subscriptions for common stock.

November 2018, the Company collected $ 1,250,000 in subscriptions and issued 3,125 shares of common stock to new third-party investors.

In addition, on February 1, 2019, (i) SCWorx Corp.

(f/k/a SCWorx Acquisition Corp.) changed its name to SCW FL Corp.

(to allow Alliance to change its name to SCWorx Corp.)

and (ii) Alliance acquired SCWorx Corp.

(n/k/a SCW FL Corp.) in a stock-for-stock exchange transaction and changed Alliance’s

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

becoming the Company’s subsidiary.

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

Combination and Related Transactions

February 1, 2019, Alliance MMA completed the acquisition of SCWorx, changed its name to SCWorx Corp., changed its ticker symbol

to “WORX”, and effected a one-for-nineteen reverse stock split of its common stock which combined the 100,000,000

Alliance shares of common stock issued to the Company’s shareholders into 5,263,158 shares of common stock of the newly

combined company.

a legal perspective, Alliance MMA acquired SCWorx FL Corp, and as a result, historical equity awards including stock options and

warrants are carried forward at their historical basis.

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

purchase accounting for the transaction.

of the Business

is a leading provider of data content and services related to the repair, normalization and interoperability of information for

healthcare providers and big data analytics for the healthcare industry.

has developed and markets health information technology solutions and associated services that improve healthcare processes and

information flow within hospitals.

SCWorx’s software platform enables healthcare providers to simplify, repair, and organize

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

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

SCWorx’s solutions are designed to improve

the flow of information quickly and accurately between the existing supply chain, electronic medical records, clinical systems,

and patient billing functions.

The software is designed to achieve multiple operational benefits such as supply chain cost reductions,

decreased accounts receivables aging, accelerated and more accurate billing, contract optimization, increased supply chain management

and cost visibility, synchronous Charge Description Master (“CDM”) and control of vendor rebates and contract administration

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

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

SCWorx’s software modules perform separate functions as follows:

Item Master File repair, expansion and automation;

for proposal automation;

data analytics modeling;

integration and warehousing.

continues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in

the United States.

Clients are geographically dispersed throughout the country.

The Company’s focus is to assist healthcare

providers with issues they have pertaining to data interoperability.

SCWorx provides these solutions through a combination of

direct sales and relationships with strategic partners.

SCWorx’s

software solutions are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where

such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS”

or RackSpace) and accessed by the

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

currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force

and its distribution and reseller partnerships.

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

intention of utilizing the SCWorx database to identify trends within the purchasing supply chain and then use this information

to assist the Company in its endeavors to provide critical, difficult-to-find items for the healthcare industry.

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

Personal Protective Equipment to the healthcare industry.

includes items such as masks, gloves, gowns, shields, etc.

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

to assist the healthcare industry in fulfilling its inventory demands.

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

with any new venture.

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

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

During the year ended December

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

In addition, changes in market conditions

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

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

condition and results of operations.

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

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

revenue from the sale of PPE or rapid test kits.

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

Instead, the Company is focused on selling its

current inventory of PPE and Test Kits.

The Company may receive commissions for acting as an intermediary with respect to the

sale of PPE and/or Test Kits.

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

as part of the acquisition of Alliance MMA, operates an online event ticketing platform focused on serving regional MMA (“mixed

martial arts”) promotions.

of the COVID-19 Pandemic

Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19

pandemic spreading throughout the United States and the world.

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

was at one of the early epicenters of the coronavirus outbreak in the United States.

The outbreak has since spread to the rest

of the country and is adversely impacting new customer acquisition.

The Company has been following 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 the Company’s customers’

business, the Company’s customers are currently 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 have

not been able to focus resources on expanding the utilization of the Company’s services, which has adversely impacted the

Company’s future 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.

Company is endeavoring 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.

The Company’s

Chief Executive Officer and employees have experience in the healthcare industry and industry contacts, and a database of items

designed to assist the healthcare industry in fulfilling its inventory demands.

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

to source and provide critical, difficult-to-find items for the healthcare industry.

Items have become difficult to source due

to unexpected disruptions within the supply chain, such as the COVID-19 pandemic.

Notwithstanding these efforts, the Company

has to date realized only a minimal amount of revenue from the sale of PPE and Test Kits.

Liquidity and Going Concern

(to allow Alliance

to change its name to SCWorx Corp.) and (ii) Alliance acquired SCWorx Corp.

(n/k/a SCW FL Corp.) in a stock-for-stock exchange transaction

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

becoming the Company’s

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

Operations of the Business

SCWorx is a provider of data

content and services related to the repair, normalization and interoperability of information for healthcare providers and big data analytics

for the healthcare industry.

SCWorx has developed and markets

health information technology solutions and associated services that improve healthcare processes and information flow within hospitals.

SCWorx’s software platform enables healthcare providers to simplify, repair, and organize its data (“data normalization”),

allows the data to be utilized across multiple internal software applications (“interoperability”) and provides the basis

for sophisticated data analytics (“big data”).

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

and accurately between the existing supply chain, electronic medical records, clinical systems, and patient billing functions.

is designed to achieve multiple operational benefits such as supply chain cost reductions, decreased accounts receivables aging, accelerated

and more accurate billing, contract optimization, increased supply chain management and cost visibility, synchronous Charge Description

Master (“CDM”) and control of vendor rebates and contract administration fees.

SCWorx empowers healthcare

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

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

SCWorx’s software modules

perform separate functions as follows:

virtualized Item Master File repair, expansion and automation;

CDM management;

contract management;

request for proposal automation;

rebate management;

big data analytics modeling;

data integration and warehousing.

SCWorx continues to provide

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

geographically dispersed throughout the country.

The Company’s focus is to assist healthcare providers with issues they have pertaining

to data interoperability.

SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners.

SCWorx’s software solutions

are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in

SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by the client through a secure connection

in a software as a service (“SaaS”) delivery method.

SCWorx currently sells its

solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller

partnerships.

SCWorx, as part of the acquisition

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

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

Impact of the COVID-19 Pandemic

The Company’s operations

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

the United States and the world.

The outbreak adversely impacted new customer acquisition.

The Company has followed the recommendations

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

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 in during the second quarter of 2020 to limit the Company’s role to acting as

an intermediary between buyers and sellers with commission based compensation.

We are endeavoring to sell our existing inventory of PPE

products primarily through use of our internal and external sales personnel.

The sale of PPE and rapid

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

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

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

Since the inception of this business, the Company completed

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

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

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

of PPE or rapid test kits.

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.

and Going Concern

accompanying consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles

GAAP”), which contemplates continuation of the Company as a going concern and the realization of assets and

satisfaction of liabilities in the normal course of business.

The consolidated financial statements do not include any adjustment

that might become necessary should the Company be unable to continue as a going concern.

Liquidity and Going Concern

The accompanying consolidated

financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

GAAP”), which

contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal

course of business.

The consolidated financial statements do not include any adjustment that might become necessary should the Company

be unable to continue as a going concern.

The Company has suffered recurring

2 unchanged sentences

continue to incur cash outflows from operations.

It is expected that its operating expenses will continue to increase and, as a result,

It is expected that its operating losses will continue and, as a result,

the Company will eventually need to generate significant increases in product revenues to achieve profitability.

These conditions indicate

that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the financial statement

issuance date.

of the filing date of this Report, the Company has only limited cash on hand, and management believes that there may not be sufficient

capital resources from operations and existing financing arrangements in order to meet operating expenses and working capital

requirements for the next twelve months.

we are evaluating various alternatives, including reducing operating expenses, securing additional financing through debt or equity

securities to fund future business activities and other strategic alternatives.

There can be no assurance that the Company will

be able to generate the level of operating revenues in its business plan, or if additional sources of financing will be available

on acceptable terms, if at all.

If no additional sources of financing are available, our future operating prospects may be adversely

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As of the filing date of this

Report, the Company has only limited cash on hand, and management believes that there may not be sufficient capital resources from operations

and existing financing arrangements in order to meet operating expenses and working capital requirements for the next twelve months.

Accordingly, we are evaluating

various alternatives, including reducing operating expenses, securing additional financing through debt or equity securities to fund future

business activities and other strategic alternatives.

There can be no assurance that the Company will be able to generate the level of

operating revenues in its business plan, or if additional sources of financing will be available on acceptable terms, if at all.

additional sources of financing are available, our future operating prospects may be adversely affected.

The financial statements do not

include any adjustments that might result from the outcome of this uncertainty.

Summary of Significant Accounting Policies

of Presentation and Principles of Consolidation

accompanying consolidated financial statements have been prepared in accordance to U.S.

GAAP and the rules and regulations of

Securities and Exchange Commission (“SEC”).

accompanying consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries.

intercompany balances and transactions have been eliminated in consolidation.

February 1, 2019, the Company effected a 1-for-19 reverse stock split with respect to the outstanding shares of its common stock.

The reverse stock split was deemed effective on February 4, 2019.

The reverse stock split did not affect the total number of shares

of common stock that the Company is authorized to issue, which is 45,000,000 shares.

The reverse stock split also did not affect

the total number of shares of Series A preferred stock that the Company is authorized to issue, which is 900,000 shares.

and per share data have been adjusted for all periods presented to reflect the reverse stock split unless otherwise noted.

Basis of Presentation and Principles of

Consolidation

The accompanying consolidated

financial statements have been prepared in accordance to U.S.

GAAP and the rules and regulations of the U.S.

Securities and Exchange Commission

The accompanying consolidated

financial statements include the accounts of SCWorx and its wholly-owned subsidiaries.

All material intercompany balances and transactions

have been eliminated in consolidation.

Cash is maintained with various

2 unchanged sentences

of cash deposits.

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.

Amounts in excess of the FDIC insured limit for the years ended December 31, 2020 and 2019 were $113,361 and zero, respectively.

Value of Financial Instruments

applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are

recognized or disclosed at fair value in the consolidated financial statements on a recurring basis.

Management defines fair value

as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date.

When determining the fair value measurements for assets and liabilities, which are required

to be recorded at fair value, management considers the principal or most advantageous market in which we would transact and the

market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks

inherent in valuation techniques, transfer restrictions and credit risk.

Fair value is estimated by applying the following hierarchy,

which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon

the lowest level of input that is available and significant to the fair value measurement:

Level 1 - Quoted prices in active markets

for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets

and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable

or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs

that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would

use in pricing the asset or liability.

Concentration

of Credit and Other Risks

instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, accounts

receivable, due from shareholder, convertible notes receivable and warrants.

The Company believes that any concentration of credit

risk in its accounts receivable is substantially mitigated by the Company’s evaluation process, relatively short collection

terms and the high level of credit worthiness of its customers.

The Company performs ongoing internal credit evaluations of its

customers’

financial condition, obtains deposits and limits the amount of credit extended when deemed necessary but generally

requires no collateral.

