Live Feed

Feed to the latest filings at the SEC

 

SCWORX CORP.

Date Filed : Jul 27, 2022

As filed with the Securitiesand Exchange Commission on July 27, 2022

RegistrationNo. 333-________

 

 

UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORMS-1

 

REGISTRATIONSTATEMENT UNDER THE SECURITIES ACT OF 1933

 

SCWORX CORP.
(Exact Name of Registrant As Specified In Its Charter)

 

Delaware   7374   47-5412331
(State Or Other Jurisdiction Of Incorporation Or Organization)   (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

 

590 MADISON AVE, 21ST FLOOR
NEW YORK, NY 10022
(844) 472-9679
(Address, Including Zip Code, And Telephone Number, Including Area Code, Of Registrant’s Principal Executive Offices)
 
TIMOTHY HANNIBAL
PRESIDENT & CHIEF EXECUTIVE OFFICER
 
SCWORX CORP.
590 MADISON AVE, 21ST FLOOR
NEW YORK, NY 10022
(844) 472-9679
(Name, Address, Including Zip Code, And Telephone Number, Including Area Code, Of Agent for Service)

 

COPIESTO:

 

MichaelD. Harris, Esq.

BrianS. Bernstein, Esq. 

NASONYEAGER GERSON HARRIS & FUMERO, P.A.

3001PGA BLVD., SUITE 305

PALMBEACH GARDENS, FL 33410

(561)686-3307

 

APPROXIMATEDATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

Assoon as practicable after this Registration Statement becomes effective.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933, please check the following box. ☒

 

Ifthis Form is used to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the followingbox and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company      

 

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

 

The registrant hereby amends this registrationstatement on such date or date(s) as may be necessary to delay its effective date until the registrant shall file a further amendmentwhich specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the SecuritiesAct of 1933, or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section8(a) may determine.

 

 

 

 

 

 

Theinformation in this prospectus is not complete and may be changed. These securities may not be sold until the registration statementfiled with the Securities and Exchange Commission of which this prospectus is a part becomes effective. This prospectus is not an offerto sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Subjectto Completion, Dated July 27, 2022

 

PROSPECTUS

 

SCWORXCORP.

 

2,288,585shares of Common Stock

 

Thisprospectus relates to the sale of up to 2,288,585 shares of our common stock which may be offered by the selling stockholder, Tumim StoneCapital, LLC (“Tumim” or the “Selling Stockholder”). The shares of common stock being offered by the SellingStockholder are outstanding or issuable pursuant to the Common Stock Purchase Agreement dated June 28, 2022 (the “Purchase Agreement”).See “The Tumim Stone Capital Transaction” for a description of the Purchase Agreement. Also, please refer to “SellingStockholder” beginning on page 32. Such registration does not mean that Tumim will actually offer or sell any of these shares.We will not receive any proceeds from the sales of the above shares of our common stock by the Selling Stockholder; however we will receiveproceeds under the Purchase Agreement if we sell shares to the Selling Stockholder.

 

Our common stock is listed on the Nasdaq CapitalMarket, under the symbol “WORX.” On July 26, 2022, the last reported sale price of the Common Stock on the Nasdaq CapitalMarket was $0.75 per share.

 

TheSelling Stockholder is an “underwriter” within the meaning of the Securities Act of 1933. The Selling Stockholder is offeringthese shares of common stock. The Selling Stockholder may sell all or a portion of these shares from time to time in market transactionsthrough any market on which our common stock is then traded, in negotiated transactions or otherwise, and at prices and on terms thatwill be determined by the then prevailing market price or at negotiated prices directly or through a broker or brokers, who may act asagent or as principal or by a combination of such methods of sale. The Selling Stockholder will receive all proceeds from the sale ofthe common stock. For additional information on the methods of sale, you should refer to the section entitled “Plan of Distribution.”

 

Weare an “emerging growth company” as defined by the Jumpstart Our Business Startups Act of 2012 and, as such, we haveelected to comply with certain reduced public company reporting requirements for this prospectus and future filings. Please see “ProspectusSummary - Implications of Being an Emerging Growth Company.”

 

Investingin our common stock involves a high degree of risk. Review the risk factors beginning on page 8 of this prospectus carefully beforeyou make an investment in our securities.  You should read this prospectus, together with additional information describedunder the headings “Incorporation of Certain Information by Reference” and “Where You Can Find MoreInformation,” carefully before you invest in any of our securities.

 

Neitherthe Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passedupon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Thedate of this prospectus is          , 2022

 

 

 

 

INDEX

 

About this Prospectus   ii
Cautionary Note Regarding Forward-Looking Statements   iii
Prospectus Summary   1
The Offering   4
Risk Factors   8
Use of Proceeds   23
Selling Stockholder   32
Plan of Distribution   33
Management’s Discussion and Analysis of Financial Condition and Results of Operation   35
Business   35
Description of Our Capital Stock   35
Properties   37
Legal Proceedings   37
Directors, Executive Officers and Corporate Governance   37
Executive Compensation   37
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   37
Certain Relationships and Related Transactions   37
Legal Matters   37
Experts   37
Where You Can Find More Information   38
Incorporation of Certain Information by Reference   38

 

i

 

 

ABOUTTHIS PROSPECTUS

 

Thisprospectus is part of a registration statement that we have filed with the Securities and Exchange Commission (the “SEC”)pursuant to which the Selling Stockholder named herein may, from time to time, offer and sell or otherwise dispose of the securitiescovered by this prospectus. You should not assume that the information contained in this prospectus is accurate on any date subsequentto the date set forth on the front cover of this prospectus or that any information we have incorporated by reference is correct on anydate subsequent to the date of the document incorporated by reference, even though this prospectus is delivered or securities are soldor otherwise disposed of on a later date. It is important for you to read and consider all information contained in this prospectus,including the Information Incorporated by Reference herein, in making your investment decision. You should also read and consider theinformation in the documents to which we have referred you under the captions “Where You Can Find More Information” and “Incorporationof Information by Reference” in this prospectus.

 

Neitherwe nor the Selling Stockholder have authorized any dealer, salesman or other person to give any information or to make any representationother than those contained or incorporated by reference in this prospectus. You must not rely upon any information or representationnot contained or incorporated by reference in this prospectus. This prospectus does not constitute an offer to sell or the solicitationof an offer to buy any of our securities other than the securities covered hereby, nor does this prospectus constitute an offer to sellor the solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such offer orsolicitation in such jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States arerequired to inform themselves about, and to observe, any restrictions as to the offering and the distribution of this prospectus applicableto those jurisdictions.

 

Wefurther note that the representations, warranties and covenants made in any agreement that is filed as an exhibit to any document thatis incorporated by reference in the accompanying prospectus were made solely for the benefit of the parties to such agreement, including,in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation,warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly,such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

  

ii

 

 

CAUTIONARYSTATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements includedor incorporated by reference in this prospectus constitute “forward-looking statements” within the meaning Private SecuritiesLitigation Reform Act of 1995, and of Section 27A of the Securities Act of 1933, or the Securities Act, and Section 21E of the SecuritiesExchange Act of 1934, or the Exchange Act. All statements other than statements of historical fact contained in this Annual Report onForm 10-K are forward-looking statements. These statements, among other things, relate to our business strategy, goals and expectationsconcerning our services, future operations, prospects, plans and objectives of management. The words “anticipate”, “believe”,“continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”,“predict”, “project”, “will”, and similar terms and phrases are used to identify forward-looking statementsin this presentation.

 

Ouroperations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, couldmaterially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. We have basedthese forward-looking statements largely on our current expectations and projections about future events and trends that we believe mayaffect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives,and financial needs. Forward-looking statements in this prospectus include, without limitation, statements reflecting management’sexpectations for future financial performance and operating expenditures (including our ability to continue as a going concern, to raiseadditional capital and to succeed in our future operations), expected growth, profitability and business outlook, and operating expenses.

 

Forward-lookingstatements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause ouractual results, levels of activity, performance, or achievements to be materially different from those anticipated by such statements.These factors include, among other things, the unknown risks and uncertainties that we believe could cause actual results to differ fromthese forward looking statements as set forth under the heading, “Risk Factors” and elsewhere in this Annual Report on Form10-K. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all of the risks and uncertaintiesthat could have an impact on the forward-looking statements, including without limitation, risks and uncertainties relating to:

 

  our ability to secure new data management contracts as well as renewals of existing contracts;

 

  our ability to obtain additional financing in sufficient amounts or on acceptable terms when required;

 

  our dependence on third-party subcontractors to perform some of the work on our contracts;

 

  the impact of new or changed laws, regulations or other industry standards that could adversely affect our ability to conduct our business;

 

  the impact of the COVID-19 pandemic on our revenues;

 

  our ability to adopt and master new technologies and adjust certain fixed costs and expenses to adapt to our industry’s and customers’ evolving demands; and

 

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

 

Althoughwe believe that the expectations reflected in the forward-looking statements contained in this prospectus are reasonable, we cannot guaranteefuture results, levels of activity, performance, or achievements. In light of inherent risks, uncertainties and assumptions, the futureevents and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipatedor implied in the forward-looking statements.

 

Allreferences to “SCWorx,” “we,” “us,” “our” or the “Company” mean SCWorx Corp.,a Delaware corporation, and where appropriate, its wholly-owned subsidiaries 

 

Weundertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statementswere made or to reflect the occurrence of unanticipated events, except as may be required by applicable securities laws.

 

iii

 

 

PROSPECTUSSUMMARY

 

Thissummary highlights information contained elsewhere in this prospectus or incorporated by reference. It may not contain all of the informationthat you should consider before investing in our securities. You should read this entire prospectus carefully, including the “RiskFactors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, andthe financial statements and related notes included herein. This prospectus includes forward-looking statements that involve risks anduncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”

 

SCWORXCORP.

 

CorporateHistory and Information

 

SCWorx,LLC (n/k/a SCW FL Corp.) (“SCW LLC”) was a privately held limited liability company which was organized in Florida on November17, 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 basedupon Staff Accounting Bulletin Topic 5G, the technology acquired has been accounted for at predecessor cost of $0. To facilitate theplanned acquisition by Alliance MMA, Inc., a Delaware corporation (“Alliance”), on June 27, 2018, SCW LLC merged with andinto a newly-formed entity, SCWorx Acquisition Corp., a Delaware corporation (“SCW Acquisition”), with SCW Acquisition beingthe surviving entity. Subsequently, on August 17, 2018, SCW Acquisition changed its name to SCWorx Corp. On November 30, 2018, the Companyand certain of its stockholders agreed to cancel 6,510 shares of common stock. In June 2018, the Company began to collect subscriptionsfor common stock. From June to November 2018, the Company collected $1,250,000 in subscriptions and issued 3,125 shares of common stockto new third-party investors. In addition, on February 1, 2019, (i) SCWorx Corp. (f/k/a SCWorx Acquisition Corp.) changed its name toSCW 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 astock-for-stock exchange transaction and changed Alliance’s name to SCWorx Corp., which is the Company’s current name, withSCW FL Corp. becoming the Company’s subsidiary. On March 16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-ownedsubsidiary, Direct-Worx, LLC.

 

Weare a Delaware corporation. Our principal executive offices are located at 590 Madison Ave, 21st Floor, New York, NY 10022.Our phone number is (844) 472-9679 and our website can be found at www.scworx.com. The information on our website is not incorporatedinto this prospectus.

 

CompanyOverview

 

SCWorxis a provider of data content and services related to the repair, normalization and interoperability of information for healthcare providersand big data analytics for the healthcare industry.

 

SCWorxhas developed and markets health care information technology solutions and associated services that improve healthcare processes andinformation flow within hospitals and other healthcare facilities. SCWorx’s software enables a healthcare provider to simplifyand 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”). Customers use oursoftware to achieve multiple operational benefits, such as supply chain cost reductions, decreased accounts receivables aging, acceleratedand completed patient billing in less than 72 hours, contract optimization, increased supply chain management and total cost visibilityvia dynamic AI connections that automatically structures, repairs, synchronizes and maintains purchasing (“MMIS”), Clinical(“EMR”) and finance (“CDM”) systems. SCWorx’s customers include some of the most prestigious healthcareorganizations in the United States. SCWorx offers an advanced software solution for the management of health care providers’ foundationalbusiness applications, empowering its customers to significantly reduce costs, drive better clinical outcomes and enhance their revenue.SCWorx supports the interrelationship between the three core healthcare provider systems: Supply Chain, Financial and Clinical. Thissolution integrates common keys within distinct and variable databases that allows the repaired foundational data to move seamlesslyfrom one application to another enabling our Customers to drive supply chain cost reductions, optimize contracts, increase supply chainmanagement, cost visibility, control rebates and contract administration fees.

 

Currently,the business systems of hospitals are frequently deficient and often unconnected from each other. These deficiencies in part result fromthe vast amount of unstructured, manually created and managed data that proliferates within the hospital’s supply chain, clinicaland billing systems. SCWorx’s solutions are designed to improve the flow of information quickly and accurately between the buy-side(supply chain purchasing systems), the consumption-side (clinical documentation systems like the electronic medical records (“EMR”))and billing and collection systems (patient billing systems). The currently poor state of interoperability limits the potential valueof each independent system and requires significant expense and extensive human resource commitments from senior personnel to stay aheadof problems and complete basic administrative tasks. SCWorx provides an information service that ultimately leads to safer, more costeffective and financially efficient patient care.

 

SCWorxhas demonstrated that in order for the core hospital systems to function properly there must be a Single Source of Truth for all productsutilized and ultimately billed for. The Item Master File which is a database of all known products used in hospital and health care settings,must be accurate at all times and expanded upon to hold both clinical and financial attributes. An accurate and expanded Item MasterFile supports interoperability between the supply chain, clinical and financial systems by delivering, on demand, reports detailing thepurchasing, utilization and revenue associated with each and every item used, allowing hospitals to better manage their business. TheSingle Source of Truth establishes a common vernacular and syntax, while assigning a consistent meaning across the healthcare provider’score systems and accurately migrating data from one application to another and removing disconnects between critical business systems.

 

1

 

 

SCWorxempowers healthcare providers to maintain comprehensive access and visibility to an advanced business intelligence that enables betterdecision-making and reductions in product costs and utilization, ultimately leading to accelerated and accurate patient billing. SCWorx’ssoftware modules perform separate functions as follows:

 

virtualized Item Master File repair, expansion and automation;

 

EMR management;

 

CDM management;

 

contract management;

 

request for proposal automation;

 

rebate management;

 

Integration of acquired management;

 

big data analytics modeling;

 

data integration and warehousing; and

 

ScanWorx.

 

SCWorxcontinues to provide transformational data-driven solutions to some of the finest, most well-respected healthcare providers in the UnitedStates. Clients are geographically dispersed throughout the country. Our focus is to assist healthcare providers with issues they havepertaining to data interoperability.

 

SCWorx’ssoftware solutions are delivered to clients within a fixed term period, typically a three-to-five-year contracted term, where such softwareis hosted in SCWorx data centers (Amazon Web Service’s “AWS” or RackSpace) and accessed by the client through a secureconnection in a software as a service (“SaaS”) delivery method.

 

SCWorxcurrently sells its solutions and services in the United States to hospitals and health systems through its direct sales force and itsdistribution and reseller partnerships.

 

SCWorx,as part of the acquisition of Alliance MMA, owns an online event ticketing platform focused on serving regional MMA (“mixedmartial arts”) promotions which it has paused due to COVID-19.

 

Wecurrently host our solutions, serve our customers, and support our operations in the United States through an agreement with a thirdparty hosting and infrastructure provider, RackSpace. We incorporate standard IT security measures, including but not limited to; firewalls,disaster recovery, backup, etc. Our operations are dependent upon the integrity, security and consistent operation of various informationtechnology systems and data centers that process transactions, communication systems and various other software applications used throughoutour operations. Disruptions in these systems could have an adverse impact on our operations. We could encounter difficulties in developingnew systems or maintaining and upgrading existing systems. Such difficulties could lead to significant expenses or to losses due to disruptionin our business operations.

 

Inaddition, our information technology systems are subject to the risk of infiltration or data theft. The techniques used to obtain unauthorizedaccess, disable or degrade service, or sabotage information technology systems change frequently and may be difficult to detect or preventover long periods of time. Moreover, the hardware, software or applications we develop or procure from third parties may contain defectsin design or manufacture or other problems that could unexpectedly compromise the security of our information systems. Unauthorized partiesmay also attempt to gain access to our systems or facilities through fraud or deception aimed at our employees, contractors or temporarystaff. In the event that the security of our information systems is compromised, confidential information could be misappropriated, andsystem disruptions could occur. Any such misappropriation or disruption could cause significant harm to our reputation, lead to a lossof sales or profits or cause us to incur significant costs to reimburse third parties for damages.

 

Impactof the COVID-19 Pandemic

 

TheCompany’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemicwhich spread throughout the United States and the world. The New York and New Jersey area, where the Company is headquartered, was atone 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. 

