Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 14, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | SCWORX CORP. | |
Trading Symbol | WORX | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 16,696,766 | |
Amendment Flag | false | |
Entity Central Index Key | 0001674227 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-37899 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-5412331 | |
Entity Address, Address Line One | 590 Madison Avenue | |
Entity Address, Address Line Two | 21st Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10022 | |
City Area Code | (844) | |
Local Phone Number | 472-9679 | |
Title of 12(b) Security | Common stock, $0.001 par value per share | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 133,034 | $ 249,462 |
Accounts receivable - net | 458,798 | 336,033 |
Prepaid expenses and other assets | 90,533 | 295,180 |
Total current assets | 682,365 | 880,675 |
Fixed assets - net | ||
Goodwill | 8,366,467 | 8,366,467 |
Total assets | 9,048,832 | 9,247,142 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 1,391,494 | 1,364,202 |
Accounts payable and accrued liabilities - related party | 153,838 | 153,838 |
Shareholder advance | 83,811 | 100,000 |
Deferred revenue | 586,083 | 579,833 |
Equity financing | 125,000 | 125,000 |
Total current liabilities | 2,340,226 | 2,322,873 |
Long-term liabilities: | ||
Loans payable | 114,298 | 147,749 |
Total long-term liabilities | 114,298 | 147,749 |
Total liabilities | 2,454,524 | 2,470,622 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Series A Convertible Preferred stock, $0.001 par value; 900,000 shares authorized; 39,810 shares issued and outstanding | 40 | 40 |
Common stock, $0.001 par value; 45,000,000 shares authorized; 16,159,878 and 13,010,409 shares issued and outstanding, respectively | 16,160 | 13,011 |
Additional paid-in capital | 32,990,617 | 32,022,166 |
Subscriptions payable | 600,000 | |
Accumulated deficit | (26,412,509) | (25,858,697) |
Total stockholders’ equity | 6,594,308 | 6,776,520 |
Total liabilities and stockholders’ equity | $ 9,048,832 | $ 9,247,142 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Common stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 16,159,878 | 13,010,409 |
Common stock, shares outstanding | 16,159,878 | 13,010,409 |
Series A Convertible Preferred Stock | ||
Preferred stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 900,000 | 900,000 |
Preferred stock, shares issued | 39,810 | 39,810 |
Preferred stock, shares outstanding | 39,810 | 39,810 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenue | $ 991,099 | $ 992,424 | $ 1,988,548 | $ 2,023,373 |
Operating expenses: | ||||
Cost of revenues | 616,030 | 623,548 | 1,305,492 | 1,321,184 |
General and administrative | 523,532 | 932,239 | 1,230,936 | 2,031,693 |
Total operating expenses | 1,139,562 | 1,555,787 | 2,536,428 | 3,352,877 |
Loss from operations | (148,463) | (563,363) | (547,880) | (1,329,504) |
Other income (expense) | ||||
Interest expense | (5,459) | (5,932) | ||
Gain on forgiveness of PPP loan | 139,595 | |||
Total other income (expense) | (5,459) | (5,932) | 139,595 | |
Net loss before income taxes | (153,922) | (563,363) | (553,812) | (1,189,909) |
Provision for (benefit from) income taxes | ||||
Net loss | $ (153,922) | $ (563,363) | $ (553,812) | $ (1,189,909) |
Net loss per share, basic (in Dollars per share) | $ (0.01) | $ (0.05) | $ (0.04) | $ (0.1) |
Weighted average common shares outstanding, basic (in Shares) | 13,817,517 | 11,438,071 | 13,420,527 | 11,386,773 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Net loss per share, diluted | $ (0.01) | $ (0.05) | $ (0.04) | $ (0.10) |
Weighted average common shares outstanding, diluted | 13,817,517 | 11,438,071 | 13,420,527 | 11,386,773 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) | Preferred Stock | Common stock | Additional paid-in capital | Subscriptions payable | Accumulated deficit | Total |
Balance at Dec. 31, 2021 | $ 40 | $ 11,293 | $ 29,805,028 | $ 600,000 | $ (24,011,291) | $ 6,405,070 |
Balance (in Shares) at Dec. 31, 2021 | 39,810 | 11,293,030 | ||||
Shares issued as settlement of accounts payable | $ 84 | 84,916 | 85,000 | |||
Shares issued as settlement of accounts payable (in Shares) | 83,954 | |||||
Shares issued for vested restricted stock units | $ 72 | (72) | ||||
Shares issued for vested restricted stock units (in Shares) | 71,666 | |||||
Commitment shares issued in conjunction with capital raise | $ 278 | 199,722 | 200,000 | |||
Commitment shares issued in conjunction with capital raise (in Shares) | 277,778 | |||||
Stock based compensation | 645,549 | 645,549 | ||||
Net loss | (1,189,909) | (1,189,909) | ||||
Balance at Jun. 30, 2022 | $ 40 | $ 11,727 | 30,735,143 | 600,000 | (25,201,200) | 6,145,710 |
Balance (in Shares) at Jun. 30, 2022 | 39,810 | 11,726,428 | ||||
Balance at Mar. 31, 2022 | $ 40 | $ 11,396 | 30,237,493 | 600,000 | (24,637,837) | 6,211,092 |
Balance (in Shares) at Mar. 31, 2022 | 39,810 | 11,395,650 | ||||
Shares issued for vested restricted stock units | $ 53 | (53) | ||||
Shares issued for vested restricted stock units (in Shares) | 53,000 | |||||
Commitment shares issued in conjunction with capital raise | $ 278 | 199,722 | 200,000 | |||
Commitment shares issued in conjunction with capital raise (in Shares) | 277,778 | |||||
Stock based compensation | 297,981 | 297,981 | ||||
Net loss | (563,363) | (563,363) | ||||
Balance at Jun. 30, 2022 | $ 40 | $ 11,727 | 30,735,143 | 600,000 | (25,201,200) | 6,145,710 |
Balance (in Shares) at Jun. 30, 2022 | 39,810 | 11,726,428 | ||||
Balance at Dec. 31, 2022 | $ 40 | $ 13,011 | 32,022,166 | 600,000 | (25,858,697) | 6,776,520 |
Balance (in Shares) at Dec. 31, 2022 | 39,810 | 13,010,409 | ||||
Shares issued as settlement of accounts payable | $ 151 | 44,016 | 44,167 | |||
Shares issued as settlement of accounts payable (in Shares) | 151,044 | |||||
Shares issued under equity line of credit | $ 600 | 31,087 | 31,687 | |||
Shares issued under equity line of credit (in Shares) | 600,000 | |||||
Shares issued for vested restricted stock units | $ 228 | (228) | ||||
Shares issued for vested restricted stock units (in Shares) | 227,999 | |||||
Shares issued for settlement of class action | $ 1,941 | 598,059 | (600,000) | |||
Shares issued for settlement of class action (in Shares) | 1,941,858 | |||||
Shares issued for cashless exercise of warrants | $ 229 | (229) | ||||
Shares issued for cashless exercise of warrants (in Shares) | 228,568 | |||||
Stock based compensation | 295,746 | 295,746 | ||||
Net loss | (553,812) | (553,812) | ||||
Balance at Jun. 30, 2023 | $ 40 | $ 16,160 | 32,990,617 | (26,412,509) | 6,594,308 | |
Balance (in Shares) at Jun. 30, 2023 | 39,810 | 16,159,878 | ||||
Balance at Mar. 31, 2023 | $ 40 | $ 13,022 | 32,170,028 | 600,000 | (26,258,587) | 6,524,503 |
Balance (in Shares) at Mar. 31, 2023 | 39,810 | 13,021,741 | ||||
Shares issued as settlement of accounts payable | $ 151 | 44,016 | 44,167 | |||
Shares issued as settlement of accounts payable (in Shares) | 151,044 | |||||
Shares issued under equity line of credit | $ 600 | 31,087 | 31,687 | |||
Shares issued under equity line of credit (in Shares) | 600,000 | |||||
Shares issued for vested restricted stock units | $ 217 | (217) | ||||
Shares issued for vested restricted stock units (in Shares) | 216,667 | |||||
Shares issued for settlement of class action | $ 1,941 | 598,059 | (600,000) | |||
Shares issued for settlement of class action (in Shares) | 1,941,858 | |||||
Shares issued for cashless exercise of warrants | $ 229 | (229) | ||||
Shares issued for cashless exercise of warrants (in Shares) | 228,568 | |||||
Stock based compensation | 147,873 | 147,873 | ||||
Net loss | (153,922) | (153,922) | ||||
Balance at Jun. 30, 2023 | $ 40 | $ 16,160 | $ 32,990,617 | $ (26,412,509) | $ 6,594,308 | |
Balance (in Shares) at Jun. 30, 2023 | 39,810 | 16,159,878 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (553,812) | $ (1,189,909) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on forgiveness of PPP loan | (139,595) | |
Change in inventory value | 112,100 | |
Stock-based compensation | 295,746 | 645,549 |
Bad debt expense | 78,125 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (122,765) | 84,135 |
