Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 14, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | SYSOREX, INC. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 494,543,611 | |
Amendment Flag | false | |
Entity Central Index Key | 0001737372 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Jun. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-55924 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 68-0319458 | |
Entity Address, Address Line One | 13880 Dulles Corner Lane | |
Entity Address, Address Line Two | Suite 120 | |
Entity Address, City or Town | Herndon | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20171 | |
Local Phone Number | 929-3871 | |
City Area Code | 800 | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 372 | $ 659 |
Digital assets, net | 218 | 5,202 |
Accounts receivable, net | 2,205 | 3,023 |
Prepaid expenses and other current assets | 884 | 1,402 |
Assets held for sale | 8,312 | 10,182 |
Total Current Assets | 11,991 | 20,468 |
Intangible assets, net | 2,266 | 2,553 |
Goodwill | 1,634 | 1,634 |
Pre-funded right- in Ostendo | 1,600 | |
Operating lease right-of-use asset, net | 475 | 558 |
Other assets | 40 | 69 |
Total Assets | 18,006 | 25,282 |
Current Liabilities | ||
Accounts payable | 4,097 | 6,724 |
Accrued liabilities | 1,955 | 2,382 |
Short-term debt | 17,203 | 19,439 |
Conversion feature derivative liability | 9,188 | 8,355 |
Operating lease obligation, current | 211 | 49 |
Common stock derivative liability | 347 | |
Deferred revenue | 704 | 932 |
Total Current Liabilities | 33,705 | 37,881 |
Operating lease obligation - noncurrent | 355 | 509 |
Total Liabilities | 34,060 | 38,390 |
Commitments and Contingencies | ||
Stockholders’ Deficit | ||
Common stock, par value $0.00001 per share, 499,560,659 shares authorized; 494,618,990 shares issued as of June 30, 2022, and 145,713,591 shares issued as of December 31, 2021, 494,543,611 shares outstanding as of June 30, 2022, and 145,638,212 shares outstanding as of December 31, 2021 | 4 | 1 |
Treasury stock, at cost, 75,379 shares as of June 30, 2022, and as of December 31, 2021 | ||
Additional paid-in-capital | 43,237 | 36,156 |
Accumulated Deficit | (59,295) | (49,265) |
Total Stockholders’ Deficit | (16,054) | (13,108) |
Total Liabilities and Stockholders’ Deficit | $ 18,006 | $ 25,282 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Jun. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 499,560,659 | 499,560,659 |
Common stock, shares issued | 494,618,990 | 145,713,591 |
Common stock, shares outstanding | 494,543,611 | 145,638,212 |
Treasury stock, shares | 75,379 | 75,379 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues | ||||
Product revenue | $ 2,889 | $ 1,599 | $ 7,418 | $ 1,599 |
Services revenue | 647 | 412 | 1,155 | 412 |
Total Revenues | 3,536 | 2,011 | 8,573 | 2,011 |
Operating costs and expenses | ||||
Product cost | 2,689 | 1,391 | 4,704 | 1,391 |
Services cost | 491 | 242 | 753 | 242 |
Sales and marketing | 263 | 299 | 661 | 299 |
General and administrative | 1,617 | 4,307 | 5,186 | 4,364 |
Impairment of digital assets | 1,187 | 2,423 | ||
Management fees | 322 | |||
Depreciation | 3 | 3 | ||
Amortization of intangibles | 143 | 121 | 286 | 121 |
Total Operating Costs and Expenses | 6,390 | 6,363 | 14,013 | 6,742 |
Loss from Operations | (2,854) | (4,352) | (5,440) | (4,731) |
Other Income (Expenses) | ||||
Merger charges | (22,004) | (22,004) | ||
Debt Restructuring fee | (2,000) | (2,000) | ||
Interest (expense) income | (764) | 17 | (1,738) | 16 |
Realized gain on sale of digital assets | 164 | 1 | 1,271 | 88 |
Revaluation of conversion feature derivative liability | (1,868) | (2,706) | ||
Loss on extinguishment of debt | (895) | (1,444) | ||
Change in fair value of shares issued | (38) | (38) | ||
Other (expense) income, net | (3) | (25) | 3 | (27) |
Total Other Expense | (3,404) | (24,011) | (4,652) | (23,927) |
Loss from continuing operations before income taxes | (6,258) | (28,363) | (10,092) | (28,658) |
Income tax benefit | 179 | |||
Loss from continuing operations | (6,258) | (28,184) | (10,092) | (28,658) |
(Loss) income from discontinued operations | (739) | 2,441 | 62 | 4,125 |
Net Loss | $ (6,997) | $ (25,743) | $ (10,030) | $ (24,533) |
Net loss per share - basic and diluted – continuing operations (in Dollars per share) | $ (0.014) | $ (0.239) | $ (0.033) | $ (0.187) |
Net (loss) income per share – basic and diluted – discontinued operations (in Dollars per share) | $ (0.002) | $ 0.021 | $ 0.0002 | $ 0.027 |
Weighted Average Shares Outstanding - basic and diluted (in Shares) | 441,012,811 | 118,068,367 | 308,731,572 | 153,096,881 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Net Loss per share - diluted – continuing operations | $ (0.016) | $ (0.239) | $ (0.033) | $ (0.187) |
Net (loss) gain per share – diluted – discontinued operations | $ (0.002) | $ 0.021 | $ 0.0002 | $ 0.027 |
Weighted Average Shares Outstanding - diluted (in Shares) | 441,012,811 | 118,068,367 | 308,731,572 | 153,096,881 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited) - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid-In Capital | Subscription Receivables | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 2,060 | $ (100) | $ (135) | $ 1,825 | ||
Balance (in Shares) at Dec. 31, 2020 | 66,431,920 | |||||
Shares issued for: | ||||||
Distributions to shareholders | (1,521) | (1,521) | ||||
Payments of subscription receivables | 100 | 100 | ||||
Exercise of Moon warrants | ||||||
Exercise of Moon warrants (in Shares) | 14,607,980 | |||||
Net Income (Loss) | 1,210 | 1,210 | ||||
Balance at Mar. 31, 2021 | 539 | 1,075 | 1,614 | |||
Balance (in Shares) at Mar. 31, 2021 | 81,039,900 | |||||
Balance at Dec. 31, 2020 | 2,060 | (100) | (135) | 1,825 | ||
Balance (in Shares) at Dec. 31, 2020 | 66,431,920 | |||||
Shares issued for: | ||||||
Net Income (Loss) | (24,533) | |||||
Balance at Jun. 30, 2021 | $ 1 | 34,103 | (24,668) | 9,436 | ||
Balance (in Shares) at Jun. 30, 2021 | 143,513,212 | 75,379 | ||||
Balance at Mar. 31, 2021 | 539 | 1,075 | 1,614 | |||
Balance (in Shares) at Mar. 31, 2021 | 81,039,900 | |||||
Shares issued for: | ||||||
Mining equipment | 12,000 | 12,000 | ||||
Mining equipment (in Shares) | 35,588,548 | |||||
Sysorex recapitalization | 19,401 | 19,401 | ||||
Sysorex recapitalization (in Shares) | 25,985,633 | |||||
TTM digital/Sysorex merger | $ 1 | 280 | 281 | |||
TTM digital/Sysorex merger (in Shares) | 494,311 | 75,379 | ||||
Professional services | 1,883 | 1,883 | ||||
Professional services (in Shares) | 404,820 | |||||
Net Income (Loss) | (25,743) | (25,743) | ||||
Balance at Jun. 30, 2021 | $ 1 | 34,103 | (24,668) | 9,436 | ||
Balance (in Shares) at Jun. 30, 2021 | 143,513,212 | 75,379 | ||||
Balance at Dec. 31, 2021 | $ 1 | 36,156 | (49,265) | (13,108) | ||
Balance (in Shares) at Dec. 31, 2021 | 145,638,212 | 75,379 | ||||
Shares issued for: | ||||||
Professional services | 240 | 240 | ||||
Professional services (in Shares) | 6,000,000 | |||||
Convertible debt conversions | 2,909 | 2,909 | ||||
Convertible debt conversions (in Shares) | 72,717,883 | |||||
Reclassification of equity contracts to liabilities | (314) | (314) | ||||
Exercise of Pre-funded warrants | ||||||
Exercise of Pre-funded warrants (in Shares) | 12,361,622 | |||||
Cashless exercise of warrants | ||||||
Cashless exercise of warrants (in Shares) | 220,754 | |||||
Stock-based compensation | 111 | 111 | ||||
Vesting of restricted stock | ||||||
Vesting of restricted stock (in Shares) | 500,000 | |||||
Net Income (Loss) | (3,033) | (3,033) | ||||
Balance at Mar. 31, 2022 | $ 1 | 39,102 | (52,298) | (13,195) | ||
Balance (in Shares) at Mar. 31, 2022 | 237,438,471 | 75,379 | ||||
Balance at Dec. 31, 2021 | $ 1 | 36,156 | (49,265) | (13,108) | ||
Balance (in Shares) at Dec. 31, 2021 | 145,638,212 | 75,379 | ||||
Shares issued for: | ||||||
Net Income (Loss) | (10,030) | |||||
Balance at Jun. 30, 2022 | $ 4 | 43,237 | (59,295) | (16,054) | ||
Balance (in Shares) at Jun. 30, 2022 | 494,543,611 | 75,379 | ||||
Balance at Mar. 31, 2022 | $ 1 | 39,102 | (52,298) | (13,195) | ||
Balance (in Shares) at Mar. 31, 2022 | 237,438,471 | 75,379 | ||||
Shares issued for: | ||||||
Issuance of restricted stock | 5 | 5 | ||||
Issuance of restricted stock (in Shares) | 100,000 | |||||
Convertible debt conversions | $ 3 | 4,130 | 4,133 | |||
Convertible debt conversions (in Shares) | 257,005,140 | |||||
Net Income (Loss) | (6,997) | (6,997) | ||||
Balance at Jun. 30, 2022 | $ 4 | $ 43,237 | $ (59,295) | $ (16,054) | ||
Balance (in Shares) at Jun. 30, 2022 | 494,543,611 | 75,379 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash Flows from Operating Activities | ||
Net loss from continuing operations | $ (10,092) | $ (28,658) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 288 | 124 |
Stock-based compensation expense | 111 | |
Amortization of right of use asset | 83 | |
Realized gain on sale of digital assets | (1,271) | (88) |
Loss on extinguishment of debt | 1,444 | |
Change in fair value of debt conversion feature | 2,706 | 27 |
Gain on settlement of vendor liabilities | (1,533) | |
Impairment of digital assets | 2,423 | |
