What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-09-24 compared with 2023-04-17 · 568 added, 569 removed, 866 unchanged (57% of the section changed)

47 unchanged sentences

Steven Horowitz

Vincent Matozzo

Background of Officers and Directors

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

Mr Ferrara was appointed to

the Board of Directors in August 2021.

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

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

John is also an experienced Corporate Director, having served

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

Since 2017, John has been

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

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.

John is a member of Financial Executives Institute (FEI)

and Executive Forum.

Steven Horowitz

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Accountant (CGMA).

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

Steve is a member of the American Institute of Certified Public Accountants (AICPA).

Vincent Matozzo

Matozzo is an innovative

strategist and leader recognized for driving results through effective supply chain strategies and product innovation.

He is a dynamic

leader who drives change and delivers results for clients, corporations, and consortiums.

He is passionate about automating processes

and delivering a superior customer experience while enabling teams.

Matozzo is a subject matter expert in Lean and Agile process modeling,

with experience in all aspects of pre-award modeling to post-award monitoring, requisitioning to reimbursement- including data visualization

and procurement.

He has expertise in technical execution and supply chain innovation and enjoys deploying initiatives in technology development

to continuously improve interoperability and operations.

Matozzo is a featured speaker and expert in supply chain organizational development

and business continuity.

He is skilled in designing and implementing innovative business models that produce dramatic results.

has served in various supply chain capacities across manufacturing, aerospace, and healthcare at organizations including Yale New Haven

Health, Vizient, and NYU Langone Health.

Code of Business Conduct and Ethics

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Involvement in Certain Legal Proceedings

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.

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.

Litigation involving our former CEO, Marc S.

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

Board Composition

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.

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

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.

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

In addition, Mr.

Horowitz is considered an

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

All members of the Audit Committee

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

Compensation Committee

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The members of the Nominating Committee are Mr.

Ferrara (chair), Mr.

Matozzo (chair), Mr.

Horowitz, and all currently satisfy the independence

16 unchanged sentences

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, 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.

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, 2023, 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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is set forth therein.

Incentive Plan

Name and Principal Position

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and Chief Executive Officer.

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

Kohler has served as Chief Financial Officer since November 1, 2020.

Directors’ Compensation

The following summary compensation

table sets forth information concerning compensation for services rendered in all capacities during 2022 and 2021 awarded to, earned by

or paid to our directors.

table sets forth information concerning compensation for services rendered in all capacities during 2023 and 2022 awarded to, earned

by or paid to our directors.

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

in accordance with ASC Topic 718.

and Principal Position

Name and Principal Position

Alton Irby (1)

Chairman and Director

John Ferrara (2)

Vincent Matozzo (2)

Steven Horowitz (3)

John Ferrara (4)

Former Director

Steven Wallitt (5)

Former Director

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

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

May 15, 2024, Mr Irby returned all previously received stock grants to the Company.

(2) Vincent Matozzo was appointed as a Director on August 17, 2023.

May 15, 2024, Mr Matozzo returned all previously received stock grants to the Company.

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

May 15, 2024, Mr Horowitz returned all previously received stock grants to the Company.

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

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

Mr Ferrera resigned as a director effective August 18, 2023

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.

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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The following table sets forth

certain information regarding beneficial ownership of our common stock as of March 31, 2023:

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

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

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

As of March 31, 2023, there were 13,021,741

certain information regarding beneficial ownership of our common stock as of September 23, 2024:

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

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

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

As of September 23, 2024, there were

1,599,367 shares of our common stock outstanding.

Amount and Nature of Beneficial Ownership as

of March 31, 2023 (1)

of September 23, 2024 (1)

Named Executive Officers and Directors

Timothy Hannibal

Vincent Matozzo

Steven Horowitz

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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.

In determining the percent of common stock owned by a person or entity on March 31, 2023, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days of March 31, 2023 upon the exercise of stock options, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on March 31, 2023 and (ii) the total number of shares that the beneficial owner may acquire upon exercise of stock options within 60 days of March 31, 2023.

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

Employee Grants of Plan Based Awards and Outstanding

Equity Awards at Fiscal Year-End

Prior to the completion of

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

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

Our stockholders approved

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

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

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

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

The following sets forth the

stock option awards to our officers and directors as of December 31, 2022.

Outstanding Equity Awards at December 31, 2022

have not vested

Current Officers

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 September 23, 2024.

In determining the percent of common stock owned by a person or entity on September 23, 2024, (a) the numerator is the number

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

23, 2024 upon the exercise of stock options, and (b) the denominator is the sum of (i) the total shares of common stock outstanding

on September 23, 2024 and (ii) the total number of shares that the beneficial owner may acquire upon exercise of stock options within

60 days of September 23, 2024.

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

Corp., 100 S Ashley Dr, Suite 100 Tampa, FL 33602.

Certain Relationships and Related

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At December 31, 2023 and

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

During September 2021, the

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

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

sheet as of December 31, 2022

2022 Company had amounts due to officers in the amount of $149,838 and $153,838, respectively.

During September 2021, the Company’s former CEO (also a significant

shareholder) advanced $100,000 in cash to the Company for short term capital requirements.

