What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-04-17 compared with 2022-03-31 · 83 added, 154 removed, 527 unchanged (31% of the section changed)

41 unchanged sentences

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.

● virtualized

Item Master File repair, expansion and automation;

for proposal automation;

data analytics modeling;

integration and warehousing.

SCWorx continues to provide

12 unchanged sentences

partnerships.

SCWorx, as part of the acquisition

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

which it has paused due to COVID-19.

We currently host our solutions,

83 unchanged sentences

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

Significant customers are

those which represent more than 10% of the Company’s revenue for each period presented, or the Company’s accounts receivable

balance as of each respective balance sheet date.

For each significant customer, revenue as a percentage of total revenue and accounts

receivable as a percentage of total net accounts receivable are as follows:

For the years ended

Accounts Receivable

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

Allowance for Doubtful Accounts

51 unchanged sentences

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.

Our identified

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

Management 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,

we assess 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, we 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.

goodwill, refer to Note 4, Business Combinations.

Property and Equipment

23 unchanged sentences

the following performance obligations in our 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 our 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,

Normalization:

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

Software-as-a-service

which is generated from clients’ access of and usage of our 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.

31 unchanged sentences

is made available to customers.

We do have some contracts

that have payment terms that differ from the timing of revenue recognition, which requires us to assess whether the transaction price

for those contracts include a significant financing component.

We have 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.

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.

Some contracts have payment terms that differ from the timing of revenue

recognition, which requires us to assess whether the transaction price for those contracts include a significant financing component.

We have 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.

We do 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.

As of December 31, 2021, we

96 unchanged sentences

Loss Per Share

We compute 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, we had 1,161,913 and 790,847, respectively, common stock equivalents outstanding.

We compute 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 and warrants and the exercise of

fully vested restricted stock units.

Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

December 31, 2022 and 2021, we had 4,095,867 and 3,322,670, respectively, common stock equivalents outstanding.

Indemnification

73 unchanged sentences

the health care industry, including many of the Company’s hospital customers.

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.

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.

Year Ended December 31, 2022 Compared to

6 unchanged sentences

General and administrative

Other (expense) income

Other income (expense)

Provision for income taxes

$ (1,847,406 )

$ (3,814,468 )

Revenue for the year ended

1 unchanged sentence

The decline in revenue is primarily

related to decreases in revenues from PPE sales of approximately $410,000 as we have pivoted away from direct PPE inventory sales and

a decrease of approximately $125,000 in ticket sales upon the suspension of our Cagetix operations due to COVID-19.

related to a slight decrease in revenues from SaaS customer sales during the period.

Cost of Revenues

2 unchanged sentences

The $157,956 decrease is primarily

related to a decrease of approximately $103,000 in costs related to ticket sales revenue which was suspended in 2021 and decrease of approximately

$127,000 in costs related to PPE inventory sales with the remaining decrease related to lowered salary costs of revenue in the current

related to a decrease in labor costs during the current year.

General and administrative

1 unchanged sentence

This decrease was primarily due to a decrease in salary expense of approximately $64,000, a decrease in stock-based compensation (non-cash)

of approximately $600,000, a decrease in legal and professional fees of $1,080,000, a decrease in travel expense of $170,000, a decrease

in accounting fees of $40,000, and a decrease in commission expense of $170,000, partially offset by an increase in inventory expense

We expect general and administrative expenses to remain relatively flat during 2022, unless we complete a capital raise,

in which case we would expect expenses to grow as we ramp our sales force.

We had other expense of $1,357,339

during the year ended December 31, 2020.

Other expense in 2020 related to net losses on the settlement of accounts payable due to the

fair value of the shares issued in settlement being greater than the value of the accounts payable.

of approximately $1,546,000, a decrease in accounting fees of $144,000, a decrease in inventory write down expense of $170,000, a decrease

in bad debt expense of $204,000, and a decrease in commission expense of $210,000.

We expect general and administrative expenses (excluding

non-cash compensation expenses) to remain relatively flat during 2023 with the exception of increases in our sales force.

We had other income of $279,191

during the year ended December 31, 2022 related to the forgiveness of PPP loans.

Liquidity and Capital Resources

18 unchanged sentences

Recent Fundraising

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

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.

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.

The Company expects the loan to be fully forgiven.

On September 17, 2021, The

Company issued units at $1.79 per unit comprised in the aggregate of 298,883 shares of common stock and 298,883 5 year warrants to purchase

shares of common stock for aggregate gross proceeds of $525,000.