Prepaid expenses and other assets | (25,353) | (63,961) |
Accounts payable and accrued liabilities | 71,459 | 309,722 |
Deferred revenue | 6,250 | 116,250 |
Net cash used in operating activities | (328,475) | (47,584) |
Net cash from investing activities | ||
Cash flows from financing activities: | ||
Proceeds from the sale of common stock | 261,687 | |
Payments of notes payable | (33,451) | |
Payments of shareholder advance | (16,189) | |
Proceeds from advances - related party | 160,085 | |
Payments of advances - related party | (160,085) | |
Net cash provided by financing activities | 212,047 | |
Net decrease in cash | (116,428) | (47,584) |
Cash, beginning of period | 249,462 | 71,075 |
Cash, end of period | 133,034 | 23,491 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 5,932 | |
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Commitment shares issued in conjunction with capital raise | 200,000 | |
Shares issued for vested restricted stock units | 228 | 72 |
Shares issued for settlement of class action | 1,941 | |
Shares issued for cashless exercise of warrants | $ 229 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2023 | |
Description of Business [Abstract] | |
Description of Business | Note 1. Description of Business Nature of Business SCWorx, LLC (n/k/a SCW FL Corp.) (“SCW LLC”) was a privately held limited liability company which was organized in Florida on November 17, 2016. On December 31, 2017, SCW LLC acquired Primrose Solutions, LLC (“Primrose”), a Delaware limited liability company, which became its wholly-owned subsidiary and focused on developing functionality for the software now used and sold by SCWorx Corp. (the “Company” or “SCWorx”). The majority interest holders of Primrose were interest holders of SCW LLC and based upon Staff Accounting Bulletin Topic 5G, the technology acquired has been accounted for at predecessor cost of $0. To facilitate the planned acquisition by Alliance MMA, Inc., a Delaware corporation (“Alliance”), on June 27, 2018, SCW LLC merged with and into a newly-formed entity, SCWorx Acquisition Corp., a Delaware corporation (“SCW Acquisition”), with SCW Acquisition being the surviving entity. Subsequently, on August 17, 2018, SCW Acquisition changed its name to SCWorx Corp. On November 30, 2018, the Company and certain of its stockholders agreed to cancel 6,510 shares of common stock. In June 2018, the Company began to collect subscriptions for common stock. From June to November 2018, the Company collected $1,250,000 in subscriptions and issued 3,125 shares of common stock to new third-party investors. In addition, on February 1, 2019, (i) SCWorx Corp. (f/k/a SCWorx Acquisition Corp.) changed its name to SCW FL Corp. (to allow Alliance to change its name to SCWorx Corp.) and (ii) Alliance acquired SCWorx Corp. (n/k/a SCW FL Corp.) in a stock-for-stock exchange transaction and changed Alliance’s name to SCWorx Corp., which is the Company’s current name, with SCW FL Corp. becoming the Company’s subsidiary. On March 16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC. Operations of the Business SCWorx is a provider of data content and services related to the repair, normalization and interoperability of information for healthcare providers and big data analytics for the healthcare industry. SCWorx has developed and markets health information technology solutions and associated services that improve healthcare processes and information flow within hospitals. SCWorx’s software platform enables healthcare providers to simplify, repair, and organize its data (“data normalization”), allows the data to be utilized across multiple internal software applications (“interoperability”) and provides the basis for sophisticated data analytics (“big data”). SCWorx’s solutions are designed to improve the flow of information quickly and accurately between the existing supply chain, electronic medical records, clinical systems, and patient billing functions. The software is designed to achieve multiple operational benefits such as supply chain cost reductions, decreased accounts receivables aging, accelerated and more accurate billing, contract optimization, increased supply chain management and cost visibility, synchronous Charge Description Master (“CDM”) and control of vendor rebates and contract administration fees. SCWorx empowers healthcare providers to maintain comprehensive access and visibility to an advanced business intelligence that enables better decision-making and reductions in product costs and utilization, ultimately leading to accelerated and accurate patient billing. SCWorx’s software modules perform separate functions as follows: ● virtualized Item Master File repair, expansion and automation; ● CDM management; ● contract management; ● request for proposal automation; ● rebate management; ● big data analytics modeling; and ● data integration and warehousing. SCWorx continues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the United States. Clients are geographically dispersed throughout the country. The Company’s focus is to assist healthcare providers with issues they have pertaining to data interoperability. SCWorx provides these solutions through a combination of direct sales and relationships with strategic partners. SCWorx’s software solutions are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where such software is hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by the client through a secure connection in a software as a service (“SaaS”) delivery method. SCWorx currently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and its distribution and reseller partnerships. Impact of the COVID-19 Pandemic The Company’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic which spread throughout the United States and the world. The New York and New Jersey area, where the Company is headquartered, was at one of the early epicenters of the coronavirus outbreak in the United States. The outbreak adversely impacted new customer acquisition. The Company has followed the recommendations of local health authorities to minimize exposure risk for its team members since the outbreak. In addition, the Company’s customers (hospitals) also experienced extraordinary disruptions to their businesses and supply chains, while experiencing unprecedented demand for health care services related to COVID-19. As a result of these extraordinary disruptions to the Company’s customers’ business, the Company’s customers were focused on meeting the nation’s health care needs in response to the COVID-19 pandemic. As a result, the Company believes that its customers were not able to focus resources on expanding the utilization of the Company’s services, which has adversely impacted the Company’s growth prospects, at least until the adverse effects of the pandemic subside. In addition, the financial impact of COVID-19 on the Company’s hospital customers could cause the hospitals to delay payments due to the Company for services, which could negatively impact the Company’s cash flows. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed 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 (“SEC”). The accompanying unaudited condensed consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. These interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. They do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto contained in its report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 17, 2023. The unaudited condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at June 30, 2023, the results of its operations for the three and six months ended June 30, 2023 and cash flows for the six months ended June 30, 2023. The results of operations for three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for future quarters or the full year. Cash Cash is maintained with various financial institutions. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company did not have amounts in excess of the FDIC insured limit as of June 30, 2023 and December 31, 2022. Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Management defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement 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 the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. Concentration of Credit and Other Risks Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, accounts receivable 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. Significant customers are those which represent more than 10% of the Company’s revenue for each period presented, or the Company’s accounts receivable balance as of each respective balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue For the six months ended Accounts Receivable June 30, June 30, Customers 2023 2022 2023 2022 Customer A 11 % 13 % 13 % 13 % Customer B 10 % 10 % 44 % 11 % Customer C 15 % 12 % 8 % 18 % Customer D 11 % 12 % 4 % 6 % Customer E 2 % 2 % 14 % - % Customer F 0 % 3 % 0 % 19 % 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. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, the Company records a specific allowance against amounts due. For all other customers, the Company recognizes allowances for doubtful accounts based on its historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment. Actual future losses from uncollectible accounts may differ from the Company’s estimates. The Company did not have a recorded allowance for doubtful accounts as of June 30, 2023 and December 31, 2022. Inventory The inventory balance at June 30, 2023 is related to the Company’s Direct-Worx, LLC subsidiary and consisted of approximately 87,000 gowns. These items are carried on the unaudited condensed 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 June 30, 2023 and December 31, 2022 consisted of the following: June 30, December 31, 2023 2022 Inventory $ 523,440 $ 523,440 Allowance for obsolescence (523,440 ) (523,440 ) Net inventory value $ - $ - Goodwill and Purchased Identified Intangible Assets Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. The Company reviews impairment of goodwill annually in the fourth quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. 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. The Company did not record any depreciation expense for the three and six months ended June 30, 2023 and 2022. Revenue Recognition The Company recognizes revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Topic 606 the Company performs the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company follows the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. The Company has identified the following performance obligations in its SaaS contracts with customers: 1) Data Normalization: which includes data preparation, product and vendor mapping, product categorization, data enrichment and other data related services, 2) 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, 3) Maintenance: which includes ongoing data cleansing and normalization, content enrichment, and optimization, and 4) Professional Services: mainly related to specific customer projects to manage and/or analyze data and review for cost reduction opportunities A contract will typically include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted for separately. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price basis. Significant judgment is required to determine the stand-alone selling price for each distinct performance obligation and is typically estimated based on observable transactions when these services are sold on a stand-alone basis. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met. The Company considers control to have transferred upon delivery because the Company has a present right to payment at that time, the Company has transferred use of the good or service, and the customer is able to direct the use of, and obtain substantially all the remaining benefits from, the good or service. The Company’s SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements. If it is determined that the Company has not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied. Revenue recognition for the Company’s performance obligations are as follows: Data Normalization and Professional Services The Company’s Data Normalization and Professional Services are typically fixed fee. When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer. SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which the Company’s service is made available to customers. The Company does have some contracts that have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the transaction price for those contracts include a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The Company does not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. In periods prior to the adoption of ASC 606, the Company recognized revenues when persuasive evidence of an arrangement existed, delivery had occurred, the sales price was fixed or determinable, and the collectability of the resulting receivable was reasonably assured. The adoption of Topic 606 did not result in a cumulative effect adjustment to the Company’s opening retained earnings since there was no significant impact upon adoption of Topic 606. There was also no material impact to revenues, or any other financial statement line items for the year ended December 31, 2018 as a result of applying ASC 606. The Company has one revenue stream, from the SaaS business, and believes it has presented all varying factors that affect the nature, timing and uncertainty of revenues and cash flows. PPE Inventory sales Revenues from the sale of inventory are typically recognized upon shipment to a customer as long as the Company has met all performance obligations related to the sale in accordance with Topic 606. Brokered PPE sales 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. Remaining Performance Obligations As of June 30, 2023 and December 31, 2022, the Company had $586,083 and $579,833, respectively, of remaining performance obligations recorded as deferred revenue. The Company expects to recognize the majority of revenue relating to the current performance obligations during the following 12 month period. Costs to Obtain and Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with ASC 340-40. Cost of Revenues Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of the Company’s large data array that were incurred in delivering professional services and maintenance of the Company’s large data array during the periods presented. Contract Balances Contract assets arise when the associated revenue was earned prior to the Company’s unconditional right to receive a payment under a contract with a customer (unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received. There were no contract assets as of June 30, 2023 and December 31, 2022. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied. Contract liabilities were $586,083 and $579,833 as of June 30, 2023 and December 31, 2022, respectively. Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2023 and December 31, 2022, the Company has evaluated available evidence and concluded that the Company may not realize all the benefits of its deferred tax assets; therefore, a valuation allowance has been established for its deferred tax assets. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impact that the tax changes in the CARES Act may have on its business but does not expect the impact to be material. There was no income tax expense for three and six months ended June 30, 2023 and 2022. Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments. Under the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award. The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of a new award. Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. The Company estimates the expected life of options granted based on historical exercise patterns, which are believed to be representative of future behavior. The Company estimates the volatility of the Company’s common stock on the date of grant based on historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period. The Company also grants performance based restricted stock awards to employees and consultants. These awards will vest if certain employee\consultant-specific or Company-designated performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, 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 is recorded over the remaining requisite service period. Refer to Note 6, Stockholders’ Equity, for additional detail. Loss Per Share The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Indemnification The Company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of the Company’s software. In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated losses for such indemnification. The Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against the Company and no liability has been recorded in its condensed consolidated financial statements. As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments above the applicable policy retention, should they occur. In connection with the Class Action and derivative claims and investigations described in Note 5, Commitments and Contingencies, the Company is obligated to indemnify its officers and directors for costs incurred in defending against these claims and investigations. Contingencies The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company reviews the developments in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount. Legal costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to the allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, stock-based compensation, goodwill, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Actual results could differ materially from those estimates. Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. |
Loan Payable
Loan Payable | 6 Months Ended |
Jun. 30, 2023 | |
Loan Payable [Abstract] | |
Loan Payable | Note 3. Loans Payable CARES funding On May 5, 2020, the Company obtained a $293,972 unsecured loan payable through the Paycheck Protection Program (“PPP”), which was enacted as part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES ACT”). The funds were received from Bank of America through a loan agreement pursuant to the CARES Act. The CARES Act was established in order to enable small businesses to pay employees during the economic slowdown caused by COVID-19 by providing forgivable loans to qualifying businesses for up to 2.5 times their average monthly payroll costs. The amount borrowed under the CARES Act and used for payroll costs, rent, mortgage interest, and utility costs during the 24 week period after the date of loan disbursement is eligible to be forgiven provided that (a) the Company uses the PPP Funds during the eight week period after receipt thereof, and (b) the PPP Funds are only used to cover payroll costs (including benefits), rent, mortgage interest, and utility costs. While the full loan amount may be forgiven, the amount of loan forgiveness will be reduced if, among other reasons, the Company does not maintain staffing or payroll levels or less than 60% of the loan proceeds are used for payroll costs. Principal and interest payments on any unforgiven portion of the PPP Funds (the “PPP Loan”) will be deferred to the date the SBA remits the borrower’s loan forgiveness amount to the lender or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness period for six months and will accrue interest at a fixed annual rate of 1.0% and carry a two year maturity date. There is no prepayment penalty on the CARES Act Loan. In May 2022, the Company was granted an extension on the maturity date of this note until March 5, 2025. The loan was partially forgiven in the amount of $139,569 in September 2022 with the balance remaining due. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | Note 4. Leases Operating Leases The Company’s principal executive office in New York City is under a month-to-month arrangement. The Company has operating leases for corporate, business and technician offices. Leases with a probable term of 12 months or less, including month-to-month agreements, are not recorded on the condensed consolidated balance sheet, unless the arrangement includes an option to purchase the underlying asset, or an option to renew the arrangement, that the Company is reasonably certain to exercise (short-term leases). The Company recognizes lease expense for these leases on a straight-line bases over the lease term. The Company’s only remaining lease is month-to-month. As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components (common-area maintenance costs) from lease components (fixed payments including rent) and instead to account for each separate lease component and its associated non-lease components as a single lease component. The Company uses its incremental borrowing rate for purposes of discounting lease payments. As of June 30, 2023 and December 31, 2022, 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 three months ended June 30, 2023 and 2022, the components of lease expense were as follows: For the three months ended For the six months ended June 30, June 30, 2023 2022 2023 2022 Operating lease cost $ 435 $ 434 $ 870 $ 921 Total lease cost $ 435 $ 434 $ 870 $ 921 As of June 30, 2023, the Company has no additional operating leases, other than that noted above, and no financing leases. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 5. Commitments and Contingencies In conducting our business, we may become involved in legal proceedings. We will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred. Legal Proceedings 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. SCWorx Corp. and Marc S. Schessel,. 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 Action. 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) agreed to a cash payment to the class plaintiffs (ii) the former CEO agreed to transfer 100,000 shares of company common stock to the class plaintiffs, and (iii) the Company agreed to issue $600,000 worth of common stock to the class plaintiffs, in exchange for which all parties were 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 has satisfied the accrued retention liability of $700,000. By 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. On June 5, 2023, the Company issued all shares owed under the Stipulation of Settlement. The Company has now fulfilled all of its obligations under the Stipulation of Settlement CorProminence d/b/a Core IR v. SCWorx AAA Arbitration 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 commenced on March 20, 2023 and is currently scheduled to resume September 6, 2023. Hadrian Equities Partners, LLC et ano. v. SCWorx Corp, Case No. 22-cv-07096 (JLR) (S.D.N.Y) On August 19, 2022, Hadrian Equities Partners, LLC and the Phillip W. Caprio, Jr. 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. To date, the Complaint has not been served. 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 has since filed a Second Amended Complaint which the company must answer by August 28, 2023. Carole R. Bernstein, Esq. v. SCWorx Corp. 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 alleges that the Company breached its engagement agreement with Ms. Bernstein by failing to pay legal fees when due. .Ms. Bernstein is seeking to recover $69,163.98 fees owing for servcies, plus interest, costs, including her attorney’s fees. The Company’s responsive pleadings (Answer/Counterclaims) are due on or about September 5, 2023. 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 Company’s issuance, no later than 30 days after the entry of the Class Distribution Order in the class action entitled Yannes v. SCWorx Corp. of shares of the Company’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. 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 U.S.C. § 77q(a)]. On June 2, 2022, the Court granted the motion, approved the settlement and entered a final judgment. SCWorx has paid all installments on the monetary penalty of $125,000 and has issued Company common stock valued at $600,000 to the authorized claimants in the Yannes settlement in full satisfaction of its financial obligations under the Consent Judgement. 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. The Company believes it has satisfied its accrued retention obligations with respect to the insurance coverage. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 6. Stockholders’ Equity Authorized Shares The Company has 45,000,000 Common shares and 900,000 Series A convertible preferred shares authorized with a par value of $0.001 per share. Common Stock Issuance of Shares for Vested Restricted Stock Units Between January 10, 2023 and January 26, 2023, the Company issued a total of 11,332 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 216,667 shares of common stock to holders of fully vested restricted stock units. Issuance of Shares as Settlement of Accounts Payable On May 24, 2023, the Company issued 102,096 shares of common stock in full settlement of $26,545 of accounts payable. The shares had a fair value of $0.26 per share. On June 22, 2023, the Company issued 48,948 shares of common stock in full settlement of $17,621 of accounts payable. The shares had a fair value of $0.36 per share. Issuance of Shares under Common Stock Purchase Agreement On June 1, 2023, the Company issued 300,000 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 300,000 shares of common stock for net proceeds of $134,634 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 228,568 shares of common stock in a cashless exchange for 823,078 warrants to purchase shares of common stock at $0.65 per share. 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 June 30, 2023, $415,000 worth of the shares and warrants have been issued. The remaining $125,000 received by the Company is included in equity financing within current liabilities on the consolidated balance sheet. Stock Incentive Plan 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 six months ended June 30, 2023 were: Warrant Grants Stock Option Grants Restricted Number of Weighted- Number of Weighted- Number of Balance at December 31, 2022 1,567,720 $ 1.35 118,388 $ 3.25 2,409,759 Granted - - - - 491,044 Exercised (823,078 ) 0.65 - - (379,043 ) Cancelled/Expired (44,614 ) 9.14 (14,441 ) 6.75 - Balance at June 30, 2023 700,028 $ 1.67 103,947 $ 2.76 2,521,760 Exercisable at June 30, 2023 700,028 $ 1.67 103,947 $ 2.76 2,351,760 The Company has classified the warrant as having Level 2 inputs, and has used the Black-Scholes option-pricing model to value the warrants. The Company’s outstanding warrants and options at June 30, 2023 are as follows: Warrants Outstanding Warrants Exercisable Exercise Price Range Number Weighted Average Weighted Number Weighted Average Intrinsic Value $0.65 - $7.08 700,028 0.86 $ 1.67 700,028 $ 1.67 - Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Weighted Number Weighted Average Intrinsic Value $2.64 - $5.89 103,947 1.37 $ 2.76 103,947 $ 2.76 - As of June 30, 2023 and December 31, 2022, the total unrecognized expense for unvested stock options and restricted stock awards was approximately $148,240 and $222,000, respectively, to be recognized over a twelve month period from the original grant dates. Stock-based compensation expense for three and six months ended June 30, 2023 and 2022 was as follows: For the three months ended For the six months ended June 30, June 30, 2023 2022 2023 2022 Stock-based compensation expense $ 147,873 $ 297,981 $ 295,746 $ 645,549 Stock-based compensation expense categorized by the equity components for three and six months ended June 30, 2023 and 2022 was as follows: For the three months ended For the six months ended June 30, June 30, 2023 2022 2023 2022 Common stock $ 147,873 $ 297,981 $ 295,746 $ 645,549 Total $ 147,873 $ 297,981 $ 295,746 $ 645,549 |
Net Loss per Share
Net Loss per Share | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss per Share [Abstract] | |
Net Loss per Share | Note 7. Net Loss per Share Basic net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock outstanding during each period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. The Company uses the treasury stock method to determine whether there is a dilutive effect of outstanding option grants. The following securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: For the three and June 30, 2023 2022 Stock options 103,947 118,388 Warrants 700,028 1,043,525 Restricted stock units 2,521,760 2,449,091 Total common stock equivalents 3,325,735 3,611,004 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 8. Related Party Transactions At June 30, 2023 and December 31, 2022 Company had a payable due to an officer in the amount of $153,838 for contract work performed prior to becoming an officer. During September 2021, the Company’s former CEO and shareholder advanced $100,000 in cash to the Company for short term capital requirements. This amount is non-interest bearing and payable upon demand. The Company had balances of $83,811 and $100,000 included in Shareholder advance on the Company’s consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively. Between May 24, 2023 and June 8, 2023, the Company’s CFO advanced and aggregate $160,085 in cash to the Company for short term capital requirements. As of June 30, 2023, all advanced amounts have been repaid in full. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9. 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. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed 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 (“SEC”). The accompanying unaudited condensed consolidated financial statements include the accounts of SCWorx and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. These interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. They do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto contained in its report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 17, 2023. The unaudited condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at June 30, 2023, the results of its operations for the three and six months ended June 30, 2023 and cash flows for the six months ended June 30, 2023. The results of operations for three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for future quarters or the full year. |
Cash | Cash Cash is maintained with various financial institutions. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Company did not have amounts in excess of the FDIC insured limit as of June 30, 2023 and December 31, 2022. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Management applies fair value accounting for significant financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Management defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement 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 the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
Concentration of Credit and Other Risks | 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 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. Significant customers are those which represent more than 10% of the Company’s revenue for each period presented, or the Company’s accounts receivable balance as of each respective balance sheet date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue For the six months ended Accounts Receivable June 30, June 30, Customers 2023 2022 2023 2022 Customer A 11 % 13 % 13 % 13 % Customer B 10 % 10 % 44 % 11 % Customer C 15 % 12 % 8 % 18 % Customer D 11 % 12 % 4 % 6 % Customer E 2 % 2 % 14 % - % Customer F 0 % 3 % 0 % 19 % |
Allowance for Doubtful Accounts | 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. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations, the Company records a specific allowance against amounts due. For all other customers, the Company recognizes allowances for doubtful accounts based on its historical write-off experience in conjunction with the length of time the receivables are past due, customer creditworthiness, geographic risk and the current business environment. Actual future losses from uncollectible accounts may differ from the Company’s estimates. The Company did not have a recorded allowance for doubtful accounts as of June 30, 2023 and December 31, 2022. |
Inventory | Inventory The inventory balance at June 30, 2023 is related to the Company’s Direct-Worx, LLC subsidiary and consisted of approximately 87,000 gowns. These items are carried on the unaudited condensed 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 June 30, 2023 and December 31, 2022 consisted of the following: June 30, December 31, 2023 2022 Inventory $ 523,440 $ 523,440 Allowance for obsolescence (523,440 ) (523,440 ) Net inventory value $ - $ - |
