What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-04-17 compared with 2022-03-31 · 269 added, 507 removed, 1166 unchanged (40% of the section changed)

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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.

to discuss remediation efforts.

Our management is currently considering looking for additional accounting and finance personnel to assist

in the remediation efforts.

Notwithstanding the foregoing,

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Other Information

Disclosure Regarding

Foreign Jurisdictions that Prevent Inspections.

Disclosure Regarding Foreign Jurisdictions that Prevent

Not applicable.

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

President & Chief Executive Officer

President & Chief Executive Officer, Director

Chief Financial Officer

Steven Horowitz

Steven Wallitt

Background of Officers and Directors

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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.

a partner at CFO Performance Partners, a professional services firm that provides CFO 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

from Columbia University and a BS in Accounting from the University of Maryland.

John is a member of Financial Executives Institute (FEI)

and Executive Forum.

Steven Horowitz

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to the Board of Directors in August 2021.

Since 2012, Mr.

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.

Horowitz is currently the Chief Executive Officer of CareCentrix, a multi-billion dollar

health care services company, after previously serving as its Chief Financial Officer since 2012.

Prior to joining CareCentrix,

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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

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

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 Center.

Steve received his MBA from

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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.

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.

Steve is a member of the American Institute of Certified Public Accountants (AICPA) and the Wall Street Journal CFO

Code of Business Conduct and Ethics

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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.

During the past ten years, none of our current officers, directors,

significant employees or control persons have been involved in any legal proceedings as described in Item 401(f) of Regulation S-K.

involving our former CEO, Marc S.

Schessel, is described in Item 3, “Legal Proceedings.”

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.

The Board of Directors

currently consists of four 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

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In addition, each of Mr.

Horowitz and Mr.

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

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Ferrara (chair), Mr.

Horowitz and Mr.

Hannibal, and all except for Mr.

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

Horowitz, and all currently satisfy the independence

requirements and other established criteria of Nasdaq.

The Nominating and Governance

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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.

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, 2022, 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.

Executive Compensation

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Timothy Hannibal (1)

President, Chief Executive Officer and

President, Chief Executive Officer and Director

Chris Kohler (2)

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.

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

On August 10, 2020 Mr.

August 10, 2020 Mr.

Hannibal was appointed President and Chief Operating Officer.

On May 28, 2021 Mr.

Hannibal was appointed President and Chief Executive Officer.

Hannibal was appointed President

and Chief Executive Officer.

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

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Steven Wallitt (4)

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.

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

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

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

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

Mr Wallitt’s service was not continued effective approval of

the Company’s proxy statement nominations at our shareholder meeting held December 22, 2022.

Security Ownership of Certain Beneficial

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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.

Steven Wallitt

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, 2023.

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Outstanding Equity Awards at December 31, 2022

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

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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

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sheet as of December 31, 2022

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.

Director Independence

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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, 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.

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 ended December 31, 2022.

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

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Exhibits and Financial Statement Schedules

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

Financial Statements .

following documents are filed as a part of this report:

(1) Financial

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.

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.

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

(3) Exhibits .

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

Pursuant to the requirements

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President, Chief Executive Officer

March 31, 2022

April 17, 2023

/s/ Chris Kohler

Chief Financial Officer

March 31, 2022

April 17, 2023

Pursuant to the requirements

3 unchanged sentences

Timothy Hannibal

President, Chief Executive Officer

March 31, 2022

President, Chief Executive Officer, Director

April 17, 2023

/s/ Chris Kohler

Chief Financial Officer

March 31, 2022

April 17, 2023

/s/ Alton Irby

March 31, 2022

/s/ Steven Wallitt

Steven Wallitt,

March 31, 2022

April 17, 2023

/s/ John Ferrara

March 31, 2022

April 17, 2023

/s/ Steven Horowitz

Steven Horowitz

March 31, 2022

April 17, 2023

Index to Consolidated Financial Statements

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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

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We have served as the Company’s auditor

March 31, 2022

April 17, 2023

Consolidated Balance Sheets

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900,000 shares authorized;