 

Inaddition, 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 disruptionsto the Company’s customers’ business, the Company’s customers were focused on meeting the nation’s health careneeds in response to the COVID-19 pandemic. As a result, the Company believes that its customers were not able to focus resources onexpanding the utilization of the Company’s services, which has adversely impacted the Company’s growth prospects, at leastuntil the adverse effects of the pandemic subside. In addition, the financial impact of COVID-19 on the Company’s hospital customerscould cause the hospitals to delay payments due to the Company for services, which could negatively impact the Company’s cash flows.

 

2

 

 

TheCompany sought to mitigate these impacts to revenue through the sale of personal protective equipment (“PPE”) and COVID-19rapid test kits (“Kits”) to the health care industry, including many of the Company’s hospital customers. On March16, 2020, in response to the COVID-19 pandemic, SCWorx established a wholly-owned subsidiary, Direct-Worx, LLC to endeavor to sourceand provide critical, difficult-to-find items for the healthcare industry. Items had become difficult to source due to unexpected disruptionswithin the supply chain due to the COVID-19 pandemic. 

 

Shortlythereafter, in the second quarter of 2020, the Company’s Board of Directors decided to limit the Company’s role in PPE andKit sales to acting as an intermediary between buyers and sellers with commission based compensation. We are endeavoring to sell ourexisting inventory of PPE products primarily through use of our internal and external sales personnel.

 

Thesale of PPE and Kits for COVID-19 represented a new business for the Company and was subject to the myriad risks associated with anynew venture. The Company encountered great difficulty in attempting to secure reliable sources of supply for both COVID-19 Rapid TestKits and PPE. The Company currently has no contracted supply of Rapid Test Kits or PPE. Since the inception of this business until thedate of this prospectus, the Company has only sold an immaterial amount of COVID-19 rapid test kits and PPE and does not expect to generateany significant revenue in the future from such sales.

  

TheCompany is no longer actively seeking to procure and sell Kits or PPE. Instead, the Company is focused on selling its current inventoryof PPE. The Company may receive commissions for acting as an intermediary with respect to the sale of PPE and/or Kits. However, thereis no assurance the Company will realize any material revenue from these activities.

 

Implicationsof Being an Emerging Growth Company

 

We qualifyas an “emerging growth company” as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permittedand currently intend to rely on the following provisions of the JOBS Act that contain exceptions from disclosure and other requirementsthat otherwise are applicable to companies that conduct initial public offerings and file periodic reports with the SEC. These provisionsinclude, but are not limited to:

 

  being permitted to present only two years of audited financial statements in this prospectus and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our periodic reports and registration statements, including this prospectus;
     
  not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
     
  reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, including in this prospectus; and
     
  exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

We will remainan emerging growth company until:

 

  the first to occur of the last day of the fiscal year (i) that follows February 19, 2026, (ii) in which we have total annual gross revenue of at least $1.07 billion or (iii) in which we are deemed to be a “large accelerated filer,” as defined in the Exchange Act, which means the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter; or
     
  if it occurs before any of the foregoing dates, the date on which we have issued more than $1 billion in non-convertible debt over a three-year period.

 

Wehave elected to take advantage of certain of the reduced disclosure obligations in this prospectus and may elect to take advantage ofother reduced reporting requirements in our future filings with the SEC. As a result, the information that we provide to our stockholdersmay be different than what you might receive from other public reporting companies in which you hold equity interests.

 

Wehave elected to avail ourselves of the provision of the JOBS Act that permits emerging growth companies to take advantage of an extendedtransition period to comply with new or revised accounting standards until those standards apply to private companies. As a result, wewill not be subject to new or revised accounting standards at the same time as other public companies that are not emerging growth companies.

 

Foradditional information, see the section titled “Risk Factors — Risks of being an Emerging Growth Company — Weare an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may makeour Common Stock less attractive to investors.

 

3

 

 

THEOFFERING

 

Thisprospectus relates to the resale by the Selling Stockholder identified in this prospectus of up to 2,288,585 shares of Common Stock (the“Shares”). All of the Shares, if and when sold, will be sold by the Selling Stockholder. The Selling Stockholder may selltheir Shares from time to time at market prices prevailing at the time of sale, at prices related to the prevailing market price, orat negotiated prices. We will not receive any proceeds from the sale of Shares by the Selling Stockholder.

 

Issuer   SCWorx Corp.
     

Common Stock offered by the Selling

Stockholders

 

Up to 2,288,585 shares of our Common Stock, consisting of:

 

up to 2,010,807 shares of Common Stock that we may sell to Tumim, from time to time at our sole discretion, pursuant to the Purchase Agreement, described below; and

 

277,778 shares of our Common Stock issued to Tumim as consideration for its commitment to purchase shares of our Common Stock under the Purchase Agreement (the “Commitment Shares”).  

     

Common Stock outstanding prior to

this Offering

  11,795,873 shares
     

Common Stock outstanding immediately

after this Offering

 

 

13,806,680 shares, assuming the sale of 2,010,807 shares of our Common Stock to Tumim. The actual number of shares issued will vary depending on the sales prices under this offering, but will not be greater than 2,288,585 shares (inclusive of the Commitment Shares and other shares issued in connection with the Equity Line), representing 19.99% of the shares of our common stock outstanding on the date of the Purchase Agreement, in accordance with Nasdaq Market rules, unless as otherwise set forth herein.

     
Nasdaq symbol   Our Common Stock is currently listed on Nasdaq under the symbol “WORX.”
     
Use of proceeds  

The Selling Stockholder will receive all of the proceeds from the sale of the shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the shares of our Common Stock by the Selling Stockholder through this prospectus. However, we may receive proceeds of up to $5,000,000 from the sale of our Common Stock to the Selling Stockholder under the Purchase Agreement.

 

We did not receive any cash proceeds from the issuance of the Commitment Shares to Tumim under the Purchase Agreement. We intend to use any proceeds from the Selling Stockholder that we receive under the Purchase Agreement for working capital and general corporate purposes. See “Use of Proceeds” on page 23 for more information.

     
Risk factors   Investing in our securities involves a high degree of risk. As an investor you should be prepared to lose your entire investment See “Risk Factors” beginning on page 8.

 

4

 

 

The numberof shares of common stock to be outstanding prior to and after this offering excludes:

 

a total of 222,402 shares of common stock issuable upon the conversion of Series A Convertible Preferred Stock;

 

a total of 118,388 shares of common stock issuable upon the exercise of outstanding stock options with a weighted average exercise price of $3.25 per share;

 

a total of 1,043,525 shares of common stock issuable upon the exercise of outstanding warrants with a weighted average exercise price of $2.57 per share;

 

THETUMIM STONE CAPITAL TRANSACTION

 

OnJune 28, 2022, we entered into the Purchase Agreement and a Registration Rights Agreement (the “Registration Rights Agreement”)with Tumim. Pursuant to the Purchase Agreement, we have the right to sell to Tumim up to $5,000,000 (the “Total Commitment”)in shares of the Company’s Common Stock, subject to certain limitations and conditions set forth in the Purchase Agreement. Inaccordance with our obligations under the Registration Rights Agreement, we have filed the registration statement that includes thisprospectus with the SEC to register under the Securities Act, the resale by Tumim of shares of Common Stock that we have issued and mayissue to Tumim under the Purchase Agreement.

 

Uponthe satisfaction of each of the conditions to our right to commence sales of our Common Stock to Tumim set forth in the Purchase Agreement(such event, the “Commencement”), including that the registration statement that includes this prospectus is declared effectiveby the SEC and the final form of this prospectus is filed with the SEC, we will have the right, but not the obligation, from time totime at our sole discretion over the period from and after the date of the Commencement (the “Commencement Date”), to directTumim to purchase up to a fixed maximum amount of shares of Common Stock as set forth in the Purchase Agreement (each, a “FixedPurchase”), on any trading day, so long as, in addition to other requirements set forth in the Purchase Agreement, (i) the dailyvolume weighted average price for the Common Stock for such trading day is not the lowest daily volume weighted average price for theCommon Stock during the 10-consecutive trading day period ending on and including such trading day (the “Fixed Purchase ValuationPeriod”), (ii) the closing sale price of the Common Stock on such trading day is greater the arithmetic average of the 10-dailyvolume weighted average prices for the Common Stock during such Fixed Purchase Valuation Period for such Fixed Purchase, and (iii) thelowest sale price of the Common Stock during the Fixed Purchase Valuation Period exceeds the specified threshold price for such FixedPurchase set forth in the Purchase Agreement, .

 

Inaddition to Fixed Purchases, we will have the right, but not the obligation, from time to time at our sole discretion over the periodfrom and after the Commencement Date, to direct Tumim to purchase additional amounts of our Common Stock as VWAP purchases under thePurchase Agreement (each, a “VWAP Purchase”), by delivering a VWAP Purchase notice on any trading day, so long as certainrequirements set forth in the Purchase Agreement have been met. We may not deliver a Fixed Purchase notice for a Fixed Purchase and aVWAP Purchase notice for a VWAP Purchase to Tumim on the same trading day, and we may not deliver any Fixed Purchase notice or VWAP Purchasenotice to Tumim, unless (i) at least three trading days has elapsed since the date on which the most recent prior notice for a FixedPurchase or VWAP Purchase was delivered by us to Tumim and (ii) all Shares subject to all prior notices for Fixed Purchases and VWAPPurchases (as applicable) delivered by the Company to Tumim pursuant to the Purchase Agreement have theretofore been received by Tumim.

 

Thepurchase price of the shares of Common Stock that we elect to sell to Tumim pursuant to a Fixed Purchase under the Purchase Agreementwill be determined by reference to the market prices of the Common Stock during the applicable Fixed Purchase Valuation Period for suchFixed Purchase as set forth in the Purchase Agreement, less a fixed 7% discount. The purchase price of the shares of Common Stock thatwe elect to sell to Tumim pursuant to a VWAP Purchase under the Purchase Agreement will be determined by reference to the lowest dailyvolume weighted average price of the Common Stock during the three consecutive trading day-period immediately following the date on whichwe timely deliver the applicable VWAP Purchase notice for such VWAP Purchase to Tumim (the “VWAP Purchase Valuation Period”)as set forth in the Purchase Agreement, less a fixed 5% discount. There is no upper limit on the price per share that Tumim could beobligated to pay for the Common Stock under the Purchase Agreement. The purchase price per share of Common Stock to be sold in a FixedPurchase or a VWAP Purchase will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reversestock split or other similar transaction occurring during the applicable Fixed Purchase Valuation Period or the applicable VWAP PurchaseValuation Period, respectively, used to compute the purchase price per share for such purchase.

 

5

 

 

Fromand after Commencement, the Company will control the timing and amount of any sales of Common Stock to Tumim. Actual sales of sharesof our Common Stock to Tumim under the Purchase Agreement will depend on a variety of factors to be determined by the Company from timeto time, including, among other things, market conditions, the trading price of the Common Stock and determinations by the Company asto the appropriate sources of funding for the Company and its operations. We may ultimately decide to sell to Tumim all, some or noneof the shares of our Common Stock that may be available for us to sell pursuant to the Purchase Agreement.

 

Underthe applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”), in no event may we issue to Tumim under the Purchase Agreementmore than 2,288,585  shares of our Common Stock (including the Commitment Shares), which number of shares equals 19.99% of the sharesof the Common Stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless(i) we obtain stockholder approval to issue shares of Common Stock in excess of the Exchange Cap or (ii) the average price of all applicablesales of Common Stock to Tumim under the Purchase Agreement equals or exceeds approximately $0.7999,representing the lower of (i) the Nasdaq official closing price for the Common Stock immediately preceding the execution of the PurchaseAgreement or (ii) the arithmetic average of the five Nasdaq official closing prices for the Common Stock immediately preceding the executionof the Purchase Agreement, plus an incremental amount of $0.0971 (the “Base Price”),such that issuances and sales of Common Stock under the Purchase Agreement are exempt from the Exchange Cap limitation under applicableNasdaq rules. In any event, the Purchase Agreement specifically provides that we may not issue or sell any shares of our Common Stockunder the Purchase Agreement if such issuance or sale would breach any applicable Nasdaq rules.

  

ThePurchase Agreement also prohibits us from directing Tumim to purchase any shares of our Common Stock if those shares, when aggregatedwith all other shares of our Common Stock then beneficially owned by Tumim (as calculated pursuant to Section 13(d) of the SecuritiesExchange Act of 1934 and Rule 13d-3 thereunder), would result in Tumim beneficially owning more than 4.99% of the outstandingCommon Stock (the “Beneficial Ownership Cap”).

 

Thenet proceeds from sales, if any, under the Purchase Agreement, will depend on the frequency and prices at which the Company sells sharesof Common Stock to Tumim. To the extent the Company sells shares under the Purchase Agreement, the Company currently plans to use anyproceeds therefrom for costs of this transaction, operating expenses, and for working capital and other general corporate purposes.

 

Thereare no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the PurchaseAgreement or Registration Rights Agreement, other than a prohibition on entering into a “Variable Rate Transaction,” as definedin the Purchase Agreement, and as more specifically described in the section of this prospectus entitled “The Tumim Stone CapitalTransaction.” Tumim has agreed not to cause, or engage in any manner whatsoever, any direct or indirect short selling or hedgingof the Common Stock during the term of the Purchase Agreement.

 

ThePurchase Agreement will automatically terminate upon the earliest of (i) the first day of the month next following the 24-month anniversaryof the date this registration statement is declared effective by the SEC (the “Effective Date”), (ii) Tumim’s purchaseof the Total Commitment of Common Stock, or (iii) the occurrence of certain other events set forth in the Purchase Agreement. The Companyhas the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon 10 trading days’prior written notice to Tumim. Neither the Company nor Tumim may assign or transfer its rights and obligations under the Purchase Agreement,and no provision of the Purchase Agreement or the Registration Rights Agreement may be modified or waived by the parties.

 

ThePurchase Agreement and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnificationobligations of the parties. The representations, warranties and covenants contained in such agreements were made only for purposes ofsuch agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitationsagreed upon by the contracting parties.

 

Asconsideration for Tumim’s irrevocable commitment to purchase shares of Common Stock upon the terms of and subject to satisfactionof the conditions set forth in the Purchase Agreement, concurrently with the execution and delivery of the Purchase Agreement, the Companyissued to Tumim the Commitment Shares. The Company has also agreed to reimburse Tumim for the fees and expenses of its counsel, up toa maximum of $30,000.

 

Inconsideration for their services, Americas Executions, LLC (the “Placement Agent”) was issued 69,445 shares valued at $50,000of the Company’s Common Stock. The Shares issued to the Placement Agent were valued at $0.72 per share, which was the closing priceof the preceding day. 

 

6

 

 

Because the purchase priceper share to be paid by Tumim for the shares of Common Stock that we may elect to sell to Tumim under the Purchase Agreement, if any,will fluctuate based on the market prices of our Common Stock during the applicable Fixed Purchase Valuation Period and applicable VWAPPurchase Valuation Period for each Fixed Purchase and VWAP Purchase made pursuant to the Purchase Agreement, if any, as of the date ofthis prospectus it is not possible for us to predict the number of shares of Common Stock that we will sell to Tumim under the PurchaseAgreement, the actual purchase price per share to be paid by Tumim for those shares, or the actual gross proceeds to be raised by us fromthose sales, if any. As of July 26, 2022, there were 11,795,873 shares of our Common Stock outstanding, of which 11,625,753 shares wereheld by non-affiliates, which include the Commitment Shares we issued to Tumim upon execution of the Purchase Agreement, but excludesthe 2,010,807 shares of Common Stock we may, in our sole discretion, sell to Tumim from time to time from and after the Commencement Datepursuant to the Purchase Agreement. Although the Purchase Agreement provides that we may sell up to an aggregate of $5,000,000 of ourCommon Stock to Tumim, only 2,288,585 shares of our Common Stock (representing the maximum number of shares we may issue and sell underthe Purchase Agreement under the Exchange Cap limitation) are being registered for resale under this prospectus, which includes the CommitmentShares. If all of the shares offered for resale by Tumim under this prospectus were issued and outstanding as of July 26, 2022, such shareswould represent approximately 19.4% of the total number of shares of our Common Stock outstanding and approximately 19.7% of the totalnumber of outstanding shares held by non-affiliates, in each case as of July 26, 2022.