During May 2020, we received

$515,000 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.

Of the $515,000 investment, $125,000 is subject to execution of definitive documents.

Between September 7, 2022

and September 12, 2022, the Company issued an aggregate 1,153,845 shares of common stock as commitment shares pursuant to a private placement

The shares had a fair value of $750,000 or $0.65 per share.

Company received aggregate net proceeds related to this placement

We are currently experiencing

3 unchanged sentences

Based on our current business

plan, if we had sufficient capital resources, we anticipate that our operating activities would use approximately $400,000 in cash per

month over the next twelve months, or approximately $4.8 million.

Currently we have only limited cash on hand, and consequently, we are

unable to implement our current business plan.

Accordingly, we have an immediate need for additional capital to fund our operating activities.

plan, if we had sufficient capital resources, we anticipate that our operating activities would use a net of approximately $50,000 in

cash per month over the next twelve months, or approximately $600,000.

Currently we have only limited cash on hand, and consequently,

we are unable to implement our current business plan.

Accordingly, we have an immediate need for additional capital to fund our operating

In order to remedy this liquidity

8 unchanged sentences

by the end of 2023, which should ameliorate our liquidity deficiency.

If we are unable to raise additional funds in the near

term, we will not be able to fully implement our business plan, in which case there could be a material adverse effect on our results

of operations and financial condition.

If we are unable to raise additional funds in the near term, we

will not be able to fully implement our business plan, in which case there could be a material adverse effect on our results of operations

and financial condition.

In the event we do not generate

3 unchanged sentences

The accompanying financial statements do not include any adjustments that might

be required should the Company be unable to recover the value of its assets or satisfy its liabilities (see Note 2 to the Financial Statements

- Liquidity/Going Concern).

be required should the Company be unable to recover the value of its assets or satisfy its liabilities.

Based on our current limited

13 unchanged sentences

31, 2022 have resulted in negative cash flows from operations of $546,663.

If we are able to raise additional capital during first

half of 2022 and generate additional revenue through the acquisition of new customers, and provided we realize a reduction in legal and

accounting expenses, which we anticipate, we believe we may begin to generate positive operating cash flows by the end of

However, there is no assurance we will be able to increase our revenue sufficiently so as to generate positive operating cash flows

within this time frame.

If we are able to raise additional capital during first half

of 2023 and generate additional revenue through the acquisition of new customers, we believe we may begin to generate positive operating

cash flows by the end of 2023.

However, there is no assurance we will be able to increase our revenue sufficiently so as to generate positive

operating cash flows within this time frame.

Operating Activities

Net cash used in operating

activities was $546,663 for the year ended December 31, 2022, mainly related to the net loss of $1,847,406 and a gain on forgiveness of

PPP Loans of $285,818, partially offset by non-cash stock-based compensation of $1,141,932 related to various equity awards to employees

and non-employees, $78,125 in bad debt expense, and a $156,600 decrease in inventory valuation.

Net cash used in operating

activities was $1,069,945 for the year ended December 31, 2021, mainly related to the net loss of $3,814,46 and decreases of $452,284

1 unchanged sentence

$2,687,901 related to various equity awards to employees and non-employees, $163,917 in bad debt expense, and a $475,000 decrease in inventory

Net cash used in operating

activities was $959,070 for the year ended December 31, 2020, mainly related to the net loss of $7,402,350, a $523,440 increase in inventory

and a $76,470 increase in prepaid expenses, partially offset by non-cash stock-based compensation of $3,284,570 related to various equity

awards to employees and non-employees, $1,612,538 in non-cash losses related to the settlement of accounts payable, an $848,473 increase

in accounts payable and accrued liabilities.

Investing Activities

4 unchanged sentences

activities was $725,050 for the year ended December 31, 2022.

This consisted proceeds from a common stock placement.

Net cash provided by financing

activities was $764,595 for the year ended December 31, 2021.

This consisted of $139,595 in proceeds from a loan payable, $100,000 advanced

by the Company’s former CEO (also a significant shareholder), and $525,000 from a common stock placement.

Net cash provided by financing

activities was $847,542 for the year ended December 31, 2020, primarily related to $515,000 in proceeds from equity financing and $293,972

in proceeds from a note payable.

Contractual Cash Obligations

8 unchanged sentences

company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Financial Statements and Supplementary

The consolidated financial

statements are included in Part IV, Item 15 (a) (1) of this Report.

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure

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 7. Management’s Discussion and Analysis