Issuance of shares in exchange for services | 240 | 1,883 |
Merger charges | 22,004 | |
Debt restructuring expense | 2,000 | |
Change in fair value of share derivative liability | 38 | |
Changes in assets and liabilities: | ||
Prepaid assets and other current assets | 546 | 167 |
Accounts receivable and other receivables | 818 | 4,182 |
Accounts payable | (1,094) | (2,938) |
Accrued liabilities and other current liabilities | 834 | 285 |
Operating lease liability | 8 | |
Net cash provided by operating activities – continuing operations | (4,451) | (1,012) |
Net cash (used in) provided by operating activities – discontinued operations | (1,191) | (117) |
Net cash used in operating activities | (5,642) | (1,129) |
Cash Flows from Investing Activities | ||
Proceeds from sale of digital assets | 6,955 | 3,331 |
Reverse acquisition of Sysorex business | 28 | |
Pre-funded right in Ostendo | (1,600) | |
Net cash provided by investing activities -continuing operations | 5,355 | 3,359 |
Net cash provided by (used in) investing activities – discontinued operations | (103) | |
Net cash provided by investing activities | 5,355 | 3,256 |
Cash Flows from Financing Activities | ||
Repayment of loans | (2,195) | |
Payment of subscription receivable | 100 | |
Net cash provided by (used in) financing activities- continuing operations | (2,095) | |
Net cash provided by financing activities – discontinued operations | ||
Net cash provided by (used in) financing activities | (2,095) | |
Net (decrease) in cash and cash equivalents | (287) | 32 |
Cash and cash equivalents at beginning of period | 659 | 67 |
Cash and cash equivalents at end of period | 372 | 99 |
Cash paid for: | ||
Interest | 989 | |
Income taxes | 126 | |
Supplemental disclosure of noncash investing and financing activities: | ||
Conversion of debt to equity | 7,042 | |
Settlement of loan with mining equipment | 75 | |
Sysorex recapitalization | 19,401 | |
Distributions of digital assets to members | $ 1,521 | |
Reclassification of equity contracts to liabilities | 314 | |
Settlement of share derivative liability | $ 5 |
Nature and Description of Busin
Nature and Description of Business | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Nature and description of Business | Note 1 — Nature and Description of Business Description of Business Sysorex, Inc., through its wholly owned subsidiary, Sysorex Government Services, Inc., (“SGS”), (unless otherwise stated or the context otherwise requires, the terms “SGS” “we,” “us,” “our” and the “Company” refer collectively to Sysorex, Inc. and SGS), provides information technology solutions primarily to the public sector. These solutions include cybersecurity, professional services, engineering support, IT consulting, enterprise level technology, networking, wireless, help desk, and custom IT solutions. In addition to SGS, the Company has another wholly owned subsidiary, TTM Digital Assets & Technologies, Inc. (“TTM Digital”), TTM Digital’s focus is to mine Ethereum and opportunities related to the Ethereum blockchain. As discussed in the Heads of Terms agreement below, the Company is in discussion with a third party to sell its Ethereum mining assets and certain associated real property (“Assets”). The Company continues to operate its wholly owned subsidiaries. The Company is headquartered in Virginia. Heads of Terms Agreement On March 24, 2022, Sysorex, Inc. (“ Company Heads of Terms Ostendo Assets Definitive Documentation Additionally, pursuant to the Heads of Terms, the Company has agreed to make a non-refundable deposit of $1,600,000 (“ Deposit Purchased Shares On June 10, 2022, the Company executed an Amendment No. 1 to Heads of Terms (“Amendment 1”) with Ostendo and the Company’s wholly owned subsidiary TTM Digital Assets & Technologies, Inc. (“Seller”, and together with the Company, the “Seller Parties”). Pursuant to the Amendment 1, the parties agreed to amend and restate certain terms contained in the Heads of Terms, including, among other things: 1) The closing of the transaction is to occur no later than June 30, 2022, unless mutually extended in writing by the parties. 2) The definition of “TTM Assets” was amended and restated to read “(i) all of the Seller Parties’ GPUs and related assets, supporting equipment and software (including software licenses, if any), in each case wherever located, (ii) the Company’s equity interests in Style Hunter, Inc. (excluding options to purchase equity interests), (iii) the real estate comprising the Lockport, NY location, and (iv) any other assets directly or indirectly used in the operation of the Seller Parties’ crypto mining business.” 3) The first sentence of the section of the Heads of Terms entitled “Purchase Price Consideration” was amended and restated to read: “The Purchase Price shall be comprised of the issuance to the Seller of 4,697,917 fully paid, non-assessable shares. On June 30, 2022, the Company executed an Amendment No. 2 to Heads of Terms (“Amendment 2”) with Ostendo and the Company’s wholly owned subsidiary TTM Digital Assets & Technologies, Inc. (“Seller”, and together with the Company, the “Seller Parties”). Pursuant to the Amendment 2, the parties agreed to amend certain terms contained in the Heads of Terms and Amendment 1, including: 1) The closing of the transaction is to occur no later than July 31, 2022, unless mutually extended in writing by the parties. 2) The term “Expiration Date” in the section of the Heads of Term entitled “Exclusivity” is hereby amended to be the earlier of July 31, 2022, or the date on which Ostendo notifies the Company in writing that it is terminating negotiations regarding the transactions (and Ostendo agrees to give such notification promptly upon making a determination to terminate negotiations). As of August 15, 2022, the parties have not yet entered into Definitive Documentation, and have not amended the Heads of Terms, as amended, to extend the closing date; however, the parties continue to negotiate toward completion of Definitive Documentation. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2022 | |
Going Concern [Abstract] | |
Going Concern | Note 2 — Going Concern As of June 30, 2022, the Company had an approximate cash balance of $0.4 million, a working capital deficit of approximately $21.7 million, and an accumulated deficit of approximately $59.3 million. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements are issued. The Company does not believe that its capital resources as of June 30, 2022, its ability to settle convertible debt obligations through issuance of the Company’s shares, availability on the SouthStar facility to finance purchase orders and invoices, reauthorization of key vendors and credit limitation improvements will be sufficient to fund planned operations during the next twelve months. As a result, the Company will need additional funds to support its obligations. The Company continues to explore a number of other possible solutions to its financing needs, including efforts to raise additional capital as needed, through the issuance of equity, equity-linked or debt securities, as well as possible transactions with other companies, strategic partnerships, and other mechanisms for addressing our financial condition. The Company will utilize its current contracts that are not limited to a single branch of government or a specific agency. These contracts can provide the Company an opportunity to attain new solutions and service type orders. The Company will also utilize SGS’s small business status to partner with prime contractors on larger orders. The Company currently has utilized SouthStar to finance purchase orders and it also has the ability to factor its receivables if needed to fund operations. In addition, the Company will need to increase its authorized common stock to settle convertible debt conversions. If the Company is unable to raise additional capital on terms acceptable to the Company and on a timely basis, or is unable to attain new vendors, the Company will be required to downsize or wind down its operations through liquidation, bankruptcy, or sale of its assets. In addition, until the sale of the TTM Assets is consummated, the Company will be subject to changes in the Ethereum Network. The Ethereum network is in the process of implementing software upgrades and other changes to its protocol, which are intended to be a new iteration of the Ethereum network that changes its consensus mechanism from “proof of work” to “proof of stake”, which may decrease the reliance on computing power as an advantage to validating blocks. The move to a proof of stake mechanism will shift the network from mining utilizing computing power to staking, in which Ethereum holders can deposit their Ethereum in exchange for rewards. The switch to a proof of stake model would adversely affect the Company’s operations and ability to sustain operations. In addition, as of June 30, 2022, the Company has been reliant on its ability to liquidate Ethereum to continue to fund operations when needed, and as such, the Company does not currently have enough Ethereum on hand to fund operations through the next twelve months. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 3 — Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles that are generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of the Company’s operations for the three and six months ended June 30, 2022, are not necessarily indicative of the results to be expected for the year ending December 31, 2022. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the years ended December 31, 2021, and 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2022, as amended by Amendment No. 1 to the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (the “SEC”) on May 23, 2022, and Amendment No. 2 on Form 10-K filed with the SEC on June 1, 2022. TTM Digital Reverse Merger and Sysorex Recapitalization On April 8, 2021, the Company, TTM Digital, and TTM Acquisition Corp., a Nevada corporation, and a wholly owned subsidiary of Sysorex (“MergerSub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). Under the terms of the Merger Agreement, the parties agreed that Sysorex would acquire TTM Digital by way of a reverse triangular merger, subject to certain closing conditions (the “Merger”). On April 14, 2021 (the “Effective Time”), the closing conditions delineated in the Merger Agreement were satisfied and the Merger closed. At the Effective Time, the MergerSub was merged with and into TTM Digital with TTM Digital surviving the Merger. Under the terms of the Merger Agreement, the shareholders of TTM Digital received a right to receive an aggregate of 124,218,268 shares of Sysorex common stock, $0.00001 par value per share (the “Merger Shares”) in exchange for their shares of TTM Digital. Simultaneously, upon the issuance of the Merger Shares to the TTM Digital shareholders, Sysorex was issued all of the authorized capital of TTM Digital and TTM Digital became a wholly owned subsidiary of Sysorex (together, the “Combined Company”). The Merger resulted in a change of control, with the shareholders of TTM Digital receiving that number of Merger Shares equal to approximately eighty percent (80%) of the outstanding shares of capital stock of Sysorex including the effect of the Sysorex Recapitalization as discussed in TTM Digital Reverse Merger and Sysorex Recapitalization. Due to the TTM Digital shareholders acquiring a controlling interest in Sysorex after the merger, the transaction was accounted for as a reverse acquisition for accounting purposes, with TTM Digital being the accounting acquirer and reporting entity. Therefore, the historical amounts presented prior to the Merger are those of TTM Digital. The Merger is accounted for under the acquisition method of accounting applied to Sysorex as the accounting acquiree under the guidance of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 805 Business Combinations (“ASC 805”). Discontinued Operations As discussed in Note 5 – Discontinued Operation, the Company made the decision to divest its mining equipment and the data center of the TTM Digital reporting unit (“TTM Assets”) and commenced discussions with a third party to execute an asset sale. As a result of the decision to divest operating assets of the TTM Digital reporting unit, the Company has determined that the subject assets met the definition of assets held for sale as defined by ASC 205-20 – Presentation of Financial Statements – Discontinued Operations. As of December 31, 2021, the Company determined the TTM Assets represented discontinued operations as it constituted a disposal of a significant component and a strategic shift that will have a material effect on the Company’s operations and financial results. As a result, the Company reclassified the balances and activities of the TTM Assets from their historical presentation to assets held for sale and assets and liabilities – discontinued operations on the Condensed Consolidated balance sheets and to gain from discontinued operations on the Condensed Consolidated statements of operations for the periods presented. On June 10, 2022, the definition of “TTM Assets” was amended and restated to read “(i) all of the Seller Parties’ GPUs and related assets, supporting equipment and software (including software licenses, if any). As a result, all of TTM assets have been classified and reported as assets held for sale in the condensed consolidated balance sheets, and all associated revenues and costs are reported as discontinued operations in the condensed consolidated statement of operations. The TTM Assets to be sold will not include the Company’s Ether funds generated prior to and held at Closing. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 4 — Summary of Significant Accounting Policies Principles of Consolidation The unaudited condensed consolidated financial statements have been prepared using the accounting records of Sysorex, TTM Digital and SGS. All inter-company balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of: ● Revenue recognition ● Fair value of digital assets ● Fair value of the Company’s common stock ● Expected useful lives and valuation of long lived-assets ● Fair value of derivative liabilities Impairment of Long-lived Assets The Company reviews its long-lived assets, including mining equipment, for impairment whenever events or changes in circumstances indicate the carrying value of an asset or group of assets may not be recoverable. The carrying amount is considered not recoverable if the sum of the undiscounted cash flows to be generated from the use and eventual disposition of the asset group is less than the carrying amount of the asset group. If the carrying amount exceeds the undiscounted cash flows, then the carrying amount is compared to the fair value and an impairment loss is recorded for the difference between the fair value and the carrying amount. For the three and six months ended June 30, 2022, the Company incurred $1.0 million of impairment charges. No impairment charges were identified for long-lived assets during the three and six months ended June 30, 2021. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, the Company satisfies a performance obligation. Mining Revenue TTM Digital has entered into mining pools with the operators to provide computing power to the mining pool. The Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s contracts with mining pool operators The transaction consideration the Company receives, if any, is non-cash consideration. The transaction price of the Company’s share of the cryptocurrency award is measured at fair value on the date received, which is not materially different than the fair value at the time the Company has earned the award from the mining pool. The consideration is all variable under the definition within ASC 606. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Fair value of the digital asset award received is determined using the quoted price of the related digital asset at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could impact the Company’s Condensed Consolidated financial position and results from operations. Hardware and Software Revenue Recognition SGS is a primary resale channel for a large group of vendors and suppliers, including original equipment manufacturers (“OEMs”), software publishers and wholesale distributors. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of consideration is probable. The Company evaluates the following indicators amongst others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified product or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s products can be delivered to customers in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor or supplier or (iii) via electronic delivery of keys for software licenses. The Company’s shipping terms typically specify F.O.B. destination. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouse. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis. The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement, the Company provides direct warranty to the customer with the Company’s own personnel as the customer requires warranty on the solution and not individual vendor products. This type of warranty is sold integral to the overall solution quoted to the customer. The Company considers these service-type warranties to be performance obligations of the principal from the underlying products that make up a solution and therefore is acting as a principal in the transaction and records revenue on a gross basis over time. License and Maintenance Services Revenue Recognition SGS provides a customized design and configuration solution for its customers and in this capacity resells hardware, software and other IT equipment license and maintenance services in exchange for fixed fees. The Company selects the vendors and sells the products and services, including maintenance services, that best fit the customer’s needs. For sales of maintenance services and warranties, the customer obtains control at the point in time that the services to be provided by a third-party vendor are purchased by the customer and therefore the Company’s performance obligation to provide the overall systems solution is satisfied at that time. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer-approved invoice. For resale of services, including maintenance services, warranties, and extended warranties, the Company is acting as an agent as the primary activity for those services are fulfilled by a third party. While the Company may facilitate and act as a first responder for these services, the third-party service providers perform the primary maintenance and warranty services for the customer. Therefore, the Company is not primarily responsible for performing these services and revenue is recorded on a net basis. SGS’s professional services include fixed fee contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. For fixed fee contracts, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Anticipated losses are recognized as soon as they become known. For the three and six months ended June 30, 2022, SGS did not incur any such losses. These amounts are based on known and estimated factors. Revenues from time and material or firm fixed price long-term and short-term contracts are derived principally with various United States government agencies. Digital Assets Digital assets (predominantly Ethereum) are included in current assets in the accompanying Condensed Consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company’s consideration of the consistent daily trading volume on cryptocurrency exchange markets, there are no limitations or restrictions on Company’s ability to sell Ethereum, and the pattern of actual sales of Ethereum by the Company. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. During the three and six months ended June 30, 2022, the Company recorded impairment of $1.2 million and $2.4 million, respectively. The Company did not incur any impairment losses for the three and six months ended June 30, 2021. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying Condensed Consolidated statements of cash flows. The sales of digital assets are included within investing activities in the accompanying Condensed Consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. Fair Value The Company follows the accounting guidance under FASB’s ASC 820, Fair Value Measurements for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accrued liabilities, and accounts payable, approximate fair value due to the short-term nature of these instruments. Derivative Liabilities The Company evaluates its convertible instruments, options, warrants, or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, Derivatives and Hedging. The Company evaluates whether the amount of common stock on a as converted basis is in excess of its authorized share total which, if in excess, would result in derivative accounting treatment. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to a liability at the fair value of the instrument on the reclassification date. Held for Sale and Discontinued Operations Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy. An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset shall not be depreciated or amortized while it is classified as held for sale. Convertible Debt The Company’s debt instruments contain a host liability, freestanding warrants, and an embedded conversion feature. The Company uses the guidance under FASB ASC Topic 815 Derivatives and Hedging (“ASC 815”) to determine if the embedded conversion feature must be bifurcated and separately accounted for as a derivative under ASC 815. It also determines whether any embedded conversion features requiring bifurcation and/or freestanding warrants qualify for any scope exceptions contained within ASC 815. Generally, contracts issued or held by a reporting entity that are both (i) indexed to its own stock, and (ii) classified in shareholders equity, would not be considered a derivative for the purposes of applying ASC 815. Any embedded conversion features and/or freestanding warrants that do not meet the scope exception noted above are classified as derivative liabilities, initially measured at fair value, and remeasured at fair value each reporting period with change in fair value recognized in the Condensed Consolidated statements of operations. Any embedded conversion features and/or freestanding warrants that meet the scope exception under ASC 815 are initially recorded at their relative fair value in paid-in-capital and are not remeasured at fair value in future periods. The host debt instrument is initially recorded at its relative fair value in long-term debt. The host debt instrument is accounted for in accordance with guidance applicable to non-convertible debt under FASB ASC Topic 470 Debt (“ASC 470”) and is accreted to its face value over the term of the debt with accretion expense and periodic interest expense recorded in the unaudited condensed consolidated statements of operations. Issuance costs are allocated to each instrument in the same proportion as the proceeds that are allocated to each instrument. Issuance costs allocated to the debt hosted instrument are netted against the proceeds allocated to the debt host. Issuance costs allocated to freestanding warrants classified in equity are recorded in paid-in-capital. Net Loss per Share Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Convertible debt, restricted stock, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the three and six months ended June 30, 2022, and as a result, all potentially dilutive common shares are considered antidilutive for this period. The Company includes potentially issuable shares in the Weighted-average common shares – basic that include warrants and other agreements that are exercisable for little or no consideration without substantive contingencies and others once any contingencies relative to the issuance of the shares is resolved. Computations of basic and diluted weighted average common shares outstanding were as follows for the periods reported: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Weighted-average common shares outstanding 438,012,811 110,063,554 305,731,572 139,087,196 Weighted-average potential common shares considered outstanding 3,000,000 8,004,813 3,000,000 14,009,685 Weighted-average common shares outstanding - basic 441,012,811 118,068,367 308,731,572 153,096,881 Dilutive effect of options, warrants and restricted stock units - - - - Weighted-average common shares outstanding - diluted 441,012,811 118,068,367 308,731,572 153,096,881 Options, restricted stock units, and warrants and convertible debt excluded from the computation of diluted loss per share because the effect of inclusion would be anti-dilutive 1,177,949,083 - 141,166,211 - Emerging Growth Company Sysorex is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). As such, Sysorex is eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended. In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, for complying with new or revised accounting standards, meaning that Sysorex, as an emerging growth company, can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Sysorex has elected to take advantage of this extended transition period, and therefore our financial statements may not be comparable to those of companies that comply with such new or revised accounting standards. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 5 — Discontinued Operations The carrying value of the TTM Digital asset disposal group was $8.3 million as of June 30, 2022, and $10.2 million as of December 31, 2021. For the three and six months ended June 30, 2022, the Company recorded $1.0 million of impairment charges to the assets held for sale, as the carrying value of the assets were less than the estimated fair value less costs to sell. The following table details the assets and liabilities of the Company’s TTM Assets that were classified as assets held for sale and discontinued operations for the periods presented (in thousands): June 30, December 31, 2022 2021 Mining equipment and facilities, net $ 7,812 $ 9,682 Investment in Style Hunter 500 500 Total Current Assets $ 8,312 $ 10,182 Total Assets associated with discontinued operations $ 8,312 $ 10,182 The following table presents the TTM Digital assets statement of operations line items classified as discontinued operations included within gain (loss) from discontinued operations for the three and six months ended June 30, 2022, and 2021 (in thousands): For the For the For the For the Ended Ended Ended Ended 2022 2021 2022 2021 Revenues Mining income $ 1,286 $ 4,234 $ 3,268 $ 6,251 Hosting income 14 - 72 - Total revenues 1,300 4,234 3,340 6,251 Operating costs and expenses Mining cost 402 344 928 475 General and administrative 223 1 479 2 Impairment of fixed assets 961 - 961 - Depreciation 453 1,342 910 1,541 Total operating costs and expenses 2,039 1,687 3,278 2,018 Gain (loss) from Operations (739 ) 2,547 62 4,233 Other Income (Expenses) Interest expense - (46 ) - (45 ) Loss on disposal of fixed assets - - - (7 ) Income (loss) before taxes and equity method investee (739 ) 2,501 62 4,181 Provision for income taxes - - - - Income (loss) before equity method investee (739 ) 2,501 62 4,181 Share of net loss of equity method investee - 60 - 56 Net income (loss) from discontinued operations $ (739 ) $ 2,441 $ 62 $ 4,125 The following table summarizes the net cash flows from discontinued operations of TTM Digital (in thousands): For the Six Months 2022 2021 Net cash used in operating activities – discontinued operations (1,191 ) (117 ) Net cash provided by investing activities – discontinued operations - (103 ) Net cash provided by financing activities – discontinued operations - - |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 6 — Intangible Assets Intangible assets as of June 30, 2022, consist of the following: Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (127 ) $ 933 Customer relationships 1,900 (567 ) 1,333 Total intangible assets $ 2,960 $ (694 ) $ 2,266 Intangible assets as of December 31, 2021, consist of the following: Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (74 ) $ 986 Customer relationships 1,900 (333 ) 1,567 Total intangible assets $ 2,960 $ (407 ) $ 2,553 The estimated future amortization expense associated with intangible assets is as follows: Calendar Years Ending December 31, Amount 2022 287 2023 573 2024 573 2025 266 Thereafter 567 Total $ 2,266 |