The Company believes that any concentration of credit risk in its due from shareholder and convertible

notes receivable was substantially mitigated by the shareholder’s material interest in the Company, ability to sell off

portions of the interest, if necessary, and the closing of the acquisition of SCWorx by Alliance and conversion of the notes payable

- related party into shares of Series A Convertible Preferred Stock and the settlement of the due from stockholder balance with

the surrender of 1,401 SCWorx shares of common stock in January 2019.

year ended December 31, 2020 the Company had two customers representing 22% and 17% of aggregate revenues.

For the year ended

December 31, 2019, the Company had two customers representing 19% and 10% of aggregate revenues.

At December 31, 2020, we had three

customers representing 35%, 32% and 10% of aggregate accounts receivable.

At December 31, 2019, the Company had four customers representing

17%, 14%, 10% and 10% of aggregate accounts receivable.

for Doubtful Accounts

Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’

inability to make required payments.

In determining the reserve, the Company evaluates the collectability of its accounts receivable

based upon a variety of factors.

In cases where the Company becomes aware of circumstances that may impair a specific customer’s

ability to meet its financial obligations, the Company records a specific allowance against amounts due.

For all other customers,

the Company recognizes allowances for doubtful accounts based on its historical write-off experience in conjunction with the length

of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment.

future losses from uncollectible accounts may differ from the Company’s estimates.

The Company recorded an allowance for

doubtful accounts as of December 31, 2020 and 2019 of $183,277 and $344,412, respectively.

inventory balance at December 31, 2020 is related to the Company’s Direct-Worx, LLC subsidiary and consisted of approximately

87,000 gowns and approximately 47,000 test kits.

These items are carried on the consolidated balance sheet at cost.

affiliated with a shareholder advanced the $475,000 in cash to the supplier of the test kits and the amount due is recorded in

shareholder advance.

is valued at the lower of cost or market value.

When market value is determined to be less than cost, the Company records an allowance.

As of December 31, 2020 and 2019, the Company had allowances of $0.

Company determines if an arrangement is a lease at inception.

The current portion of lease obligations are included in accounts

payable and accrued liabilities on the consolidated balance sheets.

Right-of-use (“ROU”) assets represent the Company’s

right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease

payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present

value of lease payments over the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company

uses its incremental borrowing rate based on the information available at commencement date in determining the present value of

lease payments.

The Company’s lease terms may include options to extend or terminate the lease, which are included in the

lease ROU asset when it is reasonably certain that the Company will exercise that option.

Lease expense for lease payments is

recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease components only, none with

non-lease components, which are generally accounted for separately (refer to Note 7, Leases, for additional detail).

Company includes the results of operations of a business it acquires in its consolidated results as of the date of acquisition.

The Company allocates the fair value of the purchase consideration of its acquisition to the tangible assets, liabilities and

intangible assets acquired, based on their estimated fair values.

The excess of the fair value of purchase consideration over

the fair values of these identifiable assets and liabilities is recorded as goodwill.

The primary items that generate goodwill

include the value of the synergies between the acquired businesses and the Company.

Intangible assets are amortized over their

estimated useful lives.

The fair value of contingent consideration (earn out) associated with acquisitions is remeasured each

reporting period and adjusted accordingly.

Acquisition and integration related costs are recognized separately from the business

combination and are expensed as incurred.

For additional information regarding the Company’s acquisitions, refer to Note

5, Business Combinations.

and Purchased Identified Intangible Assets

is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net

tangible and identified intangible assets acquired under a business combination.

Goodwill also includes acquired assembled workforce,

which does not qualify as an identifiable intangible asset.

The Company reviews impairment of goodwill annually in the fourth quarter,

or more frequently if events or circumstances indicate that the goodwill might be impaired.

The Company first assesses qualitative

factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

If, after assessing the totality

of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit

is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary.

intangible assets

finite-lived intangible assets consist of ticketing software and promoter relationships resulting from the February 1, 2019 business

The Company’s identified intangible assets are amortized on a straight-line basis over their estimated useful

lives, ranging from 5 to 7 years.

The Company makes judgments about the recoverability of finite-lived intangible assets whenever

facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets

may not be recoverable.

If such facts and circumstances exist, the Company assesses recoverability by comparing the projected

undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective

carrying amounts.

Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets.

the useful life is shorter than originally estimated, the Company would accelerate the rate of amortization and amortize the remaining

carrying value over the new shorter useful life.

further discussion of goodwill and identified intangible assets, refer to Note 5, Business Combinations.

and Equipment

and equipment are recorded at cost, less accumulated depreciation.

Depreciation is calculated using the straight-line method over

the related assets’

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 .

Amounts in excess of the FDIC insured limit for the years ended December 31, 2021 and 2020 were zero and $ 113,361 , respectively.

Fair Value of Financial Instruments

Management applies fair value

accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed

at fair value in the consolidated financial statements on a recurring basis.

Management defines fair value as the price that would be

received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, management

considers the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that

market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions

and credit risk.

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value

into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to

the fair value measurement:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs

other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities

in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term

of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions

that market participants would use in pricing the asset or liability.

Concentration of Credit and Other Risks

Financial instruments that

potentially subject the Company to significant concentrations of credit risk consist principally of cash, accounts receivable, due from

shareholder, convertible notes receivable and warrants.

The Company believes that any concentration of credit risk in its accounts receivable

is substantially mitigated by the Company’s evaluation process, relatively short collection terms and the high level of credit worthiness

of its customers.

The Company performs ongoing internal credit evaluations of its customers’ financial condition, obtains deposits

and limits the amount of credit extended when deemed necessary but generally requires no collateral.

For the year ended December

31, 2021, we had two customers representing 19 % and 13 % of aggregate revenues.

or the year ended December 31, 2020, we had two customers

representing 22 % and 17 % of aggregate revenues.

At December 31, 2021, we had three customers representing 17 %, 16 % and 14 % of aggregate

accounts receivable.

At December 31, 2020, we had three customers representing 35 %, 32 % and 10 % of aggregate accounts receivable.

Allowance for Doubtful Accounts

The Company continually monitors

customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments.

In determining the reserve, the Company evaluates the collectability of its accounts receivable based upon a variety of factors.

where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations,

the Company records a specific allowance against amounts due.

For all other customers, the Company recognizes allowances for doubtful

accounts based on its historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness,

geographic risk and the current business environment.

Actual future losses from uncollectible accounts may differ from the Company’s

The Company recorded an allowance for doubtful accounts as of December 31, 2021 and 2020 of $ 421,736 and $ 183,277 , respectively.

The inventory balance at December

31, 2021 is related to the Company’s Direct-Worx, LLC subsidiary and consisted of approximately 87,000 gowns.

These items are tracked

based on average cost and carried on the consolidated balance sheet at the lower of cost or market.

During the year ended December

31, 2021, the Company recorded a write down on the fair value of its inventory of $ 366,840 .

Inventory assets as of December 31, 2021 and

2020 consisted of the following:

Allowance for obsolescence

Net inventory value

The Company determines if

an arrangement is a lease at inception.

The current portion of lease obligations are included in accounts payable and accrued liabilities

on the consolidated balance sheets.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset

for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information

available at commencement date in determining the present value of lease payments.

The Company’s lease terms may include options

to extend or terminate the lease, which are included in the lease ROU asset when it is reasonably certain that the Company will exercise

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has lease agreements

with lease components only, none with non-lease components, which are generally accounted for separately (refer to Note 7, Leases, for

additional detail).

Goodwill and Purchased Identified Intangible

Goodwill is recorded as the

difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified

intangible assets acquired under a business combination.

Goodwill also includes acquired assembled workforce, which does not qualify as

an identifiable intangible asset.

The Company reviews impairment of goodwill annually in the fourth quarter, or more frequently if events

or circumstances indicate that the goodwill might be impaired.

The Company first assesses qualitative factors to determine whether it

is necessary to perform the quantitative goodwill impairment test.

If, after assessing the totality of events or circumstances, the Company

determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative

goodwill impairment test is unnecessary.

Identified intangible assets

Identified finite-lived intangible

assets consist of ticketing software and promoter relationships resulting from the February 1, 2019 business combination.

The Company’s

identified intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 5 to 7 years.

Company makes judgments about the recoverability of finite-lived intangible assets whenever facts and circumstances indicate that the

useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable.

If such facts and circumstances

exist, the Company assesses recoverability by comparing the projected undiscounted net cash flows associated with the related asset or

group of assets over their remaining lives against their respective carrying amounts.

Impairments, if any, are based on the excess of

the carrying amount over the fair value of those assets.

If the useful life is shorter than originally estimated, the Company would accelerate

the rate of amortization and amortize the remaining carrying value over the new shorter useful life.

For further discussion of

goodwill and identified intangible assets, refer to Note 5, Business Combinations.

Property and Equipment

Property and equipment are

recorded at cost, less accumulated depreciation.

Depreciation is calculated using the straight-line method over the related assets’

estimated useful lives.

Equipment, furniture and fixtures are being amortized over a period of three

that materially increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred.

expense for the years ended December 31, 2020 and 2019 was $29,043 and $6,453, respectively.

Company recognizes revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that

reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

To determine revenue

recognition for arrangements within the scope of Topic 606 the Company performs the following steps:

Equipment, furniture and fixtures are being amortized over a period of three years.

Expenditures that materially

increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred.

Depreciation expense for the

years ended December 31, 2021 and 2020 was $ 76,156 and $ 29,043 , respectively.

Revenue Recognition

The Company recognizes revenue

in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which

an entity expects to be entitled in exchange for those goods or services.

To determine revenue recognition for arrangements within the

scope of Topic 606 the Company performs the following steps:

Identify the contract(s) with a customer

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Recognize revenue when (or as) the entity satisfies a performance obligation

Company follows the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one

performance obligation.

Performance obligations are the unit of accounting for revenue recognition and generally represent the

distinct goods or services that are promised to the customer.

Company has identified the following performance obligations in its SaaS contracts with customers:

Normalization:

which includes data preparation, product and vendor mapping, product categorization, data enrichment and other

data related services,

Software-as-a-service

(“SaaS”):

which is generated from clients’

access of and usage of the Company’s hosted software

solutions on a subscription basis for a specified contract term, which is usually annually.

In SaaS arrangements, the client

cannot take possession of the software during the term of the contract and generally has the right to access and use the software

and receive any software upgrades published during the subscription period,

The Company follows the accounting

revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation.

Performance obligations

are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer.

The Company has identified

the following performance obligations in its SaaS contracts with customers:

Data Normalization:

which includes data preparation, product and vendor mapping, product categorization, data enrichment and other data related services,

Software-as-a-service (“SaaS”):

which is generated from clients’ access of and usage of the Company’s hosted software solutions on a subscription basis for a specified contract term, which is usually annually.

