What changed in this filing

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Item 1A. Risk Factors

2024-09-24 compared with 2023-04-17 · 66 added, 109 removed, 630 unchanged (22% of the section changed)

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business, the Company’s customers were focused on meeting the nation’s health care needs in response to the COVID-19 pandemic.

Thus, 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:

Kits — the Company currently has no contracted supply of Rapid Test Kits.

PPE — Personal Protective Equipment (PPE) includes items such as masks, gloves, gowns, shields, etc.

Currently the Company has no contracted supply of PPE.

Regarding PPE and Test Kits,

the Company’s Board of Directors determined during the second quarter of 2020 to limit the Company’s role to acting as an

intermediary between buyers and sellers with commission-based compensation.

However, there is no assurance the Company will realize any

material revenue from these activities.

Thus, 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.

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.

We have a history of losses and may continue

to incur losses in the future.

We have a history of losses

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

For the year ended

December 31, 2022, our revenues were $4,038,188, and we had a net loss of $1,847,406.

For the year ended December 31, 2021, our revenues

were $4,632,529, and we had a net loss of $3,814,468.

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

For the year ended December 31, 2023, our revenues were $3,804,943, and we had a net loss of $3,981,144.

For the year ended December

31, 2022, our revenues were $4,038,188, and we had a net loss of $1,847,406.

At December 31, 2023, we had an accumulated deficit of $29,839,841.

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may never achieve or sustain profitability.

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

Our total revenues declined approximately $590,000 (12%) to $4,038,188 in the year ended December 31, 2022 as compared to $4,632,529 in

the year ended December 31, 2021.

This decline in revenue will be exacerbated if we are unable to develop and market new products,

which could help us increase our sales to existing customers or develop new customers.

Even if we are able to grow our revenues, they

may not be sufficient to exceed increases in our operating expenses or to enable us to achieve or sustain profitability.

To become profitable, we must,

among other things, increase our revenues.

Our total revenues declined approximately $233,000 (5.7%) to $3,804,943 in the year ended December

31, 2023 as compared to $4,038,188 in the year ended December 31, 2022.

This decline in revenue may continue if we are unable to

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

Even if we are

able to grow our revenues, they may not be sufficient to exceed increases in our operating expenses or to enable us to achieve or sustain

profitability.

Risks Related to Our Business

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

may have difficulty integrating the acquired companies;

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

of managing geographically or culturally diverse enterprises;

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

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

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

contracts in a short time period;

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

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

in dilution to our stockholders, impact our ability to service our debt within the scheduled repayment terms and include covenants or

other restrictions that would impede our ability to manage our operations;

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

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

We may have difficulty integrating the acquired companies;

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

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

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

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

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

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

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

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

Any of these risks could prevent

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

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

entity that could reduce the amount of work we receive;

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

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

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

markets as a result of economic downturns or other reasons.

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

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

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

Since many of our customer

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Factors that may contribute to fluctuations include:

ability to effectively manage our working capital;

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

and availability of labor.

our ability to effectively manage our working capital;

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

pricing and availability of labor.

Actual results could differ from the estimates

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significant estimates by our management include:

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

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

provisions for uncollectible receivables and customer claims;

recoveries of costs from subcontractors, suppliers and others;

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

for estimated liabilities, including litigation and insurance reserves;

and intangible asset impairment assessment.

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

accruals for estimated liabilities, including litigation and insurance reserves;

goodwill and intangible asset impairment assessment.

At the time the estimates

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Risks Related to our Common Stock

We may not be able to maintain the minimum

$1.00 bid price per share of our Common Stock, as required by the Nasdaq Stock Market, which could force us to implement a reverse stock

split of our Common Stock.

June 8, 2022, Nasdaq notified the Company that based upon the Company’s closing bid price for the last 30 consecutive business

days (April 26, 2022 through June 7, 2022), the Company no longer meets the listed securities requirement to maintain minimum bid

price of $1 per share pursuant to Nasdaq Rules 5550(a)(2) and 5810(c)(3)(A).

December 6, 2022, the Company received written notification from the Listing Qualifications Department of Nasdaq, granting the Company’s

request for a 180-day extension to regain compliance with the Bid Price Rule.

The Company now has until June 5, 2023 to meet the requirement.

If at any time prior to June 5, 2023, the bid price of the Company’s ordinary shares closes at $1.00 per share or more for a minimum of

10 consecutive business days, the Company will regain compliance with the Bid Price Rule.

the Nasdaq Rules, if at any time during this second extension 180 day period the closing bid price of the Company’s securities is

at least $1 for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance and the matter would

If we do not regain compliance by the end of the second extension period, we could,

subject to shareholder approval, implement a reverse stock split so as to increase the price per share of our common stock on a post-split

adjusted basis.

In such a case, there is a risk that the price of our common stock could decline on a split-adjusted basis.

if our common stock were trading at $.80 per share and we implemented a 5/1 reverse stock split, there is a risk that our common stock

could trade below $4.00 per share on a split-adjusted basis.

Our common stock price has fluctuated substantially,

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

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

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

● announcements

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

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

conditions for providers of services to the medical industry;

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

in government policies in the United States;

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

of operations to meet any such expectations;

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

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

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

lawsuit involving us, our services or our products;

and departure of key personnel;

investigations of our business activities;

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

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

resulting from natural or man-made disasters.

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

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

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

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

market conditions for providers of services to the medical industry;

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

changes in government policies in the United States;

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

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

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

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

any lawsuit involving us, our services or our products;

arrival and departure of key personnel;

government investigations of our business activities;

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

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

Any of these factors, as well

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As of December 31, 2023,

there was goodwill of $8,366,467.

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

that impairment may have occurred.

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

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

and the discount rates applied to expected cash flows.

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

and estimates we choose for testing.

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

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

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

Changes in our strategy or market conditions could

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

the Company had goodwill of $5,842,433.

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

indicate that impairment may have occurred.

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

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

cash flows, and the discount rates applied to expected cash flows.

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

the assumptions and estimates we choose for testing.

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

and estimates.

The determination of whether goodwill or acquired intangible assets have become impaired involves a significant level of

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

Changes in our strategy or market

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

Any future acquisitions may result in potentially

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

What changed 10-K

Item 1A. Risk Factors