Credit Risk and Concentrations
Credit Risk and Concentrations | 6 Months Ended |
Jun. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
Credit Risk and Concentrations | Note 7 — Credit Risk and Concentrations Financial instruments that subject the Company to credit risk consist principally of trade accounts receivable and cash. The Company performs certain credit evaluation procedures and does not require collateral for financial instruments subject to credit risk. The Company believes that credit risk is limited because the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk of its customers, establishes an allowance for uncollectible accounts and, consequently, believes that its accounts receivable credit risk exposure beyond such allowances is limited. The Company maintains cash deposits with financial institutions, which, from time to time, may exceed federally insured limits. The Company has not experienced any losses and believes it is not exposed to any significant credit risk from cash. The following table sets forth the percentages of sales derived by the Company from those customers that accounted for at least 10% of sales during the six months ended June 30, 2022, and 2021 (in thousands of dollars): For the Six Months Ended For the Six Months Ended $ % $ % Customer A 1,677 20 % 1,254 49 % Customer B 5,765 69 % 492 19 % The following table sets forth the percentages of sales derived by the Company from those customers that accounted for at least 10% of sales during the three months ended June 30, 2022, and 2021 (in thousands of dollars): For the Three Months Ended For the Three Months Ended $ % $ % Customer A 507 15 % 1,254 49 % Customer B 2,181 65 % 492 19 % Customer C -- -- 302 12 % As of June 30, 2022, Customers A and B represented approximately 55% of total accounts receivable. Three other customer represents approximately 45% of total accounts receivable. As of June 30, 2021, Customers A and B represented approximately 56% and 12% of total accounts receivable, respectively. For the six months ended June 30, 2022, two vendors represented approximately 54% and 34% of total purchases. Purchases from these vendors during the six months ended June 30, 2022, were $8.1 million and $5.1 million, respectively. For the three months ended June 30, 2022, two vendors represented approximately 65% and 20% of total purchases. Purchases from these vendors during the three months ended June 30, 2022, were $1.9 million and $0.6 million, respectively. For the six and three months ended June 30, 2021, four SGS vendors represented approximately 53%, 35%, 28% and 11% of total purchases for SGS products. Purchases from these vendors during the six and three months ended June 30, 2021, were $0.9 million, $0.6 million, $0.4 million and $0.2 million, respectively. Mining equipment purchased from one TTM vendor during the six months ended June 30, 2021, was $14.2 million. Of the $14.2 million, in consideration exchanged $12 million was paid in Common Stock of the Company and the balance of $2.2 million was settled through payment in digital assets. Geographic and Technology Concentration The Company had geographic diversity between April 1, 2021, and June 30, 2022, using a colocation datacenter in North Carolina. Subsequent to June 30, 2022, the Company had consolidated its mining operations exclusively in New York. Any legislation that restricts or bans the mining of proof-of-work related digital asset mining in New York State would have a negative impact on the Company’s ability to operate and generate revenues. Further, the Company had concentrated exposure to the Ethereum blockchain infrastructure through its mining operations during the periods presented. There is a possibility of digital asset mining algorithms transitioning to proof-of-stake validation and other mining related risks, which could make us less competitive and ultimately adversely affect our business and our ability to generate revenues. When and if Ethereum switches to proof-of stake the Company’s GPUs will no longer be able to mine Ethereum. Additionally, on August 5, 2021, the London Hard Fork protocol went into effect which includes changes in Ethereum’s handling of transaction fees. These changes had an impact on the Company’s future potential Ethereum revenue stream due to less Ethereum being distributed per mined block, if not offset by an increase in the value of ETH and/or additional transaction tipping, the process by which a user can pay an additional amount to ensure a transaction is processed very quickly. The Company saw a financial impact during the first half of 2022. While the Company doubled mining capacity in the first half of 2021, the difficulty to mine increased. This resulted in a steady decrease of average mining rewards, along with the market price of Ethereum, particularly during the second half of 2021 and into the first half of 2022. |
Short-term debt
Short-term debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Short-term debt | Note 8 — Short-term debt Short-term debt as of June 30, 2022, and December 31, 2021, consisted of the following (in thousands): June 30, December 31, 2022 2021 Convertible Debentures & Warrants, including interest payable to the Convertible Debenture Holders (A) $ 16,303 $ 19,439 Revolving Credit Facility (B) 900 - Total Short-Term Debt $ 17,203 $ 19,439 (A) 2021 Convertible Debentures & Warrants On July 7, 2021, the Company consummated the initial closing of a private placement offering (the “Offering”) pursuant to the terms and conditions of a Securities Purchase Agreement for up to $15,187,500 in principal amount (“Original Principal Value”) Convertible Debentures. To manage the administration of the Offering the Company entered into a placement agency agreement with Joseph Gunner & Co. LLC, a U.S. registered broker-dealer (“Placement Agent”). At the initial closing, the Company sold the purchasers (i) 12.5% Original Issue Discount Convertible Debentures (“Debentures”) in an aggregate principal amount of $9,990,000 and (ii) warrants to purchase up to 3,534,751 shares of common stock of the Company. The Company received total gross proceeds of $8,880,000 taking into account the 12.5% discount before deducting placement agent fees and expenses of approximately $913,000. The Debentures mature on July 7, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. On August 13, 2021, the Company consummated the second closing of the offering pursuant to the same terms and conditions of the Securities Purchase Agreement dated July 7, 2021. At the second closing, the Company sold the purchasers (i) 12.5% Original Issue Discount Senior Secured Convertible Debentures in an aggregate principal amount of $3,976,875 and (ii) warrants to purchase up to 1,862,279 shares of common stock of the Company. The Company received a total of $3,535,000 in gross proceeds following the second closing taking into account the 12 % discount before deducting placement agent fees and expenses of approximately $354,000. The Debentures mature on August 13, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. Under the conversion terms of the Debentures, the Debenture is convertible, in whole or in part, into shares of Common Stock at the option of the Holder at any time until the Debenture is no longer outstanding. The Holder executes a conversion by delivering to the Company a Notice of Conversion specifying the principal amount to be converted and the date on which the conversion is to be executed. The Conversion Price is set at the lower of (i) $18.00 and (ii) 80% of the average of the VWAP during the 5 Trading Day period immediately prior to the applicable Conversion Date. The number of Conversion Shares to be issued is determined by dividing the outstanding principal amount of the debenture to be converted by the Conversion Price. The Debentures are subject to mandatory conversion (“Mandatory Conversion”) in the event the Company closes a registered public offering of its Common Stock and receives gross proceeds of not less than $40,000,000 and at the completion of which the Company’s securities are traded on a national exchange (“Qualified Offering”). The Company determined that the conversion feature associated with the convertible debentures should be bifurcated and treated as a separate derivative liability. The Company recorded a revaluation loss of approximately $1.9 million and $2.7 million for the three and six months ended June 30, 2022, for the change in the fair value of the conversion option. As of June 30, 2022, the derivative liability associated with the conversion option was $9.2 million. In addition, during the quarter, the Company recognized an extinguishment loss of approximately $0.9 million and $1.4 million for the three and six months ended June 30, 2022, as a result of the conversion of debt of $3.7 million during the period ended June 30, 2022. Debenture Default The Debentures provide that any monetary judgment filed against the Company for more than $50,000, and if such judgment remains unvacated for a period of 45 calendar days shall constitute an event of default. On December 14, 2021, the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement was entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25. As a result, the Confession of Judgment was deemed to be an event of default under the Debentures although the Company only became aware of the Confession of Judgment on December 14, 2021. On January 7, 2022, the Company received a notice of default (the “Default Notice”) from the Placement Agent stating that the Company defaulted under the Purchase Agreement as a result of: (i) the Company failing to disclose certain material indebtedness of the Company outstanding as of the date of the Purchase Agreement; and (ii) the filing of a judgment relating to such material indebtedness. Due to such events of default, (i) the Debentures are now deemed to have begun bearing interest at the default interest rate of 18% per annum from the date of the issuance of the Debentures; and (ii) the holders of the Debentures are entitled to receive in satisfaction of the amounts owing under the Debentures an amount equal to 130% of the Original Principal Value of the Debentures (“Default Principal Increase”), in accordance with the terms of the Debentures. In addition, as a result of the events of default, the exercise price for the Warrant is the lower of: (A) $18.00 and (B) an amount equal to fifty percent (50%) of the average of volume-weighted average price for the common stock of the Company over the five (5) trading days preceding the date of the delivery of the applicable exercise notice or (C) the qualified offering price as defined in the Purchase Agreement. (B) Revolving Credit Facility Non-Recourse Factoring and Security Agreement Effective as June 19, 2020 (the “Effective Date”), the Company and SouthStar Financial, LLC (“SouthStar”) entered into a financing purchase order agreement. Through SouthStar, the Company receives 100% financing on purchase orders with 50% of the purchase order amount paid directly to the vendor/supplier and the remaining balance is paid to the vendor once payment is made on the Company’s customer invoice. Purchase order interest rates charged to the Company is calculated from the date funds are advanced on the purchase order to the date the Company’s customer invoice is verified and funded. The financing fees charged are 0.90% for the first 10-day period and 0.90% every 10-day period thereafter |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Note 9 — Fair Value Measurement Fair value measurements are determined based on assumptions that a market participant would use in pricing an asset or a liability. A three-tiered hierarchy distinguishes between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3). The following table presents the placement in the fair value hierarchy measured at fair value on a recurring basis as of June 30, 2022, and December 31, 2021 (in thousands): Fair value measurement at reporting date using Quoted Significant active markets other Significant for identical observable unobservable Balance assets inputs inputs As of June 30, 2022: Recurring fair value measurements: Derivative Liabilities: Conversion feature derivative liability $ 9,188 $ — $ — $ 9,188 Common stock derivative liability 347 — — 347 Total derivative liabilities $ 9,535 $ — $ — $ 9,535 Total recurring fair value measurements $ 9,535 $ — $ — $ 9,535 As of December 31, 2021 Recurring fair value measurements Derivative liability: Conversion feature derivative liability $ 8,355 $ — $ — $ 8,355 Common stock derivative liability — — — — Total derivative liabilities $ 8,355 $ — $ — $ 8,355 Total recurring fair value measurements $ 8,355 $ — $ — $ 8,355 The conversion feature of the convertible Debentures was separately accounted for at fair value as a derivative liability under guidance in ASC 815 that is remeasured at fair value on a recurring basis using Level 3 inputs. The Company uses a probability weighted expected return model (“PWERM”) valuation technique to measure the fair value of the conversion feature with any changes in the fair value of the conversion feature liability recorded in earnings. Significant inputs to the model include estimated time to conversion events, estimated interest converted at the event, the implied yield, the discount rate for the conversion, and the probability of the conversion events. For the three and six months ended June 30, 2022, the Company recorded a loss of approximately $1.9 million and $2.7 million for the change in fair value of debt conversion feature. As discussed in Note 11 – Equity below, the Company exceeded its authorized share limit with respect to potentially issuable shares under the equity contracts described with the Share Derivative Liabilities section. The Company estimates the fair value of the Common stock derivative liability based on the fair value of the potentially issuable shares for the warrants, stock options and RSUs vested but unissued. This liability excludes the fair value of the potentially convertible shares for the convertible Debentures which are accounted for through the carrying value of the debt and the separate conversion feature derivative liability. The Company recorded the common stock derivative liability at fair value as of June 30, 2022, through a transfer from equity to the common stock derivative liability. Changes in the fair value of the liability in future periods will be included in other income (expense) in the consolidated statements of operations. The change in Level 3 fair value of the Company’s derivative liabilities is as follows: Conversion Common Total Balance as of December 31, 2021 $ 8,355 $ - $ 8,355 Transferred to equity on debt conversion (1,873 ) (5 ) (1,878 ) Transferred from equity on recognition of derivative liability - 314 314 Increase in fair value included in earnings 2,706 38 2,744 Balance as of June 30, 2022 $ 9,188 $ 347 $ 9,535 |
Digital Assets
Digital Assets | 6 Months Ended |
Jun. 30, 2022 | |
Digital Assets [Abstract] | |
Digital Assets | Note 10 — Digital Assets The following tables present the roll forward of digital asset activity from continuing and discontinued operations during the periods ended: Six months ended 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 3,268 6,252 Purchase of mining equipment with digital assets - (1,019 ) Mining pool operating fees (33 ) (66 ) Impairment of digital assets (2,423 ) - Management fees - (322 ) Owners’ distributions - (1,521 ) Proceeds from sale of digital assets (6,955 ) (3,331 ) Transaction fees (112 ) - Realized gain on sale of digital assets 1,271 88 Ending Balance $ 218 $ 105 Three months ended 2022 2021 Opening Balance $ 1,237 $ 14 Revenue from mining 1,286 4,234 Purchases of Mining equipment with digital assets - (1,019 ) Mining pool operating fees (13 ) (45 ) Impairment of digital assets (1,187 ) - Proceeds from sale of digital assets (1,246 ) (3,080 ) Transaction fees (23 ) - Realized gain on sale of digital assets 164 1 Ending Balance $ 218 $ 105 |
Equity