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

39,810 shares issued and outstanding

Common stock, $ 0.001 par value;

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Other income (expense)

Loss on settlement of accounts payable

( 1,357,339 )

Gain on forgiveness of PPP loan

Total other income (expense)

Net loss before income taxes

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$ ( 24,011,291 )

Conversion of Series A Convertible Preferred Stock into common stock

Shares issued as settlement of accounts payable

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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

Commitment shares issued in conjunction with capital raise

Stock based compensation

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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 common stock placement

Shares issued for vested restricted stock units

Shares issued for cashless exercise of options

Shares issued for equity financing

Shares ussuable for settlement of legal obligations

Stock based compensation

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

Amortization of intangibles

Change in inventory value

Gain on forgiveness of PPP loan

Stock-based compensation

Loss on settlement of accounts payable

Bad debt expense

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Cash flows from financing activities:

Proceeds from common stock placement

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

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Shares issued for equity financing

Commitment shares issued in conjunction with capital raise

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

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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

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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,

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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

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

losses from operations and incurred a net loss of $ 3,814,468 for the year ended December 31, 2021 and $ 7,402,350 for the year ended December

The accumulated deficit as of December 31, 2021 was $ 24,011,291 The Company has not yet achieved profitability and expects to

continue to incur cash outflows from operations.

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.

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.

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

Summary of Significant Accounting Policies

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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.

The Company did not have any amounts in excess of the FDIC insured limit for the years ended December 31, 2022 and 2021.

Fair Value of Financial Instruments

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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

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

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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:

During the year ended December 31, 2022, the

Company wrote off the remaining value of this inventory as unsellable and is in the process of disposal.

Inventory assets as of December

31, 2022 and 2021 consisted of the following:

Allowance for obsolescence

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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.

goodwill, refer to Note 4, Business Combinations.

Property and Equipment

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and cash flows.

PPE Inventory sales

from the sale of inventory are typically recognized upon shipment to a customer as long as the Company has met all performance obligations

related to the sale in accordance to Topic 606.

Brokered PPE sales

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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.

assumed to be purchased from the exercise of stock options or warrants and the exercise of fully vested restricted stock units.

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

As of December 31, 2021 and 2020, the Company had 4,095,867

and 3,322,670 , respectively, common stock equivalents outstanding.

Indemnification

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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 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

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Aggregate purchase price

Identified intangible assets

consist of the following:

December 31, 2020

Intangible assets

Ticketing software

Promoter relationships

Total intangible assets

$ ( 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

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There is no prepayment penalty on the CARES Act Loan.

The Company expects the loan to be fully forgiven.

In May 2022, the Company was granted an extension on the

maturity date of this note until March 5, 2025 .

The loan was partially forgiven in the amount of $ 139,569 in September 2022 with the balance

remaining due.

On March 17, 2021, we received

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There is no prepayment penalty on the CARES Act Loan.

The Company expects the loan to be fully forgiven.

This note was fully forgiven on March 12, 2022.

Operating Leases

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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

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As of December 31, 2022

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.

and 2021, there were no assets recorded under operating leases.

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

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Total lease cost

Other information related

to leases was as follows:

For the years ended

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, 2022 and

2020, the Company has no additional operating leases, other than those noted above, and no financing leases.

2021, the Company has no additional operating leases, and no financing leases.

Commitments and Contingencies

In conducting our business,

we may become involved in legal proceedings.

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

incurred and the amount can be reasonably estimated.

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

the range is accrued.

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

the range is accrued.

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

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

Settlement of Consolidated

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

SCWorx, et ano.

and Leonard v.

6 unchanged sentences

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.

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.

order dated March 22, 2022, the Court granted preliminary approval of the class action.

After a fairness hearing held on June 29, 2022,

the Court approved the Stipulation of Settlement.

CorProminence d/b/a Core IR v.

AAA Arbitration Case 01-22-0001-5709

As previously disclosed, on April 25, 2022, the

Company received a Demand for Arbitration along with a Statement of Claim filed by Core IR with the American Arbitration Association seeking

damages in the amount of approximately $ 190,000.00 arising out of a marketing and consulting agreement.