 

Ifafter the Commencement Date we elect to sell to Tumim all of the 2,010,807 shares of Common Stock (in addition to the Commitment Shares)being registered for resale under this prospectus that are available for sale by us to Tumim in Fixed Purchases and VWAP Purchases underthe Purchase Agreement, depending on the market prices of our Common Stock during the applicable Fixed Purchase Valuation Period foreach Fixed Purchase and the applicable VWAP Purchase Valuation Period for each VWAP Purchase made pursuant to the Purchase Agreement,the actual gross proceeds from the sale of all such shares may be substantially less than the $5,000,000 Total Commitment available tous under the Purchase Agreement. If it becomes necessary for us to issue and sell to Tumim under the Purchase Agreement more shares thanare being registered for resale under this prospectus in order to receive aggregate gross proceeds equal to the Total Commitment of $5,000,000under the Purchase Agreement, we must first (i) obtain stockholder approval to issue shares of Common Stock in excess of the ExchangeCap under the Purchase Agreement in accordance with applicable Nasdaq rules, unless the average per share purchase price paid by Tumimfor all shares of Common Stock sold under the Purchase Agreement equals or exceeds the Base Price , in which case the Exchange Cap limitationwill not apply under applicable Nasdaq rules, and (ii) file with the SEC one or more additional registration statements to register underthe Securities Act the resale by Tumim of any such additional shares of our Common Stock we wish to sell from time to time under thePurchase Agreement, which the SEC must declare effective, in each case before we may elect to sell any additional shares of our CommonStock to Tumim under the Purchase Agreement. Any issuance and sale by us under the Purchase Agreement of a substantial amount of sharesof Common Stock in addition to the shares of our Common Stock being registered for resale by Tumim under this prospectus could causeadditional substantial dilution to our stockholders. The number of shares of our common stock ultimately offered for sale by Tumim isdependent upon the number of shares of Common Stock, if any, we ultimately sell to Tumim under the Purchase Agreement.

 

Theissuance of our Common Stock to Tumim pursuant to the Purchase Agreement will not affect the rights or privileges of our existing stockholders,except that the economic and voting interests of each of our existing stockholders will be diluted. Although the number of shares ofour Common Stock that our existing stockholders own will not decrease, the shares of our Common Stock owned by our existing stockholderswill represent a smaller percentage of our total outstanding shares of our Common Stock after any such issuance. There are substantialrisks to our stockholders as a result of the sale and issuance of Common Stock to Tumim under the Purchase Agreement. See “RiskFactors.”

 

7

 

 

RISKFACTORS

 

Youshould carefully consider the following risk factors in addition to other information in this prospectus before purchasing our commonstock. The risks and uncertainties described below are those that we currently deem to be material and that we believe are specific toour company, our industry and this offering. These risks and uncertainties are not the only ones facing us. Additional risks of whichwe are not presently aware or that we currently believe are immaterial may also harm our business and results of operations. The tradingprice of our Common Stock could decline due to the occurrence of any of these risks, and investors could lose all or part of their investment.

 

Inevaluating the Company, its business and any investment in the Company, readers should carefully consider the following factors, togetherwith the additional risk factors incorporated by reference from Item 1A of the Company’s Annual Report on Form 10-K as filed withthe SEC on May 19, 2021 (see “Incorporation of Certain Information by Reference”):

 

RisksRelated to this Offering

 

Thesale or issuance of our common stock to Tumim may cause dilution and the sale of the shares of common stock acquired Tumim, or the perceptionthat such sales may occur, could cause the price of our common stock to fall.

 

OnJune 28, 2022, we entered into the Purchase Agreement with Tumim, pursuant to which Tumim has committed to purchase up to $5,000,000of shares of our Common Stock. Upon the execution of the Purchase Agreement, we issued 277,778 Commitment Shares to Tumim as considerationfor its commitment to purchase shares of our Common Stock under the Purchase Agreement. The remaining 2,010,807 shares of our CommonStock being registered for resale hereunder that may be issued under the Purchase Agreement may be sold by us to Tumim at our discretionfrom time to time over a 24-month period commencing after the satisfaction of certain conditions set forth in the Purchase Agreement,including that the SEC has declared effective the registration statement that includes this prospectus. The purchase price for the sharesthat we may sell to Tumim under the Purchase Agreement will fluctuate based on the price of our Common Stock. Depending on market liquidityat the time, sales of such shares may cause the trading price of our Common Stock to fall.

 

Wegenerally have the right to control the timing and amount of any future sales of our shares to Tumim. Sales of our Common Stock, if any,to Tumim will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Tumim all,some or none of the additional shares of our Common Stock that may be available for us to sell pursuant to the Purchase Agreement. Therefore,sales to Tumim by us could result in substantial dilution to the interests of other holders of our Common Stock. Additionally, the saleof a substantial number of shares of our Common Stock to Tumim, or the anticipation of such sales, could make it more difficult for usto sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. If andwhen we do sell shares to Tumim, after Tumim has acquired the shares, Tumim may resell all, some or none of those shares at any timeor from time to time in its discretion.

 

Ourmanagement might apply the net proceeds from this offering in ways with which you do not agree and in ways that may impair the valueof your investment.

 

Wecurrently intend to use the net proceeds from this offering for general corporate purposes. Our management has broad discretion as tothe use of these proceeds and you will be relying on the judgment of our management regarding the application of these proceeds. We mightapply these proceeds in ways with which you do not agree, or in ways that do not yield a favorable return. If our management appliesthese proceeds in a manner that does not yield a significant return, if any, on our investment of these net proceeds, it could compromiseour ability to pursue our growth strategy and adversely affect the market price of our common stock.

 

8

 

 

Itis not possible to predict the actual number of shares we will sell under the Purchase Agreement to the Selling Stockholder, or the actualgross proceeds resulting from those sales and we may not have full access to the full amount available under the Purchase Agreement withTumim.

 

Becausethe purchase price per share to be paid by Tumim for the shares of Common Stock that we may elect to sell to them under the PurchaseAgreement, if any, will fluctuate based on the market prices of our Common Stock during the applicable Fixed Purchase Valuation Periodand applicable VWAP Purchase Valuation Period for each Fixed Purchase and VWAP Purchase made pursuant to the Purchase Agreement, if any,it is not possible for us to predict, as of the date of this prospectus and prior to any such sales, the number of shares of Common Stockthat we will sell to Tumim under the Purchase Agreement, the purchase price per share that Tumim will pay for shares purchased from usunder the Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by Tumim under the Purchase Agreement,if any.

 

Moreover,although the Purchase Agreement provides that we may sell up to an aggregate of $5,000,000 of our Common Stock to Tumim, only 2,288,585shares of our Common Stock (representing the maximum number of shares we may issue and sell under the Purchase Agreement under the ExchangeCap limitation) are being registered for resale by Tumim under this prospectus, consisting of (i) the 277,778 Commitment Shares thatwe previously issued to Tumim upon execution of the Purchase Agreement as consideration for its commitment to purchase our Common Stockunder the Purchase Agreement and (ii) up to 2,010,807 shares of Common Stock that we may elect to sell to Tumim, in our sole discretion,from time to time from and after the Commencement Date under the Purchase Agreement. If after the Commencement Date, we elect to sellto Tumim all of the shares of Common Stock being registered for resale under this prospectus that are available for sale by us to Tumim,depending on the market prices of our Common Stock, the actual gross proceeds from the sale of all such shares may be substantially lessthan the $5,000,000 Total Commitment available to us under the Purchase Agreement, which could materially adversely affect our liquidity.

 

Ifit becomes necessary for us to issue and sell to Tumim under the Purchase Agreement more than the 2,010,807 shares being registered forresale under this prospectus in order to receive aggregate gross proceeds equal to the Total Commitment of $5,000,000 under the PurchaseAgreement, we must first (i) obtain stockholder approval to issue shares of Common Stock in excess of the Exchange Cap under the PurchaseAgreement in accordance with applicable Nasdaq rules, unless the average per share purchase price paid by Tumim for all shares of CommonStock sold under the Purchase Agreement equals or exceeds the Base Price, in which case the Exchange Cap limitation will not apply underapplicable Nasdaq rules, and (ii) file with the SEC one or more additional registration statements to register under the Securities Actthe resale by Tumim of any such additional shares of our Common Stock we wish to sell from time to time under the Purchase Agreement,which the SEC must declare effective, in each case before we may elect to sell any additional shares of our Common Stock to Tumim underthe Purchase Agreement. Any issuance and sale by us under the Purchase Agreement of a substantial amount of shares of Common Stock inaddition to the shares of our Common Stock being registered for resale by Tumim under this prospectus could cause additional substantialdilution to our stockholders. The number of shares of our common stock ultimately offered for sale by Tumim is dependent upon the numberof shares of Common Stock, if any, we ultimately sell to Tumim under the Purchase Agreement.

 

Investorswho buy shares at different times will likely pay different prices.

 

Pursuantto the Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares soldto Tumim. If and when we do elect to sell shares of our Common Stock to Tumim pursuant to the Purchase Agreement, after Tumim has acquiredsuch shares, Tumim may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices.As a result, investors who purchase shares from Tumim at different times will likely pay different prices for those shares, and so mayexperience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results. Investorsmay experience a decline in the value of the shares they purchase from Tumim as a result of future sales made by us to Tumim at priceslower than the prices such investors paid for their shares in this offering.

 

9

 

 

Wemay require additional financing to sustain our operations and without it we will not be able to continue operations.

 

Theextent to which we rely on Tumim as a source of funding will depend on a number of factors including, the prevailing market price ofour Common Stock and the extent to which we are able to secure working capital from other sources. If obtaining sufficient funding fromTumim were to prove unavailable or prohibitively dilutive, we may need to secure another source of funding to satisfy our working capitalneeds. Even if we were to sell to Tumim all of the shares of Common Stock available for sale to Tumim under the Purchase Agreement, wemay still need additional capital to fully implement our business, operating and development plans. Should the financing we require tosustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences would be a materialadverse effect on our business, operating results, financial condition and prospects. Without such financing, we may not be able to continueour operations

 

Futuresales and issuances of our Common Stock or other securities might result in significant dilution and could cause the price of our CommonStock to decline.

 

Toraise capital, we may sell Common Stock, convertible securities or other equity securities in one or more transactions other than thosecontemplated by the Purchase Agreement, at prices and in a manner we determine from time to time. We may sell shares or other securitiesin any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasingshares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additionalshares of our Common Stock, or securities convertible or exchangeable into Common Stock, in future transactions may be higher or lowerthan the price per share paid by investors in this offering.

 

Wecannot predict what effect, if any, sales of shares of our Common Stock in the public market or the availability of shares for sale willhave on the market price of our Common Stock. However, future sales of substantial amounts of our Common Stock in the public market,including shares issued upon exercise of outstanding options, or the perception that such sales may occur, could adversely affect themarket price of our Common Stock.

 

RisksRelated to Our Financial Results

 

TheCOVID-19 pandemic has disrupted our business and the business of our hospital customers.

 

TheCompany’s operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemicwhich spread throughout the United States and the world. The outbreak adversely impacted new customer acquisition. The Company has followedthe recommendations of local health authorities to minimize exposure risk for its team members since the outbreak. 

 

Inaddition, 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 disruptionsto the Company’s customers’ business, the Company’s customers were focused on meeting the nation’s health careneeds in response to the COVID-19 pandemic. As a result, the Company believes that its customers were not able to focus resources onexpanding the utilization of the Company’s services, which has adversely impacted the Company’s growth prospects, at leastuntil the adverse effects of the pandemic subside. In addition, the financial impact of COVID-19 on the Company’s hospital customerscould cause the hospitals to delay payments due to the Company for services, which could negatively impact the Company’s cash flows.

 

10

 

 

Wehave a history of losses and may continue to incur losses in the future.

 

Wehave a history of losses and may continue to incur losses in the future, which could negatively impact the trading value of our commonstock. For the year ended December 31, 2021, our revenues were $4,632,529, and we had a net loss of $3,814,468. For the year ended December31, 2020, our revenues were $5,213,118, and we had a net loss of $7,402,350. At December 31, 2021, we had an accumulated deficit of $24,011,291.Additionally, we had a net loss of approximately $626,546 for the three months ended March 31, 2022 and an accumulated deficit of 24,637,837.

 

Wemay continue to incur operating and net losses in future periods. These losses may increase, and we may never achieve profitability fora variety of reasons, including increased competition, decreased growth in our target market and other factors described elsewhere inthis “Risk Factors” section. If we cannot achieve sustained profitability, our stockholders may lose all or a portion oftheir investment in our company.

 

Ifwe are unable to grow our revenue, we may never achieve or sustain profitability.

 

Tobecome profitable, we must, among other things, increase our revenues. Our total revenues declined approximately $580,000 (11%) to $4,632,529in the year ended December 31, 2021 as compared to $5,213,118 in the year ended December 31, 2020. In order to become profitable andthen maintain profitability, we must, among other things, increase our revenues while dealing with the ongoing impacts of the COVID-19pandemic.   This decline in revenue will be exacerbated if we are unable to develop and market new products, which could helpus increase our sales to existing customers or develop new customers. Even if we are able to grow our revenues, they may not be sufficientto exceed increases in our operating expenses or to enable us to achieve or sustain profitability.

 

RisksRelated to Our Business

 

Ourinability to obtain additional capital may prevent us from completing our business strategy and successfully operating our business;however, additional financings may subject our existing stockholders to substantial dilution.

 

Tocontinue our growth path, we expect to finance our future expansion plans through public or private equity offerings or debt financings.Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available,we may be required to delay or reduce the scope of our business plans. To the extent that we raise additional funds by issuing equitysecurities, our stockholders may experience significant dilution. In addition, debt financing, if available, may involve restrictivecovenants. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediateneed for additional capital at that time. Our access to the financial markets and the pricing and terms we receive in the financial marketscould be adversely impacted by various factors, including changes in financial markets and interest rates.

 

Ourfuture funding requirements will depend on many factors, including, but not limited to, the costs and timing of our future acquisitions.

 

Ourcontracts may require us to perform extra or change order work, which can result in disputes and adversely affect our business and financialcondition.

 

Ourcontracts generally require us to perform extra or change order work as directed by the customer, even if the customer has not agreedin advance on the scope or price of the extra work to be performed. This process may result in disputes over whether the work performedis beyond the scope of the work included in the original project plans and specifications or, if the customer agrees that the work performedqualifies as extra work, the price that the customer is willing to pay for the extra work. Even when the customer agrees to pay for theextra work, we may be required to fund the cost of such work for a lengthy period of time until the change order is approved by the customerand we are paid by the customer; any of which would adversely affect our business and financial condition.

 

11

 

 

Wederive a significant portion of our revenue from a few customers and the loss of one of these customers, or a reduction in their demandfor our services, could adversely affect our business, financial condition, results of operations and prospects.

 

Ourcustomer base is highly concentrated. Due to the size and nature of our contracts, one or a few customers have during any given year,as well as over a period of consecutive years, represented a substantial portion of our consolidated revenues and gross profits. Twocustomers accounted for approximately 19% and 13%, respectively, of our revenue in the year ended December 31, 2021. Two customers accountedfor approximately 22% and 17%, respectively, of our revenue in the year ended December 31, 2020. Revenues under our contracts with significantcustomers may continue to vary from period to period depending on the timing or volume of work that those customers contract from us.A limited number of customers may continue to comprise a substantial portion of our revenue for the foreseeable future. 

 

Adefault or delay in payment on a significant scale could adversely affect our business, financial condition, results of operations andprospects. We could lose business from a significant customer for a variety of reasons, including:

 

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

 

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

 

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

 

Sincemany of our customer contracts allow our customers to terminate the contract without cause, our customers may terminate their contractswith us at will, which could impair our business, financial condition, results of operations and prospects.

 

Thereis substantial doubt about our ability to continue as a going concern.

 

Ourauditors have indicated in their report on our financial statements for the year ended December 31, 2021 that conditions exist that raisesubstantial doubt about our ability to continue as a going concern since we may not have sufficient capital resources from operationsand existing financing arrangements to meet our operating expenses and working capital requirements.

 

Asof December 31, 2021, we had only limited cash on hand, a working capital deficit of $1,527,830 and accumulated deficit of $24,011,291.During the year ended December 31, 2021, we had a net loss of $3,814,468 and used $1,069,945 of cash in operations. We have historicallyincurred operating losses and may continue to incur operating losses for the foreseeable future. We believe that these conditions raisesubstantial doubt about our ability to continue as a going concern. This may hinder our ability to obtain financing or may force us toobtain financing on less favorable terms than would otherwise be available. If we are unable to develop sufficient revenues and additionalcustomers for our products and services, we may not generate enough revenue to sustain our business, and we may fail, in which case ourstockholders would suffer a total loss of their investment. There can be no assurance that we will be able to continue as a going concern.

 

Ourfailure to adequately expand our direct sales force will impede our growth.

 

Wewill need to expand and optimize our sales infrastructure in order to grow our customer base and our business. We plan to expand ouraccount management/sales force when we have sufficient capital to do so. Identifying and recruiting qualified personnel and trainingthem requires significant time, expense and attention. If we are unable to hire, develop and retain talented account management/salespersonnel or if the personnel are unable to achieve desired productivity levels in a reasonable period of time, we may not be able torealize the intended benefits of this investment or increase our revenue.

 

12

 

 

Ifwe are unable to attract and retain qualified executive officers and managers, we will be unable to operate efficiently, which couldadversely affect our business, financial condition, results of operations and prospects.

 

Wedepend on the continued efforts and abilities of our management, to establish and maintain our customer relationships and identify strategicopportunities. The loss of any one of them could negatively affect our ability to execute our business strategy and adversely affectour business, financial condition, results of operations and prospects. Competition for managerial talent with significant industry experienceis high, and we may lose access to executive officers for a variety of reasons, including more attractive compensation packages offeredby our competitors. Although we have entered into employment agreements with certain of our senior level management, we cannot guaranteethat any of them or other key management personnel will remain employed by us for any length of time.

