WORX 10-K & 10-Q changes, risk factors and insider trading

There iscould substantialbe doubt about our ability to to continue as a going concern.

As of December 31, 2024, we had only limited cash on hand, a working capital deficit of $1,333,171 and accumulated deficit of $30,976,066. During the year ended December 31, 2024, we had a net loss of $1,136,225 and used $1,084,292 of cash in operations. We have historically incurred operating losses and may continue to incur operating losses for the foreseeable future. We believe that these conditions raise substantial doubt about our ability to continue as a going concern. This may hinder our ability to obtain financing or may force us to obtain financing on less favorable terms than would otherwise be available. If we are unable to develop sufficient revenues and additional customers for our products and services, we may not generate enough revenue to sustain our business, and we may fail, in which case our stockholders would suffer a total loss of their investment. There can be no assurance that we will be able to continue as a going concern.

We derive a significant portion of our revenue from a fewsmall number of customers and the loss of one of these customers, or a reduction in their demand for our services, could adversely affect our business, financial condition, results of operations and prospects.

Sales of substantial amounts of shares of our common stock, or the perception that these sales could occur, would likelycould adversely affect the market price of our common stock stock and could impair our future ability to raise capital through common stock offerings.

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

Please refer to Item 3. Legal Proceedings of this Annual Report on Form 10-K for a detailed description of the pending legal actions and investigations. As of December 31, 2025, the Company has no actual, pending or threatened litigation.

There has been limited trading in our common stock, and there can be no assurance that an active trading market in our common stock will either develop or be maintained. Our common stock has experienced, and is likely to experience in the future, significant price 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 the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to enter the market periodically in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock will be stable or that our share price will appreciate over time.

Basis of Presentation and Consolidation

Financial instruments that potentially subject our company to significant concentrations of credit risk consist principally of cash,cash and accounts receivablereceivable. and warrants. We believe that any concentration of credit risk in its accounts receivable is substantially mitigated by our evaluation process, relatively short collection terms and the high level of credit worthiness of its customers. We perform ongoing internal credit evaluations of its customers’ financial condition, obtain deposits and limit the amount of credit extended when deemed necessary but generally require no collateral.

Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current industry trends, changes in customer payment terms, and specific customer situations. The Company’s normal collection cycle ranges between thirty and 60 days. Estimated uncollectible amounts are charged to earnings and a credit to a valuation allowance. Balances which remain outstanding after reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable The Company recorded an allowanceallowances for credit losses of $55,200 and $20,000 as of December 31, 2024. The Company has assessed all receivables are collectable2025 and did not record an allowance for credit losses as of December 31, 2023.2024, respectively.

As of December 31, 2024,2025, we had $354,083$158,750 of remaining performance obligations recorded as deferred revenue. We expect to recognize sales relating to these existing performance obligations ofthroughout during 2025.2026.

Costs to fulfill a contract typically include costs related to satisfying performance obligations as well as general and administrative costs that are not explicitly chargeable to customer contracts. These expenses are recognized and expensed when incurred in accordance with Accounting Standard Codification (“ASC”) 340-40.340-40 “Components, Costs & Considerations”.

Revenue for the year ended December 31, 20242025 was $2,989,599,$2,877,629, compared to $3,804,943$2,989,599 in revenue for the year ended December 31, 2023.2024. This decrease was primarily due to the expiration and non-renewal of certain customer contracts partially offset by new customer contracts.

Cost of revenues for the year ended December 31, 20242025 was $2,243,614,$1,957,923, compared to $2,535,865$2,243,614 for the year ended December 31, 2023.2024. The $292,251$285,691 decrease is primarily related to a decrease in labor costs duringas thewell currentas year.decreases in our cloud hosting costs. Overall gross profit for the year ended December 31, 20242025 decreasedincreased by approximately 41% 23% from the prior year due to non-renewalsreductions in our costs of contracts outpacing cost reductions.revenues.

InAs orderof year-end, we are experiencing negative cash flows from operations. However, we believe cash on hand to remedybe thissufficient liquidity deficiencyto fund our operations and fund the future growthimplementation of our business,business we entered into a securities purchase agreement on January 17, 2025 for gross proceeds of $1,500,000.plan. We intend to utilize these funds to pursue growth through the expansion of our sales force, product offering and project capabilities. However, there can be no guarantee of success, and any shortfall may impact our ability to raise additional funds if needed.

Our operations through December 31, 2024 have resulted in negative cash flows from operations of $1,084,292. We intend to use theour additionalcurrent cash capital raised during January 2025reserves to generate additional revenue through the acquisition of new customers, and believe we may begin to generate positive operating cash flows by the end of 2025.2026. However, there is no assurance we will be able to increase our revenue sufficiently so as to generate positive operating cash flows within this time frame.

On April 7,July 28, 2026, following stockholder approval at the Company’s annual meeting, the Company amended its certificate of incorporation to implement a 1 for 15 12 reverse split of its common stock. The effect of the reverse stock split was to combine every 1512 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 AprilAugust 10, 4, 2026. The effects of the reverse stock split have been reflected in this Quarterly Report on Form 10-Q for all periods presented.