This amount is non-interest bearing and payable

The Company had balances of $67,622 and $100,000 included in shareholder advance on the Company’s consolidated balance

sheets as of December 31, 2023 and 2022, respectively.

Between May 24, 2023 and

November 29, 2023, the Company’s CFO advanced an aggregate $193,558 in cash to the Company for short term capital requirements.

As of December 31, 2023, all advanced amounts have been repaid.

Director Independence

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

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

and any affiliations with our company.

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

director and any affiliations with our company.

Our Board of Directors undertook

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Based upon information

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

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

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

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

in the Nasdaq listing standards.

Principal Accountant Fees and Services

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

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

The Audit Committee of the

Board of Directors has selected Astra Audit and Advisory, LLC (“Astra”), an independent registered public accounting firm,

to audit our financial statements for the years ended December 31, 2023 and 2022.

BF Borgers CPA PC served as

our independent registered public accounting firm from April 2021 through May 2024 at which time the US Securities and Exchange Commission

(“Commission”) entered an Order denying BF Borgers CPA PC (“BF Borgers”) the privilege of appearing or practicing

before the Commission as an accountant.

The Company subsequently terminated BF Borgers as its independent registered public accounting

Principal Accountant Fees and Services

During 2023 and 2022, fees

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

For the year ended

Audit-Related Fees

All Other Fees

During 2022 and 2021, fees

for services provided by Sadler Gibb were as follows:

for services provided by Astra Audit and Advisory, LLC were as follows:

For the year ended

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During 2023 and 2022, fees

for services provided by Withum were as follows:

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

For the year ended

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All Other Fees

Other Fees include fees billed

for consents to file prior period reports as part of our 2021 Form 10-K

The Audit Committee pre-approves

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particular services on a case-by-case basis.

Exhibits and Financial Statement Schedules

Exhibits and Financial Statement

following documents are filed as a part of this report:

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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

Financial Statement

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

submission of the schedule or because the information required is given in the consolidated financial statements or the notes thereto.

(3) Exhibits .

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Pursuant to the requirements

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

the undersigned, thereunto duly authorized.

/s/ Timothy Hannibal

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

by the undersigned, thereunto duly authorized.

Timothy Hannibal

President, Chief Executive Officer

April 17, 2023

/s/ Chris Kohler

September 23, 2024

Chief Financial Officer

April 17, 2023

September 23, 2024

Pursuant to the requirements

1 unchanged sentence

capacities and on the dates indicated.

/s/ Timothy Hannibal

Timothy Hannibal

President, Chief Executive Officer, Director

April 17, 2023

/s/ Chris Kohler

September 23, 2024

Chief Financial Officer

April 17, 2023

/s/ Alton Irby

April 17, 2023

/s/ John Ferrara

April 17, 2023

/s/ Steven Horowitz

September 23, 2024

Vincent Matazzo

September 23, 2024

Steven Horowitz

April 17, 2023

September 23, 2024

Index to Consolidated Financial Statements

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of Independent Registered Public Accounting Firm

To the shareholders and the board of directors

of SCWorx Corp.

To the Board of Directors and

Stockholders of SCWorx Corp.

Opinion on the Financial Statements

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balance sheets of SCWorx Corp.

(the “Company”) as of December 31, 2022 and 2021, the related statement of operations, stockholders’

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

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

31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States.

(the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations,

changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related

notes (collectively referred to as the financial statements).

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

respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows

for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the

United States of America.

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, the Company has incurred net losses and working

capital deficits.

These factors, and the need for additional financing in order for the Company to meet its business plans raises substantial

doubt about the Company’s ability to continue as a going concern.

Our opinion is not modified with respect to that matter.

Basis for Opinion

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

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

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

federal securities laws and the applicable

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

We conducted our audit in accordance with the

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

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

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

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Accordingly, we express no such opinion.

Our audit included performing procedures to assess

Our audits included performing procedures to assess

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

1 unchanged sentence

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

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

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

the overall presentation of the financial statements.

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

/s/ BF Borgers CPA PC

BF Borgers CPA PC

We have served as the Company’s auditor

April 17, 2023

We believe that our audits provide a reasonable basis for our opinion.

Astra Audit & Advisory, LLC

We have served as the Company’s auditor since 2024.

Tampa, Florida

September 23, 2024

West Spruce Street #1430 i Tampa,

Florida 33607 i +1.813.441.9707

Consolidated Balance Sheets

Current assets:

Accounts receivable - net

Accounts receivable

Prepaid expenses and other assets

Total current assets

Fixed assets - net

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Accounts payable and accrued liabilities - related party

Shareholder advance

Stockholder advance

Deferred revenue

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Total liabilities

Commitments and contingencies

Commitments and contingencies (Note 8)

Stockholders’ equity:

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For the years ended

Operating expenses:

Cost of revenues

Operating expenses:

Legal and Professional

Salaries and wages

Stock compensation

General and administrative

4 unchanged sentences

Other income (expense)

Interest expense

Impairment of goodwill

( 2,524,034 )

Gain on forgiveness of PPP loan

Total other income (expense)