Goodwill and Purchased Identified Intangible Assets | Goodwill and Purchased Identified Intangible Assets Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. The Company reviews impairment of goodwill annually in the fourth quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. |
Property and Equipment | 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. The Company did not record any depreciation expense for the three and six months ended June 30, 2023 and 2022. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Topic 606 to depict the transfer of promised goods or services in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of Topic 606 the Company performs the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company follows the accounting revenue guidance under Topic 606 to determine whether contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. The Company has identified the following performance obligations in its SaaS contracts with customers: 1) Data Normalization: which includes data preparation, product and vendor mapping, product categorization, data enrichment and other data related services, 2) 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, 3) Maintenance: which includes ongoing data cleansing and normalization, content enrichment, and optimization, and 4) Professional Services: mainly related to specific customer projects to manage and/or analyze data and review for cost reduction opportunities A contract will typically include Data Normalization, SaaS and Maintenance, which are distinct performance obligations and are accounted for separately. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price basis. Significant judgment is required to determine the stand-alone selling price for each distinct performance obligation and is typically estimated based on observable transactions when these services are sold on a stand-alone basis. At contract inception, an assessment of the goods and services promised in the contracts with customers is performed and a performance obligation is identified for each distinct promise to transfer to the customer a good or service (or bundle of goods or services). To identify the performance obligations, the Company considers all the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Revenue is recognized when the performance obligation has been met. The Company considers control to have transferred upon delivery because the Company has a present right to payment at that time, the Company has transferred use of the good or service, and the customer is able to direct the use of, and obtain substantially all the remaining benefits from, the good or service. The Company’s SaaS and Maintenance contracts typically have termination for convenience without penalty clauses and accordingly, are generally accounted for as month-to-month agreements. If it is determined that the Company has not satisfied a performance obligation, revenue recognition will be deferred until the performance obligation is deemed to be satisfied. Revenue recognition for the Company’s performance obligations are as follows: Data Normalization and Professional Services The Company’s Data Normalization and Professional Services are typically fixed fee. When these services are not combined with SaaS or Maintenance revenues as a single unit of accounting, these revenues are recognized as the services are rendered and when contractual milestones are achieved and accepted by the customer. SaaS and Maintenance SaaS and Maintenance revenues are recognized ratably over the contract terms beginning on the commencement date of each contract, which is the date on which the Company’s service is made available to customers. The Company does have some contracts that have payment terms that differ from the timing of revenue recognition, which requires the Company to assess whether the transaction price for those contracts include a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects of a significant financing component if it expects that at the contract inception, the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The Company does not maintain contracts in which the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service exceeds the one-year threshold. In periods prior to the adoption of ASC 606, the Company recognized revenues when persuasive evidence of an arrangement existed, delivery had occurred, the sales price was fixed or determinable, and the collectability of the resulting receivable was reasonably assured. The adoption of Topic 606 did not result in a cumulative effect adjustment to the Company’s opening retained earnings since there was no significant impact upon adoption of Topic 606. There was also no material impact to revenues, or any other financial statement line items for the year ended December 31, 2018 as a result of applying ASC 606. The Company has one revenue stream, from the SaaS business, and believes it has presented all varying factors that affect the nature, timing and uncertainty of revenues and cash flows. PPE Inventory sales Revenues from the sale of inventory are typically recognized upon shipment to a customer as long as the Company has met all performance obligations related to the sale in accordance with Topic 606. Brokered PPE sales 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. Remaining Performance Obligations As of June 30, 2023 and December 31, 2022, the Company had $586,083 and $579,833, respectively, of remaining performance obligations recorded as deferred revenue. The Company expects to recognize the majority of revenue relating to the current performance obligations during the following 12 month period. Costs to Obtain and Fulfill a Contract Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with ASC 340-40. |
Cost of Revenues | Cost of Revenues Cost of revenues primarily represent data center hosting costs, consulting services and maintenance of the Company’s large data array that were incurred in delivering professional services and maintenance of the Company’s large data array during the periods presented. |
Contract Balances | Contract Balances Contract assets arise when the associated revenue was earned prior to the Company’s unconditional right to receive a payment under a contract with a customer (unbilled revenue) and are derecognized when either it becomes a receivable or the cash is received. There were no contract assets as of June 30, 2023 and December 31, 2022. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied. Contract liabilities were $586,083 and $579,833 as of June 30, 2023 and December 31, 2022, respectively. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standard Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2023 and December 31, 2022, the Company has evaluated available evidence and concluded that the Company may not realize all the benefits of its deferred tax assets; therefore, a valuation allowance has been established for its deferred tax assets. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impact that the tax changes in the CARES Act may have on its business but does not expect the impact to be material. There was no income tax expense for three and six months ended June 30, 2023 and 2022. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation expense in accordance with the authoritative guidance on share-based payments. Under the provisions of the guidance, stock-based compensation expense is measured at the grant date based on the fair value of the option or warrant using a Black-Scholes option pricing model and is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The authoritative guidance also requires that the Company measures and recognizes stock-based compensation expense upon modification of the term of stock award. The stock-based compensation expense for such modification is accounted for as a repurchase of the original award and the issuance of a new award. Calculating stock-based compensation expense requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. The Company estimates the expected life of options granted based on historical exercise patterns, which are believed to be representative of future behavior. The Company estimates the volatility of the Company’s common stock on the date of grant based on historical volatility. The assumptions used in calculating the fair value of stock-based awards represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, its stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of its stock-based awards that are granted, exercised and cancelled. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period. The Company also grants performance based restricted stock awards to employees and consultants. These awards will vest if certain employee\consultant-specific or Company-designated performance targets are achieved. If minimum performance thresholds are achieved, each award will convert into a designated number of the Company’s common stock. If minimum performance thresholds are not achieved, then no shares will be issued. Based upon the expected levels of achievement, 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 is recorded over the remaining requisite service period. Refer to Note 6, Stockholders’ Equity, for additional detail. |