The Company filed its answer,

affirmative defenses and counterclaims on May 16, 2022.

By order of the arbitrator dated November 1, 2022, Core IR received permission

to amend its Statement of Claim to increase its request for damages to $ 257,545.63 .

The arbitration hearing commences on March 20, 2023

and will continue through March 24, 2023.

Hadrian Equities Partners, LLC et ano.

22-cv-07096 (JLR) (S.D.N.Y)

On August 19, 2022, Hadrian Equities Partners,

LLC and the Phillip W.

2007 Irrevocable Trust filed a complaint in the United States District Court for the Southern District

of New York alleging that SCWorx was dilatory and did not comply with its alleged contractual duties to remove the restrictions from Plaintiffs’

converted AMMA stock to SCWorx stock until August 10 and August 11, 2020.

Plaintiffs allege that as a result, they were unable to sell

their SCWorx stock when SCWorx was trading at its highest price on April 13, 2020.

The Complaint seeks $ 500,000 in damages.

Complaint has not been served.

Upon review of the Complaint, SCWorx counsel provided Plaintiffs’ counsel with a “safe harbor”

Notice of Motion for sanctions pursuant to Fed.

11 and letter explaining that the material allegations in the Complaint are

false inasmuch as the restrictions on Plaintiffs’ SCWorx shares were removed on April 21, 2020– after months of waiting for

Plaintiffs to supply the correct documents with accurate information so that outside counsel could provide an opinion and clear the stocks

The “safe harbor” letter and Notice of Motion gave Plaintiffs 21 days to withdraw the Complaint.

for and receiving several extensions in addition to the 21 days, Plaintiffs have not withdrawn the Complaint and thus, a Motion for Sanctions

was filed by SCWorx on November 4, 2022.

After the motion for sanctions was filed, Plaintiffs filed an Amended Complaint on November 28,

On February 6, 2023, SCWorx filed its answer to the Amended Complaint interposing numerous defenses.

SCWorx is awaiting a decision

from the Court on its Motion for Sanctions.

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.

Ct., Suffolk County )

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

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

Klarman claims that Alliance ceased

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

This action was settled on or about December 16, 2021

by the parties without any admission of liability or wrongdoing.

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

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

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

To date, all shares have been issued pursuant

to this agreement.

As previously disclosed, on or about April 6,

2022, the Company reached a settlement in principle with the SEC Staff which, subject to a few changes, was subsequently approved by the

Commission in which the Company agreed to resolve the SEC’s investigation regarding the April 13, 2020 press release and related

disclosures (related to Covid-19 rapid test kits) through the Company’s payment of (a) a civil monetary penalty of $125,000, payable

in 4 equal installments over 12 months and (b) disgorgement of $471,000 and prejudgment interest in the amount of $32,761.56 which payment

is to be deemed satisfied by the transfer by the Company, no later than 30 days after the entry of the Class Distribution Order in the

class action entitled Yannes v.

of shares of SCWorx’s common stock, valued at $600,000 at the time of issuance to authorized

claimants in the Yannes settlement, provided that the Class Distribution Order is entered within 365 days from the entry of the Final

Judgment in the SEC action.

In the event that the Company does not transfer shares of its common stock, valued at $600,000 at the time

of issuance to authorized claimants in the class action settlement within 365 days from the entry of a Final Judgment, the Company will

be required to remit to the SEC the full amount of disgorgement within 395 days from entry of a Final Judgment.

On May 31, 2022, the Commission

filed a complaint against Marc Schessel and the Company in the United States District Court for the District of New Jersey alleging 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 relating to the April 13,

2020 press release and related disclosures we made in relation to the transaction involving COVID-19 test kits.

At the same time, on May

31, 2022, the Commission filed a motion for approval of the Consent Judgment which contained the aforementioned fine, disgorgement requirement

as well as an agreement by the Company to an injunction permanently restraining and enjoining the Company from violating Section 10(b)

of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C.

§ 78j(b)] and Rules 10b-5(a), (b), and (c) thereunder

[17 C.F.R § 240.10b ..