 

Fines,judgments and other consequences resulting from our failure to comply with regulations or adverse outcomes in litigation proceedingscould adversely affect our business, financial condition, results of operations and prospects.

 

Fromtime to time, we may be involved in lawsuits and regulatory actions, including class action lawsuits that are brought or threatened againstus in the ordinary course of business. These actions may seek, among other things, compensation for alleged personal injury, workers’compensation, violations of the Fair Labor Standards Act and state wage and hour laws, employment discrimination, breach of contract,property damage, punitive damages, civil penalties, and consequential damages or other losses, or injunctive or declaratory relief.

 

Pleaserefer to Item 3. Legal Proceedings of our Annual Report on Form 10-K (see “Incorporation of Certain Information by Reference”)for a detailed description of our prior legal actions and investigations.

 

Anydefects or errors, or failures to meet our customers’ expectations could result in large damage claims against us. Claimants mayseek large damage awards and, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of anysuch proceedings. Any failure to properly estimate or manage cost, or delay in the completion of projects, could subject us to penalties.

 

Theultimate resolution of these matters through settlement, mediation or court judgment could have a material adverse effect on our financialcondition, results of operations and cash flows. Regardless of the outcome of any litigation, these proceedings could result in substantialcost and may require us to devote substantial resources to defend ourselves. When appropriate, we establish reserves for litigation andclaims that we believe to be adequate in light of current information, legal advice and professional indemnity insurance coverage, andwe adjust such reserves from time to time according to developments. If our reserves are inadequate or insurance coverage proves to beinadequate or unavailable, our business, financial condition, results of operations and prospects may suffer.

 

Ifwe are required to reclassify independent contractors as employees, we may incur additional costs and taxes which could adversely affectour business, financial condition, results of operations and prospects.

 

Weuse a significant number of independent contractors in our operations for whom we do not pay or withhold any federal or state employmenttax. There are a number of different tests used in determining whether an individual is an employee or an independent contractor andsuch tests generally take into account multiple factors. There can be no assurance that legislative, judicial or regulatory (includingtax) authorities will not introduce proposals or assert interpretations of existing rules and regulations that would change, or at leastchallenge, the classification of our independent contractors. Although we believe we have properly classified our independent contractors,the U.S. Internal Revenue Service or other U.S. federal or state authorities or similar authorities of a foreign government may determinethat we have misclassified our independent contractors for employment tax or other purposes and, as a result, seek additional taxes fromus or attempt to impose fines and penalties. If we are required to pay employer taxes or pay backup withholding with respect to priorperiods with respect to or on behalf of our independent contractors, our operating costs will increase, which could adversely impactour business, financial condition, results of operations and prospects.

 

13

 

 

Ourdependence on subcontractors and suppliers could increase our cost and impair our ability to complete contracts on a timely basis orat all.

 

Werely on third-party subcontractors to perform some of the work on our contracts. We also rely on third-party suppliers to provide materialsneeded to perform our obligations under those contracts. We generally do not bid on contracts unless we have the necessary subcontractorsand suppliers committed for the anticipated scope of the contract and at prices that we have included in our bid. Therefore, to the extentthat we cannot engage subcontractors or suppliers, our ability to bid for contracts may be impaired. In addition, if a subcontractoror third-party supplier is unable to deliver its goods or services according to the negotiated terms for any reason, we may suffer delaysand be required to purchase the services from another source at a higher price. We sometimes pay our subcontractors and suppliers beforeour customers pay us for the related services. If customers fail to pay us and we choose, or are required, to pay our subcontractorsfor work performed or pay our suppliers for goods received, we could suffer an adverse effect on our business, financial condition, resultsof operations and prospects.

 

Ourinsurance coverage may be inadequate to cover all significant risk exposures.

 

Wewill be exposed to liabilities that are unique to the services we provide. While we intend to maintain insurance for certain risks, theamount of our insurance coverage may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial costsresulting from risks and uncertainties of our business. It is also not possible to obtain insurance to protect against all operationalrisks and liabilities. The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have a material adverseeffect on our business, financial condition, results of operations and prospects.

 

RisksRelated to Our Industry

 

Ourindustry is highly competitive, with a variety of larger companies with greater resources competing with us, and our failure to competeeffectively could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance.

 

Thecontracts on which we bid are generally awarded through a competitive bid process, with awards generally being made to the lowest bidder,but sometimes based on other factors, such as shorter contract schedules, larger scale to complete projects or prior experience withthe customer. Within our markets, we compete with many other service providers. Price is often the principal factor in determining whichservice provider is selected by our customers, especially on smaller, less complex projects. As a result, any organization with adequatefinancial resources and access to technical expertise may become a competitor. Smaller competitors are sometimes able to win bids forthese projects based on price alone because of their lower costs and financial return requirements. Additionally, our competitors maydevelop the expertise, experience and resources to provide services that are equal or superior in price to our services, and we may notbe able to maintain or enhance our competitive position.

 

Someof our competitors have already achieved greater market penetration than we have in the markets in which we compete, and some have greaterfinancial and other resources than we do. A number of national companies in our industry are larger than we are and, if they so desire,could establish a presence in our markets and compete with us for contracts. As a result of this competition, we may need to accept lowercontract margins in order to compete against competitors that have the ability to accept awards at lower prices or have a pre-existingrelationship with a customer. If we are unable to compete successfully in our markets, our business, financial condition, results ofoperations and prospects could be adversely affected.

 

Manyof the customers we serve are subject to consolidation and rapid technological and regulatory change, and our inability or failure toadjust to our customers’ changing needs could reduce demand for our services.

 

Wederive, and anticipate that we will continue to derive, a substantial portion of our revenue from customers in the medical industry.This industry is subject to rapid changes in technology and governmental regulation. Changes in technology may reduce the demand forthe services we provide. Additionally, the medical industry has been characterized by a high level of consolidation that may result inthe loss of one or more of our customers. Our failure to rapidly adopt and master new technologies as they are developed in any of theindustries we serve or the consolidation of one or more of our significant customers could adversely affect our business, financial condition,results of operations and prospects.

 

14

 

 

Further,customers are regulated by the Department of Health and Human Services and other regulators. These regulators may interpret the applicationof their regulations in a manner that is different than the way such regulations are currently interpreted and may impose additionalregulations, either of which could reduce demand for our services and adversely affect our business and results of operations.

 

Economicdownturns could cause capital expenditures in the industries we serve to decrease, which may adversely affect our business, financialcondition, results of operations and prospects.

 

Thedemand for our services has been and may be vulnerable to general downturns in the United States economy. The current election cyclemay cause economic uncertainty. Our customers are affected by economic changes that decrease the need for or the profitability of theirservices. This can result in a decrease in the demand for our services and potentially result in the delay or cancellation of projectsby our customers. As a result, some of our customers may opt to defer or cancel pending projects. A downturn in overall economic conditionsalso affects the priorities placed on various projects funded by governmental entities and federal, state and local spending levels.

 

Ingeneral, economic uncertainty makes it difficult to estimate our customers’ requirements for our services. Our plan for growthdepends on expanding our company. If economic factors in any of the regions in which we plan to expand are not favorable to the growthand development of the medical industry, we may not be able to carry out our growth strategy, which could adversely affect our business,financial condition, results of operations and prospects.

 

OtherRisks Relating to Our Company and Results of Operations

 

Ouroperating results may fluctuate due to factors that are difficult to forecast and not within our control.

 

Ourpast operating results may not be accurate indicators of future performance, and you should not rely on such results to predict our futureperformance.

 

Ouroperating results have fluctuated and could fluctuate in the future. Factors that may contribute to fluctuations include:

 

  our ability to effectively manage our working capital;

 

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

 

  pricing and availability of labor.

 

Actualresults could differ from the estimates and assumptions that we use to prepare our financial statements.

 

Toprepare financial statements in conformity with GAAP, management is required to make estimates and assumptions as of the date of thefinancial statements that affect the reported values of assets and liabilities, revenues and expenses, and disclosures of contingentassets and liabilities. Areas requiring significant estimates by our management include:

 

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

 

  provisions for uncollectible receivables and customer claims and recoveries of costs from subcontractors, suppliers and others;

 

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

 

  accruals for estimated liabilities, including litigation and insurance reserves; and

 

  goodwill and intangible asset impairment assessment.

 

Atthe time the estimates and assumptions are made, we believe they are accurate based on the information available. However, our actualresults could differ from, and could require adjustments to, those estimates.

 

15

 

 

Weexercise judgment in determining our provision for taxes in the United States that are subject to tax authority audit review that couldresult in additional tax liability and potential penalties that would negatively affect our net income.

 

Theamounts we record in intercompany transactions for services, licenses, funding and other items affects our potential tax liabilities.Our tax filings are subject to review or audit by the U.S. Internal Revenue Service and state, local and foreign taxing authorities.We exercise judgment in determining our worldwide provision for income and other taxes and, in the ordinary course of our business, theremay be transactions and calculations where the ultimate tax determination is uncertain. Examinations of our tax returns could resultin significant proposed adjustments and assessment of additional taxes that could adversely affect our tax provision and net income inthe period or periods for which that determination is made.

 

RisksRelated to our Common Stock

 

Wemay not be able to maintain the minimum $1.00 bid price per share of our Common Stock, as required by the Nasdaq Stock Market, whichcould force us to implement a reverse stock split of our Common Stock.

 

From April 26, 2022 throughJune 7, 2022 (22 trading days), the closing bid price of our common stock was below $1.00 per share, the minimum price per share requiredfor continued inclusion on the Nasdaq Stock Market, as a result of which we received a notice of delisting from Nasdaq. However, the NasdaqRules provide a compliance period of 180 calendar days, through December 5, 2022, in which to regain compliance.

 

Underthe Nasdaq Rules, if at any time during this 180 day period the closing bid price of the Company’s securities is at least $1 fora minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance and the matter would be closed. Inthe event that the Company does not regain compliance during the initial 180 day period, the Company may still be eligible for additionaltime. To qualify, the Company would be required to meet the continued listing requirements for market value of publicly held shares andall other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and would need toprovide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split,if necessary. If the Company meets these additional requirements, Nasdaq will inform the Company that it has been granted an additional180 calendar days. However, if it appears to the Nasdaq staff that the Company will not be able to cure the deficiency, or if the Companyis not otherwise eligible, Nasdaq would then provide notice that the Company’s securities will be subject to delisting.

 

Ourcommon stock price has fluctuated substantially, and the trading price of our common stock is likely to continue to be volatile, whichcould result in losses to investors and litigation.

 

Inaddition to changes to market prices based on our results of operations and the factors discussed elsewhere in this “Risk Factors”section, the market price of and trading volume for our common stock may change for a variety of other reasons, not necessarily relatedto our actual operating performance. The capital markets have experienced extreme volatility that has often been unrelated to the operatingperformance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. In addition,the average daily trading volume of the securities of small companies can be very low, which may contribute to future volatility. Factorsthat could cause the market price of our common stock to fluctuate significantly include:

 

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

 

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

 

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

 

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

 

  market conditions for providers of services to the medical industry;

 

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

 

  changes in government policies in the United States and, if our international business increases, in other foreign countries;

 

16

 

 

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

 

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

 

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

 

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

 

  any lawsuit involving us, our services or our products;

 

  arrival and departure of key personnel;

 

  government investigations of our business activities;

 

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

 

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

 

Anyof these factors, as well as broader market and industry factors, may result in large and sudden changes in the trading volume of ourcommon stock and could seriously harm the market price of our common stock, regardless of our operating performance. This may preventstockholders from being able to sell their shares at or above the price they paid for shares of our common stock, if at all. In addition,following periods of volatility in the market price of a company’s securities, stockholders often institute securities class actionlitigation against that company. Our involvement in any class action suit or other legal proceeding, including the existing lawsuitsfiled against us and described elsewhere in this report, could divert our senior management’s attention and could adversely affectour business, financial condition, results of operations and prospects.

 

Thesale or availability for sale of substantial amounts of our common stock could adversely affect the market price of our common stock.

 

Sales of substantial amounts of shares of our common stock, or theperception that these sales could occur, would likely adversely affect the market price of our common stock and could impair our futureability to raise capital through common stock offerings. As of March 31, 2022, we had 11,395,650 shares of common stock issued and outstanding,of which 1,706,652 shares were restricted securities and eligible for sale pursuant to Rule 144 promulgated by the SEC. The sale of theseshares into the open market may adversely affect the market price of our common stock. 

 

Asof March 31, 2022, there were outstanding warrants to purchase an aggregate of 1,043,525 shares of our common stock at a weighted-averageexercise price of $2.57 per share, all of which were exercisable as of such date. As of March 31, 2022, there were outstanding optionsto purchase an aggregate of 118,388 shares of our common stock at a weighted-average exercise price of $3.25 per share, all of whichwere exercisable as of such date. The market price of our common stock also may be adversely affected by our issuance of shares of ourcapital stock or convertible securities in connection with future acquisitions, or in connection with our financing efforts.

 

Wehave never paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock.

 

Wehave never paid cash dividends and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currentlyintend to retain any earnings to finance our operations and growth. As a result, any short-term return on your investment will dependon the market price of our common stock, and only appreciation of the price of our common stock, which may never occur, will providea return to stockholders. The decision whether to pay dividends will be made by our board of directors in light of conditions then existing,including, but not limited to, factors such as our financial condition, results of operations, capital requirements, business conditions,and covenants under any applicable contractual arrangements. Investors seeking cash dividends should not invest in our common stock.

 

17

 

 

Ifequity research analysts do not publish research or reports about our business, or if they issue unfavorable commentary or downgradeour common stock, the market price of our common stock will likely decline.

 

Thetrading market for our common stock will rely in part on the research and reports that equity research analysts, over whom we have nocontrol, publish about us and our business. We may never obtain research coverage by securities and industry analysts. If no securitiesor industry analysts commence coverage of our company, the market price for price of our common stock could decline if one or more equityanalysts downgrade our common stock or if those our common stock could decline. In the event we obtain securities or industry analystcoverage, the market analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing reports about us or our business.

 

Afailure by us to establish and maintain effective internal control over financial reporting could have a material adverse effect on ourbusiness and operating results.

 

Maintainingeffective internal control over financial reporting is necessary for us to produce accurate and complete financial reports and to helpprevent financial fraud. In addition, such control is required in order to maintain the listing of our common stock on the Nasdaq CapitalMarket. While we have undertaken steps to improve our financial reporting process, including the implementation of a firm-wide accountinginformation system that collects, stores and processes financial and accounting data on a consolidated basis for use in meeting our reportingobligations, there are no assurances that our internal control over financial reporting has been effective at any time since then. Forthe year ended December 31, 2021, we did not have effective controls over financial reporting. Our management has identified materialweaknesses in our internal controls related to deficiency in the design of internal controls and segregation of duties.

 

Ifwe are unable to maintain adequate internal controls or fail to correct material weaknesses in such controls noted by our managementor our independent registered public accounting firm, our business and operating results could be adversely affected, we could againfail to meet our obligations to report our operating results accurately and completely and our continued listing on the Nasdaq CapitalMarket could be jeopardized.

 

Complyingwith the laws and regulations affecting public companies will increase our costs and the demands on management and could harm our operatingresults.

 

Asa public company and particularly after we cease to be an “emerging growth company,” we will incur significant legal, accounting,and other expenses. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and the Nasdaq Capital Market imposevarious requirements on public companies, including requiring changes in corporate governance practices. Our management and other personneldevote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continueto increase our legal, accounting, and financial compliance costs and have made and will continue to make some activities more time-consumingand costly. For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officerliability insurance, and we may be required to accept reduced policy limits and coverage or to incur substantial costs to maintain thesame or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified personsto serve on our board of directors or board committees or as executive officers.

 

Ifwe do not manage our planned growth effectively, our revenue, business and operating results may be harmed.

 

Ourexpansion strategy includes the possible acquisitions of other SaaS companies. We may not be able to identify, secure and manage futureacquisitions successfully. The acquisition of any future businesses may require a greater than anticipated investment of operationaland financial resources as we seek to institute uniform standards and controls across acquired businesses. Acquisitions may also resultin the diversion of management and resources, increases in administrative costs, including those relating to the assimilation of newemployees, and costs associated with any financings undertaken in connection with such acquisitions. We cannot assure you that any acquisitionwe undertake, including those we have already made, will be successful. Future growth will also place additional demands on our management,sales, and marketing resources, and may require us to hire and train additional employees. We will need to expand and upgrade our systemsand infrastructure to accommodate our growth, and we may not have the resources to do so in the time frames required. The failure tomanage our growth effectively will materially and adversely affect our business, financial condition and results of operations.

 

18

 

 

Wemay explore acquiring additional companies and such acquisitions may subject us to additional unknown risks.

