Note 6. Commitments and Contingencies

In conducting its business, the Company may become involved in legal proceedings. The Company will accrue a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

CorProminence d/b/a Core IR v. SCWorx

AAA Arbitration Case 01-22-0001-5709

As previously disclosed in the Company’s periodic reports filed with the SEC, on April 25, 2022, the Company received a Demand for Arbitration along with a Statement of Claim filed by Core IR with the American Arbitration Association seeking damages in the amount of approximately $190,000 arising out of a marketing and consulting agreement. The Company filed its answer, affirmative defenses and counterclaims on May 16, 2022. By order of the arbitrator dated November 1, 2022, Core IR received permission to amend its Statement of Claim to increase its request for damages to $257,546. The Company received the final decision of the Arbitrator on October 16, 2023, awarding Core IR $461,856 including unpaid compensation, indemnification for legal fees and costs, prevailing party legal fees and interest (the “Award”). Core IR has since obtained a judgement in the amount of approximately $502,000 (including interest) (“Judgement”). The Company and Core IR entered into a settlement agreement dated July 12, 2024 under which the Company agreed to issue Core IR shares of its common stock with a value of $502,000 (determined based on sales proceeds realized by Core IR), in full and complete satisfaction of the Judgement. On July, 18, 2024, the Company issued 159,776 shares of its common stock in the first tranche of payments under this agreement. On March 14, 2025, the Company issued an additional 191,250 shares of its common stock under this agreement. The remaining balances of $135,496 and $283,906 owed under the settlement agreement is included accounts payable and accrued liabilities in the Company’s condensed consolidated balance sheets at March 31, 2025 and December 31, 2024, respectively.

Contract Commitments

On February 5, 2024, the Company entered into a 120 day agreement with a registered broker in which it agreed to pay a 6% commission to the broker for any capital raised from parties introduced by the broker. Following the expiration of the first 120 days, the Company remains obligated to pay the commission of all capital or debt proceeds received from parties introduced by the broker during the original term of the agreement for a period of time. These obligations currently expire on or around July 17, 2025.

Loan Commitments

Between July 15, 2024 and January 17, 2025, the Company issued an aggregate $2,655,000 in senior secured convertible notes. Under these notes, the Company has pledged all assets of the Company as collateral. See Note 4. Debt for further details.