In SaaS arrangements, the client cannot take possession of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades published during the subscription period,

which includes ongoing data cleansing and normalization, content enrichment, and optimization, and

Professional Services:

mainly related to specific customer projects to manage and/or analyze data and review for cost reduction opportunities.

contract will typically include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted

for separately.

The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price

Significant judgement is required to determine the stand-alone selling price for each distinct performance obligation and

is typically estimated based on observable transactions when these services are sold on a stand-alone basis.

At contract inception,

an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is

identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services).

the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether

they are explicitly stated or are implied by customary business practices.

Revenue is recognized when the performance obligation has

The Company considers control to have transferred upon delivery because the Company has a present right to payment at

that time, the Company has transferred use of the good or service, and the customer is able to direct the use of, and obtain substantially

all the remaining benefits from, the good or service.

Company’s SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly,

are generally accounted for as month-to-month agreements.

If it is determined that the Company has not satisfied a performance

obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied.

recognition for the Company’s performance obligations are as follows:

Normalization and Professional Services

Company’s Data Normalization and Professional Services are typically fixed fee.

When these services are not combined with

SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when

contractual milestones are achieved and accepted by the customer.

and Maintenance

and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which

is the date on which the Company’s service is made available to customers.

Company does have some contracts that have payment terms that differ from the timing of revenue recognition, which requires the

Company to assess whether the transaction price for those contracts include a significant financing component.

The Company has

elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if it

expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer

and when the customer pays for that good or service will be one year or less.

The Company does not maintain contracts in which

the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good

or service exceeds the one-year threshold.

periods prior to the adoption of ASC 606, the Company recognized revenues when persuasive evidence of an arrangement existed,

delivery had occurred, the sales price was fixed or determinable, and the collectability of the resulting receivable was reasonably

The adoption of Topic 606 did not result in a cumulative effect adjustment to the Company’s opening retained earnings

since there was no significant impact upon adoption of Topic 606.

There was also no material impact to revenues, or any other

financial statement line items for the year ended December 31, 2018 as a result of applying ASC 606.

Company has one revenue stream, from the SaaS business, and believes it has presented all varying factors that affect the nature,

timing and uncertainty of revenues and cash flows.

A contract will typically

include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted for separately.

The transaction

price is allocated to each separate performance obligation on a relative stand-alone selling price basis.

Significant judgement is required

to determine the stand-alone selling price for each distinct performance obligation and is typically estimated based on observable transactions

when these services are sold on a stand-alone basis.

At contract inception, an assessment of the goods and services promised in the contracts

with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer

a good or service (or bundle of goods or services).

To identify the performance obligations, the Company considers all the goods

or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Revenue is recognized when the performance obligation has been met.

The Company considers control to have transferred upon delivery

because the Company has a present right to payment at that time, the Company has transferred use of the good or service, and the customer

is able to direct the use of, and obtain substantially all the remaining benefits from, the good or service.

The Company’s SaaS and

Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for

as month-to-month agreements.

If it is determined that the Company has not satisfied a performance obligation, revenue recognition will

be deferred until the performance obligation is deemed to be satisfied.

Revenue recognition for the

Company’s performance obligations are as follows:

Data Normalization and Professional Services

The Company’s Data Normalization

and Professional Services are typically fixed fee.

When these services are not combined with SaaS or Maintenance revenues as a single

unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted

by the customer.

SaaS and Maintenance

SaaS and Maintenance revenues

are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which the Company’s

service is made available to customers.

The Company does have some

contracts that have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the

transaction price for those contracts include a significant financing component.

The Company has elected the practical expedient that

permits an entity to not adjust for the effects of a significant financing component if it expects that at the contract inception, the

period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service

will be one year or less.

The Company does not maintain contracts in which the period between when the entity transfers a promised good

or service to a customer and when the customer pays for that good or service exceeds the one-year threshold.

In periods prior to the adoption

of ASC 606, the Company recognized revenues when persuasive evidence of an arrangement existed, delivery had occurred, the sales price

was fixed or determinable, and the collectability of the resulting receivable was reasonably assured.

The adoption of Topic 606 did not

result in a cumulative effect adjustment to the Company’s opening retained earnings since there was no significant impact upon adoption

of Topic 606.

There was also no material impact to revenues, or any other financial statement line items for the year ended December

31, 2018 as a result of applying ASC 606.

The Company has one revenue

stream, from the SaaS business, and believes it has presented all varying factors that affect the nature, timing and uncertainty of revenues

and cash flows.

PPE Inventory sales

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Remaining Performance Obligations

of December 31, 2020, we had $2,025,333 of remaining performance obligations recorded as deferred revenue.

We expect to recognize

sales relating to these existing performance obligations of during 2021.

to Fulfill a Contract

to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative

costs that are not explicitly chargeable to customer contracts.

These expenses are recognized and expensed when incurred in accordance

with ASC 340-40.

of revenues primarily represent data center hosting costs, consulting services and maintenance of the Company’s large data

array that were incurred in delivering professional services and maintenance of the Company’s large data array during the

periods presented.

assets arise when the revenue associated prior to the Company’s unconditional right to receive a payment under a contract

with a customer ( i.e ., unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received.

There were no contract assets as of December 31, 2020 and 2019.

liabilities arise when customers remit contractual cash payments in advance of our company satisfying our performance obligations

under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation

is satisfied.

Contract liabilities were $2,025,333 and $1,056,637 as of December 31, 2020 and 2019, respectively.

Company converted to a corporation from a limited liability company during 2018.

Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification

(“ASC”) Topic 740, “Income Taxes.”

Under this method, income tax expense is recognized for the amount

(i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting

from matters that have been recognized in an entity’s financial statements or tax returns.

Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are

expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized

in the results of operations in the period that includes the enactment date.

allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred

tax assets will not be realized.

As of December 31, 2020 and 2019, the Company has evaluated available evidence and concluded

that the Company may not realize all the benefits of its deferred tax assets;

therefore, a valuation allowance has been established

for its deferred tax assets.

Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements

and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a

tax position taken or expected to be taken in a tax return.

ASC Topic 740-10-40 provides guidance on derecognition, classification,

interest and penalties, accounting in interim periods, disclosure, and transition.

The Company has no material uncertain tax positions

for any of the reporting periods presented.

December 22, 2017, the Tax Cuts and Jobs Act of 2017, (the “Tax Act”) was enacted.

The Tax Act significantly revised

corporate income tax regime by, including but not limited to, lowering the U.S.

corporate income tax rate from 34% to

21% effective January 1, 2018, implementing a territorial tax system, imposing a one-time transition tax on previously untaxed

accumulated earnings and profits of foreign subsidiaries, and creating new taxes on foreign sourced earnings.

The Company completed

the accounting for tax effects of the Tax Act under ASC 740.

As of December 31, 2021, we

had $ 472,750 of remaining performance obligations recorded as deferred revenue.

We expect to recognize sales relating to these existing

performance obligations of during 2022.

Costs to Fulfill a Contract

Costs to fulfill a contract

typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly

chargeable to customer contracts.

These expenses are recognized and expensed when incurred in accordance with ASC 340-40.

Cost of Revenue

Cost of revenues primarily

represent data center hosting costs, consulting services and maintenance of the Company’s large data array that were incurred in

delivering professional services and maintenance of the Company’s large data array during the periods presented.

Contract Balances

Contract assets arise when

the revenue associated prior to the Company’s unconditional right to receive a payment under a contract with a customer ( i.e .,

unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received.

There were no contract assets as of

December 31, 2021 and 2020.

Contract liabilities arise

when customers remit contractual cash payments in advance of our company satisfying our performance obligations under the contract and

are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied.

Contract liabilities

were $ 472,750 and $ 2,025,333 as of December 31, 2021 and 2020, respectively.

The Company uses the asset

and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740,

“Income Taxes.” Under this method, income tax expense is recognized for the amount of:

(i) taxes payable or refundable for

the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s

financial statements or tax returns.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.

Valuation allowances are provided

if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

As of December 31, 2021 and 2020, the Company has evaluated available evidence and concluded that the Company may not realize all the

benefits of its deferred tax assets;

therefore, a valuation allowance has been established for its deferred tax assets.

ASC Topic 740-10-30 clarifies

the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold

and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a

ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,

disclosure, and transition.

The Company has no material uncertain tax positions for any of the reporting periods presented.

On December 22, 2017, the

Tax Cuts and Jobs Act of 2017, (the “Tax Act”) was enacted.

The Tax Act significantly revised the U.S.

corporate income tax

regime by, including but not limited to, lowering the U.S.

corporate income tax rate from 34 % to 21 % effective January 1, 2018, implementing

a territorial tax system, imposing a one-time transition tax on previously untaxed accumulated earnings and profits of foreign subsidiaries,

and creating new taxes on foreign sourced earnings.

The Company completed the accounting for tax effects of the Tax Act under ASC 740.

There were no impacts to the years ended December 31, 2021 and 2020.

Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments.

the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the

option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite

service period, which is generally the vesting period.

authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification

of the term of stock award.

The stock-based compensation expense for such modification is accounted for as a repurchase of the

original award and the issuance of a new award.

stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based

awards, stock price volatility, and the pre-vesting option forfeiture rate.

The Company estimates the expected life of options

granted based on historical exercise patterns, which are believed to be representative of future behavior.

The Company estimates

the volatility of the Company’s common stock on the date of grant based on historical volatility.

The assumptions used in

calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent

uncertainties and the application of management’s judgment.

As a result, if factors change and the Company uses different

assumptions, its stock-based compensation expense could be materially different in the future.

In addition, the Company is required

to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest.

The Company estimates the

forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled.

If the actual

forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from

what was recorded in the current period.

The Company also grants performance based restricted stock awards to employees and consultants.

These awards will vest if certain employee\consultant-specific or company-designated performance targets are achieved.

performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock.

minimum performance thresholds are not achieved, then no shares will be issued.

Stock-Based Compensation

The Company accounts for stock-based

compensation expense in accordance with the authoritative guidance on share-based payments.

Under the provisions of the guidance, stock-based

compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing

model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.

The authoritative guidance

also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award.

The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of

Calculating stock-based compensation

expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility,

and the pre-vesting option forfeiture rate.

The Company estimates the expected life of options granted based on historical exercise patterns,

which are believed to be representative of future behavior.

The Company estimates the volatility of the Company’s common stock on

the date of grant based on historical volatility.

The assumptions used in calculating the fair value of stock-based awards represent the

Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment.

As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different

in the future.

In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares

expected to vest.

The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted,

exercised and cancelled.

If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could

be significantly different from what was recorded in the current period.

The Company also grants performance based restricted stock awards

to employees and consultants.

These awards will vest if certain employee\consultant-specific or company-designated performance targets

are achieved.

If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s

common stock.

If minimum performance thresholds are not achieved, then no shares will be issued.