 

Wemay make future acquisitions of SaaS companies in markets that we do not serve now. We may not be able to reach agreements with suchcompanies on favorable terms or at all. In completing acquisitions, we will rely upon the representations and warranties and indemnitiesmade by the sellers with respect to each acquisition as well as our own due diligence investigation. We cannot assure you that such representationsand warranties will be true and correct or that our due diligence will uncover all materially adverse facts relating to the operationsand financial condition of the acquired companies or their businesses. To the extent that we are required to pay for undisclosed obligationsof an acquired company, or if material misrepresentations exist, we may not realize the expected economic benefit from such acquisitionand our ability to seek legal recourse from the seller may be limited.

 

Anyfuture acquisitions may result in potentially dilutive issuances of equity securities, the incurrence of indebtedness and increased amortizationexpense.

 

Anyfuture acquisitions are likely to result in issuances of equity securities, which will be dilutive to the equity interests of existingstockholders, and may involve the incurrence of debt, which will require us to maintain cash flows sufficient to make payments of principaland interest, the assumption of known and unknown liabilities, and the amortization of expenses related to intangible assets, all ofwhich could have an adverse effect on our business, financial condition and results of operations.

 

Thevalue of our goodwill and other intangible assets may decline.

 

Asof December 31, 2021, there was goodwill of $8,366,467. We evaluate goodwill at least annually, and will do so more frequently ifevents or circumstances indicate that impairment may have occurred. Many of the assumptions and estimates that we make in order to estimatethe fair value of our intangible assets directly impact the results of impairment testing, including an estimate of future expected revenues,earnings and cash flows, and the discount rates applied to expected cash flows. We are able to influence the outcome and ultimate resultsbased on the assumptions and estimates we choose for testing. To avoid undue influence, we have set criteria that are followed in makingassumptions and estimates. The determination of whether goodwill or acquired intangible assets have become impaired involves a significantlevel of judgment in the assumptions underlying the approach used to determine the value of our reporting unit. Changes in our strategyor market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets.

 

Wemay become involved in litigation which could harm the value of our business.

 

Becauseof the nature of our business and the exit from lines of business, there is a risk of litigation. Any litigation could cause us to incursubstantial expenses whether or not we prevail, which would add to our costs and affect the capital available for our operations.

 

Pleaserefer to Item 3. Legal Proceedings of our Annual Report on Form 10-K (see “Incorporation of Certain Information by Reference”)for a detailed description of our prior legal actions and investigations.

 

Economicuncertainty impacts our business and financial results, and a renewed recession could materially affect us in the future.

 

Periodsof economic slowdown or recession could lead to a reduction in demand for our software and services, which in turn could reduce our revenuesand results of operations and adversely affect our financial position. Our business will be dependent upon business discretionary spendingand therefore is affected by business confidence as well as the future performance of the United States and global economies. As a result,our results of operations are susceptible to economic slowdowns and recessions.

 

19

 

 

Wedepend on the services of key executives, and the loss of these executives could materially harm our business and our strategic directionif we were unable to replace them with executives of equal experience and capabilities.

 

Ourfuture success significantly depends on the continued service and performance of our key management and other personnel. We cannot preventmembers of senior management from terminating their employment with us even if we have an employment agreement with them. Losing theservices of members of senior management could materially harm our business until a suitable replacement is found, and such replacementmay not have equal experience and capabilities. We have not purchased life insurance covering any members of our senior management.

 

Themarkets in which we operate are highly competitive, rapidly changing and increasingly fragmented, and we may not be able to compete effectively,especially against competitors with greater financial resources or marketplace presence.

 

Weface competition from other SaaS companies. Many of the companies with which we will compete have greater financial and technical resourcesthan are available to us. Our failure to compete effectively could result in a significant loss of customers, which could adversely affectour operating results.

 

Wemay need additional capital to support our operations or the growth of our business, and we cannot be certain that this capital willbe available on reasonable terms when required, or at all.

 

Inorder for us to grow and execute our business plan successfully, we will likely require additional financing which may not be availableon acceptable terms or at all. If such financing is available, it may be dilutive to the equity interests of existing stockholders. Failureto obtain financing will have a material adverse effect on our financial position. If we are unable to obtain adequate financing or financingon terms satisfactory to us when we require it, our ability to continue to support the operation or growth of our business could be significantlyimpaired and our operating results may be harmed.

 

Ifwe fail to meet the continued listing standards and corporate governance requirements for Nasdaq Capital Market companies, we may besubject to de-listing.

 

Ourcommon stock is currently listed on the Nasdaq Capital Market. In order to maintain this listing, we are required to comply with variouscontinued listing standards, including corporate governance requirements, set forth in the Nasdaq Listing Rules. These standards andrequirements include, but are not limited to, maintaining a minimum bid price for our common stock, as well as having a majority of ourBoard members qualify as independent. If we fail to meet any one of these requirements for an extended period of time, we will be subjectto possible de-listing.  

 

Ourcommon stock may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stockand our ability to grow our business.

 

Therehas historically been limited trading in our common stock, and there can be no assurance that an active trading market in our commonstock will either develop or be maintained. Our common stock has experienced, and is likely to experience in the future, significantprice and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance.In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or thecondition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may alsocause short sellers to enter the market periodically in the belief that we will have poor results in the future. We cannot predict theactions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or that ourshare price will appreciate over time.

 

20

 

 

Ourstock price has been volatile.

 

Themarket price of our common stock has been highly volatile and could fluctuate widely in price in response to various factors, many ofwhich are beyond our control, including the following:

 

  our ability to obtain working capital financing;
     
  additions or departures of key personnel;
     
  sales of our common stock;
     
  our ability to execute our business plan;
     
  operating results that fall below expectations;
     
  regulatory developments; and
     
  economic and other external factors.

 

Inaddition, the securities markets from time to time experience significant price and volume fluctuations that are unrelated to the operatingperformance of particular companies. These market fluctuations may also materially and adversely affect the market price of our commonstock.

 

Offersor availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

Theperiodic availability of shares for sale upon the expiration of any statutory holding period or lockup agreements, could create a circumstancecommonly referred to as an “overhang”, in anticipation of which the market price of our common stock could fall. The existenceof an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financingthrough the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

 

Wemay be unable to establish, protect or enforce our intellectual property rights adequately.

 

Oursuccess will depend in part on our ability to establish, protect and enforce our intellectual property and other proprietary rights.Our inability to protect our tradenames, service marks and other intellectual property rights from infringement, piracy, counterfeitingor other unauthorized use could negatively affect our business. If we fail to establish, protect or enforce our intellectual propertyrights, we may lose an important advantage in the market in which we compete. Our intellectual property rights may not be sufficientto help us maintain our position in the market and our competitive advantages. Monitoring unauthorized uses of and enforcing our intellectualproperty rights can be difficult and costly. Legal intellectual property actions are inherently uncertain and may not be successful,and may require a substantial amount of resources and management attention.

 

Wecurrently hosts our solution, serve our customers, and support our operations in the United States through an agreement with a thirdparty hosting and infrastructure provider, Rackspace. The Company incorporates standard IT security measures, including but not limitedto; firewalls, disaster recovery, backup, etc.

 

Circumstancesoutside our control could pose a threat to our intellectual property rights. For example, effective intellectual property protectionmay not be available in the United States or other countries in which we seek protection of our marks or our copyrighted works. Also,the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectualproperty rights may harm our business or our ability to compete.

 

21

 

 

Changesin laws, regulations and other requirements could adversely affect our business, results of operations or financial condition.

 

Weare subject to the laws, regulations and other requirements of the jurisdictions in which we operate. Changes to these laws could havea material adverse impact on the revenue, profit or the operation of our business.

 

Disruptionsin our information technology systems or security breaches of confidential customer information or personal employee information couldhave an adverse impact on our operations.

 

Ouroperations are dependent upon the integrity, security and consistent operation of various information technology systems and data centersthat process transactions, communication systems and various other software applications used throughout our operations. Disruptionsin these systems could have an adverse impact on our operations. We could encounter difficulties in developing new systems or maintainingand upgrading existing systems. Such difficulties could lead to significant expenses or to losses due to disruption in our business operations.

 

Inaddition, our information technology systems are subject to the risk of infiltration or data theft. The techniques used to obtain unauthorizedaccess, disable or degrade service, or sabotage information technology systems change frequently and may be difficult to detect or preventover long periods of time. Moreover, the hardware, software or applications we develop or procure from third parties may contain defectsin design or manufacture or other problems that could unexpectedly compromise the security of our information systems. Unauthorized partiesmay also attempt to gain access to our systems or facilities through fraud or deception aimed at our employees, contractors or temporarystaff. In the event that the security of our information systems is compromised, confidential information could be misappropriated, andsystem disruptions could occur. Any such misappropriation or disruption could cause significant harm to our reputation, lead to a lossof sales or profits or cause us to incur significant costs to reimburse third parties for damages.

 

Ourcurrent insurance policies may not provide adequate levels of coverage against all claims, and we may incur losses that are not coveredby our insurance.

 

Webelieve we maintain insurance coverage that is customary for businesses of our size and type; however, we may be unable to insure againstcertain types of losses or claims, or the cost of such insurance may be prohibitive. For example, although we carry insurance for breachesof our computer network security, there can be no assurance that such insurance will cover all potential losses or claims or that thedollar limits of such insurance will be sufficient to provide full coverage against all losses or claims. Uninsured losses or claims,if they occur, could have a material adverse effect on our financial condition, business and results of operations.

 

Wemay be required to pay for the defense of our clients, officers, or directors in accordance with certain indemnification provisions.

 

Ourcompany provides indemnification of varying scope to certain customers against claims of intellectual property infringement made by thirdparties arising from the use of our services. In accordance with authoritative guidance for accounting for guarantees, we evaluate estimatedlosses for such indemnification. Management considers such factors as the degree of probability of an unfavorable outcome and the abilityto make a reasonable estimate of the amount of loss. To date, no such claims have been filed against our company and, as a result, noliability has been recorded in our financial statements.

 

Aspermitted under Delaware law, our company has agreements whereby we indemnify our officers and directors for certain events or occurrenceswhile the officer or director is, or was, serving at our company’s request in such capacity. The maximum potential amount of futurepayments we could be required to make under these indemnification agreements is unlimited; however, we have directors’ and officers’liability insurance coverage that is intended to reduce our financial exposure and may enable us to recover a portion of any such payments.

 

Pleaserefer to Item 3. Legal Proceedings of our Annual Report on Form 10-K (see “Incorporation of Certain Information by Reference”)for a detailed description of our prior legal actions and investigations.

 

22

 

 

USEOF PROCEEDS

 

Thisprospectus relates to shares of and Common Stock that may be offered and sold from time to time by Tumim pursuant to the Purchase Agreement.We will not receive any proceeds from the resale of shares of Common Stock by Tumim.

 

We may receive up to $5,000,000 in gross proceeds pursuant to the PurchaseAgreement. We estimate that the net proceeds to us from the sale of our Common Stock to Tumim pursuant to the Purchase Agreement, lessour fees and expenses, would be up to $4,900,000 over an approximately 24-month period, assuming that we receive all $5,000,000 in grossproceeds pursuant to the Purchase Agreement. See “Plan of Distribution” elsewhere in this prospectus for more information.

 

Weintend to use any proceeds from the Selling Stockholder that we receive under the Purchase Agreement for working capital and generalcorporate purposes, which include, but are not limited to, marketing, costs of this offering, operating expenses and working capital.We cannot specify with certainty all of the particular uses for the net proceeds that we will have from the sale of our shares pursuantto the Purchase Agreement. Therefore, our management will have broad discretion to determine the specific use for the net proceeds andwe may use the proceeds for purposes that are not contemplated at the time of this offering.

 

Wewill incur all costs associated with this prospectus and the registration statement of which it is a part.

 

23

 

 

THETUMIM STONE CAPITAL TRANSACTION

 

General

 

OnJune 28, 2022, we entered into the Purchase Agreement and the Registration Rights Agreement with Tumim. Pursuant to the Purchase Agreement,we have the right to sell to Tumim up to $5,000,000 in shares of the Company’s Common Stock, subject to certain limitations andconditions set forth in the Purchase Agreement. In accordance with our obligations under the Registration Rights Agreement, we have filedthe registration statement that includes this prospectus with the SEC to register under the Securities Act, the resale by Tumim of sharesof Common Stock that we have issued and may issue to Tumim under the Purchase Agreement.

 

Wedo not have the right to commence any sales of our Common Stock to Tumim under the Purchase Agreement until the Commencement, which isthe time when all of the conditions to our right to commence sales of our Common Stock to Tumim set forth in the Purchase Agreement havebeen satisfied, including that the registration statement that includes this prospectus is declared effective by the SEC and the finalform of this prospectus is filed with the SEC. From and after the Commencement, we will control the timing and amount of any sales ofour Common Stock to Tumim. Actual sales of shares of our Common Stock to Tumim under the Purchase Agreement will depend on a varietyof factors to be determined by us from time to time, including, among others, market conditions, the trading price of the Common Stockand determinations by us as to the appropriate sources of funding for our company and our operations.

 

Thepurchase price of the shares of Common Stock that we elect to sell to Tumim pursuant to a Fixed Purchase under the Purchase Agreementwill be determined by reference to the market prices of the Common Stock during the applicable Fixed Purchase Valuation Period for suchFixed Purchase as set forth in the Purchase Agreement, less a fixed 7% discount, as described in greater detail below. The purchase priceof the shares of Common Stock that we elect to sell to Tumim pursuant to a VWAP Purchase under the Purchase Agreement will be determinedby reference to the lowest daily volume weighted average price of the Common Stock during the applicable VWAP Purchase Valuation Period,less a fixed 5% discount, as described in greater detail below. There is no upper limit on the price per share that Tumim could be obligatedto pay for the Common Stock under the Purchase Agreement.

 

Underthe applicable Nasdaq rules, in no event may we issue to Tumim under the Purchase Agreement more than the Exchange Cap of 2,288,585shares of our Common Stock (including the Commitment Shares), unless (i) we obtain stockholder approval to issue shares of Common Stockin excess of the Exchange Cap or (ii) the average per share purchase price paid by Tumim for all shares of Common Stock sold under thePurchase Agreement equals or exceeds Base Price, representing the lower of (i) the Nasdaq official closing price for the Common Stockimmediately preceding the execution of the Purchase Agreement or (ii) the arithmetic average of the five Nasdaq official closing pricesfor the Common Stock immediately preceding the execution of the Purchase Agreement, plus an incremental amount of $0.0971, in whichcase the Exchange Cap limitation will not apply under applicable Nasdaq rules. In any event, the Purchase Agreement specifically providesthat we may not issue or sell any shares of our Common Stock under the Purchase Agreement if such issuance or sale would breach any applicableNasdaq rules.

 

ThePurchase Agreement also prohibits us from directing Tumim to purchase any shares of our Common Stock if those shares, when aggregatedwith all other shares of our Common Stock then beneficially owned by Tumim (as calculated pursuant to Section 13(d) of the SecuritiesExchange Act of 1934, and Rule 13d-3 thereunder), would result in Tumim beneficially owning more than the Beneficial OwnershipCap of 4.99% of the outstanding Common Stock.

 

24

 

 

Because the purchase priceper share to be paid by Tumim for the shares of Common Stock that we may elect to sell to Tumim under the Purchase Agreement, if any,will fluctuate based on the market prices of our Common Stock during the applicable Fixed Purchase Valuation Period and applicable VWAPPurchase Valuation Period for each Fixed Purchase and VWAP Purchase made pursuant to the Purchase Agreement, if any, as of the date ofthis prospectus it is not possible for us to predict the number of shares of Common Stock that we will sell to Tumim under the PurchaseAgreement, the actual purchase price per share to be paid by Tumim for those shares, or the actual gross proceeds to be raised by us fromthose sales, if any. As of July 26, 2022, there were 11,795,873 shares of our Common Stock outstanding, of which 170,120 shares were heldby non-affiliates, which include the Commitment Shares we issued to Tumim upon execution of the Purchase Agreement, but excludes the 2,288,585shares of Common Stock we may, in our sole discretion, sell to Tumim from time to time from and after the Commencement Date pursuant tothe Purchase Agreement. If all of the shares offered for resale by Tumim under this prospectus were issued and outstanding as of July26, 2022, such shares would represent approximately 19.4% of the total number of shares of our Common Stock outstanding and approximately19.7% of the total number of outstanding shares held by non-affiliates, in each case as of July 26, 2022.

 

Thenet proceeds from sales, if any, under the Purchase Agreement, will depend on the frequency and prices at which the Company sells sharesof Common Stock to Tumim. To the extent the Company sells shares under the Purchase Agreement, the Company currently plans to use anyproceeds therefrom for marketing, costs of this transaction, operating expenses and for working capital and other general corporate purposes.

 

Theissuance of our Common Stock to Tumim pursuant to the Purchase Agreement will not affect the rights or privileges of our existing stockholders,except that the economic and voting interests of each of our existing stockholders will be diluted. Although the number of shares ofour Common Stock that our existing stockholders own will not decrease, the shares of our Common Stock owned by our existing stockholderswill represent a smaller percentage of our total outstanding shares of our Common Stock after any such issuance.

