Note 9. Subsequent Events

We have evaluated all events that occurred after the balance sheet date through the date when our financial statements were issued to determine if they must be reported. Management has determined that other than those disclosed below, there were no additional reportable subsequent events to be disclosed.

Reverse Stock Split

On October 6, 2023, following stockholder approval at the Company’s annual meeting, the Company amended its certificate of incorporation to implement a 1 for 15 reverse split of its common stock. The effect of the reverse stock split was to combine every 15 shares of outstanding common stock into one share of common stock. The reverse stock split was effective at the opening of the trading day on October 11, 2023.

Entry into material agreement

As previously disclosed, on October 20, 2023, the Company entered into a letter of intent to acquire American Energy Partners, Inc. (“American Environmental”) (OTC: AEPT).

The letter of intent sets forth the proposed terms and conditions pursuant to which the Company and American Environmental intend to effect a business combination, as a result of which American Environmental and the Company’s healthcare data management business will each be conducted through wholly-owned subsidiaries of the Company (the “Proposed Transaction”).

The Company anticipates that the Proposed Transaction will be structured as a share-for-share exchange, with SCWorx shareholders retaining 17% and American Environmental receiving 83% of the combined Company, after giving effect to a $6 million capital raise by American Environmental, which is a condition to completion of the Proposed Transaction.

The Proposed Transaction has been approved by the Boards of Directors of both SCWorx and American Environmental and is expected to close in the first quarter of CY 2024. The Transaction will be considered a “reverse merger” because the shareholders of American Environmental will own more than a majority of the outstanding common stock of the Company following completion of the Proposed Transaction. As such, the Proposed Transaction is subject to NASDAQ approving a listing application based on initial inclusion standards. In addition, the closing of the Proposed Transaction is subject to satisfaction of the following conditions: (i) satisfactory completion of due diligence review by both parties, (ii) the negotiation, execution and delivery of definitive agreements, (iii) American Environmental raising $6 Million of equity, concurrently with the closing, (iv) satisfactory completion of an audit of American Environmental’s financial statements, (v) approval by both SCWorx and American Environmental shareholders, as well as other customary closing conditions.

There can be no assurance that the Proposed Transaction will be completed as currently contemplated, or at all.

American Environmental is an environmental services company headquartered in Pennsylvania. Effective October 30, 2023, American Energy Partners, Inc.’s name will be changed to “American Environmental Partners, Inc.”, subject to regulatory approval.