Based upon the expected levels of achievement,

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The expected levels of achievement

are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based

compensation is adjusted in the period of change and recorded on the statements of operations and the remaining unrecognized stock-based

compensation is recorded over the remaining requisite service period.

Refer to Note 9, Stockholders’

Equity, for additional

Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share”

which requires presentation

of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement.

Basic EPS is computed

by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator)

during the period.

Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury

stock method and convertible preferred stock using the if-converted method.

In computing diluted EPS, the average stock price

for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

As of December 31, 2020 and 2019, the Company

had 790,847 and 1,650,511, respectively, common stock equivalents outstanding.

are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation

is adjusted in the period of change and recorded on the statements of operations and the remaining unrecognized stock-based compensation

is recorded over the remaining requisite service period.

Refer to Note 9, Stockholders’ Equity, for additional detail.

Loss Per Share

The Company computes earnings

(loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings

(loss) per share (“EPS”) on the face of the income statement.

Basic EPS is computed by dividing the loss available to common

shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.

Diluted EPS gives effect

to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock

using the if-converted method.

In computing diluted EPS, the average stock price for the period is used in determining the number of shares

assumed to be purchased from the exercise of stock options or warrants.

Diluted EPS excludes all dilutive potential shares if their effect

is anti-dilutive.

As of December 31, 2021 and 2020, the Company had 1,161,913 and 790,847 , respectively, common stock equivalents outstanding.

Indemnification

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

by third parties arising from the use of the Company’s software.

In accordance with authoritative guidance for accounting

for guarantees, the Company evaluates estimated losses for such indemnification.

The Company 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 the Company and no liability has been recorded in its financial statements.

permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events

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

potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

addition, the Company has directors’

and officers’

liability insurance coverage that is intended to reduce its financial

exposure and may enable it to recover any payments above the applicable policy retention, should they occur.

In connection with the Class Action and derivative claims and investigations

described in Note 8, Commitments and Contingencies, the Company is obligated to indemnify its officers and directors for costs incurred

in defending against these claims and investigations.

The Company provides indemnification

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

of the Company’s software.

In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated

losses for such indemnification.

The Company 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 the Company and no liability has

been recorded in its financial statements.

As permitted under Delaware

law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer

or director is, or was, serving at the Company’s request in such capacity.

The maximum potential amount of future payments the Company

could be required to make under these indemnification agreements is unlimited.

In addition, the Company has directors’ and

officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments

above the applicable policy retention.

In connection with the Class

Action and derivative claims and investigations described in Note 8, Commitments and Contingencies, the Company is obligated to indemnify

its officers and directors for costs incurred in defending against these claims and investigations.

Contingencies

Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can

be reasonably estimated.

If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated,

the Company discloses the possible loss in the notes to the consolidated financial statements.

The Company reviews the developments

in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related

possible losses disclosed.

The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of

negotiations, settlements, rulings, advice of legal counsel, and updated information.

Significant judgment is required to determine

both the probability and the estimated amount.

costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period.

preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions

that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

The Company regularly

evaluates estimates and assumptions related to the allowance for doubtful accounts, the estimated useful lives and recoverability

of long-lived assets, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation

The Company bases its estimates and assumptions on current facts, historical experience and various other factors

that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the

carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

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

To the extent

there are material differences between the estimates and the actual results, future results of operations will be affected.

results could differ materially from those estimates.

Issued Accounting Pronouncements

February 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016-02, Leases (Topic 842) (“ASU 2016-02”).

ASU 2016-02 requires a lessee to record a right-of-use asset

and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all

leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements.

are required to provide the amount, timing and uncertainty of cash flows arising from leases.

A modified retrospective transition

approach is provided for lessees of leases existing at, or entered into after, the beginning of the earliest comparative period

presented in the financial statements, with certain practical expedients available.

ASU 2016-02 is effective for fiscal years

beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted.

2018, the FASB issued ASU No.

2018-11, Leases (Topic 842) Targeted Improvements (“ASU 2018-11”).

allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an

entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening

balance of retained earnings in the period of adoption.

ASU 2018-11 also allows lessors to not separate non-lease components from

the associated lease component if certain conditions are met.

We adopted the provisions of ASU 2016-02 and ASU 2018-11 in the

quarter beginning January 1, 2019.

The adoption resulted in the recognition of additional disclosures and a right of use asset

of approximately $53,000 included as a component of prepaid expenses and other assets and a lease liability of approximately $53,000,

which is included as a component of accounts payable and accrued liabilities at December 31, 2019.

The Company did not have any

right of use assets or lease liabilities at December 31, 2020.

October 2018, the FASB issued ASU No.

2018-17, Consolidation (Topic 810):

Targeted Improvements to Related Party

Guidance for Variable Interest Entities (“ASU 2018-17”).

ASU 2018-17 provides that indirect interests held

through related parties in common control arrangements should be considered on a proportional basis for determining whether fees

paid to decision makers and service providers are variable interests.

ASU 2018-17 is effective for annual and interim periods

beginning after December 15, 2019, with early adoption permitted.

We adopted this new standard in the first quarter of fiscal

2020, and the adoption of the standard did not have a material impact on our consolidated financial statements.

August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes

to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure

requirements on fair value measurements.

ASU 2018-13 is effective in the first quarter of fiscal 2020, and earlier adoption is

We adopted this new standard in the first quarter of fiscal 2020, and the adoption of the standard did not have a material

impact on our consolidated financial statements.

January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill

Impairment (“ASU 2017-04”), which eliminates step two from the goodwill impairment test.

Under ASU 2017-04, an

entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair

value up to the amount of goodwill allocated to that reporting unit.

We adopted this new standard in the first quarter of fiscal

2020, and the adoption of the standard did not have a material impact on our consolidated financial statements.

June 2018, the FASB issued ASU No.

2018-07, Stock-based Compensation:

Improvements to Nonemployee Share-based Payment

Accounting, which amends the existing accounting standards for share-based payments to nonemployees.

This ASU aligns much

of the guidance on measuring and classifying nonemployee awards with that of awards to employees.

Under the new guidance, the

measurement of nonemployee equity awards is fixed on the grant date.

The effective date for the standard is for interim periods

in fiscal years beginning after December 15, 2018, with early adoption permitted, but no earlier than our adoption date of Topic

The new guidance is required to be applied retrospectively with the cumulative effect recognized at the date of initial application.

We adopted this new standard in the first quarter of fiscal 2019, and the adoption of the standard did not have a material impact

on our consolidated financial statements.

June 2016, the FASB issued ASU No.

2016-13 (“ASU 2016-13”) “Financial Instruments - Credit Losses”

Measurement of Credit Losses on Financial Instruments”

which requires the measurement and recognition of expected

credit losses for financial assets held at amortized cost.

ASU 2016-13 replaces the existing incurred loss impairment model with

an expected loss model which requires the use of forward-looking information to calculate credit loss estimates.

It also eliminates

the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be

recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.

changes will result in earlier recognition of credit losses.

In November 2019, the FASB issued ASU 2019-10 “Financial Instruments

Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)”

(“ASC 2019-10”),

which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within

those fiscal years, for public entities which meet the definition of a smaller reporting company.

The Company will adopt ASU 2016-13

effective January 1, 2023.

Management is currently evaluating the effect of the adoption of ASU 2016-13 on the consolidated financial

The effect will largely depend on the composition and credit quality of our investment portfolio and the economic

conditions at the time of adoption.

The Company records a liability

when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated.

If the Company

determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss

in the notes to the consolidated financial statements.

The Company reviews the developments in its contingencies that could affect the

amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed.

The Company adjusts

provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel,

and updated information.

Significant judgment is required to determine both the probability and the estimated amount.

Legal costs associated with

loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period.

Use of Estimates

The preparation of consolidated

financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and

disclosed in the consolidated financial statements and accompanying notes.

The Company regularly evaluates estimates and assumptions related

to the allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible

debt, stock-based compensation, and deferred income tax asset valuation allowances.

The Company bases its estimates and assumptions on

current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results

of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses

that are not readily apparent from other sources.

The actual results experienced by the Company may differ materially and adversely from

the Company’s estimates.

To the extent there are material differences between the estimates and the actual results, future results

of operations will be affected.

Actual results could differ materially from those estimates.

Recently Issued Accounting Pronouncements

From time to time, new accounting

pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.

If not discussed, management believes

that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial

statements upon adoption.

Related Party Transactions

Company incurred interest expense of $23,720 to Mark Munro, a related party during the year ended December 31, 2019, which was

accrued and converted to Series A Preferred Stock in 2019.

At December 31, 2021 and 2020

Company had amounts due to officers in the amount of $ 153,838 .

During April, 2020, a company

affiliated with a shareholder advanced $475,000 in cash to the supplier of test kits for their purchase.

The amount due is recorded in

shareholder advance.

July 24, 2020, the Company’s then Chief Executive Officer, Marc Schessel, transferred 20,000 of his personally held common

shares to Mark Shefts, a Director as compensation for acting as a director.

The company deemed this transfer to be in consideration

for services and recorded a non-cash expense of $115,100 for the fair value of the shares transferred.

in accounts payable at December 31, 2020 are amounts due to officers of the Company in the amount of $153,838.

in accounts receivable at December 31, 2020 are amounts due from a former officer and director of the Company in the amount of

affiliated with a shareholder advanced $ 475,000 in cash on the Company’s behalf, to the supplier of test kits for their purchase.

In May 2021, the company returned the test kits pursuant to its sales contract in full satisfaction of the $ 475,000 previously advanced.

On January 19, 2021, Marc.

Schessel’s employment as CEO of SCWorx, Corp., a Delaware corporation, ceased by mutual agreement, and the Company and Mr.

concurrently entered into a consulting agreement under which Mr.

Schessel will provide consulting services to the Company.

The Consulting

Agreement provides for annual consulting fees of $ 295,000 .

In addition, such agreement provides for cash and equity bonuses based on revenue

The Consulting Agreement is for a term of two years, but may be terminated by the Company for “cause” (as defined)

or by either party for any reason or no reason upon sixty days prior notice.

The Consulting Agreement also contains non-competition and

non-solicitation provisions which are applicable during the term of the Consulting Agreement and for a period of two years thereafter.

During September 2021, the

Company’s former CEO (also a significant shareholder) advanced $ 100,000 in cash to the Company for short term capital requirements.

This amount is non-interest bearing and payable upon demand and included in Shareholder advance on the Company’s consolidated balance

sheet as of December 31, 2021

Business Combinations

February 1, 2019, the Company’s shareholders exchanged all of its outstanding shares in exchange for 5,263,158 shares of

Alliance common stock.

Due to the Company’s shareholders acquiring a controlling interest in Alliance after acquisition,

the transaction was treated as a reverse merger for accounting purposes, with SCWorx being the reporting company.

In accordance

with purchase accounting rules under ASC 805, the purchase consideration was $11,765,491.

acquisition was accounted for under the acquisition method of accounting.