Equity | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Equity | Note 11 — Equity As discussed in Note 3 Basis of Presentation the Company completed a reverse merger of Sysorex and TTM Digital with TTM Digital being the accounting acquirer and reporting entity. In a reverse merger, the capital accounts of the reporting entity (TTM Digital) are restated to reflect the legal capital structure of the legal acquirer (Sysorex). As a result, the share data of the reporting entity has been retroactively restated for all periods presented to the equivalent share values of Sysorex for the capital transaction activity of TTM Digital, as if the reverse merger occurred on January 1, 2020. The share data of the reporting entity has been retroactively stated for all periods presented to the equivalent share values of Sysorex. The Company is authorized to issue 499,560,659 shares of common stock, $0.00001 par value, and 10,000,000 shares of preferred stock, $0.00001 par value. The holders of the Company’s common stock are entitled to one vote per share. As of June 30, 2022, 499,560,659 common stock shares were authorized; 494,618,990 shares were issued, and 494,543,611 shares were outstanding. No preferred stock has been designated or issued. Stock Options A summary of stock option activity for the six months ended June 30, 2022, is as follows: Number of Weighted Outstanding, January 1, 2022 1,656,000 $ 2.00 Granted - $ - Exercised - - Forfeited or cancelled - - Outstanding, June 30, 2022 1,656,000 $ 2.00 Exercisable, June 30, 2022 1,656,000 $ 2.00 Warrants The following table represents the activity related to the Company’s warrants during the three-month period ended June 30, 2022: Number of Weighted Outstanding, January 1, 2022 5,926,763 $ * Granted - - Exercised (418,931 ) - Outstanding, June 30, 2022 5,507,832 $ - The weighted average contractual term as of June 30, 2022, is 4.1 years. If at any time after the six month anniversary of the closing date as disclosed in Note 8 Short-term debt, 2021 convertible debenture and warrants, there is no effective registration statement registering the warrant shares granted to the convertible debenture holders and placement agent, then, for each thirty days following the six month anniversary of the their respective closing date or portion of any thirty day period thereafter in which no effective registration statement is available, the amount of warrant shares shall be automatically increased by five percent over the warrant shares available on such dates. As such, the Company is obligated to grant 2,038,254 warrants through June 30, 2022. * The exercise price will be determined by a 5-day VWAP price calculation on the exercise date. Restricted Stock Units The following table represents the activity related to the Company’s restricted stock awards granted to employees and directors during the six months ended June 30, 2022: Number of Weighted Outstanding, January 1, 2022 1,000,000 $ 0.48 Granted - - Vested 700,000 0.40 Unvested, June 30, 2022 300,000 $ 0.67 The unrecognized stock compensation at June 30, 2022 is $0.05 million. Share Derivative Liabilities As the amount of common stock on an as converted basis as of June 30, 2022, exceeded our authorized share amount, the Company’s outstanding warrants, stock options and vested but unissued restricted stock shares (“RSUs”) were reclassified to derivative liabilities in the consolidated financial statements. This results in non-cash gains or losses each period during the term of the warrants, stock options, RSU vesting period and convertible debt. The table below summarizes the reclassified share derivative liabilities as of June 30, 2022 (dollars in thousands): June 30, Warrants $ 282 Stock options 58 RSUs vested but unissued 7 Total share derivative liability $ 347 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12 — Commitments and Contingencies Contractual Commitments On September 5, 2017, prior to the merger and as a result of a spinoff from Sysorex’s previous parent, a computer hardware supplier threatened legal action against the Company and demanded approximately $1.8 million for payment of unpaid invoices. On or about January 29, 2018, the parties executed a settlement agreement resolving the matter. No court action was filed. The liability of approximately $0.6 million has been accrued and includes interest $0.1 million calculated based on a default rate, which is included as a component of accounts payable and accrued liabilities as of June 30, 2022, in the unaudited condensed consolidated balance sheets. On January 22, 2018, a software vendor filed a motion for entry of default judgment (the “Motion”) against SGS in the Circuit Court of Fairfax County, Virginia. The Motion alleges that SGS failed to respond to a complaint served on November 22, 2017. The Motion requests a default judgment in the amount of $336,000 plus $20,000 in legal fees. On August 10, 2018, the Company and vendor entered into a settlement agreement and the Company is repaying the debt in monthly installments. The liability of approximately $0.2 million has been accrued and includes interest $0.08 million calculated based on a default rate and is included as a component of accounts payable and accrued liabilities as of June 30, 2022, in the unaudited condensed consolidated balance sheets. The Company entered into a Registration Rights Agreement (the “RRA”) dated April 13, 2021. The Company had ninety (90) calendar days following the closing date of its Merger with TTM Digital Assets & Technologies, Inc. on April 14, 2021, to file an initial registration statement covering the Shares. The ninety (90) calendar day filing date was July 13, 2021 (“Filing Deadline”). The Company did not fulfil its obligation to file a registration statement covering the Shares by July 13, 2021, nor any date and therefore has accounted for an accrued liability in the amount of $0.2 million recorded in the unaudited condensed consolidated balance sheets – accrued liabilities for the year ended June 30, 2022. The RRA terminated as of October 14, 2021, by its own terms. The Company entered into a Promissory Judgment Note dated as of August 15, 2018 (the “Note”), with Tech Data Corporation (“Tech Data”), pursuant to which the Company promised to pay the principal sum of $6,849,423.42 to Tech Data. The Note provides that interest shall accrue on the balance of the Note at the rate of 18% per annum. Due to miscommunication with Tech Data, the Company inadvertently failed to pay, when due, some of the installment payments in the aggregate principal amount of $3,341,801.80, as set forth in the Note and has defaulted under the Note. On December 14, 2021, the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement is entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25. Following a negotiation with Tech Data, the Company was able to reduce the Award by in excess of $4.2 million, and on January 13, 2022, the Company and Tech Data entered into a Settlement and Release Agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company paid $1,375,000. (the “Settlement Amount”) on January 14, 2022. The Company recognized a gain on settlement of $1.5 million and has recorded in product costs in the condensed consolidated statement of operations. The Award was deemed satisfied in full. Among other things, Tech Data agreed to file an acknowledgment of full satisfaction of judgment attached as an exhibit to the Settlement Agreement, not take any further action against the Company in connection with or relating to the Judgment, and release the Company and its representatives from any and all claims, including the Judgment, which Tech Data may have against the Company based upon any transaction that occurred at any time before the date of the Settlement Agreement. On June 3, 2022, the Company became aware that a Complaint had been entered against the Company in the United States District Court Southern District of New York by ProActive Capital Partners, L.P, a convertible debenture holder. The Complaint is entered for injunctive relief to honor is stock conversion, recover damages, and receive payments due under the Debenture agreement. The convertible debenture principal and interest of $0.2 million is recorded in the unaudited condensed consolidated balance sheets – accrued liabilities for the period ended June 30, 2022. The notice of conversion to convert its convertible debt to shares of the Company’s stock will be honored upon issuance of the Company’s increase in authorized shares. Operating Leases/Right-of-Use Assets and Lease Liability On December 8, 2021, the Company’s principal executive offices moved to 13880 Dulles Corner Lane, Suite 120, Herndon, Virginia 20171. We lease these premises, which consist of approximately 5,800 square feet, pursuant to a lease that expires on May 31, 2025. The total amount of rent expense under the leases is recognized on a straight-line basis over the term of the leases. The Company has no other operating or financing leases with terms greater than 12 months. As of June 30, 2022, future minimum operating leases commitments are as follows: Calendar Years Ending December 31, Amount 2022 $ 105 2023 214 2024 219 2025 92 Total future lease payments 630 Less: interest expense at incremental borrowing rate (64 ) Net present value of lease liabilities $ 566 Other assumptions and pertinent information related to the Company’s accounting for operating leases are: Weighted average remaining lease term: 2.92 years Weighted average discount rate used to determine present value of operating lease liability: 8 % Litigation Certain conditions may exist as of the date the financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company, or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed, unless they involve guarantees, in which case the guarantees would be disclosed. There can be no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 — Related Party Transactions Effective April 1, 2021, the Company entered a variety of contracts with CoreWeave, Inc. (“CoreWeave”). Hosting Facilities Services Order The Hosting Facility Services Order (the “Hosting Contract”) provided for the provision of hosting facility space and services by CoreWeave. The services are