Total other (expense) income

( 2,530,482 )

Net loss before income taxes

10 unchanged sentences

Preferred Stock

Additional paid-in

Subscriptions

Year ended December 31, 2022

December 31, 2023

Balances, December 31, 2022

1 unchanged sentence

Shares issued as settlement of accounts payable

Shares issued for common stock placement

Shares issued under equity line of credit, net of financing costs

Shares issued for vested restricted stock units

Commitment shares issued in conjunction with capital raise

Shares issued for settlement of class action

Shares issued for cashless exercise of warrants

Proceeds received from potential acquisition

Stock based compensation

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Preferred Stock

Additional paid-in

Subscriptions

Year ended December 31, 2021

Subscriptions

December 31, 2022

Balances, December 31, 2021

$ ( 24,011,291 )

Conversion of Series A Convertible Preferred Stock into common stock

Shares issued as settlement of accounts payable

1 unchanged sentence

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

Commitment shares issued in conjunction with capital raise

Stock based compensation

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Consolidated Statements of Cash Flows

For the years ended

the years ended

Cash flows from operating activities:

1 unchanged sentence

$ ( 1,847,406 )

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

Change in inventory value

Gain on forgiveness of PPP loan

Stock-based compensation

Bad debt expense

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other assets

Accounts payable and accrued liabilities

Deferred revenue

Net cash used in operating activities

( 1,069,945 )

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from common stock placement

Proceeds from notes payable

Proceeds from shareholder advance

Net cash provided by financing activities

Adjustments to reconcile net

loss to net cash used in operating activities:

on forgiveness of PPP loan

Changes in operating assets

and liabilities:

expenses and other assets

payable and accrued liabilities

cash provided by (used in) operating activities

Cash flows from investing

from potential acquisition

cash provided by investing activities

Cash flows from financing

from the sale of common stock

of loans payable

of stockholder advance

from advances - related party

of advances - related party

cash provided by financing activities

Net (decrease) increase in cash

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Cash, end of period

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for income taxes

Non-cash investing and financing activities:

Shares issued for equity financing

Commitment shares issued in conjunction with capital raise

Shares issued for vested restricted stock units

Supplemental disclosures of

cash flow information:

paid for interest

paid for income taxes

Non-cash investing and financing

shares issued in conjunction with capital raise

issued for vested restricted stock units

issued for settlement of class action

issued for cashless exercise of warrants

The accompanying notes are an integral part

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becoming the Company’s

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

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 industry which it has since ceased.

On October 6, 2023, following

stockholder approval at the Company’s annual meeting, the Company amended its certificate of incorporation to implement a 1 for

15 reverse split of its common stock.

The effect of the reverse stock split was to combine every 15 shares of outstanding common stock

into one share of common stock.

The reverse stock split was effective at the opening of the trading day on October 11, 2023.

The effects of the reverse

stock split have been reflected in this Annual Report on Form 10-K for all periods presented.

On October 16, 2023, the Company entered into a letter of intent to

merge with American Energy Partners, Inc.

(“American Environmental”) and subsequently entered into a definitive agreement

and plan of merger (the “Merger Agreement”) on December 22, 2023.

The Merger Agreement was mutually terminate on March 26,

During the year ended December 31, 2023, American Environmental contributed an aggregate $ 165,000 to the Company to assist in covering

its operating expenses.

Operations of the Business

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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

27 unchanged sentences

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

Regarding PPE and Test Kits,

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

an intermediary between buyers and sellers with commission based compensation.

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

Note 2 – 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 $ 3,981,144 for the year ended December 31, 2023 and $ 1,847,406 for the year ended December

The accumulated deficit as of December 31, 2023 was $ 29,839,841 .

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

As of the filing date of this

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

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

Accordingly, we are evaluating

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

business activities and other strategic alternatives.

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

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

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

The financial statements do not

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

Summary of Significant Accounting Policies

1 unchanged sentence

Consolidation

The accompanying consolidated

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

The accompanying consolidated financial statements have been prepared

in accordance with U.S.

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

Securities and Exchange Commission

Securities and Exchange Commission (“SEC”).

The accompanying consolidated

7 unchanged sentences

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

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

The Company did not have any amounts in excess of the FDIC insured limit for as of December 31, 2023 and 2022.

Fair Value of Financial Instruments

1 unchanged sentence

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

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

Management defines fair value as the price that would be

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

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

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

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

and credit risk.

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

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

the fair value measurement:

at fair value in the consolidated financial statements.

Management defines fair value as the price that would be received from selling

an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When determining

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

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

would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk.

value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and

bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

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

Level 2 - Observable inputs

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

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

of the assets or liabilities.

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

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

Level 2 - Observable inputs other than quoted prices in

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

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or

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

participants would use in pricing the asset or liability.

Concentration of Credit and Other Risks

Financial instruments that

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

shareholder, convertible notes receivable and warrants.

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

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

of its customers.

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

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

potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable.

Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company’s evaluation

process, relatively short collection terms and the high level of credit worthiness of its customers.