5(a), (b), (c)];

and Section 17(a) of the Securities Act of 1933 (“Securities Act’’) [15

On June 2, 2022, the Court granted the motion, approved the settlement and entered a final judgment.

thus far paid 3 of 4 installments on the monetary penalty of $125,000.

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.

Stockholders’ Equity

1 unchanged sentence

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.

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 .

Common shares and 900,000 Series A convertible preferred shares authorized with a par value of $ 0.001 per share.

Issuance of Shares for Vested Restricted Stock

1 unchanged sentence

August 9, 2022, the Company issued a total of 107,998 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.

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.

On August 10, 2021, the Company

On March 31, 2022, the Company

issued 12,196 shares of common stock in full settlement of $ 10,000 of accounts payable.

6 unchanged sentences

The shares had a fair value of $ 0.79 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 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.

Between January 18, 2022 and

March 18, 2022, the Company issued an aggregate 71,758 shares of common stock in settlement of $ 75,000 pursuant to a legal settlement.

Issuance of Shares in conjunction with capital

On June 28, 2022, the Company

issued 277,778 shares of common stock as commitment shares pursuant to a capital funding agreement.

The shares had a fair value of $ 200,000

or $ 0.72 per share.

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

of $ 725,050 .

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

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.

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.

As of September 30, 2022, $415,000 worth of the shares

and warrants have been issued.

The remaining $ 125,000 received by the Company is included in equity financing within current liabilities

on the consolidated balance sheet.

Stock Incentive Plan

4 unchanged sentences

Stock Option Grants

Number of shares

Balance at December 31, 2020

Cancelled/Expired

Balance at December 31, 2021

Exercisable at December 31, 2021

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

Stock Option Grants

Restricted Stock Units

Number of shares subject to warrants

average exercise price per share

Number of shares subject to options

average exercise price per share

Number of shares subject to restricted stock units

Balance at December 31, 2021

Cancelled/Forfeited

Cancelled/Expired

Balance at December 31, 2022

2 unchanged sentences

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

Expected volatility

Fair value of common stock

The Company’s outstanding warrants and options

at December 31, 2021 are as follows:

The Company’s outstanding warrants

and options at December 31, 2021 are as follows:

Warrants Outstanding

Warrants Exercisable

Weighted Average

Contractual Life

Exercise Price

Exercise Price Range

Number Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Number Exercisable

Weighted Average Exercise Price

Intrinsic Value

$ 0.65 - $ 20.90

1 unchanged sentence

Options Exercisable

Exercise Price Range

Number Outstanding

Contractual Life

Exercise Price

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Number Exercisable

Weighted Average Exercise Price

Intrinsic Value

$ 2.64 - $ 6.84

As of December 31, 2022 and

2020, the total unrecognized expense for unvested stock options and restricted stock awards was approximately $ 1.0 million and $ 2.5 million,

2021, the total unrecognized expense for unvested stock options and restricted stock awards was approximately $ 220,000 and $ 1.0 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

6 unchanged sentences

For the years ended

Transfer of common stock by founders to contractors

Stock compensation is included

11 unchanged sentences

Stock options

Restricted stock units

Total common stock equivalents

30 unchanged sentences

Statutory rate

( 1,554,494 )

State tax rate

4 unchanged sentences

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.

As of December 31, 2022 and 2021, the Company had state loss carry-forwards of approximately $ 17.1 million

and $ 16 , 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

2 unchanged sentences

December 31, 2022 and 2021 was an increase of $ 549,770 and $ 1,695,763 , 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.

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, 2022 and 2021.

The Company had no unrecognized

2 unchanged sentences

Subsequent Events

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.

We have evaluated all events

that occurred after the balance sheet date through the date when our financial statements were issued to determine if they must be reported.

Management has determined that there were no additional reportable subsequent events to be disclosed.

EXHIBIT INDEX

13 unchanged sentences

333-213166) filed with the SEC on August 16, 2016)

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*

Description of Registrant’s Securities*

Form of Securities Purchase Agreement dated September 9, 2022

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

9 unchanged sentences

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