Note 9. Stockholders’ Equity

Authorized Shares

The Company has 45,000,000 Common shares authorized and 5,000,000 preferred shares, of which 900,000 have been designated Series A convertible preferred shares and have been authorized with a par value of $0.001 per share.

On October 6, 2023, following stockholder approval at the Company’s annual meeting, the Company amended its certificate of incorporation to implement a 1 for 15 reverse split of its common stock. The effect of the reverse stock split was to combine every 15 shares of outstanding common stock into one share of common stock. The reverse stock split was effective at the opening of the trading day on October 11, 2023. The effects of the reverse stock split have been reflected in this Annual report on form 10/K for all periods presented.

Issuance of Shares for Vested Restricted Stock Units

March 27, 2024, the Company issued 1,667 shares of common stock to a holder of fully vested restricted stock units.

Issuance of Shares as Settlement of Accounts Payable

Between February 6, 2024 and July 11, 2024, the Company issued an aggregate 130,039 shares of common stock in full settlement of $239,815 of accounts payable. The shares had fair values ranging from $1.20 to $2.65 per share.

On October 24, 2024, the Company issued 27,600 shares of common stock in full settlement of $32,016 of accounts payable. The shares had a fair value of $1.16 per share.

Issuance of Shares for Legal Settlements

On May 30, 2024, the Company issued 37,500 shares of common stock valued at $87,600 or $2.34 per share to fulfill its obligation under a previous legal settlement. See Note 8. Commitments and Contingencies for further information.

On July 15, 2024, the Company issued 38,052 shares of common stock valued at $53,653 or $1.41 per share to settle a potential legal claim.

On July 18, 2024, the Company issued 159,776 shares of common stock valued at $218,094 or $1.36 per share as partial fulfillment of its obligation under a previous legal settlement. See Note 8. Commitments and Contingencies for further information.

Issuance of Shares and Warrants for Stock Purchase Agreements

Between November 18, 2024 and November 19, 2024, SCWorx Corp. entered into a Securities Purchase Agreement (“SPA”) with certain accredited investors (the “Investors”), and, pursuant to the SPA, sold to the Investors an aggregate 232,558 shares of its common stock and warrants to acquire up to an aggregate 232,558 additional shares of the Company’s common stock for gross proceeds of $200,000. The exercise price of the warrants is $0.86 per share, subject to certain adjustments.

Warrants issued in conjunction with loans payable

On July 15, 2024, the Company issued warrants to purchase an aggregate 4,887,118 shares of the Company’s common stock at exercise prices ranging from $1.43 to $1.573 per share in conjunction with a convertible note issuance, see Note 4. Loans Payable. The warrants were valued at $6,163,572 using the Black-Scholes pricing model.  The Company has recognized $973,200 of this value as a discount to the associated notes.

The Company has classified the warrants as having Level 2 inputs, and has used the Black-Scholes option-pricing model to value the warrants.

The fair values at the commitment date for the warrants were based upon the following management assumptions as of the date of issuance:

Stock Incentive Plan

The number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the year ended December 31, 2024 are:

The number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the year ended December 31, 2023 are:

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

The Company’s outstanding warrants at December 31, 2024 are as follows:

As of December 31, 2024 and 2023, there was no unrecognized expense for unvested stock options and restricted stock awards.

Stock-based compensation expense for the years ended December 31, 2024 and 2023 was as follows:

Stock-based compensation expense categorized by the equity components for the years ended December 31, 2024 and 2023 is as follows:

Stock compensation is included on the consolidated statements of operations.