The Company performs ongoing internal

credit evaluations of its customers’ financial condition, obtains deposits and limits the amount of credit extended when deemed

necessary but generally requires no collateral.

Significant customers are

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Accounts Receivable

Allowance for Doubtful Accounts

The Company continually monitors

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

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

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

the Company records a specific allowance against amounts due.

For all other customers, the Company recognizes allowances for doubtful

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

geographic risk and the current business environment.

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

The Company recorded an allowance for doubtful accounts as of December 31, 2022 and 2021 of $ 0 and $ 421,736 , respectively.

Allowance for Credit Losses

Accounts receivable are comprised

of amounts billed and currently due from customers.

Accounts receivable are amounts related to any unconditional right the Company has

for receiving consideration and are presented as accounts receivable in the consolidated balance sheets.

The Company maintains an allowance

for credit losses for estimated losses resulting from the inability of our customers to make required payments.

The Company employs an

expected credit loss model utilizing historical loss rates and historical trends in credit quality indicators (e.g., delinquency, risk

ratings), adjusted to reflect current economic conditions and knowledge or customer relationships.

Management considers the following factors when determining the collectability

of specific customer accounts:

customer creditworthiness, past transaction history with the customer, current industry trends, changes

in customer payment terms, and specific customer situations.

The Company’s normal collection cycle ranges between thirty and 60

Estimated uncollectible amounts are charged to earnings and a credit to a valuation allowance.

Balances which remain outstanding

after reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable The

Company has assessed all receivables are collectable and did not record an allowance for credit losses as of December 31, 2023 and 2022.

The inventory balance at December

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

During the year ended December

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

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

Net inventory value

During the year ended December 31, 2022, the Company wrote off all

remaining $ 156,000 in the value of this inventory as unsellable.

During the year ended December 31, 2023, the Company disposed of all

remaining inventory previously written off.

The Company determines if

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goodwill impairment test is unnecessary.

For further discussion of

goodwill, refer to Note 4, Business Combinations.

Property and Equipment

Property and equipment are

recorded at cost, less accumulated depreciation.

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

estimated useful lives.

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

Expenditures that materially

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

Depreciation expense for the

years ended December 31, 2022 and 2021 was $ 0 and $ 76,156 , respectively.

For further discussion of goodwill, refer to Note 5, Goodwill.

Revenue Recognition

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the following performance obligations in its SaaS contracts with customers:

Data Normalization:

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

Software-as-a-service (“SaaS”):

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

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

Normalization:

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

2) Software-as-a-service

which is generated from clients’ access of and usage of the Company’s hosted software solutions

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

In SaaS arrangements, the client cannot take possession

of the software during the term of the contract and generally has the right to access and use the software and receive any software upgrades

published during the subscription period,

3) Maintenance:

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

Professional Services:

4) Professional

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

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Data Normalization and Professional Services

The Company’s Data Normalization

and Professional Services are typically fixed fee.

When these services are not combined with SaaS or Maintenance revenues as a single

unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted

by the customer.

The Company’s Data Normalization and Professional Services are

typically fixed fee.

When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues

are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer.

When these services

are combined with SaaS or Maintenance revenues, revenues recognized ratably over the period of the contract.

SaaS and Maintenance

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or service to a customer and when the customer pays for that good or service exceeds the one-year threshold.

In periods prior to the adoption

of ASC 606, the Company recognized revenues when persuasive evidence of an arrangement existed, delivery had occurred, the sales price

was fixed or determinable, and the collectability of the resulting receivable was reasonably assured.

The adoption of Topic 606 did not

result in a cumulative effect adjustment to the Company’s opening retained earnings since there was no significant impact upon adoption

of Topic 606.

There was also no material impact to revenues, or any other financial statement line items for the year ended December

31, 2018 as a result of applying ASC 606.

The Company has one revenue

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and cash flows.

Brokered PPE sales

revenues are recognized once the customer obtains physical possession of the product(s).

Because the Company acts as an agent in arranging

the relationship between the customer and the supplier, PPE revenues are presented net of related costs, including product procurement,

warehouse and shipping fees, etc.

Remaining Performance Obligations

As of December 31, 2022, we

had $ 579,833 of remaining performance obligations recorded as deferred revenue.

We expect to recognize sales relating to these existing

performance obligations of during 2023.

As of December 31, 2023, the

Company had $ 378,583 of remaining performance obligations recorded as deferred revenue.

The Company expects to recognize sales relating

to these existing performance obligations of during 2024.

As of December 31, 2022, the

Company had $ 579,833 of remaining performance obligations recorded as deferred revenue.

The Company recognized sales relating to those

existing performance obligations of during 2023.

Costs to Fulfill a Contract

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The Company uses the asset

and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740,

“Income Taxes.” Under this method, income tax expense is recognized for the amount of:

(i) taxes payable or refundable for

the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s

financial statements or tax returns.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.

and liability method of accounting for income taxes in accordance with ASC Topic 740, “ Income Taxes .” Under this method,

income tax expense is recognized for the amount of:

(i) taxes payable or refundable for the current year and (ii) deferred tax consequences

of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns.

tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary

differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized

in the results of operations in the period that includes the enactment date.