 

AmericasExecutions, LLC (“Placement Agent”) served as the Company’s placement agent in connection with the Purchase Agreement.In consideration for their services, the Placement Agent was issued 69,445 shares of the Company’s Common Stock (valued at $50,000or $0.72 per share).  

 

Asconsideration for Tumim’s irrevocable commitment to purchase shares of Common Stock upon the terms of and subject to satisfactionof the conditions set forth in the Purchase Agreement, concurrently with the execution and delivery of the Purchase Agreement, the Companyissued to Tumim the 277,778 Commitment Shares. The Company has also agreed to reimburse Tumim for the fees and expenses of its counsel,up to a maximum of $30,000.

 

ThePurchase Agreement and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnificationobligations of the parties. The representations, warranties and covenants contained in such agreements were made only for purposes ofsuch agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitationsagreed upon by the contracting parties.

 

Neitherthe Company nor Tumim may assign or transfer its rights and obligations under the Purchase Agreement and no provision of the PurchaseAgreement or the Registration Rights Agreement may be modified or waived by the parties.

 

Purchaseof Shares by Tumim Stone Capital

 

FixedPurchases

 

Uponthe terms and subject to the conditions set forth in the Purchase Agreement, we will have the right, but not the obligation, from timeto time at our sole discretion over the period from and after the Commencement Date, to direct Tumim, by our timely delivery of FixedPurchase notices to Tumim on the applicable Fixed Purchase Dates (as defined below), to purchase up to a fixed maximum amount of sharesof Common Stock at the applicable fixed purchase price per share (each, a “Fixed Purchase”), after 4:00 p.m., New York Citytime, but prior to 5:00 p.m., New York City time on any trading day (each, a “Fixed Purchase Date”), so long as (in additionto the conditions described elsewhere in this prospectus):

 

  the daily volume weighted average price for the Common Stock for such Fixed Purchase Date is not the lowest daily volume weighted average price for the Common Stock during the applicable Fixed Purchase Valuation Period for such Fixed Purchase (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during such Fixed Purchase Valuation Period);

 

25

 

 

  the closing sale price of the Common Stock on such Fixed Purchase Date is greater than the arithmetic average of the 10 daily volume weighted average prices for the Common Stock during the applicable Fixed Purchase Valuation Period for such Fixed Purchase (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during such Fixed Purchase Valuation Period);
     
  the lowest Sale Price of the Common Stock during such Fixed Purchase Valuation Period exceeds $0.25  (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during such Fixed Purchase Valuation Period) (the lower of $0.25 and any such adjusted price, the “Fixed Purchase Threshold Price”);
     
  at least three trading days has elapsed since the later of (A) the Trading Day on which the most recent prior Fixed Purchase notice was delivered by the Company to Tumim and (B) the Trading Day on which most recent prior VWAP Purchase notice was delivered by the Company to Tumim; and
     
  all shares of Common Stock subject to all prior Fixed Purchase notices and VWAP Purchase notices (as applicable) delivered by the Company to Tumim under the Purchase Agreement have theretofore been received by Tumim in electronic form as “DWAC Shares” (as such term is defined in the Purchase Agreement).

 

Themaximum number of shares of Common Stock that Tumim is required to purchase in any single Fixed Purchase under the Purchase Agreement(the “Fixed Purchase Maximum Amount”) is equal to the lesser of:

 

  100,000 shares of Common Stock (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring after the date of the Purchase Agreement); and
     
  100% of the average daily trading volume in the Common Stock on Nasdaq (or, in the event the Common Stock is then listed on an “Eligible Market” as defined under the Purchase Agreement, the lowest daily trading volume on such Eligible Market) during the applicable Fixed Purchase Valuation Period for such Fixed Purchase (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during such Fixed Purchase Valuation Period); provided, however, that the Selling Stockholderr’s maximum financial commitment in any single Fixed Purchase shall not exceed $500,000.

 

Thepurchase price per share of Common Stock to be purchased by Tumim in a Fixed Purchase (the “Fixed Purchase Price”) will beequal to 93% of the lower of:

 

  the lowest sale price for our Common Stock on the applicable Fixed Purchase Date for such Fixed Purchase; and
     
  the arithmetic average of the three lowest closing sale prices for the Common Stock during the applicable Fixed Purchase Valuation Period for such Fixed Purchase.

 

TheFixed Purchase Price to be paid by Tumim in a Fixed Purchase will be equitably adjusted as set forth in the Purchase Agreement for anyreorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during theapplicable Fixed Purchase Valuation Period used to compute the applicable Fixed Purchase Price for such Fixed Purchase.

 

Thepayment for, against simultaneous delivery of, shares in respect of each Fixed Purchase under the Purchase Agreement will be settledon the trading day immediately following the applicable Fixed Purchase Date for such Fixed Purchase, as set forth in the Purchase Agreement.

 

26

 

 

VWAPPurchase

 

Uponthe terms and subject to the conditions set forth in the Purchase Agreement, in addition to Fixed Purchases under the Purchase Agreementas described above, we will also have the right, but not the obligation, from time to time at our sole discretion over the period fromand after the Effective Date, to direct Tumim to purchase up to a fixed maximum amount of shares of Common Stock at the applicable purchaseprice per share to be calculated on the trading day immediately following the applicable VWAP Purchase Valuation Period (the “VWAPPurchase Date”) in accordance with the Purchase Agreement (each, a “VWAP Purchase”), by our timely delivery of a VWAPPurchase notice to Tumim on the trading day immediately prior to the applicable VWAP Purchase Valuation Period (each, a “VWAP PurchaseExercise Date”), so long as (in addition to the conditions described elsewhere in this prospectus):

 

  at least three trading days have elapsed since the later of (A) the trading day on which the most recent prior Fixed Purchase notice was delivered by the Company to Tumim and (B) the trading day on which most recent prior VWAP Purchase notice was delivered by the Company to the Tumim
     
  all shares of Common Stock subject to all prior Fixed Purchase notices and VWAP Purchase notices (as applicable) delivered by the Company to Tumim under the Purchase Agreement have theretofore been received by Tumim in electronic form as DWAC Shares.

 

Themaximum number of shares of Common Stock that Tumim is required to purchase in any single VWAP Purchase under the Purchase Agreementis equal to the lesser of:

 

  300% of the then applicable Fixed Purchase Maximum Amount calculated as of the applicable VWAP Purchase Exercise Date for such VWAP Purchase assuming for purposes of this definition that the applicable VWAP Purchase Exercise Date is the applicable Fixed Purchase Date for purposes of calculating such Fixed Purchase Maximum Amount (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the applicable VWAP Purchase Valuation Period for such VWAP Purchase); and
     
  100% of the daily trading volume in the Common Stock on Nasdaq (or, in the event the Common Stock is then listed on an “Eligible Market” as defined under the Purchase Agreement, on such Eligible Market) on the applicable VWAP Purchase Exercise Date for such VWAP Purchase (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the applicable VWAP Purchase Valuation Period for such VWAP Purchase).

 

Thepurchase price per share of Common Stock to be purchased by Tumim in a VWAP Purchase (the “VWAP Purchase Price”) will beequal to 95% of the lowest daily volume weighted average price of the Common Stock during the applicable VWAP Purchase Valuation Period.At or prior to 9:30 a.m., New York City time, on the applicable VWAP Purchase Date immediately following the applicable VWAP PurchaseValuation Period for such VWAP Purchase, Tumim will provide us with a written confirmation for such VWAP Purchase setting forth the applicableVWAP Purchase Price (both on a per share basis and the total aggregate VWAP Purchase Price) to be paid by Tumim for the shares of CommonStock purchased by Tumim in such VWAP Purchase.

 

TheVWAP Purchase Price to be paid by Tumim in a VWAP Purchase will be equitably adjusted as set forth in the Purchase Agreement for anyreorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during theapplicable VWAP Purchase Valuation Period used to compute the applicable VWAP Purchase Price for such VWAP Purchase.

 

Thepayment for, against simultaneous delivery of, shares in respect of each VWAP Purchase under the Purchase Agreement will be settled onthe applicable VWAP Purchase Date immediately following the applicable VWAP Purchase Valuation Period for such VWAP Purchase, as setforth in the Purchase Agreement.

 

27

 

 

ConditionsPrecedent to Commencement and For Delivery of Fixed Purchase Notices and VWAP Purchase Notices

 

Ourright to deliver Fixed Purchase notices and VWAP Purchase notices to Tumim under the Purchase Agreement, and Tumim’s obligationto accept Fixed Purchase notices and VWAP Purchase notices delivered by us under the Purchase Agreement, are subject to (i) the initialsatisfaction, at the Commencement, and (ii) the satisfaction, on the applicable Fixed Purchase Date for each Fixed Purchase and on theapplicable VWAP Purchase Exercise Date for each VWAP Purchase after the Commencement Date, of the conditions precedent thereto set forthin the Purchase Agreement, all of which are entirely outside of Tumim’s control, which conditions include the following:

 

  the accuracy in all material respects of the representations and warranties of the Company included in the Purchase Agreement;
     
  the Company having performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Purchase Agreement and Registration Rights Agreement to be performed, satisfied or complied with by the Company;
     
  the registration statement that includes this prospectus having been declared effective under the Securities Act by the SEC, and Tumim being able to utilize this prospectus to resell all of the shares of Common Stock included in this prospectus;
     
  the SEC shall not have issued any stop order suspending the effectiveness of the registration statement that includes this prospectus or prohibiting or suspending the use of this prospectus, and the absence of any suspension of qualification or exemption from qualification of the Common Stock for offering or sale in any jurisdiction;
     
  there shall not have occurred any event and there shall not exist any condition or state of facts, which makes any statement of a material fact made in the registration statement that includes this prospectus untrue or which requires the making of any additions to or changes to the statements contained therein in order to state a material fact required by the Securities Act to be stated therein or necessary in order to make the statements then made therein not misleading;

 

  this prospectus, in final form, shall have been filed with the SEC under the Securities Act prior to Commencement, and all reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shall have been filed with the SEC;
     
  trading in the Common Stock shall not have been suspended by the SEC or the Nasdaq, the Company shall not have received any final and non-appealable notice that the listing or quotation of the Common Stock on the Nasdaq shall be terminated on a date certain (unless, prior to such date, the Common Stock is listed or quoted on any other Eligible Market, as such term is defined in the Purchase Agreement), and there shall be no suspension of, or restriction on, accepting additional deposits of the Common Stock, electronic trading or book-entry services by DTC with respect to the Common Stock;
     
  the Company shall have complied with all applicable federal, state and local governmental laws, rules, regulations and ordinances in connection with the execution, delivery and performance of the Purchase Agreement and the Registration Rights Agreement;

 

28

 

 

 

  the absence of any statute, regulation, order, decree, writ, ruling or injunction by any court or governmental authority of competent jurisdiction which prohibits the consummation of or that would materially modify or delay any of the transactions contemplated by the Purchase Agreement or the Registration Rights Agreement;
     
  the absence of any action, suit or proceeding before any arbitrator or any court or governmental authority seeking to restrain, prevent or change the transactions contemplated by the Purchase Agreement or the Registration Rights Agreement, or seeking material damages in connection with such transactions;
     
  all of the shares of Common Stock that may be issued pursuant to the Purchase Agreement shall have been approved for listing or quotation on The Nasdaq Capital Market (or if the Common Stock is not then listed on The Nasdaq Capital Market, on any Eligible Market), subject only to notice of issuance;
     
  no condition, occurrence, state of facts or event constituting a material adverse effect shall have occurred and be continuing;
     
  the absence of any bankruptcy proceeding against the Company commenced by a third party, and the Company shall not have commenced a voluntary bankruptcy proceeding, consented to the entry of an order for relief against it in an involuntary bankruptcy case, consented to the appointment of a custodian of the Company or for all or substantially all of its property in any bankruptcy proceeding, or made a general assignment for the benefit of its creditors; and
     
  the receipt by Tumim of the opinions, bring-down opinions and negative assurances from outside counsel to the Company in the forms mutually agreed to by the Company and Tumim prior to the date of the Purchase Agreement.

 

Terminationof the Purchase Agreement

 

Unlessearlier terminated as provided in the Purchase Agreement, the Purchase Agreement will terminate automatically on the earliest to occurof:

 

  the first day of the month next following the 24-month anniversary of the Effective Date;
     
  the date on which Tumim shall have purchased shares of Common Stock under the Purchase Agreement for an aggregate gross purchase price equal to its $5,000,000 Total Commitment under the Purchase Agreement;
     
  the date on which the Common Stock shall have failed to be listed or quoted on The Nasdaq Capital Market or any other Eligible Market; and
     
  the date on which the Company commences a voluntary bankruptcy case or any third party commences a bankruptcy proceeding against the Company, a custodian is appointed for the Company in a bankruptcy proceeding for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors.

 

Wehave the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon 10 trading days’prior written notice to Tumim. We and Tumim may also terminate the Purchase Agreement at any time by mutual written consent.

 

TumimStone Capital also has the right to terminate the Purchase Agreement upon 10 trading days’ prior written notice to us, but onlyupon the occurrence of certain events, including:

 

  the occurrence of a Material Adverse Effect (as defined in the Purchase Agreement);
     
  the occurrence of a Fundamental Transaction (as defined in the Purchase Agreement) involving the Company;
     
  our failure to file with the SEC, or the SEC’s failure to declare effective, the registration statement that includes this prospectus or any additional registration statement we file with the SEC pursuant to the Registration Rights Agreement, within the time periods set forth in the Registration Rights Agreement;
     
  the effectiveness of the registration statement that includes this prospectus or any additional registration statement we file with the SEC pursuant to the Registration Rights Agreement lapses for any reason (including the issuance of a stop order by the SEC), or this prospectus or the prospectus included in any additional registration statement we file with the SEC pursuant to the Registration Rights Agreement otherwise becomes unavailable to Tumim for the resale of all of the shares of Common Stock included therein, and such lapse or unavailability continues for a period of 20 consecutive trading days or for more than an aggregate of 60 trading days in any 365-day period, other than due to acts of Tumim; or

 

29

 

 

  the securities cannot be transferred electronically as DWAC Shares or are not eligible for deposit in at least one of the Tumim’s prime brokerage accounts for a period of five consecutive Trading Days;
     
    the Company is in material breach or default of the Purchase Agreement, and, if such breach or default is capable of being cured, such breach or default is not cured within 10 Trading Days after notice of such breach or default is delivered to the Company;
     
  trading in the Common Stock on The Nasdaq Capital Market (or if the Common Stock is then listed on an Eligible Market, trading in the Common Stock on such Eligible Market) has been suspended for a period of three consecutive trading days.

 

Notermination of the Purchase Agreement by us or by Tumim will become effective prior to the first Trading Day immediately following theapplicable settlement date related to any pending Fixed Purchase or any pending VWAP Purchase (as applicable) that has not been fullysettled in accordance with the terms and conditions of the Purchase Agreement, and will not affect any of our respective rights and obligationsunder the Purchase Agreement with respect to any pending Fixed Purchase or any pending VWAP Purchase (as applicable), and both we andTumim have agreed to complete our respective obligations with respect to any such pending Fixed Purchase or any pending VWAP Purchase(as applicable) under the Purchase Agreement. Furthermore, no termination of the Purchase Agreement will affect the Registration RightsAgreement, which will survive any termination of the Purchase Agreement.

 

NoShort-Selling or Hedging by Tumim Stone Capital

 

Tumimhas agreed that neither it nor any of its affiliates shall engage in any direct or indirect short-selling or hedging of our Common Stockduring any time prior to the termination of the Purchase Agreement.

 

Prohibitionon Variable Rate Transactions

 

Subjectto specified exceptions included in the Purchase Agreement, we are limited in our ability to enter into specified variable rate transactionsduring the term of the Purchase Agreement. Such transactions include, among others, the issuance of convertible securities with a conversionor exercise price that is based upon or varies with the trading price of our Common Stock after the date of issuance.

 

Effectof Performance of the Purchase Agreement on our Stockholders

 

Allshares of Common Stock that have been or may be issued or sold by us to Tumim under the Purchase Agreement that are being registeredunder the Securities Act for resale by Tumim in this offering are expected to be freely tradable. The shares of Common Stock being registeredfor resale in this offering (excluding the Commitment Shares we already issued to Tumim) may be issued and sold by us to Tumim from timeto time at our discretion over a period of up to 24 months commencing on the Commencement Date. The resale by Tumim of a significantamount of shares registered for resale in this offering at any given time, or the perception that these sales may occur, could causethe market price of our Common Stock to decline and to be highly volatile. Sales of our Common Stock, if any, to Tumim under the PurchaseAgreement will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Tumim all,some or none of the shares of our Common Stock that may be available for us to sell to Tumim pursuant to the Purchase Agreement.