Loss Per Share | Loss Per Share The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings (loss) per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. |
Indemnification | Indemnification The Company provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by third parties arising from the use of the Company’s software. In accordance with authoritative guidance for accounting for guarantees, the Company evaluates estimated losses for such indemnification. The Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. To date, no such claims have been filed against the Company and no liability has been recorded in its condensed consolidated financial statements. As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable it to recover any payments above the applicable policy retention, should they occur. In connection with the Class Action and derivative claims and investigations described in Note 5, Commitments and Contingencies, the Company is obligated to indemnify its officers and directors for costs incurred in defending against these claims and investigations. |
Contingencies | Contingencies The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible, and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company reviews the developments in its contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. The Company adjusts provisions and changes to its disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount. Legal costs associated with loss contingencies are accrued based upon legal expenses incurred by the end of the reporting period. |
Use of Estimates | 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, stock-based compensation, goodwill, 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 | Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of Significant Customers | For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total net accounts receivable are as follows: Revenue For the six months ended Accounts Receivable June 30, June 30, Customers 2023 2022 2023 2022 Customer A 11 % 13 % 13 % 13 % Customer B 10 % 10 % 44 % 11 % Customer C 15 % 12 % 8 % 18 % Customer D 11 % 12 % 4 % 6 % Customer E 2 % 2 % 14 % - % Customer F 0 % 3 % 0 % 19 % |
Schedule of Inventory Assets | 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 June 30, 2023 and December 31, 2022 consisted of the following: June 30, December 31, 2023 2022 Inventory $ 523,440 $ 523,440 Allowance for obsolescence (523,440 ) (523,440 ) Net inventory value $ - $ - |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Components of Lease Expense | For three months ended June 30, 2023 and 2022, the components of lease expense were as follows: For the three months ended For the six months ended June 30, June 30, 2023 2022 2023 2022 Operating lease cost $ 435 $ 434 $ 870 $ 921 Total lease cost $ 435 $ 434 $ 870 $ 921 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Warrant and Stock Option Grants with Time-Based Vesting | 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 six months ended June 30, 2023 were: Warrant Grants Stock Option Grants Restricted Number of Weighted- Number of Weighted- Number of Balance at December 31, 2022 1,567,720 $ 1.35 118,388 $ 3.25 2,409,759 Granted - - - - 491,044 Exercised (823,078 ) 0.65 - - (379,043 ) Cancelled/Expired (44,614 ) 9.14 (14,441 ) 6.75 - Balance at June 30, 2023 700,028 $ 1.67 103,947 $ 2.76 2,521,760 Exercisable at June 30, 2023 700,028 $ 1.67 103,947 $ 2.76 2,351,760 |
Schedule of Company’s Outstanding Warrants and Options | The Company’s outstanding warrants and options at June 30, 2023 are as follows: Warrants Outstanding Warrants Exercisable Exercise Price Range Number Weighted Average Weighted Number Weighted Average Intrinsic Value $0.65 - $7.08 700,028 0.86 $ 1.67 700,028 $ 1.67 - Options Outstanding Options Exercisable Exercise Price Range Number Weighted Average Weighted Number Weighted Average Intrinsic Value $2.64 - $5.89 103,947 1.37 $ 2.76 103,947 $ 2.76 - |
Schedule of Stock-Based Compensation Expense | Stock-based compensation expense for three and six months ended June 30, 2023 and 2022 was as follows: For the three months ended For the six months ended June 30, June 30, 2023 2022 2023 2022 Stock-based compensation expense $ 147,873 $ 297,981 $ 295,746 $ 645,549 |
Schedule of Stock-Based Compensation Expense Categorized By the Equity Components | Stock-based compensation expense categorized by the equity components for three and six months ended June 30, 2023 and 2022 was as follows: For the three months ended For the six months ended June 30, June 30, 2023 2022 2023 2022 Common stock $ 147,873 $ 297,981 $ 295,746 $ 645,549 Total $ 147,873 $ 297,981 $ 295,746 $ 645,549 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Net Loss per Share [Abstract] | |
Schedule of Diluted Net Loss per Share | The following securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: For the three and June 30, 2023 2022 Stock options 103,947 118,388 Warrants 700,028 1,043,525 Restricted stock units 2,521,760 2,449,091 Total common stock equivalents 3,325,735 3,611,004 |
Description of Business (Detail
Description of Business (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |
Nov. 30, 2018 | Nov. 30, 2018 | Jun. 30, 2023 | |
Description of Business (Details) [Line Items] | |||
Acquired technology predecessor cost | $ 0 | ||
SCWorx [Member] | |||
Description of Business (Details) [Line Items] | |||
Common stock cancel shares | 6,510 | ||
Common stock, value, subscriptions | $ 1,250,000 | $ 1,250,000 | |
Number of shares issued | 3,125 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies [Abstract] | |||
Insured by the federal deposit insurance corporation | $ 250,000 | ||
Revenue percentage | 10% | ||
Gowns in inventory | $ 87,000 | ||
Fair value of inventory | $ 366,840 | ||
Deferred revenue | 586,083 | $ 579,833 | |
Contract liabilities | $ 586,083 | $ 579,833 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of Significant Customers | Jun. 30, 2023 | Jun. 30, 2022 |
Customer A [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenue | 11% | 13% |
Accounts Receivable | 13% | 13% |
Customer B [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenue | 10% | 10% |
Accounts Receivable | 44% | 11% |
Customer C [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenue | 15% | 12% |
Accounts Receivable | 8% | 18% |
Customer D [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenue | 11% | 12% |
Accounts Receivable | 4% | 6% |
Customer E [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenue | 2% | 2% |
Accounts Receivable | 14% | |
Customer F [Member] | ||
Revenue, Major Customer [Line Items] | ||
Revenue | 0% | 3% |
Accounts Receivable | 0% | 19% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of Inventory Assets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Schedule of Inventory Assets [Abstract] | ||
Inventory | $ 523,440 | $ 523,440 |
Allowance for obsolescence | (523,440) | (523,440) |
Net inventory value |
Loan Payable (Details)
Loan Payable (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
May 05, 2020 | May 31, 2022 | Sep. 30, 2022 | |
Loan Payable (Details) [Line Items] | |||
Loan proceeds percentage | 60% | ||
Interest rate | 1% | ||
Debt maturity term | 2 years | ||