Valuation allowances are provided

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The Company has no material uncertain tax positions for any of the reporting periods presented.

On December 22, 2017, the

Tax Cuts and Jobs Act of 2017, (the “Tax Act”) was enacted.

The Tax Act significantly revised the U.S.

corporate income tax

regime by, including but not limited to, lowering the U.S.

corporate income tax rate from 34 % to 21 % effective January 1, 2018, implementing

a territorial tax system, imposing a one-time transition tax on previously untaxed accumulated earnings and profits of foreign subsidiaries,

and creating new taxes on foreign sourced earnings.

The Company completed the accounting for tax effects of the Tax Act under ASC 740.

There were no impacts to the years ended December 31, 2022 and 2021.

Stock-Based Compensation

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The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of

Calculating stock-based compensation

expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility,

and the pre-vesting option forfeiture rate.

The Company estimates the expected life of options granted based on historical exercise patterns,

which are believed to be representative of future behavior.

The Company estimates the volatility of the Company’s common stock on

the date of grant based on historical volatility.

The assumptions used in calculating the fair value of stock-based awards represent the

Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment.

As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different

in the future.

In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares

expected to vest.

The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted,

exercised and cancelled.

If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could

be significantly different from what was recorded in the current period.

The Company also grants performance based restricted stock awards

to employees and consultants.

These awards will vest if certain employee\consultant-specific or company-designated performance targets

are achieved.

If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s

common stock.

Calculating stock-based compensation expense requires the input of

highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option

forfeiture rate.

The Company estimates the expected life of options granted based on historical exercise patterns, which are believed

to be representative of future behavior.

The Company estimates the volatility of the Company’s common stock on the date of grant

based on historical volatility.

The assumptions used in calculating the fair value of stock-based awards represent the Company’s

best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment.

As a result, if

factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future.

In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to

The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and

If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly

different from what was recorded in the current period.

The Company also grants performance based restricted stock awards to employees

and consultants.

These awards will vest if certain employee\consultant-specific or company-designated performance targets are achieved.

If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock.

If minimum performance thresholds are not achieved, then no shares will be issued.

Based upon the expected levels of achievement,

stock-based compensation is recognized on a straight-line basis over the requisite service period.

The expected levels of achievement

are reassessed over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation

is adjusted in the period of change and recorded on the statements of operations and the remaining unrecognized stock-based compensation

Based upon the expected levels of achievement, stock-based

compensation is recognized on a straight-line basis over the requisite service period.

The expected levels of achievement are reassessed

over the requisite service periods and, to the extent that the expected levels of achievement change, stock-based compensation is adjusted

in the period of change and recorded on the consolidated statements of operations and the remaining unrecognized stock-based compensation

is recorded over the remaining requisite service period.

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Loss Per Share

The Company computes earnings

(loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings

(loss) per share (“EPS”) on the face of the income statement.

Basic EPS is computed by dividing the loss available to common

shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.

Diluted EPS gives effect

to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock

using the if-converted method.

In computing diluted EPS, the average stock price for the period is used in determining the number of shares

assumed to be purchased from the exercise of stock options or warrants 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.

The Company computes earnings (loss) per share in accordance with ASC

260, “ Earnings per Share ” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”)

on the face of the income statement.

Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted

average number of shares outstanding (denominator) during the period.

Diluted EPS gives effect to all dilutive potential common shares

outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.

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 and the exercise of fully vested restricted stock units.

Diluted EPS excludes all dilutive potential shares

if their effect is anti-dilutive.

As of December 31, 2023 and 2022, the Company had 180,390 and 273,059 , respectively, common stock equivalents

Indemnification

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To date, no such claims have been filed against the Company and no liability has

been recorded in its financial statements.

been recorded in its consolidated financial statements.

As permitted under Delaware

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Use of Estimates

The preparation of consolidated

financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and

disclosed in the consolidated financial statements and accompanying notes.

The Company regularly evaluates estimates and assumptions related

to the allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, equity component of convertible

debt, stock-based compensation, and deferred income tax asset valuation allowances.

The Company bases its estimates and assumptions on

current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results

of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses

that are not readily apparent from other sources.

The actual results experienced by the Company may differ materially and adversely from

the Company’s estimates.

To the extent there are material differences between the estimates and the actual results, future results

of operations will be affected.

Actual results could differ materially from those estimates.

The preparation of consolidated financial statements in conformity

GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated

financial statements and accompanying notes.

The Company regularly evaluates estimates and assumptions related to the allowance for credit

losses, the estimated useful lives and recoverability of long-lived assets, equity component of convertible debt, stock-based compensation,

and deferred income tax asset valuation allowances.

The Company bases its estimates and assumptions on current facts, historical experience

and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

To the extent there

are material differences between the estimates and the actual results, future results of operations will be affected.

Actual results

could differ materially from those estimates.

Recently Issued Accounting Pronouncements

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At December 31, 2023 and 2022,

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

the Company had amounts due to officers in the amount of $ 149,838 and $ 153,838 , respectively.