 

Ifand when we elect to sell shares of our Common Stock to Tumim pursuant to the Purchase Agreement, after Tumim has acquired such shares,Tumim may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result,investors who purchase shares from Tumim in this offering at different times will likely pay different prices for those shares, and somay experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results.Investors may experience a decline in the value of the shares they purchase from Tumim in this offering as a result of future sales madeby us to Tumim at prices lower than the prices such investors paid for their shares in this offering. In addition, if we sell a substantialnumber of shares to Tumim under the Purchase Agreement, or if investors expect that we will do so, the actual sales of shares or themere existence of our arrangement with Tumim may make it more difficult for us to sell equity or equity-related securities in the futureat a time and at a price that we might otherwise wish to effect such sales.

 

30

 

 

Although the Purchase Agreementprovides that we may sell up to an aggregate of $5,000,000 of our Common Stock to Tumim, only 2,288,585 shares of our Common Stock (representingthe maximum number of shares we may issue and sell under the Purchase Agreement under the Exchange Cap limitation) are being registeredfor resale under this prospectus, which includes the Commitment Shares. If after the Commencement Date we elect to sell to Tumim all ofthe shares of Common Stock (in addition to the Commitment Shares) being registered for resale under this prospectus that are availablefor sale by us to Tumim in Fixed Purchases and VWAP Purchases under the Purchase Agreement, depending on the market prices of our CommonStock during the applicable Fixed Purchase Valuation Period for each Fixed Purchase and the applicable VWAP Purchase Valuation Periodfor each VWAP Purchase made pursuant to the Purchase Agreement, the actual gross proceeds from the sale of all such shares may be substantiallyless than the $5,000,000 Total Commitment available to us under the Purchase Agreement. If it becomes necessary for us to issue and sellto Tumim under the Purchase Agreement more shares than are being registered for resale under this prospectus in order to receive aggregategross proceeds equal to the Total Commitment of $5,000,000 under the Purchase Agreement, we must first (i) obtain stockholder approvalto issue shares of Common Stock in excess of the Exchange Cap under the Purchase Agreement in accordance with applicable Nasdaq rules,unless the average per share purchase price paid by Tumim for all shares of Common Stock sold under the Purchase Agreement equals or exceedsthe Base Price, in which case the Exchange Cap limitation will not apply under applicable Nasdaq rules, and (ii) file with the SEC oneor more additional registration statements to register under the Securities Act the resale by Tumim of any such additional shares of ourCommon Stock we wish to sell from time to time under the Purchase Agreement, which the SEC must declare effective, in each case beforewe may elect to sell any additional shares of our Common Stock to Tumim under the Purchase Agreement. Any issuance and sale by us underthe Purchase Agreement of a substantial amount of shares of Common Stock in addition to the shares of our Common Stock being registeredfor resale by Tumim under this prospectus could cause additional substantial dilution to our stockholders. The number of shares of ourcommon stock ultimately offered for sale by Tumim is dependent upon the number of shares of Common Stock, if any, we ultimately sell toTumim under the Purchase Agreement.

 

Thefollowing table sets forth the amount of gross proceeds we would receive from Tumim from our sale of shares of Common Stock to Tumimunder the Purchase Agreement at varying purchase prices:

 

Assumed Average
Purchase Price
Per Share
($)
   Number of Registered
Shares to be Issued if Full
Purchase (1)
   Percentage of Outstanding
Shares After Giving Effect
to the Issuance to Tumim
Stone Capital (2)
   Gross Proceeds from the Sale of Shares to Tumim Under the Purchase
Agreement
($)
 
              
$0.50    2,288,585    16.3%   1,144,293 
$0.70    2,288,585    16.3%   1,602,010 
$0.75 (3)    2,288,585    16.3%   1,670,667 
$1.00    2,288,585    16.3%   2,288,585 
$1.20    2,288,585    16.3%   2,746,302 
$1.70    2,288,585    16.3%   3,890,595 
$2.20    2,272,727    16.2%   5,000,000 
$2.70    1,851,852    13.6%   5,000,000 
$3.20    1,562,500    11.7%   5,000,000 
$3.70    1,351,351    10.3%   5,000,000 

 

(1)Although the Purchase Agreement provides that we may sell up to $5,000,000 of our Common Stock to Tumim, we are only registering 2,288,585 shares under this prospectus, which may or may not cover all of the shares we ultimately sell to Tumim under the Purchase Agreement. The number of registered shares to be issued as set forth in this column (i) gives effect to the Exchange Cap (ii) is without regard for the Beneficial Ownership Cap; and (iii) excludes the Commitment Shares.

 

(2)The denominator is based on 11,795,873shares outstanding as of July 26, 2022 adjusted to include the issuance of the number of shares set forth in the adjacent column thatwe would have sold to Tumim, assuming the average purchase price in the first column. The numerator is based on the number of sharesissuable under the Purchase Agreement at the corresponding assumed average purchase price set forth in the first column.

 

(3)The closing sale price of ourCommon Stock on July 25, 2022.

 

31

 

 

SELLINGSTOCKHOLDERS

 

Thisprospectus relates to the possible resale from time to time by Tumim of any or all of the shares of Common Stock that has been or maybe issued by us to under the Purchase Agreement. For additional information regarding the issuance of Common Stock covered by this prospectus,see the section titled “Tumim Stone Capital Transaction” above. We are registering the shares of Common Stock pursuant tothe provisions of the Registration Rights Agreements we entered into with Tumim on June 28, 2022 in order to permit the Selling Stockholderto offer the shares for resale from time to time. Except for the transactions contemplated by the Purchase Agreement and the RegistrationRights Agreement and a prior investment made by an affiliated entity, Tumim has not had any material relationship with us within thepast three years.

 

The table below presents information regardingthe Selling Stockholder and the shares of Common Stock that it may offer from time to time under this prospectus. This table is preparedbased on information supplied to us by the Selling Stockholder, and reflects holdings as of July 26, 2022. The number of shares in thecolumn “Maximum Number of Shares of Common Stock to be Offered Pursuant to this Prospectus” represents all of the shares ofCommon Stock that the Selling Stockholder may offer under this prospectus. The Selling Stockholder may sell some, all or none of its sharesin this Offering. We do not know how long the Selling Stockholder will hold the shares before selling them, and we currently have no agreements,arrangements or understandings with the Selling Stockholder regarding the sale of any of the shares.

 

Beneficial ownership is determined in accordancewith Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes shares of Common Stock with respect to which the SellingStockholder has voting and investment power. The percentage of shares of Common Stock beneficially owned by the Selling Stockholder priorto the Offering shown in the table below is based on an aggregate of 11,795,873 shares of our Common Stock outstanding on July 26, 2022.Because the purchase price of the shares of Common Stock issuable under the Purchase Agreement is determined on each Fixed Purchase Date,with respect to a Fixed Purchase, and on each VWAP Purchase Date, with respect to a VWAP Purchase, the number of shares that may actuallybe sold by the Company under the Purchase Agreement may be fewer than the number of shares being offered by this prospectus. The fourthcolumn assumes the sale of all of the shares offered by the Selling Stockholder pursuant to this prospectus.

 

Name of Selling Stockholder  Number of Shares of
Common Stock Owned
Prior to Offering
   Maximum
Number of
Shares of
Common Stock
to be
Offered
Pursuant to
this Prospectus
   Number of Shares of
Common Stock Owned
After Offering
 
   Number(1)   Percent(2)       Number(3)   Percent(2) 
                     
Tumim Stone Capital LLC(4)   277,778    2.4%   2,288,585    0    0 

 

(1)Consists of the Commitment Shares. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned prior to the Offering all of the shares that Tumim may be required to purchase from us under the Purchase Agreement, because the issuance of such shares to Tumim is solely at our discretion and is subject to a number of conditions contained in the Purchase Agreement, the satisfaction of which are entirely outside of Tumim’s control, including the registration statement that includes this prospectus becoming and remaining effective. Furthermore, the Fixed Purchases and VWAP Purchases of Common Stock are subject to certain agreed upon maximum amount limitations set forth in the Purchase Agreement. Also, the Purchase Agreement prohibits us from issuing and selling any shares of our Common Stock to Tumim to the extent such shares, when aggregated with all other shares of our Common Stock then beneficially owned by Tumim, would cause Tumim’s beneficial ownership of our Common Stock to exceed the 4.99% Beneficial Ownership Cap. The Purchase Agreement also prohibits us from issuing or selling more than 2,288,585 shares of our Common Stock under the Purchase Agreement without obtaining stockholder approval to issue additional shares in accordance with applicable Nasdaq rules, unless the average per share purchase price paid by Tumim for all shares of Common Stock sold under the Purchase Agreement equals or exceeds the Base Price, in which case the Exchange Cap limitation will not apply under applicable Nasdaq rules. Does not include 235,000 shares of Common Stock underlying warrants held by 3i, LP, an affiliate of Tumim (see footnote (4) below), none of which underlying warrant shares are being registered for resale under this prospectus.

 

(2)Applicable percentage ownershipis based on 11,795,873 shares of our Common Stock outstanding as of July 26. 2022 and based on 13,806,680 shares of our Common Stockoutstanding after the Offering.

 

(3)Assumes the sale of all shares being offered pursuant to this prospectus, which includes the Commitment Shares.

 

(4)The business address of Tumim Stone Capital LLC is 140 Broadway, 38th Floor, New York, NY 10005. Tumim Stone Capital LLC’s principal business is that of a private investor. Maier Joshua Tarlow is the manager of 3i Management, LLC, the general partner of 3i, LP, which is the sole member of Tumim Stone Capital, LLC, and has sole voting control and investment discretion over securities beneficially owned directly by Tumim Stone Capital LLC and indirectly by 3i Management, LLC and 3i, LP. 3i Management, LLC is also the manager of Tumim Stone Capital LLC. None of Mr. Tarlow, 3i Management, LLC, 3i, LP or Tumim Stone Capital LLC is a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, or an affiliate or associated person of a FINRA member or independent broker-dealer. The foregoing should not be construed in and of itself as an admission by Mr. Tarlow as to beneficial ownership of the securities beneficially owned directly by Tumim Stone Capital LLC and indirectly by 3i Management, LLC and 3i, LP.

 

32

 

 

PLANOF DISTRIBUTION

 

Theshares of common stock offered by this prospectus are being offered by the Selling Stockholder, Tumim Stone Capital LLC.  The sharesmay be sold or distributed from time to time by the Selling Stockholder directly to one or more purchasers or through brokers, dealers,or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing marketprices, at negotiated prices, or at fixed prices, which may be changed. The sale of the ordinary shares offered by this prospectus couldbe effected in one or more of the following methods:

 

ordinary brokers’ transactions;

 

transactions involving cross or block trades;

 

through brokers, dealers, or underwriters who may act solely as agents;

 

“at the market” into an existing market for the ordinary shares;

 

in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;

 

in privately negotiated transactions; or

 

any combination of the foregoing.

 

Inorder to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensedbrokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for salein the state or an exemption from the state’s registration or qualification requirement is available and complied with.

 

TumimStone Capital is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

 

TumimStone Capital has informed us that it intends to use one or more registered broker-dealers to effectuate all sales, if any, of our commonstock that it has acquired and may in the future acquire from us pursuant to the Purchase Agreement.  Such sales will be made atprices and at terms then prevailing or at prices related to the then current market price.  Each such registered broker-dealer willbe an underwriter within the meaning of Section 2(a)(11) of the Securities Act.  Tumim Stone Capital has informed us that each suchbroker-dealer will receive commissions from Tumim Stone Capital that will not exceed customary brokerage commissions.

 

Brokers,dealers, underwriters or agents participating in the distribution of the shares of our common stock offered by this prospectus may receivecompensation in the form of commissions, discounts, or concessions from the purchasers, for whom the broker-dealers may act as agent,of the shares sold by the Selling Stockholder through this prospectus. The compensation paid to any such particular broker-dealer byany such purchasers of shares of our common stock sold by the Selling Stockholder may be less than or in excess of customary commissions. Neither we nor the Selling Stockholder can presently estimate the amount of compensation that any agent will receive from any purchasersof shares of our common stock sold by the Selling Stockholder.

 

Weknow of no existing arrangements between the Selling Stockholder or any other stockholder, broker, dealer, underwriter or agent relatingto the sale or distribution of the shares of our common stock offered by this prospectus.

 

Wemay from time to time file with the SEC one or more supplements to this prospectus or amendments to the registration statement of whichthis prospectus forms a part to amend, supplement or update information contained in this prospectus, including, if and when requiredunder the Securities Act, to disclose certain information relating to a particular sale of shares offered by this prospectus by the SellingStockholder, including the names of any brokers, dealers, underwriters or agents participating in the distribution of such shares bythe Selling Stockholder, any compensation paid by the Selling Stockholder to any such brokers, dealers, underwriters or agents, and anyother required information.

 

Wewill pay the expenses incident to the registration under the Securities Act of the offer and sale of the shares of our common stock coveredby this prospectus by the Selling Stockholder. As consideration for its irrevocable commitment to purchase our common stock under thePurchase Agreement, we have issued to Tumim 277,778 shares of our common stock as Commitment Shares. We also have agreed to reimburseTumim for the fees and disbursements of its counsel, payable upon execution of the Purchase Agreement, in an amount not to exceed $30,000.

 

33

 

 

Wealso have agreed to indemnify Tumim and certain other persons against certain liabilities in connection with the offering of shares ofour common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contributeamounts required to be paid in respect of such liabilities.  Tumim has agreed to indemnify us against liabilities under the SecuritiesAct that may arise from certain written information furnished to us by Tumim specifically for use in this prospectus or, if such indemnityis unavailable, to contribute amounts required to be paid in respect of such liabilities. Insofar as indemnification for liabilitiesarising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in theopinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.

 

We estimate that the totalexpenses for the offering will be approximately $100,000.

 

TumimStone Capital has represented to us that at no time prior to the date of the Purchase Agreement has Tumim Stone Capital or its agents,representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such termis defined in Rule 200 of Regulation SHO of the Exchange Act) of our common stock or any hedging transaction, which establishes a netshort position with respect to our common stock.  Tumim Stone Capital has agreed that during the term of the Purchase Agreement,neither Tumim Stone Capital, nor any of its agents, representatives or affiliates will enter into or effect, directly or indirectly,any of the foregoing transactions.

 

Wehave advised the Selling Stockholder that it is required to comply with Regulation M promulgated under the Exchange Act. With certainexceptions, Regulation M precludes the Selling Stockholder, any affiliated purchasers, and any broker-dealer or other person who participatesin the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is thesubject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in orderto stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketabilityof the securities offered by this prospectus.

 

Wehave entered into an agreement with Americas Executions, LLC, or Americas Executions, a registered broker-dealer and member of the FinancialIndustry Regulatory Authority, Inc., or FINRA, dated June 28, 2022, pursuant to which Americas Executions agreed to act as the placementagent in connection with the transactions contemplated by the Purchase Agreement with the Investor, or the Placement Agent EngagementAgreement. Pursuant to the Placement Agent Engagement Agreement, we have agreed to pay Americas Executions a placement fee of $50,000,representing 1.0% of Tumim’s $5,000,000 total commitment under the Purchase Agreement, payable in shares of our common stock. Accordingly,upon our execution of the Placement Agent Engagement Agreement, we issued 69,445 shares of our common stock to Americas Executions aspayment of such placement fee to Americas Executions, which shares are not being registered under the registration statement that includesthis prospectus. We have also agreed to provide indemnification and contribution to Americas Executions with respect to certain civilliabilities, including liabilities under the Securities Act.

 

Thisoffering will terminate on the date that all shares of our common stock offered by this prospectus have been sold by the Selling Stockholder.

 

Ourcommon stock is currently listed on The Nasdaq Capital Market under the symbol “WORX”.

 

34

 

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Ourdiscussion and analysis of financial condition and results of operations is incorporated by reference from Part II, Item 7 of the Company’sAnnual Report on Form 10-K as filed with the SEC on May 19, 2021 and from Part II, Item 2 of the Company’s Quarterly Report onForm 10-Q as filed with the SEC on May 17, 2021 (see “Incorporation of Certain Information by Reference”).

 

BUSINESS

 

Thedescription of our business is incorporated by reference from Part I, Item 1 of the Company’s Annual Report on Form 10-K as filedwith the SEC on May 19, 2021 (see “Incorporation of Certain Information by Reference”).

 

DESCRIPTIONOF OUR CAPITAL STOCK

 

Thefollowing description summarizes important terms of our capital stock and our other securities. For a complete description, you shouldrefer to our Certificate of Incorporation and bylaws, forms of which are incorporated by reference to the exhibits to the registrationstatement of which this prospectus is a part, as well as the relevant portions of the Delaware General Corporation Law (“DGCL”).

 

CapitalStock

 

TheCompany has two classes of stock: common and preferred. The Company’s Certificate of Incorporation authorizes the issuance of upto 45,000,000 shares of Common Stock, par value $0.001 per share, and 900,000 shares of preferred stock, par value $0.001 per share.

 

CommonStock

 

As of July 26, 2022, there were 11,795,873 sharesof Common Stock issued and outstanding. Each share of Common Stock entitles the holder thereof to one vote, either in person or by proxy,at a meeting of stockholders. Each share of Preferred Stock entitles the holder thereof the number of votes for which the preferred sharewould convert into as of any specific date in time, either in person or by proxy, at a meeting of stockholders. The holders are not entitledto vote their shares cumulatively. Accordingly, the holders of more than 50% of the issued and outstanding shares of Common Stock canelect all of the directors of the Company.