Debt Instrument, Maturity Date | Mar. 05, 2025 | ||
Loan due amount | $ 139,569 | ||
Paycheck Protection Program [Member] | |||
Loan Payable (Details) [Line Items] | |||
Unsecured loan payable | $ 293,972 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of Components of Lease Expense - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Components of Lease Expense [Abstract] | ||||
Operating lease cost | $ 435 | $ 434 | $ 870 | $ 921 |
Total lease cost | $ 435 | $ 434 | $ 870 | $ 921 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||||
Jun. 07, 2023 | Nov. 01, 2022 | Jun. 02, 2022 | Apr. 06, 2022 | Apr. 25, 2022 | Jun. 30, 2023 | |
Commitments and Contingencies (Details) [Line Items] | ||||||
Class plaintiffs, description | Under the terms of this agreement, (i) the insurers for the Company and Marc Schessel (former CEO) agreed to a cash payment to the class plaintiffs (ii) the former CEO agreed to transfer 100,000 shares of company common stock to the class plaintiffs, and (iii) the Company agreed to issue $600,000 worth of common stock to the class plaintiffs, in exchange for which all parties were 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 has satisfied the accrued retention liability of $700,000. | |||||
Seeking damages | $ 190,000 | $ 500,000 | ||||
Claim to increase damages | $ 257,545.63 | |||||
Legal fees | $ 69,163.98 | |||||
Other investigations, description | 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 Company’s issuance, no later than 30 days after the entry of the Class Distribution Order in the class action entitled Yannes v. SCWorx Corp. of shares of the Company’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. 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 U.S.C. § 77q(a)].On June 2, 2022, the Court granted the motion, approved the settlement and entered a final judgment. SCWorx has paid all installments on the monetary penalty of $125,000 and has issued Company common stock valued at $600,000 to the authorized claimants in the Yannes settlement in full satisfaction of its financial obligations under the Consent Judgement. | |||||
Litigation penalty | $ 125,000 | |||||
Common Stock [Member] | ||||||
Commitments and Contingencies (Details) [Line Items] | ||||||
Shares issued (in Shares) | 600,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 16, 2023 | Jan. 26, 2023 | May 31, 2020 | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 22, 2023 | Jun. 15, 2023 | Jun. 01, 2023 | May 24, 2023 | |
Stockholders’ Equity (Details) [Line Items] | |||||||||
Restricted stock units | 216,667 | 11,332 | |||||||
Common stock shares issued | 48,948 | 102,096 | |||||||
Accounts payable (in Dollars) | $ 17,621 | $ 26,545 | |||||||
Price per share (in Dollars per share) | $ 3.8 | $ 0.36 | $ 0.26 | ||||||
Common stock, share issued | 16,159,878 | 13,010,409 | 300,000 | 300,000 | |||||
Aggregate net proceeds (in Dollars) | $ 134,634 | $ 127,053 | |||||||
Shares of common stock | 228,568 | ||||||||
Warrants to purchase shares | 169,409 | 823,078 | |||||||
Common stock per share (in Dollars per share) | $ 0.001 | $ 0.001 | $ 0.65 | ||||||
Received amount (in Dollars) | $ 515,000 | ||||||||
Sale amount (in Dollars) | $ 565,000 | ||||||||
Shares of common stock | 135,527 | ||||||||
Exercise price (in Dollars per share) | $ 4 | ||||||||
Shares and warrants (in Dollars) | $ 415,000 | ||||||||
Equity financing (in Dollars) | 125,000 | $ 125,000 | |||||||
Unrecognized expense (in Dollars) | $ 148,240 | $ 222,000 | |||||||
Series A Convertible Preferred Stock [Member] | |||||||||
Stockholders’ Equity (Details) [Line Items] | |||||||||
Common shares | 45,000,000 | ||||||||
Convertible preferred shares authorized | 900,000 | ||||||||
Convertible preferred shares par value of per share (in Dollars per share) | $ 0.001 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Schedule of Warrant and Stock Option Grants with Time-Based Vesting - $ / shares | 6 Months Ended |
Jun. 30, 2023 | |
Warrant Grants [Member] | |
Stockholders' Equity (Details) - Schedule of Warrant and Stock Option Grants with Time-Based Vesting [Line Items] | |
Balance Beginning | 1,567,720 |
Balance Beginning (in Dollars per share) | $ 1.35 |
Exercised | (823,078) |
Exercised (in Dollars per share) | $ 0.65 |
Cancelled/Forfeited | (44,614) |
Cancelled/Forfeited (in Dollars per share) | $ 9.14 |
Balance Ending | 700,028 |
Balance Ending (in Dollars per share) | $ 1.67 |
Exercisable | 700,028 |
Exercisable (in Dollars per share) | $ 1.67 |
Stock Option Grants [Member] | |
Stockholders' Equity (Details) - Schedule of Warrant and Stock Option Grants with Time-Based Vesting [Line Items] | |
Balance Beginning | 118,388 |
Balance Beginning (in Dollars per share) | $ 3.25 |
Granted | |
Granted (in Dollars per share) | |
Exercised | |
Exercised (in Dollars per share) | |
Cancelled/Forfeited | (14,441) |
Cancelled/Forfeited (in Dollars per share) | $ 6.75 |
Balance Ending | 103,947 |
Balance Ending (in Dollars per share) | $ 2.76 |
Exercisable (in Dollars per share) | $ 2.76 |
Exercisable | 103,947 |
Restricted Stock Units [Member] | |
Stockholders' Equity (Details) - Schedule of Warrant and Stock Option Grants with Time-Based Vesting [Line Items] | |
Balance Beginning | 2,409,759 |
Granted | 491,044 |
Exercised | (379,043) |
Cancelled/Forfeited (in Dollars per share) | |
Balance Ending | 2,521,760 |
Exercisable | 2,351,760 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details) - Schedule of Company’s Outstanding Warrants and Options | 6 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
$0.65 - $7.08 [Member] | Warrants Outstanding [Member] | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number Outstanding | shares | 700,028 |
Weighted Average Exercise Price | $ / shares | $ 1.67 |
Number Exercisable | shares | 700,028 |
Weighted Average Remaining Contractual Life (in years) | 10 months 9 days |
$0.65 - $7.08 [Member] | Warrants Exercisable [Member] | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Weighted Average Exercise Price | $ / shares | $ 1.67 |
Intrinsic Value | $ | |
$2.64 - $5.89 [Member] | Warrants Exercisable [Member] | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number Outstanding | shares | 103,947 |
$2.64 - $5.89 [Member] | Options Outstanding [Member] | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Weighted Average Exercise Price | $ / shares | $ 2.76 |
Number Exercisable | shares | 103,947 |
Weighted Average Exercise Price | $ / shares | $ 2.76 |
Weighted Average Remaining Contractual Life (in years) | 1 year 4 months 13 days |
$2.64 - $5.89 [Member] | Options Exercisable [Member] | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Intrinsic Value | $ |
Stockholders' Equity (Details_3
Stockholders' Equity (Details) - Schedule of Stock-Based Compensation Expense - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Stock-Based Compensation Expense [Abstract] | ||||
Stock-based compensation expense | $ 147,873 | $ 297,981 | $ 295,746 | $ 645,549 |
Stockholders' Equity (Details_4
Stockholders' Equity (Details) - Schedule of Stock-Based Compensation Expense Categorized By the Equity Components - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Schedule of Stock-Based Compensation Expense Categorized By the Equity Components [Abstract] | ||||
Common stock | $ 147,873 | $ 297,981 | $ 295,746 | $ 645,549 |
Total | $ 147,873 | $ 297,981 | $ 295,746 | $ 645,549 |
Net Loss per Share (Details) -
Net Loss per Share (Details) - Schedule of Diluted Net Loss per Share - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 3,325,735 | 3,611,004 |
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 103,947 | 118,388 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 700,028 | 1,043,525 |
Restricted Stock Units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total common stock equivalents | 2,521,760 | 2,449,091 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jun. 30, 2023 | Jun. 08, 2023 | Dec. 31, 2022 | Sep. 30, 2021 | May 24, 2016 |
Related Party Transactions [Abstract] | |||||
Amounts due to officers | $ 153,838 | $ 153,838 | |||
Short term capital | $ 160,085 | $ 100,000 | $ 160,085 | ||
Non-interest bearing payable balances shareholder advance | $ 83,811 | $ 100,000 |