During September 2021, the

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

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

sheet as of December 31, 2022

Business Combinations

Purchase accounting

On February 1, 2019, the Company’s

shareholders exchanged all of its outstanding shares in exchange for 5,263,158 shares of Alliance common stock.

Due to the Company’s

shareholders acquiring a controlling interest in Alliance after acquisition, the transaction was treated as a reverse merger for accounting

purposes, with SCWorx being the reporting company.

In accordance with purchase accounting rules under ASC 805, the purchase consideration

was $ 11,765,491 .

The acquisition was accounted

for under the acquisition method of accounting.

The assets acquired, liabilities assumed and purchase allocation, which is based on valuations

of management, are as follows:

Identifiable intangible assets:

Ticketing software

Promoter relationships

Total identifiable intangible assets

Account payable

( 1,901,624 )

Current liabilities - discontinued operations

Aggregate purchase price

This amount is non-interest bearing and payable upon demand.

The Company had balances of $ 67,622 and $ 100,000 included in stockholder

advance on the Company’s consolidated balance sheets as of December 31, 2023 and 2022, respectively.

Between May 24, 2023 and November

29, 2023, the Company’s CFO advanced an aggregate $ 193,558 in cash to the Company for short term capital requirements.

of December 31, 2023, all advanced amounts have been repaid.

The above amounts and terms

are not necessarily what third parties would agree to.

During the year ended December

31, 2023, the Company determined that the fair value of its goodwill was less than its carrying value.

The Company determined the carrying

value to be $ 5,842,433 as of December 31, 2023 and recognized impairment expense $ 2,524,034 .

There were no changes to the

carrying value of goodwill for the years ended December 31, 2022 and 2021.

carrying value of goodwill for the year ended December 31, 2022.

Loans Payable

Receipt of CARES funding

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remaining due.

On March 17, 2021, we received

$ 139,595 in financing from the U.S.

On March 17, 2021, the Company

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.

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.

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.

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The Company’s principal

executive office in New York City is under a month-to-month arrangement.

executive office in Tampa Florida is under a month-to-month arrangement with a base rent of $ 250 per month.

The Company has operating

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Leases with a probable term of 12 months or less, including month-to-month agreements,

are not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset,

or an option to renew the arrangement, that the Company is reasonably certain to exercise (short-term leases).

The Company recognizes

lease expense for these leases on a straight-line bases over the lease term.

are not recorded on the consolidated balance sheets, unless the arrangement includes an option to purchase the underlying asset, or an

option to renew the arrangement, that the Company is reasonably certain to exercise (short-term leases).

The Company recognizes lease

expense for these leases on a straight-line bases over the lease term.

The Company’s only remaining lease is month-to-month.

As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components (common-area maintenance

a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components (common-area maintenance

costs) from lease components (fixed payments including rent) and instead to account for each separate lease component and its associated

non-lease components as a single lease component.

The Company uses its incremental borrowing rate for purposes of discounting lease payments.

As of December 31, 2022

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

For the years ended December

31, 2023 and 2022, the components of lease expense were as follows:

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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

Securities Class Action

As previously disclosed,

on April 29, 2020, a securities class action case was filed in the United States District Court for the Southern District of New York

against us and our former CEO.

The action is captioned Daniel Yannes, individually and on behalf of all others similarly situated vs.

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

SCWorx, et ano.

and Leonard v.

SCWorx et ano.) and thereafter, the three class actions were consolidated (the “Consolidated Class Action”).

The Consolidated Class Action alleged that our company and our former CEO misled investors in connection with our April 13, 2020 press

release with respect to the sale of COVID-19 rapid test kits.

As previously disclosed,

on February 11, 2022, the parties entered into a Stipulation of Settlement (subject to Court approval) to settle the Consolidated Class

The settlement resolves all claims asserted against SCWorx and the other named defendant without any admission, concession or

finding of any fault, liability or wrongdoing by the Company or any defendant.

Under the terms of this agreement, (i) the insurers for

the Company and Marc Schessel (former CEO) will make a cash payment to the class plaintiffs (ii) the former CEO will transfer 100,000

shares of company common stock to the class plaintiffs, and (iii) the Company will issue $600,000 worth of common stock to the class plaintiffs,

in exchange for which all parties will be released from all claims related to the securities class action litigation.

After giving effect

to the share issuance by the Company, the Company believes that it will have satisfied the accrued retention liability of $700,000.

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.

the Company may become involved in legal proceedings.

The Company 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.

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.

As previously disclosed in

the Company’s periodic reports filed with the SEC, 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 .

out of a marketing and consulting agreement.

The Company filed its answer, affirmative defenses and counterclaims on May 16, 2022.

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 $ 257,546 .

The Company received the final decision of the Arbitrator on October 16, 2023, awarding Core IR $ 461,856 including

unpaid compensation, indemnification for legal fees and costs, prevailing party legal fees and interest (the “Award”).

IR has since obtained a judgement in the amount of approximately $ 502,000 (including interest) (“Judgement”) which is included

in accounts payable and accrued liabilities on the Company’s consolidated balance sheet at December 31, 2023.