 

Eachshare of Common Stock has equal and identical rights to every other share for purposes of dividends, liquidation preferences, votingrights and any other attributes of the Company’s Common Stock. No voting trusts or any other arrangement for preferential votingexist among any of the stockholders, and there are no restrictions in the articles of incorporation, or bylaws precluding issuance offurther Common Stock or requiring any liquidation preferences, voting rights or dividend priorities with respect to this class of stock.

 

Allshares of Common Stock are entitled to participate ratably in dividends when and as declared by the Company’s board of directorsout of the funds legally available. Any such dividends may be paid in cash, property or additional shares of Common Stock. The Companyhas not paid any dividends on its shares of Common Stock since its inception and presently anticipates that no dividends on such shareswill be declared in the foreseeable future. Any future dividends will be subject to the discretion of the Company’s board of directorsand will depend upon, among other things, future earnings, the operating and financial condition of the Company, its capital requirements,general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on the Common Stock willbe paid in the future.

 

Holdersof Common Stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Inthe event of the dissolution, whether voluntary or involuntary of the Company, each share of Common Stock is entitled to share ratablyin any assets available for distribution to holders of the equity securities of the Company after satisfaction of all liabilities.

 

PreferredStock

 

As of July 26, 2022, the Company has authorized950,000 shares of preferred stock, with all shares designated as Series A Convertible Preferred Stock, par value $0.001 per share (“SeriesA Preferred”).

 

As of July 26, 2022, there were 39,810 sharesof issued and outstanding of Series A Preferred and no shares issued and outstanding shares of Series B Preferred Stock.

 

35

 

 

OutstandingStock Options and Warrants

 

As of July 26, 2022, there were outstanding and exercisable optionsto acquire a total of 118,388 shares of Common Stock at a weighted-average exercise price of $3.25, and there were outstanding and exercisablewarrants to acquire a total of 1,043,525 shares of our Common Stock at a weighted-average exercise price of $2.57.

 

OutstandingRestricted Stock Units

 

As of July 26, 2022, there were 2,449,091 restricted stock units outstandingthat were issued under our 2016 Stock Option Plan of which 2,020,091 were fully vested.

 

TransferAgent and Registrar

 

Thetransfer agent and registrar for our Common Stock is Transfer Online, Inc. The transfer agent’s address is: 512 SE Salmon St. Portland,OR 97214. Shares of our Common Stock offered hereby will be issued in uncertificated form only, subject to limited circumstances.

 

MarketListing

 

OurCommon Stock is currently listed on Nasdaq under the symbol “WORX”.

 

Disclosureof Commission Position on Indemnification for Securities Act Liabilities

 

Insofaras indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling personspursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policyas expressed in the Securities Act and is, therefore, unenforceable.

 

36

 

 

PROPERTIES

 

Thedescription of our properties is incorporated by reference from Part I, Item 2 of the Company’s Annual Report on Form 10-K as filedwith the SEC on May 13, 2022 (see “Incorporation of Certain Information by Reference”).

 

LEGALPROCEEDINGS

 

Thedescription of our legal proceedings is incorporated by reference from Part II, Item 1 of the Company’s Quarterly Report on Form10-Q as filed with the SEC on May 13, 2022 (see “Incorporation of Certain Information by Reference”).

 

DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Thedescription of directors, executive officers and corporate governance is incorporated by reference from Part III, Item 10 of the Company’sAnnual Report on Form 10-K as filed with the SEC on March 31, 2022 (see “Incorporation of Certain Information by Reference”).

 

EXECUTIVECOMPENSATION

 

Thedescription of our executive compensation is incorporated by reference from Part III, Item 11 of the Company’s Annual Report onForm 10-K as filed with the SEC on March 31, 2022 (see “Incorporation of Certain Information by Reference”).

 

SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATEDSTOCKHOLDER MATTERS

 

Thedescription of our security ownership of beneficial owners and management is incorporated by reference from Part III, Item 12 of theCompany’s Annual Report on Form 10-K as filed with the SEC on March 31, 2022 (see “Incorporation of Certain Information byReference”).

 

CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Thedescription of certain relationships and related transactions and director independence is incorporated by reference from Part III, Item13 of the Company’s Annual Report on Form 10-K as filed with the SEC on March 31, 2022 (see “Incorporation of Certain Informationby Reference”).

 

LEGALMATTERS

 

Thevalidity of the securities offered by this prospectus will be passed upon by Nason Yeager Gerson Harris & Fumero, P.A., Palm BeachGardens, Florida.

 

EXPERTS

 

Theconsolidated financial statements of SCWorx, Inc. as of December 31, 2021 and 2020, and for each of the years then ended, have been incorporatedby reference from our Annual Report on Form 10-K as filed with the SEC on March 31, 2022, in reliance upon the report of BF Borgers CPAPC, an independent registered public accounting firm. Such report is incorporated by reference upon the authority of said firm as anexpert in accounting and auditing.

 

37

 

 

WHEREYOU CAN FIND MORE INFORMATION

 

Wefile annual, quarterly and other reports, proxy statements and other information with the SEC. Our Annual Report on Form 10-K, QuarterlyReports on Form 10-Q, and Current Reports on Form 8-K, including any amendments to those reports, and other information that we filewith or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act can be accessed free of charge through the Internet.The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers thatfile electronically with the SEC at http://www.sec.gov. You may access the registrationstatement of which this prospectus is a part at the SEC’s Internet site.

 

Wemake available through our website, free of charge, copies of our SEC filings as soon as reasonably practicable after we electronicallyfile or furnish them to the SEC on our website, http://www.scworx.com. We have not incorporatedby reference into this prospectus the information on our website, and you should not consider it to be a part of this prospectus.

 

Thisprospectus forms part of a registration statement we have filed with the SEC relating to, among other things, the Common Stock. As permittedby SEC rules, this prospectus does not contain all the information we have included in the registration statement and the accompanyingexhibits and schedules we have filed with the SEC. You may refer to the registration statement, exhibits and schedules for more informationabout us and the Common Stock. The statements this prospectus make pertaining to the content of any contract, agreement or other documentthat is an exhibit to the registration statement necessarily are summaries of their material provisions, and we qualify them in theirentirety by reference to those exhibits for complete statements of their provisions. The registration statement, exhibits and schedulesare available through the SEC’s website.

 

INCORPORATIONOF CERTAIN INFORMATION BY REFERENCE

 

TheSEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers thatfile electronically with the SEC at www.sec.gov. The SEC allows us to “incorporate by reference” the informationin certain documents that we file with it, which means that we can disclose important information to you by referring you to documentspreviously filed with the SEC. The information incorporated by reference is considered to be part of this prospectus, and the informationthat we subsequently file with the SEC will automatically update and supersede this information. This prospectus incorporates by referencethe Company’s documents listed below and all documents subsequently filed by us with the SEC pursuant to Sections 13(a), 13(c),14 or 15(d) of the Exchange Act prior to the termination of the Offering of the shares under this prospectus:

 

Annual Report on Form 10-K for the fiscal years ended December 31, 2021 filed with the SEC on March 31, 2022

 

Quarterly Report on Form 10-Q filed with the SEC on May 13, 2022

 

Our Current Reports on Form 8-K filed with the SEC on April 8, 2022June 8, 2022, June 13, 2022, July 5, 2022 and July 6, 2022.

 

Tothe extent that any information contained in any Current Report on Form 8-K, or any exhibit thereto, was furnished, rather than filed,with the SEC, that information or exhibit is specifically not incorporated by reference in this document.

 

Youmay obtain copies of these documents free of charge on our website, http://www.scworx.com,as soon as reasonably practicable after they have been filed with the SEC and through the SEC’s website, www.sec.gov.You may also obtain such documents by submitting a written request either to the Company at 590 Madison Ave, 21st Floor, NewYork, NY 10022 ir@gscworx.com, or an oral request by calling the Company at (844) 472,9679.The Company will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of thereports that have been incorporated by reference in the prospectus contained in the registration statement but not delivered with theprospectus upon oral or written request, at no cost to the requester, by contacting the Company as noted above.

 

38

 

 

PROSPECTUS

 

SCWorxCorp.

 

Offeringof 2,288,585 shares

 

                 ,2022

 

 

 

 

 

 

PARTII

 

INFORMATIONNOT REQUIRED IN THE PROSPECTUS

 

Item13. Other Expenses of Issuance and Distribution.

 

Thefollowing table sets forth all expenses to be paid by the Company, other than underwriting discounts and commissions, upon the completionof this Offering. All amounts shown are estimates except for the SEC filing fee.

 

   Approximate
Amount
 
SEC registration fee  $169.72 
Legal fees and expenses   37,500 
Accounting fees and expenses   5,000 
Transfer agent and registrar fees   5,000 
Miscellaneous   1,830.28 
      
Total  $49,500 

 

Item14. Indemnification of Directors and Officers.

 

Section102 of the General Corporation Law of the State of Delaware permits a corporation to eliminate the personal liability of directors ofa corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except for breachesof the director’s duty of loyalty to the corporation or its stockholders, acts or omissions not in good faith or which involveintentional misconduct or a knowing violation of a law, authorizations of the payments of a dividend or approval of a stock repurchaseor redemption in violation of Delaware corporate law or for any transactions from which the director derived an improper personal benefit.

 

Section145 of the General Corporation Law of the State of Delaware provides that a corporation has the power to indemnify a director, officer,employee, or agent of the corporation and certain other persons serving at the request of the corporation in related capacities againstexpenses (including attorney’s fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by theperson in connection with a threatened, pending, or completed action, suit or proceeding to which he or she is or is threatened to bemade a party by reason of such position, if such person acted in good faith and in a manner he or she reasonably believed to be in ornot opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe hisor her conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, indemnification is limitedto expenses (including attorney’s fees) actually and reasonably incurred by the person in connection with defense or settlementof such action or suit and no indemnification shall be made with respect to any claim, issue, or matter as to which such person shallhave been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating courtdetermines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly andreasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. In addition, tothe extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense ofany action, suit, or proceeding described above (or claim, issue, or matter therein), such person shall be indemnified against expenses(including attorney’s fees) actually and reasonably incurred by such person in connection therewith. Expenses (including attorney’sfees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit, or proceedingmay be advanced by the corporation upon receipt of an undertaking by such person to repay such amount if it is ultimately determinedthat such person is not entitled to indemnification by the corporation under Section 145 of the General Corporation Law of the Stateof Delaware.

 

OurCertificate of Incorporation provides for the indemnification of our directors to the fullest extent permissible under DGCL. Our Certificateof Incorporation provides for the indemnification of our directors and officers to the maximum extent permitted by the DGCL. In addition,we maintain insurance policies insuring our directors and officers against certain liabilities that they may incur in their capacityas officers and directors of the Company.

 

Seealso the undertakings set out in response to Item 17 herein.

 

II-1

 

 

Item15. Recent Sales of Unregistered Securities.

 

Asummary of all securities that we have sold in the last year, since July 1, 2020 without registration under the Securities Act of 1933(the “Securities Act”), is incorporated by reference from Part II, Item 5 of the Company’s Annual Report on Form 10-Kas filed with the SEC on March 31, 2022 and Part II, Items 3 and 5 of the Company’s Quarterly Report on Form 10-Q as filed withthe SEC on May 13, 2022 (see “Incorporation of Certain Information by Reference”).

 

Item16. Exhibits and Financial Statement Schedules.

 

(a)See the Exhibit Index on the page immediately preceding the signature page hereto for a list of exhibits filed as part of this registrationstatement on Form S-1, which Exhibit Index is incorporated herein by reference.

 

(b)No financial statement schedules are provided because the information called for is not required or is shown either in the financialstatements or the notes thereto.

 

Item17. Undertakings.

 

Theundersigned registrant hereby undertakes:

 

Theundersigned registrant hereby undertakes:

 

(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

(i)To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

 

(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effectiveamendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registrationstatement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securitiesoffered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering rangemay be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate,the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculationof Registration Fee” table in the effective registration statement; and

 

(iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement orany material change to such information in the registration statement.; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii)above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reportsfiled with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the SecuritiesExchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filedpursuant to Rule 424(b) that is part of the registration statement.

 

II-2

 

 

(2)That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to bea new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemedto be the initial bona fide offering thereof.

 

(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at thetermination of the offering.

 

(4)That, for the purpose of determining liability under the Securities Act to any purchaser:

 

(A)Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of thedate the filed prospectus was deemed part of and included in the registration statement; and

 

(B)Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance onRule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information requiredby Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier ofthe date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offeringdescribed in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter,such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statementto which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offeringthereof. Providedhowever, that no statement made in a registration statement or prospectus that is part ofthe registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement orprospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effectivedate, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statementor made in any such document immediately prior to such effective date.

 

(5)That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuantto Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuantto Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registrationstatement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.

 

(6)Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling personsof the registrant pursuant to any charter provision, by law or otherwise, the registrant has been advised that in the opinion of theSecurities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore,unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expensesincurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdictionthe question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by thefinal adjudication of such issue.

 

II-3

 

 

EXHIBITINDEX

 

Thefollowing documents are being filed with the Commission as exhibits to this registration statement on Form S-1.

 

        Filed/Furnished   Incorporated by Reference
Exhibit No.   Description   Herewith   Form   Exhibit No.   Filing Date
                     
1.01   Stipulation of Settlement with Exhibits       8-K   1.01   4/8/22
3.1   Certificate of Incorporation, as amended February 1, 2019       10-K   3.1   4/1/19
3.2   Amended and Restated By-laws       S-1   3.3   8/16/16
4.1   Second Amended and Restated 2016 Equity Incentive Plan       DEF 14A   Annex A   1/17/19
4.2   Warrant Agreement by and between SCWorx Corp and 3i, LP dated September 17, 2021       8-K   4.1   9/23/21
5.1   Opinion of Nason, Yeager, Harris & Fumero, P.A.   (1)            
10.1   USA Procurement Settlement Agreement dated May 26, 2020       10-K   10.4   5/19/21
10.2   Equity Financing and Warrant Agreement dated December 31, 2020       10-K   10.2   5/19/21
10.3   Equity Financing and Warrant Agreement dated January 6, 2021       10-K   10.3   5/19/21
10.4   Consulting Agreement dated January 19, 2021 with Marc Schessel       10-K   10.1   5/19/21
10.5   USA Procurement Settlement Agreement dated March 12, 2021       10-K   10.5   5/19/21
10.6   Securities Purchase Agreement by and between SCWorx, Corp and 3i, LP dated September 17, 2021       8-K   10.1   9/23/21
10.7   Registration Rights Agreement by and between SCWorx, Corp and 3i, LP dated September 17, 2021       8-K   10.2   9/23/21
10.8   Class Action Settlement Agreement dated December 20, 2021       10-K   10.7   3/31/22
10.9   Derivative Action Settlement Agreement December 24, 2021       10-K   10.8   3/31/22
10.10   Registration Rights Agreement by and between SCWorx, Inc. and Tumim Stone Capital LLC, dated June 28, 2022       8-K   4.1   7/5/22
10.11   Common Stock Purchase Agreement by and between SCWorx, Corp and Tumim Stone Capital LLC, dated June 28, 2022       8-K   10.1   7/5/22
16.1   Sadler Gibb letter addressed to the Securities and Exchange Commission       8-K   16.1   1/28/22
23.1   Consent of BF Borgers CPA PC   (1)            
23.2   Consent of Nason, Yeager, Gerson, Harris & Fumero, P.A.   (2)            

101.INS   Inline XBRL Instance Document.
101.SCH   Inline XBRL Taxonomy Extension Schema Document.
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
107   Exhibit filing fees

 

(1)Filed herein
(2)Contained in Exhibit 5.1

 

II-4

 

 

SIGNATURES

 

Pursuant to the requirements of the SecuritiesAct of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto dulyauthorized, in New York, State of New York, on July 27, 2022.

 

SCWORX CORP.  
     
By: /s/ Timothy A. Hannibal  
  Timothy A Hannibal  
  President and Chief Executive Officer  

 

Pursuantto the requirement of the Securities Exchange Act of 1934, this registration statement has been signed below by the following personson behalf of the Registrant and in the capacities and on the dates indicated:

 

July 27, 2022

By: /s/ Timothy A. Hannibal
    Timothy A Hannibal
    President and Chief Executive Officer
     

July 27, 2022

By: /s/ Chris Kohler
    Chris Kohler
    Chief Financial Officer
     

July 27, 2022

By: /s/Alton Irby
    Alton Irby
    Chairman
     

July 27, 2022

By: /s/John Ferrara
    John Ferraraon
    Director
     

July 27, 2022

By: /s/Steve Horowitz
    Steve Horowitz
    Director
     

July 27, 2022

By: /s/Steven Wallitt
    Steven Wallitt
    Director

 

 

II-5

 
DEfalse0001674227 0001674227 2022-01-01 2022-03-31
Stock View