The assets acquired, liabilities assumed and purchase

allocation, which is based on valuations of management, is as follows:

Purchase accounting

On February 1, 2019, the Company’s

shareholders exchanged all of its outstanding shares in exchange for 5,263,158 shares of Alliance common stock.

Due to the Company’s

shareholders acquiring a controlling interest in Alliance after acquisition, the transaction was treated as a reverse merger for accounting

purposes, with SCWorx being the reporting company.

In accordance with purchase accounting rules under ASC 805, the purchase consideration

was $ 11,765,491 .

The acquisition was accounted

for under the acquisition method of accounting.

The assets acquired, liabilities assumed and purchase allocation, which is based on valuations

of management, are as follows:

Identifiable intangible assets:

3 unchanged sentences

Account payable

( 1,901,624 )

Current liabilities - discontinued operations

Aggregate purchase price

intangible assets consist of the following:

Identified intangible assets

consist of the following:

December 31, 2020

3 unchanged sentences

Total intangible assets

the year ended December 31, 2020, the Company determined that while its ticketing platform was still active, the negative impact that

COVID 19 had on the overall MMA industry where it is currently being utilized had potentially lessened its useful life as currently deployed.

Because of this potential impact, management has chosen to shorten the projected useful life of these assets and accelerate their amortization

expense for the years ended December 31, 2020 and 2019, was $205,219 and $34,781, respectively.

changes to the carrying value of goodwill for the years ended December 31, 2020 and 2019 are reflected below:

goodwill related to the acquisition

period adjustment

the measurement period the Company adjusted the original goodwill amount by $99,815 during the year ended December 31, 2019.

of CARES funding

May 5, 2020, the Company obtained a $293,972 unsecured loan payable through the Paycheck Protection Program (“PPP”), which

was enacted as part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES ACT”).

The funds were received from

Bank of America through a loan agreement pursuant to the CARES Act.

$ ( 240,000 )

During the year ended December

31, 2020, the Company determined that while its ticketing platform was still active, the negative impact that COVID 19 had on the overall

MMA industry where it is currently being utilized had potentially lessened its useful life as currently deployed.

Because of this potential

impact, management has chosen to shorten the projected useful life of these assets and accelerate their amortization accordingly.

Amortization expense for the

year ended December 31, 2020 was $ 205,219 .

There were no changes to the

carrying value of goodwill for the years ended December 31, 2021 and 2020.

Receipt of CARES funding

On May 5, 2020, the Company

obtained a $ 293,972 unsecured loan payable through the Paycheck Protection Program (“PPP”), which was enacted as part of the

Coronavirus Aid, Relief and Economic Security Act (the “CARES ACT”).

The funds were received from Bank of America through

a loan agreement pursuant to the CARES Act.

The CARES Act was established in order to enable small businesses to pay employees during

the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly

payroll costs.

The amount borrowed under the CARES Act and used for payroll costs, rent, mortgage interest, and utility costs during the

24 week period after the date of loan disbursement is eligible to be forgiven provided that (a) the Company uses the PPP Funds during

the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage

interest, and utility costs.

While the full loan amount may be forgiven, the amount of loan forgiveness will be reduced if, among other

reasons, the Company does not maintain staffing or payroll levels or less than 60 % of the loan proceeds are used for payroll costs.

and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will be deferred to the date the SBA remits

the borrower’s loan forgiveness amount to the lender or, if the borrower does not apply for loan forgiveness, 10 months after the

end of the borrower’s loan forgiveness period for six months and will accrue interest at a fixed annual rate of 1.0 % and carry a

two year maturity date.

There is no prepayment penalty on the CARES Act Loan.

The Company expects the loan to be fully forgiven.

On March 17, 2021, we received

$ 139,595 in financing from the U.S.

government’s Payroll Protection Program (“PPP”).

We entered into a loan agreement

with Bank of America.

This loan agreement was pursuant to the CARES Act.

The CARES Act was established in order to enable small businesses

1 unchanged sentence

times their average monthly payroll costs.

The amount borrowed under the CARES Act and used for payroll costs, rent, mortgage interest,

and utility costs during the 24 week period after the date of loan disbursement is eligible to be forgiven provided that (a) the Company

The amount borrowed under the CARES Act is eligible to be forgiven provided that (a) the Company

uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including

benefits), rent, mortgage interest, and utility costs.

While the full loan amount may be forgiven, the amount of loan forgiveness will

be reduced if, among other reasons, the Company does not maintain staffing or payroll levels or less than 60% of the loan proceeds are

used for payroll costs.

Principal and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will

be deferred to the date the SBA remits the borrower’s loan forgiveness amount to the lender or, if the borrower does not apply

for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness period for six months and will accrue interest

at a fixed annual rate of 1.0% and carry a two year maturity date.

The amount of loan forgiveness will be reduced if, among other reasons, the Company

does not maintain staffing or payroll levels.

Principal and interest payments on any unforgiven portion of the PPP Funds (the “PPP

Loan”) will be deferred for six months and will accrue interest at a fixed annual rate of 1.0 % and carry a two year maturity date.

There is no prepayment penalty on the CARES Act Loan.

expects the loan to be fully forgiven.

Company’s principal executive office in New York City is under a month to month arrangement.

The Company also had a lease

in Greenwich, CT which expired in March 2020 and is now month-to-month.

Company has operating leases for corporate, business and technician offices.

Leases with a probable term of 12 months or less, including

month-to-month agreements, are not recorded on the consolidated balance sheet, unless the arrangement includes an option to purchase

the underlying asset, or an option to renew the arrangement, that the Company is reasonably certain to exercise (short-term leases).

The Company recognizes lease expense for these leases on a straight-line bases over the lease term.

The Company’s only two remaining

leases are month-to-month.

As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease

components (common-area maintenance costs) from lease components (fixed payments including rent) and instead to account for each separate

lease component and its associated non-lease components as a single lease component.

The Company uses its incremental borrowing rate

for purposes of discounting lease payments.

Company adopted FASB Accounting Standards Codification, Topic 842, Leases (“ASC 842”) electing the practical expedient that

allows the Company not to restate its comparative periods prior to the adoption of the standard on January 1, 2019.

As such, the disclosures

required under ASC 842 are not presented for periods before the date of adoption.

For the comparative periods prior to adoption, the

Company presented the disclosures which were required under ASC 840.

The Company elected the optional transition method and adopted the

new guidance on January 1, 2019 on a modified retrospective basis with no restatement of prior period amounts.

As allowed under the new

accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications

and accounting of initial direct costs for all asset classes at the time of adoption.

The Company also elected not to separate lease

components from non-lease components and to exclude short-term leases from its consolidated balance sheet.

The Company’s adoption

of the new standard as of January 1, 2019 resulted in the recognition of right-of-use assets of approximately $53,000 and liabilities

of approximately $53,000.

There was no impact to the accumulated deficit upon adoption of Topic 842.

of December 31, 2020, assets recorded under operating leases were $0.

Operating lease right of use assets and lease liabilities

are recognized at the lease commencement date based on the present value of lease payments over the lease term.

The discount rate

used to determine the commencement date present value of lease payment is the Company’s incremental borrowing rate, which

is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar

economic environment.

Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid

or incentives received.

the year ended December 31, 2020 and 2019, the components of lease expense were as follows:

The Company expects the loan to be fully forgiven.

Operating Leases

The Company’s principal

executive office in New York City is under a month-to-month arrangement.

The Company also had a lease in Greenwich, CT which expired in

March 2020 and became a month to month.

This tenancy was terminated in April 2021.

The Company has operating

leases for corporate, business and technician offices.

Leases with a probable term of 12 months or less, including month-to-month agreements,

are not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset,

or an option to renew the arrangement, that the Company is reasonably certain to exercise (short-term leases).

The Company recognizes

lease expense for these leases on a straight-line bases over the lease term.

The Company’s only remaining lease is month-to-month.

As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components (common-area maintenance

costs) from lease components (fixed payments including rent) and instead to account for each separate lease component and its associated

non-lease components as a single lease component.

The Company uses its incremental borrowing rate for purposes of discounting lease payments.

As of December 31, 2021,

assets recorded under operating leases were $ 0 .

Operating lease right of use assets and lease liabilities are recognized at the lease

commencement date based on the present value of lease payments over the lease term.

The discount rate used to determine the commencement

date present value of lease payment is the Company’s incremental borrowing rate, which is the rate incurred to borrow on a collateralized

basis over a similar term at an amount equal to the lease payments in a similar economic environment.

Certain adjustments to the right-of-use

asset may be required for items such as initial direct costs paid or incentives received.

For the year ended December

31, 2021 and 2020, the components of lease expense were as follows:

For the years ended

information related to leases was as follows:

Operating lease cost

Total lease cost

Other information related

to leases was as follows:

For the years ended

paid for amounts included in the measurement of operating lease liabilities:

cash flows for operating leases

average remaining lease term (months) –

operating leases

average discount rate–

operating leases

The maturity analysis of the

Company’s annual undiscounted cash flows of operating lease liabilities as of December 31, 2019 are as follows:

Operating Lease

Year Ending December 31, 2019

Total minimum lease payments

Lease amount representing interest

Total lease liabilities

There were no commitments

for non-cancelable operating leases as of December 31, 2020 and as of December 31, 2019 there were non-cancellable lease liabilities

of December 31, 2020 and 2019, the Company has no additional operating leases, other than those noted above, and no financing

Cash paid for amounts included in the measurement of operating lease liabilities:

Operating cash flows for operating leases

Weighted average remaining lease term (months) – operating leases

Weighted average discount rate– operating leases

As of December 31, 2021 and

2020, the Company has no additional operating leases, other than those noted above, and no financing leases.

Commitments and Contingencies

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

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

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

When only a range of possible loss can be established,

the most probable amount in the range is accrued.

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

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

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

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

April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New

York against us and our CEO.

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

Plaintiff vs.

Schessel, Defendants.

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

us and our CEO.

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

Schessel, Defendants.

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

us and our CEO.

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

Schessel, Defendants.

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

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

The plaintiffs in these actions are seeking unspecified monetary damages.

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

A consolidated Amended

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

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

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

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

to continue vigorously defending against this lawsuit.

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

against Marc S.

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

Defendants”).

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

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

This lawsuit alleges that the Director Defendants

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

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

implement proper disclosure and internal controls.

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

in our disclosure and internal controls, and legal fees.

The Director Defendants intend to vigorously defend against these proceedings.

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

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

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

York against Marc S.

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

Defendants”).

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

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

This lawsuit alleges that the Director Defendants

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

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

implement proper disclosure and internal controls.

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

in our disclosure and internal controls, and legal fees.

The Director Defendants intend to vigorously defend against these proceedings.

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

dismiss which we filed in the securities class action case.

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

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

The action is captioned Hemrita

Zarins, derivatively on behalf of SCWorx Corp.