The Company and Core

IR entered into a settlement agreement dated July 12, 2024 under which the Company agreed to issue Core IR shares of its common stock

with a value of $ 502,000 (determined based on sales proceeds realized by Core IR), in full and complete satisfaction of the Judgement.

The settlement agreement is filed as exhibit 10.5 to this annual report on Form 10-K

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

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.

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 sought

$ 500,000 in damages.

Plaintiffs filed an Amended Complaint on November 28, 2022.

On February 6, 2023, SCWorx filed its answer to the Amended

Complaint interposing numerous defenses.

Plaintiff have since entered into a settlement agreement dated December 1, 2023 (effective as

of October 23, 2023) (as amended April 29, 2024), under which the Company agreed to pay Plaintiffs $ 20,000 and issue them 37,500 shares

of common stock, all in full settlement of the claims made in the lawsuit.

The Company has accrued for this liability which is included

in accounts payable and accrued liabilities on the Company’s consolidated balance sheet at December 31, 2023.

The cash payment was

made in July 2024, and the shares were issued in May 2024.

Bernstein, Esq.

As previously disclosed in

the Company’s Form 10-Q for the quarter ended June 30, 2023, on June 7, 2023, Carole R.

Bernstein, Esq.

filed a complaint in the

United States District Court for the Southern District of New York against the Company.

The complaint alleged that the Company breached

its engagement agreement with Ms.

Bernstein by failing to pay legal fees when due.

Bernstein sought to recover $ 69,164 fees owing

for services, plus interest, costs, including her attorney’s fees.

The Company has accrued for this liability which is included

in accounts payable and accrued liabilities on the Company’s consolidated balance sheet at December 31, 2023.

The Company and the

Plaintiff have since entered into a settlement agreement dated July 12, 2024, under which the Company agreed to pay Plaintiffs $ 80,000

in two equal installments of $ 40,000 , the first of which was paid August 9, 2024, and the second of which is payable on or about October

Stockholders’ Equity

2 unchanged sentences

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

On October 6, 2023, following stockholder approval at the Company’s annual meeting, the Company amended its certificate of incorporation to implement a 1 for 15 reverse split of its common stock.

The effect of the reverse stock split was to combine every 15 shares of outstanding common stock into one share of common stock.

The reverse stock split was effective at the opening of the trading day on October 11, 2023.

The effects of the reverse stock split have been reflected in this Annual report on form 10/K for all periods presented.

Issuance of Shares for Vested Restricted Stock

Between January 10, 2023 and

August 9, 2022, the Company issued a total of 107,998 shares of common stock to holders of fully vested restricted stock units.

Issuance of Shares Pursuant to Settlement of

Accounts Payable

On March 31, 2022, the Company

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

January 26, 2023, the Company issued a total of 756 shares of common stock to holders of fully vested restricted stock units.

Between June 5, 2023 and June

16, 2023, the Company issued a total of 14,445 shares of common stock to holders of fully vested restricted stock units.

Between July 5, 2023 and July

19, 2023, the Company issued a total of 956 shares of common stock to holders of fully vested restricted stock units.

On November 23, 2023, the

Company issued a total of 778 shares of common stock to holders of fully vested restricted stock units.

Issuance of Shares as Settlement of Accounts

May 24, 2023, the Company issued 6,807 shares of common stock in full settlement of $ 26,545 of accounts payable.

had a fair value of $ 3.90 per share.

June 22, 2023, the Company issued 3,264 shares of common stock in full settlement of $ 17,621 of accounts payable.

had a fair value of $ 5.40 per share.

July 26, 2023, the Company issued 4,837 shares of common stock in full settlement of $ 16,686 of accounts payable.

had a fair value of $ 3.45 per share.

August 18, 2023, the Company issued 8,734 shares of common stock in full settlement of $ 32,750 of accounts payable.

shares had a fair value of $ 3.75 per share.

September 27, 2023, the Company issued 7,910 shares of common stock in full settlement of $ 22,542 of accounts payable.

The shares had a fair value of $ 2.85 per share.

On August 11, 2022, the Company

issued 69,444 shares of common stock in full settlement of $ 50,000 of accounts payable.

October 23, 2023, the Company issued 17,000 shares of common stock in full settlement of $ 37,571 of accounts payable.

shares had a fair value of $ 2.21 per share.

December 22, 2023, the Company issued 20,520 shares of common stock in full settlement of $ 35,088 of accounts payable.

The shares had a fair value of $ 1.71 per share

On September 27, 2022, the

Company issued 21,360 shares of common stock in full settlement of $ 16,875 of accounts payable.

The shares had a fair value of $ 0.79 per

Issuance of Shares Pursuant to Legal Settlement

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

Issuance of Shares under Common Stock Purchase

On June 1, 2023, 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 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.

issued 200,000 shares of common stock for net proceeds of $ 127,053 under its common stock purchase agreement dated June 28, 2022.

On June 22, 2023, the Company

issued 200,000 shares of common stock for net proceeds of $ 134,634 under its common stock purchase agreement dated June 28, 2022.