Results of Operations – Three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025

Our operating results for the three month periods ended MarchJune 31,30, 2026 and 2025 are summarized as follows:

Revenue for the three months ended MarchJune 31,30, 2026 was $744,899$706,049 as compared to $720,299$682,632 for the three months ended MarchJune 31,30, 2025. This increase was primarily due to the modification of certain customer contracts as well as new customer contracts during the current year.

Cost of revenues were $370,790 $375,626 for the three months ended MarchJune 31,30, 2026 compared to $583,436$502,215 for the same period in 2025. The decrease is primarily related to a decrease in labor costs as well as decreases in our cloud hosting costs. Overall gross profit for the yearthree months ended December 31,June 202530, 2026 increased by approximately 173%83% from the same period in the prior year due in part to reductions in our cloud hosting costs of approximately $24,000 $7,000 and contractor expenses of approximately $180,000.$133,000, partially offset by an increase in salaries and wages of approximately $13,000.

Operating expenses increased $39,063decreased $22,567 to $509,923$451,377 for the three months ended MarchJune 31,30, 2026, as compared to $470,860$473,944 in the same period of 2025. The increasedecrease is primarily attributable to increasesdecreases in salaries and wages of approximately $56,000$16,000 and nonbad cash stock compensationdebt expense of $12,000,$11,000 partially offset by decreases increases in Legallegal and professional fees of $46,000.$13,000. We expect operating expenses to remain relatively flat during the rest of 2026 with the exception of marketing and advertising.

We had other expenses of $37,953$1,612,558 during the three months ended June 30, 2025 comprised of non-cash interest expense, amortization of debt discounts, and $142,306a non-cash loss on legal settlement. We did not have other expenses during the three months ended MarchJune 31,30, 2026 and 2025, respectively, comprised of non-cash interest expense and amortization of debt discounts. The decrease was primarily due to a reduction in the balance of existing convertible notes as well as a reduction in amortization of note discounts during the current year period.2026.

For the three months ended June March 31,30, 2026, we incurred a net loss of $173,767$120,954 compared to a net loss of $476,303$1,906,085 for the same period in 2025 due to the factors detailed above.

Cash used in operating activities was approximately $253,000$258,000 for the threesix months ended MarchJune 31,30, 2026, mainly related to the net loss of approximately $174,000, increases of $1,000 in accounts receivable,$295,000 and $117,000a decrease in prepaid expenses and other assets, decreasesassets of $7,000 in accounts payable and accrued liabilities and $1,000 in deferred revenue,$108,000, partially offset by amortization of discounts $34,000, depreciation of $1,000 and$2,000, non-cash stock based compensation of $12,000.$16,000, a decrease in accounts receivable of $52,000, and increases in deferred revenue of $39,000 and accounts payable and accrued liabilities of $1,000.

Cash used in operating activities was approximately $405,000$1,056,000 for the threesix months ended MarchJune 31,30, 2025, mainly related to the net loss of approximately $476,000,$2,382,000, a $140,000$75,000 increase in accounts receivable, a $9,000 decrease in accounts payable and accrued liabilities, a $21,000$135,000 decrease in deferred revenue and a $43,000 $27,000 increase in prepaid expenses, partially offset by amortization of discounts on debt agreements of $79,000,$1,458,000 credit loss expense expense of $24,000$35,000 and aloss decreaseon inshares accountsissued receivablefor legal settlement of $174,000.$78,000.

Net cash used in investment activities was approximately $65,000$138,000 for the threesix months ended MarchJune 31,30, 2026 due to the Company’s capitalization of internal development costs related to new software assets.

The Company did not have any investing activities during the threesix months ended MarchJune 31,30, 2025.2025

Cash provided by financing activities was approximately $15,000 for the threesix months ended MarchJune 31,30, 2026, consisting of proceeds from warrant exercises.

Cash provided by financing activities was $1,370,383approximately $1,290,000 for the threesix months ended MarchJune 31,30, 2025, consisting of proceeds loans payable of $1,385,000 partially partially offset by repayments of loans payable of approximately $15,000.$27,000 and repayments of shareholder advance of $68,000.

On October 8, 2025, the Company received written notification from the Listing Qualifications Department of Nasdaq, granting the Company’s request for a 180-day extension to regain compliance with the Bid Price Rule. The Company now hashad until April 6, 2026 to meet the requirement.

On April 7, 2026, Nasdaq notified the Company that, because it failed to regain compliance with Nasdaq’s minimum bid price requirement of $1 per share pursuant to Nasdaq Rule 5550(a)(2), its securities will be delisted from the Capital Market. Consequently, trading of the Company’s common stock was suspended at the opening of business on April 14, 2026, and a Form 25-NSE was filed with the Securities and Exchange Commission, which removed the Company’s securities from listing and registration on The Nasdaq Stock Market. The Company appealed the Staff’s delisting determination to the Panel, and the Decision resolves that appeal.

As March 31,of June 30, 2026 and December 31, 2025, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.