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

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

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

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

The Plaintiff, on

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

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

Zarins named as Defendants Marc S.

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

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

as that filed in the New York State Action.

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

Settlement of Consolidated

Securities Class Action

The Director Defendants intend to vigorously defend against these proceedings.

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

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

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

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

(the “SEC Trading Halt”).

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

We are fully cooperating with

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

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

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

On May 5, 2020, the

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

which means the halt will remain in place

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

We fully cooperated with Nasdaq and responded

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

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

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

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

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

We are fully cooperating with the U.S.

Attorney’s Office in its investigation.

connection with these actions and investigations, the Company is obligated to indemnify its officers and directors for costs incurred

in defending against these claims and investigations.

Because the Company currently does not have the resources to pay for these

costs, its directors and officers liability insurance carrier has agreed to indemnify these persons even though the $750,000 retention

under such policy has not yet been met.

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

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

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

liabilities in these financial statements.

f/k/a Alliance MMA, Inc.,

As previously disclosed,

on April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New York

against us and our former CEO.

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

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

and Leonard v.

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

The Consolidated Class Action alleged that our company and our former CEO misled investors in connection with our April 13, 2020 press

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

As previously disclosed,

on February 11, 2022, the parties entered into a Stipulation of Settlement (subject to Court approval) to settle the Consolidated Class

The settlement resolves all claims asserted against SCWorx and the other named defendant without any admission, concession or

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

Under the terms of

this agreement, (i) the insurers for the Company and Marc Schessel (former CEO) will make a cash payment to the class plaintiffs (ii)

the former CEO will transfer 100,000 shares of company common stock to the class plaintiffs, and (iii) the Company will issue $ 600,000 worth

of common stock to the class plaintiffs, in exchange for which all parties will be released from all claims related to the securities

class action litigation.

After giving effect to the share issuance by the Company, the Company believes that it will have satisfied the

accrued retention liability of $ 700,000 .

Settlement of Consolidated

Derivative Action

As previously disclosed, on

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

Steven Wallitt (current director), and Marc S.

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

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

Schessel, Charles K.

Miller, Steven Wallitt, Defendants,

and SCWorx Corp., Nominal Defendant.

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

Schessel, Charles K.

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

(the “Consolidated Derivative Action”).

The Consolidated Derivative

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

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

and failing to implement proper disclosure and internal controls.

In addition, on October 29,

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

director) and Marc S.

Schessel and Charles Miller (former directors).

The action is captioned Hemrita Zarins, v.

Schessel, Robert

Christie, Steven Wallitt and SCWorx, Nominal Defendant.

The Zarins action contains substantially similar allegations as in the Consolidated

Derivative Action.

On February 15, 2022, the

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

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

as the Zarins action.

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

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

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

to the derivative class action litigation.

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

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

Other Investigations

In addition, as previously

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

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

Company is continuing to cooperate with the SEC regarding its investigation arising out of the April 13, 2020 press release and the events

The Company received a Wells notice on December 8, 2021 and an amended Wells notice on December 10, 2021.

Notice states that the staff of the Securities and Exchange Commission has made a preliminary determination to recommend that the Commission

file an enforcement action against the Company which would allege violations of Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities

Act of 1933 (the “Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”),

and Rules 10b-5(a), 10b-5(b), and 10b-5(c) thereunder.

The Wells Notice also indicates that the staff would seek fines and disgorgement,

including pre and post judgment interest in such enforcement proceeding.

The Company did not make a Wells submission to the Commission

in response to the Wells Notice.

The Company has since been actively engaged in discussions with

the Staff to settle the claims set forth in the Wells Notice.

In April 2020, we received

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

We cooperated fully with these

agencies, providing information and documents, as requested.

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

Also in April 2020, as previously

disclosed, we were contacted by the U.S.

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

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

We have cooperated

fully with the U.S.

Attorney’s Office in its investigation.

In connection with these

actions and investigations, the Company is obligated to indemnify its officers and directors for costs incurred in defending against these

claims and investigations.

Because the Company currently does not have the resources to pay for these costs, its directors and officers

liability insurance carrier has agreed to indemnify these persons.

Upon consummation of the settlement of the Consolidated Class Action,

the Company believes it will have satisfied its accrued retention obligations with respect to the insurance coverage.

David Klarman v.

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

619536/2019 (N.Y.

2 unchanged sentences

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

Klarman claims

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

does not believe that it owes the amount demanded and intends to vigorously defend against these claims.

On March 6, 2020,

SCWorx filed an answer and counterclaims against Mr.

On September 18, 2020, the Court granted Klarman's counsel's motion

to withdraw as counsel due to "irreconcilable differences."

The Court stayed the case for 45 days after service of

the Court's order.

Klarman's wife, Marie Klarman, Esq., filed a Notice of Appearance on November 6, 2020 and filed a motion

on November 9, 2020 seeking various forms of relief -- in violation of the Court's Individual Rules and the Commercial Division Rules.

We opposed Klarman’s motion on December 31, 2020 and the case was marked fully submitted on January 21, 2021.

and Order dated March 26, 2021, the Court granted Klarman’s motion to dismiss four (4) of fourteen (14) defenses, denied Klarman’s

motion to dismiss SCWorx’s counterclaims against him;

denied Klarman’s motion for summary judgment and denied Klarman’s

motion to strike allegations contained in the Affirmative Defenses and Counterclaims based on his contention that such allegations were

“scandalous”

or prejudicial.

On April 7, 2021, Klarman filed a Reply to the Counterclaims, denying the material allegations

and interposed numerous affirmative defenses.

The Court has issued a preliminary conference order, setting a discovery cut-off of

October 2022.

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

Stockholders’

Company has 45,000,000 common shares authorized with a par value of $0.001 per share.

of Shares Pursuant to Conversion of Series A Preferred Stock

On July 17, 2019, we issued

65,789 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 25,000 of such

shares of Series A Convertible Preferred Stock.

On September 9, 2019, we issued

200,000 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 76,000 of

Klarman claims that Alliance ceased

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

This action was settled on or about December 16, 2021

by the parties without any admission of liability or wrongdoing.

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

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

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

To date, all shares have been issued pursuant

to this agreement.

Stockholders’ Equity

Authorized Shares

The Company has 45,000,000

common shares authorized with a par value of $ 0.001 per share.

Issuance of Shares Pursuant to Conversion of

Series A Preferred Stock

During February 2021, the

Company issued 52,632 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the conversion of 20,000 of

such shares of Series A Convertible Preferred Stock.

On September 16, 2019, we

issued 43,081 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 16,371

of such shares of Series A Convertible Preferred Stock.

On September 16, 2019, we

issued 108,422 shares of our common stock to a holder of our shares of Series A Convertible Preferred Stock upon the conversion of 41,200

of such shares of Series A Convertible Preferred Stock.

On September 25, 2019, we

issued 73,156 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders

pursuant to the terms of such of the Series A Convertible Preferred Stock.

The shares had a fair value of $250,000.

On September 30, 2019, we

issued 24,843 shares of our common stock to a former employee in settlement of litigation.

The shares of common stock had a fair value

On November 11, 2019 we issued

200,000 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders pursuant

to the terms of such of the Series A Convertible Preferred Stock.

The shares had a fair value of $584,000.

On November 20, 2019, we issued

25,000 shares of our common stock to a former employee in per the terms of a settlement agreement.

The shares of common stock had a fair

value of $73,250.

On December 5, 2019, we issued

50,000 shares of our common stock to a director as compensation.

The shares of common stock had a fair value of $135,000.

On December 11, 2019 we issued

6,579 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders pursuant

to the terms of such of the Series A Convertible Preferred Stock.

The shares had a fair value of $21,053.

On December 23, 2019 we issued

9,211 shares of our common stock to the holders of Series A Convertible Preferred Stock in settlement of fees owed to such holders pursuant

to the terms of such of the Series A Convertible Preferred Stock.

The shares had a fair value of $26,343.

January 2020, the Company issued 5,264 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the

conversion of 2,000 of such shares of Series A Convertible Preferred Stock.

February 2020, the Company issued an aggregate of 172,369 shares of common stock to holders of its Series A Convertible Preferred

Stock upon the conversion of an aggregate of 65,500 of such shares of Series A Convertible Preferred Stock.

April 2020, the Company issued an aggregate of 1,043,935 shares of common stock to holders of its Series A Convertible Preferred

Stock upon the conversion of an aggregate of 396,695 of such shares of Series A Convertible Preferred Stock.

May 2020, the Company issued an aggregate of 51,316 shares of common stock to holders of its Series A Convertible Preferred Stock

upon the conversion of an aggregate of 19,500 of such shares of Series A Convertible Preferred Stock.

August 2020, the Company issued 13,158 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the

conversion of 5,000 of such shares of Series A Convertible Preferred Stock.

October 2020, the Company issued 13,158 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the

conversion of 5,000 of such shares of Series A Convertible Preferred Stock.

of Shares to Current and Former Employees and Directors

January 8, 2020, the Company issued 50,000 shares of common stock to a former employee per the terms of a settlement agreement.

March 12, 2020, the Company issued 16,667 shares of common stock to an employee pursuant to a vesting schedule.

April 15, 2020, the Company issued 3,913 shares of common stock to an employee pursuant to a vesting schedule.

April 16, 2020, the Company issued 5,264 shares of common stock valued at $36,584.80 or $6.95 per share to a director pursuant

to a vesting schedule.

April 21, 2020, the Company issued 30,303 shares of common stock to a former employee pursuant to a vesting schedule.

June 24, 2020, the Company issued 25,000 shares of common stock to an employee pursuant to a vesting schedule.

August 25, 2020, the Company issued 87,255 shares of common stock valued at $142,226 to a former employee per the terms of a settlement

agreement, settling $125,000 of accrued expenses and recorded a loss on settlement of $17,226.

Transfer of Common Stock to Consultants

On or about February 1, 2019,

the Company’s founder and CEO as well as another shareholder transferred an aggregate of approximately 1,379,000 and 144,000 shares

of common stock, respectively to certain consultants of the Company, of which approximately 983,000 and 144,000 shares of common stock,

respectively were sold to consultants in exchange for promissory notes.

The Company accounted for these share transfers as stock-based

compensation expense based upon the Black-Scholes model as if these were stock option grants made by the Company.

The Company used

the following inputs in the Black-Scholes option pricing model, expected life of 5 years, risk-free interest rate of 2.51%, volatility

92% and dividend yield of 0%.

As a result, the Company recognized approximately $3.6 million of stock-based compensation expense during

the first quarter of 2019 related to these share transfers.

Additionally, approximately 396,000 shares of common stock were transferred

by the founder and CEO to contractors for no consideration.

The Company accounted for these share transfers as stock-based compensation

based upon the underlying common stock price of $4.37 as of the date of transfer.