On Between July 7, 2023 and

September 28, 2023, the Company issued a total of 94,056 shares of common stock for aggregate net proceeds of $ 311,220 under its common

stock purchase agreement dated June 28, 2022.

Issuance of Shares for the Exercise of Warrants

On June 15, 2023, the Company

issued 15,238 shares of common stock in a cashless exchange for 54,872 warrants to purchase shares of common stock at $ 9.75 per share.

Issuance of Shares for Class Action Settlement

On June 5, 2023, the Company

issued an aggregate 129,458 shares of common stock in full settlement of the previously accrued subscription payable valued at $ 600,000 .

Stock Incentive Plan

14 unchanged sentences

Exercisable at December 31, 2023

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, 2022 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/Expired

Balance at December 31, 2022

Exercisable at December 31, 2022

The Company has classified

the warrant as having Level 2 inputs, and has used the Black-Scholes option-pricing model to value the warrant.

The Company’s outstanding warrants

and options at December 31, 2021 are as follows:

Warrants Outstanding

Warrants Exercisable

Exercise Price Range

Number Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Number Exercisable

Weighted Average Exercise Price

Intrinsic Value

The Company’s outstanding

warrants and options at December 31, 2023 are as follows:

Warrants Outstanding Warrants Exercisable

Exercise Price Range Number Outstanding Weighted Average Remaining Contractual Life

(in years) Weighted

Average Exercise Price Number Exercisable Weighted Average Exercise Price Intrinsic Value

$51.30 – $60.00 11,394 1.62 $ 58.72 11,394 $ 58.72 -

Options Outstanding

Options Exercisable

Exercise Price Range

Number Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Number Exercisable

Weighted Average Exercise Price

Intrinsic Value

Options Outstanding Options Exercisable

Exercise Price Range Number Outstanding Weighted Average Remaining Contractual Life

(in years) Weighted

Average Exercise Price Number Exercisable Weighted Average Exercise Price Intrinsic Value

$39.60 3,333 0.91 $ 39.60 3,333 $ 39.60 -

As of December 31, 2023 and

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

2022, the total unrecognized expense for unvested stock options and restricted stock awards was none and approximately $ 220,000 , respectively,

to be recognized over a one to three-year period for restricted stock awards and one year for option grants from the date of grant.

Stock-based compensation expense

28 unchanged sentences

Deferred revenue

Allowance for doubtful accounts

Valuation allowance

49 unchanged sentences

Subsequent Events

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.

The Company has 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 except as disclosed below, there were no additional reportable subsequent events to be

Financing Transaction

On April 12, 2024, the Company

issued a secured promissory note in the face amount of $ 330,000 , in exchange for which it received cash in the amount of $ 300,000 .

addition to the original issue discount of $ 30,000 , the note bears interest at the rate of 5 % per annum, was originally due May 10, 2024

and was secured by all the Company assets.

On July 16, 2024, the Company

closed a Securities Purchase Agreement (the “SPA”) with certain accredited investors.

Under the SPA, the Company sold a series

of senior secured convertible notes with an aggregate principal amount of $ 1,155,000 , including the exchange of the April 12, 2024 secured

promissory note, that had an initial conversion price of $ 1.43 per share, subject to certain adjustments and maturity date of December

The Company also issued five year warrants to acquire up to an aggregate 4,846,158 additional shares of the Company’s

common stock with exercise prices ranging from $ 1.43 to $ 1.573 per share.

Issuance of Shares for Vested Restricted Stock

On March 27, 2024, the Company

issued 1,667 shares of common stock to a holder of fully vested restricted stock units.

Issuance of Shares as Settlement of Accounts

February 6, 2024 and July 11, 2024, the Company issued an aggregate 130,039 shares of common stock in full settlement of $ 239,809 of

accounts payable.

The shares had a fair value ranging from $ 1.50 to $ 2.65 per share.

Issuance of Shares as settlement of other obligations

On May 30, 2024, the Company

issued 37,500 shares owed as part a prior legal settlement.

On July 15, 2024, the Company

issued 38,052 shares of common stock in full settlement of threatened litigation.

The shares were valued at $ 1.41 per share.

On July 18, 2024, the Company

issued 159,776 shares of common stock as part of a stock settlement agreement for payment of its obligation under its judgement from Core

EXHIBIT INDEX

13 unchanged sentences

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

Description of Registrant’s Securities*

Form of Securities Purchase Agreement dated September 9, 2022

Form of Series A, Series B and Series C Warrant (incorporated by reference to Exhibit 4.1 to the Company’s 8-K filed with the SEC on July 15, 2024)

Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s 8-K filed with the SEC on July 15, 2024)

Form of Senior Secured Convertible Note (incorporated by reference to Exhibit 10.2 to the Company’s 8-K filed with the SEC on July 15, 2024)

Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.3 to the Company’s 8-K filed with the SEC on July 15, 2024)

Form of Guaranty and Security Agreement (incorporated by reference to Exhibit 10.4 to the Company’s 8-K filed with the SEC on July 15, 2024)

Settlement Agreement with CorProminence LLC, d/b/a Core IR (incorporated by reference to Exhibit 10.8 to the Company’s 8-K filed with the SEC on July 15, 2024)

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