10-Q: SCWorx Reports Revenue Growth Amidst Nasdaq Delisting

SCWorx Corp. filed its Form 10-Q for the quarter ended June 30, 2026, reporting increased revenue and improved gross profit, but also detailing its delisting from the Nasdaq Capital Market and ongoing net losses.

Summary

• SCWorx Corp. reported revenue of $706,049 for the three months ended June 30, 2026, an increase from $682,632 in the same period of 2025. For the six months ended June 30, 2026, revenue was $1,450,948, up from $1,402,931 in the prior year.
• Gross profit for the three months increased by approximately 83% to $330,423, and for the six months, it increased by approximately 122% to $704,532, driven by a decrease in cost of revenues.
• Operating expenses decreased slightly for the three-month period but increased for the six-month period, primarily due to higher salaries, wages, and employee benefits.
• The company incurred a net loss of $120,954 for the three months ended June 30, 2026, compared to a net loss of $1,906,085 in the prior year. For the six months, the net loss was $294,721, a significant improvement from $2,382,388 in the prior year.
• SCWorx Corp. was notified by Nasdaq on April 7, 2026, that its securities would be delisted from the Capital Market due to failure to meet the minimum bid price requirement. Trading was suspended on April 14, 2026.
• The company is working to regain compliance with Nasdaq's bid price rule through a 1-for-12 reverse stock split, which was approved by shareholders on July 22, 2026, and effected on August 3, 2026. The company is currently in the 20-day compliance period.
• Cash used in operating activities was $258,442 for the six months ended June 30, 2026, and cash provided by financing activities was $15,502, primarily from warrant exercises.
• The company's disclosure controls and procedures were found to be not effective due to deficiencies in design and lack of segregation of duties.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as cautiously negative due to continued net losses and the Nasdaq delisting event, despite revenue growth and reduced cost of revenue.

Positives

• Revenue increased by $23,417 to $706,049 for the three months ended June 30, 2026, compared to the same period in 2025, attributed to contract modifications and new customer acquisitions.
• Cost of revenues decreased significantly by $126,589 to $375,626 for the three months ended June 30, 2026, due to reduced labor and cloud hosting costs.
• Gross profit for the three months ended June 30, 2026, increased by approximately 83% to $330,423, driven by cost reductions in cloud hosting and contractor expenses.
• Net loss for the three months ended June 30, 2026, was $120,954, a substantial improvement from $1,906,085 in the prior year.
• Net loss for the six months ended June 30, 2026, was $294,721, a significant reduction from $2,382,388 in the prior year.
• The company successfully obtained shareholder approval for a reverse stock split to regain Nasdaq compliance.
• The company has implemented a 1-for-12 reverse stock split effective August 4, 2026, to meet Nasdaq's minimum bid price requirement.

Negatives

• The company continues to incur net losses, with a net loss of $120,954 for the three months and $294,721 for the six months ended June 30, 2026.
• SCWorx Corp. was delisted from the Nasdaq Capital Market on April 14, 2026, due to failure to maintain a minimum bid price of $1 per share.
• Disclosure controls and procedures were found to be not effective due to deficiencies in design and lack of segregation of duties.
• Operating expenses increased by $16,496 to $961,300 for the six months ended June 30, 2026, compared to the same period in 2025, mainly due to increases in salaries, wages, and stock-based compensation.
• The company has $5,842,433 in goodwill, which was impaired by $2,524,034 in 2023, indicating potential past overvaluation of acquisitions.
• The company has a significant accumulated deficit of $35,714,896 as of June 30, 2026.

Risks

• The company's ability to continue as a going concern is dependent on its ability to obtain additional financing.
• The company faces risks related to resolving pending litigation on favorable terms.
• There is a risk of increased operating expenses, particularly in marketing and advertising.
• The company is dependent on third-party subcontractors for certain work.
• Changes in laws, regulations, or industry standards could adversely affect the company's business.
• The company must adapt to new technologies and adjust fixed costs to meet evolving customer demands.
• General market, economic, and political conditions could impact the company's results.

Future Outlook

The company expects operating expenses to remain relatively flat for the rest of 2026, with the exception of marketing and advertising. The company's ability to continue as a going concern is dependent on its ability to obtain additional financing.

Management Comments

• Management believes that the results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for future quarters or the full year.
• Management has concluded that disclosure controls and procedures were not effective as of June 30, 2026, due to deficiencies in the design of internal controls and lack of segregation of duties.

Industry Context

StockSavvy.ai notes that SCWorx operates in the healthcare IT sector, focusing on data normalization and interoperability. This sector is characterized by increasing demand for data management solutions due to electronic health records and value-based care initiatives. However, the company's delisting from Nasdaq and continued net losses suggest significant operational or financial challenges that may hinder its ability to capitalize on these industry trends.

Comparison to Industry Standards

• The company's revenue growth of approximately 3.4% for the quarter is modest compared to many high-growth SaaS companies in the healthcare IT sector, which often target much higher growth rates.
• The significant reduction in cost of revenue and improvement in gross profit margin are positive operational developments, but the overall net loss indicates that the company is not yet profitable.
• The delisting from Nasdaq is a significant negative indicator, suggesting potential issues with market perception, financial stability, or compliance that are not typical for companies in this sector aiming for growth and market penetration.

Corporate Governance

Legal Proceedings

• The company does not currently have any pending or threatened litigation.

Related Party Transactions

• As of June 30, 2026, and December 31, 2025, the company had a payable of $149,838 due to an officer for contract work performed prior to becoming an officer.

Stakeholder Impact

• Shareholders are impacted by the delisting from Nasdaq, which may reduce liquidity and investor confidence.
• The ongoing net losses and need for additional financing could impact future shareholder value.
• The ineffectiveness of disclosure controls could lead to less reliable financial information for investors and other stakeholders.

Next Steps

• Demonstrate compliance with Nasdaq's minimum bid price rule by evidencing a closing bid price at or above $1.00 per share for a minimum of 20 consecutive trading days.
• Continue efforts to obtain additional financing to fund its business plan and ensure going concern.
• Address deficiencies in the design of internal controls and lack of segregation of duties to improve disclosure controls and procedures.

Key Dates

Recommendation

The company's delisting from Nasdaq, continued net losses, and ineffective disclosure controls present significant risks. While revenue is growing and cost of revenue is improving, these positives are overshadowed by the severe financial and operational challenges, making it a high-risk investment.

Keywords

healthcare IT, data normalization, interoperability, SaaS, big data analytics, healthcare providers, software solutions, revenue growth