The Company recognized approximately $1.7 million

of stock-based compensation expense related to these transfers during the first quarter of 2019.

of Shares Pursuant to Exercises of Common Stock Warrants

April 14, 2020, a holder of common stock warrants exercised 7,000 warrants for a cash payment of, $38,570.

of Shares Pursuant to Cashless Exercises of Common Stock Warrants

April 2020, holders of common stock warrants exercised an aggregate of 520,925 warrants using a cashless exercise into 321,155

shares of common stock.

May 2020, holders of common stock warrants exercised an aggregate of 56,982 warrants using a cashless exercise into 26,034 shares

of common stock.

August 2020, holders of common stock warrants exercised an aggregate of 116,448 warrants using a cashless exercise into 68,715

shares of common stock.

of Shares Pursuant to Cashless Exercises of Stock Options

April 2020, holders of common stock options exercised an aggregate of 105,028 options using a cashless exercise into 57,534 shares

of common stock.

August 2020, holders of common stock options exercised an aggregate of 55,263 options using a cashless exercise into 28,890 shares

of common stock.

of Shares Pursuant to Settlement of Accounts Payable

April 16, 2020, the Company issued 100,000 shares of common stock in full settlement of $640,517 of accounts payable.

had a fair value of $6.95 per share.

May 12, 2020, the Company issued 104,567 shares of common stock in full settlement of $93,150 of accounts payable and recorded

a loss on settlement of $509,160.

During July 2021, the Company

issued 65,953 shares of common stock to a holder of its Series A Convertible Preferred Stock upon the conversion of 25,062 of such shares

of Series A Convertible Preferred Stock.

Issuance of Shares for Equity Financing

On January 6, 2021, The Company

issued 72,369 shares of common stock and 90,461 5-year warrants to purchase shares of common stock at $4.00 per share pursuant to the

prior receipt of $275,000 in equity financing.

Issuance of Shares for Common Stock Placement

On September 17, 2021, The

Company issued 298,883 shares of common stock and 298,883 5 year warrants to purchase shares of common stock at $ 1.79 for aggregate gross

proceeds of $ 525,000 .

Issuance of Shares for Vested Restricted Stock

Between January 25, 2021 and

August 13, 2021, the company issued a total of 504,965 shares of common stock to holders of fully vested restricted stock units.

Between October 4, 2021 and

October 14, 2021, the company issued a total of 157,582 shares of common stock to holders of fully vested restricted stock units.

Issuance of Shares Pursuant to Settlement of

Accounts Payable

On June 1, 2021, the Company

issued 96,757 shares of common stock in full settlement of $ 132,557 of accounts payable.

The shares had a fair value of $ 1.37 per share.

June 24, 2020, the Company issued 80,000 shares of common stock and warrants to purchase 100,000 shares of common stock, of which 50,000

shall be exercisable at $3.80 per share and the remaining 50,000 shall be exercisable at $5.80 per share, in each case for a term of

5 years, in connection with the termination of a consulting arrangement and in full settlement of any and all claims again the Company.

The Company had previously accrued $195,000 in connection with this consulting arrangement.

The stock had a fair value of $2.37 per share.

August 27, 2020, the Company issued 17,000 shares of common stock valued at $40,800 in full settlement of $48,790 of accounts

On July 14, 2021, the Company

issued 29,025 shares of common stock in full settlement of $ 85,622 of accounts payable.

The shares had a fair value of $ 2.95 per share.

The Company recorded a gain on settlement of accounts payable of $7,990.

September 10, 2020, the Company issued 140,000 shares of common stock valued at $806,400 in full settlement of $88,950 of accounts

payable and recorded a loss on settlement of $717,450.

On August 10, 2021, the Company

issued 11,611 shares of common stock in full settlement of $ 29,607 of accounts payable.

The shares had a fair value of $ 2.55 per share.

of Shares for Equity Financing

December 31, 2020, The Company issued 36,842 shares of common stock and 46,053 five year warrants to purchase shares of common

stock at $4.00 per share pursuant to the prior receipt of $140,000 in equity financing.

Preferred Stock

Issuance of Series A Preferred Stock

On August 10, 2021, the Company

issued 5,458 shares of common stock in full settlement of $ 13,919 of accounts payable.

The shares had a fair value of $ 2.55 per share.

On September 14, 2021, the

Company issued 27,403 shares of common stock in full settlement of $ 61,930 of accounts payable.

The shares had a fair value of $ 2.26 per

On November 1, 2021, the Company

issued 15,988 shares of common stock in full settlement of $ 27,178 of accounts payable.

The shares had a fair value of $ 1.70 per share.

On November 29, 2021, the

Company issued 12,522 shares of common stock in full settlement of $ 17,781 of accounts payable.

The shares had a fair value of $ 1.42 per

On December 28, 2021, the

Company authorized Series A Preferred Shares consisting of 900,000 authorized shares, with a par value of $0.001.

May 2020, the Company received $515,000 of a committed $565,000 from the sale of 135,527 shares of common stock (at a price of $3.80

per share) and warrants to purchase 169,409 shares of common stock, at an exercise price of $4.00 per share.

Company issued 23,037 shares of common stock in full settlement of $ 29,027 of accounts payable.

The shares had a fair value of $ 1.26

Issuance of Shares Pursuant to Legal Settlement

On December 12, 2021, the Company

issued 16,666 shares of common stock in settlement of $ 25,000 pursuant to a legal settlement.

Issuance of Shares for the Exercise of Options

On October 4, 2021, the Company

issued 6,579 shares of common stock in a cashless exercise of outstanding options.

Equity Financing

During May 2020, the Company

received $515,000 of a committed $565,000 from the sale of units (at a price of $3.80 per unit) comprised in the aggregate of 135,527

shares of common stock and warrants to purchase 169,409 shares of common stock, at an exercise price of $4.00 per share.

As of December

the full amount has not been received and only $140,000 worth of the shares and warrants have been issued.

The remaining $375,000 is

included in equity financing within current liabilities on the consolidated balance sheet.

Incentive Plan

connection with Alliance’s acquisition of SCW FL Corp., the Company adopted Alliance’s Second Amended and Restated

2016 Equity Incentive Plan (“2016 Plan”).

The 2016 Plan allows the Company to grant shares of the Company’s

common stock to the Company’s directors, officers, employees and consultants.

On January 30, 2019, the Alliance shareholders

approved the amendment of the 2016 Plan to increase the number of shares of common stock available for issuance thereunder to

3,000,000 shares of common stock.

February 13, 2019, the Board of Directors of the Company granted an aggregate of 425,000 restricted stock units (“RSUs”)

under the 2016 Plan, of which an aggregate of 325,000 shares were granted to management and vest quarterly over the next three years,

and of which 100,000 were issued to a consultant and vest quarterly over one year.

U pon the effectiveness under the Securities

Act of a registration statement on Form S-8 with respect to the shares covered by the 2016 Plan, t hese

RSUs vest in twelve equal quarterly instalments, commencing on the grant date of February 13, 2019 and had a grant date fair

value of approximately $2.7 million.

The Company also granted an additional 525,000 RSUs which

are subject to performance vesting, of which an aggregate of 225,000 shares were issued to management and 300,000 were issued to a consultant.

225,000 shares issued to management were cancelled in April 2020, when the person’s employment with the Company terminated.

Additionally,

the board of directors awarded stock options under the 2016 Plan to each of the four independent board members to acquire an aggregate

of 53,572 shares of the Company’s common stock and to an employee to acquire 25,000 shares.

The stock options have a term of five

years, an exercise price of $6.49 per share, vest quarterly over four quarters beginning on the grant date of February 13, 2019 and had

a grant date fair value of $431,000.

The Company determined the fair value of the stock options using the Black-Scholes model with the

following inputs:

expected life 10 years, risk-free interest rate 0.25%, dividend yield 0% and expected volatility 90%.

December 5, 2019, the Company issued 50,000 RSU’s to a member of the board of directors.

The RSU’s vested immediately and

had a fair value of $135,000.

Additionally, on December 10, 2019, the board of directors awarded stock options under the 2016 Plan to

each of the three remaining independent directors to 50,000 shares of the Company’s common stock.

The stock options have a term

of five years, an exercise price of $2.64 per share, vest immediately on the grant date of December 10, 2019 and had a grant date fair

value of $388,746.

The Company determined the fair value of the stock options using the Black-Scholes model with the following inputs:

expected life 10 years, risk-free interest rate 1.0%, dividend yield 0% and expected volatility 100%.

On June 28, 2019, the Company

terminated the aforementioned consultant and reversed the stock-based compensation expense recognized during the first quarter 2019 totaling

$162,250 as the consultant had not vested in any of the RSU’s.

On October 26, 2019, the employment

of the Employee who received the 250,000 RSU’s on February 13, 2019, terminated and the remaining stock based compensation for the

employee was cancelled as the employee had not vested in the shares.

310, 2021, the full amount had not been received and only $415,000 worth of the shares and warrants have been issued.

The remaining $125,000

is included in equity financing within current liabilities on the consolidated balance sheet.

Stock Incentive Plan

The number of shares of the

Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the year

ended December 31, 2021 are:

1 unchanged sentence

Stock Option Grants

Restricted Stock Units

Number of shares

Balance at December 31, 2020

Cancelled/Forfeited

Cancelled/Expired

Balance at December 31, 2021

Exercisable at December 31, 2021

number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based

vesting as of and for the year ended December 31, 2020 are:

The number of shares of the

Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the year

ended December 31, 2020 are:

Warrant Grants

5 unchanged sentences

Exercisable at December 31, 2020

The Company has classified the warrant as having

Level 2 inputs, and has used the Black-Scholes option-pricing model to value the warrant.

The fair value at the issuance dates for

the above warrant was based upon the following management assumptions:

Issuance dates

The Company has classified

the warrant as having Level 2 inputs, and has used the Black-Scholes option-pricing model to value the warrant.

The fair value at the

issuance dates for the above warrants issued during the years ended December 31, 2021 and 2020 were based upon the following management

Issuance date

Risk-free interest rate

0.49 - 0.88 %

Expected dividend yield

1 unchanged sentence

Fair value of common stock

The Company’s outstanding warrants and options

at December 31, 2021 are as follows:

1 unchanged sentence

Warrants Exercisable

Exercise Price Range

Weighted Average

Contractual Life (in

Weighted Average

Contractual Life

Exercise Price

Intrinsic Value

1.79 - $20.90

1 unchanged sentence

Options Exercisable

Exercise Price Range

Weighted Average

Contractual Life (in

Weighted Average

Number Outstanding

Contractual Life

Exercise Price

Intrinsic Value

2.64 - $28.50

of December 31, 2020 and 2019, the total unrecognized expense for unvested stock options and restricted stock awards was approximately $2.5 million and $3.2, respectively, to be recognized over a three-year period for restricted stock

awards and one year for option grants from the date of grant.

compensation expense for the years ended December 31, 2020 and 2019 was as follows:

For the years ended December 31,

As of December 31, 2021 and

2020, the total unrecognized expense for unvested stock options and restricted stock awards was approximately $ 1.0 million and $ 2.5 million,

respectively, to be recognized over a one to three-year period for restricted stock awards and one year for option grants from the date

Stock-based compensation expense

compensation expense categorized by the equity components for the years ended December 31, 2020 and 2019 is as follows:

for the years ended December 31, 2021 and 2020 was as follows:

For the years ended

option awards

of common stock by founders to contractors

compensation is included in general and administrative expenses on the consolidated statements of operations

Stock-based compensation expense

categorized by the equity components for the years ended December 31, 2021 and 2020 is as follows:

For the years ended

Transfer of common stock by founders to contractors

Stock compensation is included

in general and administrative expenses on the consolidated statements of operations

Net Loss Per Share

net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock outstanding

during each period.

Diluted net loss per share is computed by dividing net loss for the period by the weighted average shares

of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

The Company uses

the treasury stock method to determine whether there is a dilutive effect of outstanding option grants.

following securities were excluded from the computation of diluted net loss per share for the periods presented because including

them would have been anti-dilutive:

Basic net loss per share is

computed by dividing net loss for the period by the weighted average shares of common stock outstanding during each period.

loss per share is computed by dividing net loss for the period by the weighted average shares of common stock, common stock equivalents

and potentially dilutive securities outstanding during each period.

The Company uses the treasury stock method to determine whether there

is a dilutive effect of outstanding option grants.

The following securities were

excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:

For the years ended

common stock equivalents

virtue of a merger of the limited liability company into a corporation, the Company became a corporation during 2018.

significant items comprising the Company’s net deferred taxes as of December 31, 2020 and 2019 are as follows:

Stock options

Total common stock equivalents

By virtue of a merger of the

limited liability company into a corporation, the Company became a corporation during 2018.

The significant items comprising

the Company’s net deferred taxes as of December 31, 2021 and 2020 are as follows:

As of December 31,

4 unchanged sentences

Valuation allowance

( 10,589,220 )

( 8,893,457 )

Total deferred tax asset

Basis difference fixed assets

Basis difference intangible assets

Other liabilities

Total deferred tax liability

Net deferred tax asset (liability)

components of the provision for (benefit from) income taxes consist of the following:

The components of the provision

for (benefit from) income taxes consist of the following:

As of December 31,

3 unchanged sentences

change in valuation allowance

provision for (benefit from) income taxes varies from the amount computed by applying the statutory rate for reasons summarized

of December 31,

loss before tax per financial statements

The provision for (benefit

from) income taxes varies from the amount computed by applying the statutory rate for reasons summarized below:

As of December 31,

Net loss before tax per financial statements

$ ( 3,814,468 )

in valuation allowance

of December 31, 2020 and 2019, the Company had federal net operating loss carryforwards of approximately $32.6 million and $28.3 million,

respectively, available to offset future taxable income.

As of December 31, 2020 and 2019, the Company had state loss carry-forwards

of approximately $15.1 million and $10.8, respectively.

Future utilization of net operating losses may be limited due to potential ownership

changes under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).

The federal net operating loss carryforwards

can be carried forward indefinitely and state loss carryforwards begin to expire in 2039.

valuation allowance as of December 31, 2020 and 2019 was $8,893,457 and $7,088,189, respectively.

The net change in valuation allowance

for the years ended December 31, 2020 and 2019 was an increase of $1,805,268 and $7,014,399, respectively.

In assessing the realizability

of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets

will not be realized.

The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income

during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred income

tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Based on consideration of these

items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances

to warrant the application of a full valuation allowance as of December 31, 2020 and 2019.

Company had no unrecognized tax benefits during 2020 or 2019.

By statute, all tax years are open to examination by the major taxing

jurisdictions to which the Company is subject.

$ ( 7,402,350 )

Statutory rate

( 1,554,494 )

State tax rate

Permanent items

Change in valuation allowance

As of December 31, 2021 and

2020, the Company had federal net operating loss carryforwards of approximately $ 36.6 million and $ 32.6 million, respectively, available

to offset future taxable income.

As of December 31, 2021 and 2020, the Company had state loss carry-forwards of approximately

$ 16 million and $ 15.1 , respectively.

Future utilization of net operating losses may be limited due to potential ownership changes under

Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”).

The federal net operating loss carryforwards can

be carried forward indefinitely and state loss carryforwards begin to expire in 2039.

The valuation allowance as

of December 31, 2021 and 2020 was $ 10,589,220 and $ 8,893,457 , respectively.

The net change in valuation allowance for the years ended

December 31, 2021 and 2020 was an increase of $ 1,695,763 and $ 1,805,268 , respectively.

In assessing the realizability of deferred tax

assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be

The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the

periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred income tax liabilities,

projected future taxable income, and tax planning strategies in making this assessment.

Based on consideration of these items, management

has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application

of a full valuation allowance as of December 31, 2021 and 2020.

The Company had no unrecognized

tax benefits during 2021 or 2020.

By statute, all tax years are open to examination by the major taxing jurisdictions to which the Company

Subsequent Events

of CARES funding

March 17, 2021, we received $139,595 in financing from the U.S.

government’s Payroll Protection Program (“PPP”).

We entered into a loan agreement with Bank of America.

This loan agreement was pursuant to the CARES Act.

The CARES Act was established

in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans

to qualifying businesses for up to 2.5 times their average monthly payroll costs.

The amount borrowed under the CARES Act is eligible

to be forgiven provided that (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the

PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs.

The amount of

loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels.

and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will be deferred for six months

and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date.

There is no prepayment penalty on

the CARES Act Loan.

in Management

January 19, 2021, Marc.

Schessel’s employment as CEO of SCWorx, Corp.

ceased by mutual agreement, and the Company and

Schessel concurrently entered into a consulting agreement (“Consulting Agreement”) under which Mr.

Schessel will

provide consulting services to the Company.

The Consulting Agreement provides for annual consulting fees of $295,000.

such agreement provides for cash and equity bonuses based on revenue generation.

The Consulting Agreement is for a term of two

years, but may be terminated by the Company for “cause”

(as defined) or by either party for any reason or no reason

upon sixty days prior notice.

The Consulting Agreement also contains non-competition and non-solicitation provisions which are

applicable during the term of the Consulting Agreement and for a period of two years thereafter.

January 6, 2021, The Company issued 72,369 shares of common stock and 90,461 5 year warrants to purchase shares of common stock

at $4.00 per share pursuant to the prior receipt of $275,000 in equity financing.

February 8, 2021, the Company issued 52,632 shares of common stock to a holder of its Series A Convertible Preferred Stock upon

the conversion of 20,000 of such shares of Series A Convertible Preferred Stock.

January 25, 2021 and February 8, 2021, the Company issued a total of 8,832 shares of common stock to holders of fully vested restricted

to the rules and regulations of the SEC, the Company has filed certain agreements as exhibits to this Annual Report on Form 10-K.

These agreements may contain representations and warranties by the parties.

These representations and warranties have been made

solely for the benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to

such other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in

such agreements and are subject to more recent developments, which may not be fully reflected in the Company’s public disclosure,

(iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality standards different

from what may be viewed as material to investors.

Accordingly, these representations and warranties may not describe the Company’s

actual state of affairs at the date hereof and should not be relied upon.

of Incorporation, as amended February 1, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s 10-K filed

with the SEC on April 1, 2019)

and Restated By-laws (Incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 (File

Issuance of Shares for Vested Restricted Stock

Between January 20, 2022 and

March 1, 2022, the company issued a total of 18,666 shares of common stock to holders of fully vested restricted stock units.

Issuance of Shares Pursuant to Legal Settlement

Between January 18,

2022 and March 18, 2022, the Company issued 71,758 shares of common stock in settlement of an aggregate $ 75,000 pursuant to a legal settlement.

Issuance of Shares Pursuant to Settlement of

Accounts Payable

On March 21, 2022, the Company

issued 12,196 shares of common stock in full settlement of $ 10,000 of accounts payable.

The shares had a fair value of $ 0.82 per share.

EXHIBIT INDEX

Pursuant to the rules and

regulations of the SEC, the Company has filed certain agreements as exhibits to this Annual Report on Form 10-K.

These agreements may

contain representations and warranties by the parties.

These representations and warranties have been made solely for the benefit of the

other party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or parties, (ii) were

made only as of the date of such agreements or such other date(s) as may be specified in such agreements and are subject to more recent

developments, which may not be fully reflected in the Company’s public disclosure, (iii) may reflect the allocation of risk among

the parties to such agreements and (iv) may apply materiality standards different from what may be viewed as material to investors.

these representations and warranties may not describe the Company’s actual state of affairs at the date hereof and should not be

Exhibit Description

Certificate of Incorporation, as amended February 1, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s 10-K filed with the SEC on April 1, 2019)

Amended and Restated By-laws (Incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 (File No.

333-213166) filed with the SEC on August 16, 2016)

Consulting Agreement dated January 19, 2020 with Marc Schessel*

Equity Financing and warrant agreement dated December 31, 2020*

Equity Financing and warrant agreement dated January 6, 2021*

USA Procurement Purchase agreement dated May 26, 2020*

USA Procurement Settlement Agreement dated March 12, 2021*

Consent of independent registered public accounting firm*

Warrant dated September 17, 2021 (incorporated by reference to Exhibit #4.1 to the Company’s 8-K filed with the SEC on September 23, 2021)

Securities Purchase Agreement dated September 17, 2021 (incorporated by reference to Exhibit #10.1 to the Company’s 8-K filed with the SEC on September 23, 2021)

Registration Rights Agreement dated September 17, 2021 (incorporated by reference to Exhibit #10.2 to the Company’s 8-K filed with the SEC on September 23, 2021)

Consulting Agreement dated January 19, 2021 with Marc Schessel (incorporated by reference to Exhibit 10.1 to the Company’s 10-K filed with the SEC on May 19, 2021)

Equity Financing and warrant agreement dated January 6, 2021 (incorporated by reference to Exhibit 10.3 to the Company’s 10-K filed with the SEC on May 19, 2021)

USA Procurement Purchase agreement dated May 26, 2020 (incorporated by reference to Exhibit 10.4 to the Company’s 10-K filed with the SEC on May 19, 2021)

USA Procurement Settlement Agreement dated March 12, 2021 (incorporated by reference to Exhibit 10.5 to the Company’s 10-K filed with the SEC on May 19, 2021)

Class Action Settlement Agreement dated December 20, 2021*

Derivative Action Settlement Agreement dated December 24, 2021*

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

2 unchanged sentences

Section 1350 Certification of the Chief Financial Officer*

Taxonomy Extension Schema Document

Taxonomy Calculation Linkbase Document

Taxonomy Labels Linkbase Document

Taxonomy Presentation Linkbase Document

Taxonomy Extension Definition Linkbase Document

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Filed herewith

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 9A. Controls and Procedures