paid for in advance of the service month and the initial term of the hosting services is through June 30, 2022, and renews automatically for successive one year renewal terms unless either party terminates within sixty (60) days of the expiration of the then current term. At the signing of the Hosting Contract an estimated 382 data mining rigs were covered at an estimated monthly cost of approximately $21,556 ($260,000 per year). For the three and six months ended June 30, 2022, the Company recorded $64,667 and $129,334 in mining costs within discontinued operations on the statement of operations. The Company terminated the Hosting Facilities Services Order effective June 30,2022. Services Agreement The initial term of the Services Agreement runs from April 1, 2021, through December 31, 2022, and automatically renews thereafter for successive one (1)-year terms unless either party provides written notice to the other of nonrenewal within sixty (60) days of the expiration of the then current Term. The initiation of the Services Agreement required a one-time payment of $100,000. The monthly base management fee was set to $20.00 per GPU-based Mining System (approximately $20,000 per month), and $6.50 per ASIC-based Mining System. Base management fees are paid in arrears and due within fifteen (15) days of invoice receipt. If, during any calendar month of the Term, CoreWeave operates on average, more than 1,500 Mining Systems on behalf of the Company, the Base Management Fee with respect to the excess Mining Systems above 1,500 is discounted by 40%. For the three and six months ended June 30, 2022, the Company recorded $71,820 and $143,640 in mining costs within discontinued operations on the condensed statement of operations. The Company terminated the Service agreement effective June 30,2022. Bespoke Growth Partners, Inc. (“Bespoke”) Effective as of April 15, 2021, the Company entered into a consulting agreement with Bespoke. Under the terms of the consulting agreement, the Company agreed to total compensation for services of $975,000 which of which $775,000 was paid during the year ended December 31, 2021. The Company made an additional payment in accordance with the agreement of $200,000 in January 2022. The Company recognized an additional $167,000 amount of expense during the six months ended June 30, 2022, which is recorded as consultant fees in general and administrative operating costs in the condensed consolidated statement of operations. As of June 30, 2022, the Bespoke consulting agreement has expired. Effective as of January 13, 2022, the Company entered into a consulting agreement with Bespoke. Under the terms of the consulting agreement, the Company is to pay Bespoke a gross advisory fee of $975,000 for identifying the Ostendo acquisition and services related to the Company. On March 23, 2022, the Company paid off the balance owed for this service. The Company expensed the advisory fee during the six months ended June 30, 2022, which is recorded as consultant fees in general and administrative in the condensed consolidated statement of operations. Ressense LLC On August 4, 2021, the Company executed a six (6) month business advisory services agreement with Ressense LLC. The services to be provided include potential business activities including acquisition, merger and reverse merger opportunities. As compensation for the performance of services, the Company paid and recorded $25,000 through January 31, 2022, as consultant fees in general and administrative in the condensed consolidated statement of operations. The business advisory services agreement expired January 31, 2022. One Percent Investments, Inc. On June 21, 2022, the Company executed a four (4) month business advisory services agreement with One Percent Investments, Inc. The services to be provided include potential future merger and/or acquisition activities, strategic alliances, joint ventures, and advisory services in connection with the Company’s desire to up-list to a national stock exchange. As a compensation for the performance of services, the Company paid $125,000 for the respective service period. Additional compensation in the amount of $500,000 will be rendered in connection with the up-listing process The Company recognized $9,375 of expense during the three and six months ended June 30, 2022, which is recorded as consultant fees in general and administrative operating costs in the condensed consolidated statement of operations, and $115,625 of prepaid expense in current assets in the condensed consolidated balance sheets. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 6 Months Ended |
Jun. 30, 2022 | |
Prepaid Expenses and Other Current Assets [Line Items] | |
Prepaid Expenses and Other Current Assets | Note 14 — Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following as of June 30, 2022, and December 31, 2021: June 30, December 31, Consultants $ 116 $ 565 Rent - 17 Vendor Payments 133 - Insurance 44 162 License and Maintenance Contracts 590 658 Other 1 - $ 884 $ 1,402 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 — Subsequent Events On August 10, 2022, the Company entered into Amendment No. 2 (“Amendment No. 2”) to Employment Agreement, by and between the Company and Vincent Loiacono, the Company’s Chief Financial Officer. Pursuant to the terms of Amendment No. 2, the parties amended the termination provisions of the original employment agreement, as amended. Amendment No. 2 provides that the Company, in its sole discretion, may terminate Mr. Loiacono’s employment for any reason without Just Cause (as defined in the employment agreement, as amended) at any time. If (a) the Company terminates Mr. Loiacono’s employment without Just Cause, or (b) within 24 months following a change of control, Mr. Loiacono resigns as a result of and upon a material diminution of his duties, responsibilities, authority, and position, or a material reduction of his compensation and benefits, or if he ceases to hold the position of Chief Financial Officer after a change of control, the Company will, among other things: (l) continue to pay Mr. Loiacono’s base salary for one month for every two months of employment after the effective date up to a maximum of 12 months (as opposed to six months under the original agreement, as amended); and (2) within 45 days of termination or resignation, pay to Mr. Loiacono 100% of the value of any accrued but unpaid bonus. Except as set forth in Amendment No. 2, the original employment agreement, as amended, remains in full force and effect. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements have been prepared using the accounting records of Sysorex, TTM Digital and SGS. All inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of: ● Revenue recognition ● Fair value of digital assets ● Fair value of the Company’s common stock ● Expected useful lives and valuation of long lived-assets ● Fair value of derivative liabilities |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company reviews its long-lived assets, including mining equipment, for impairment whenever events or changes in circumstances indicate the carrying value of an asset or group of assets may not be recoverable. The carrying amount is considered not recoverable if the sum of the undiscounted cash flows to be generated from the use and eventual disposition of the asset group is less than the carrying amount of the asset group. If the carrying amount exceeds the undiscounted cash flows, then the carrying amount is compared to the fair value and an impairment loss is recorded for the difference between the fair value and the carrying amount. For the three and six months ended June 30, 2022, the Company incurred $1.0 million of impairment charges. No impairment charges were identified for long-lived assets during the three and six months ended June 30, 2021. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, the Company satisfies a performance obligation. |
Mining Revenue | Mining Revenue TTM Digital has entered into mining pools with the operators to provide computing power to the mining pool. The Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s contracts with mining pool operators The transaction consideration the Company receives, if any, is non-cash consideration. The transaction price of the Company’s share of the cryptocurrency award is measured at fair value on the date received, which is not materially different than the fair value at the time the Company has earned the award from the mining pool. The consideration is all variable under the definition within ASC 606. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Fair value of the digital asset award received is determined using the quoted price of the related digital asset at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could impact the Company’s Condensed Consolidated financial position and results from operations. |
Hardware and Software Revenue Recognition | Hardware and Software Revenue Recognition SGS is a primary resale channel for a large group of vendors and suppliers, including original equipment manufacturers (“OEMs”), software publishers and wholesale distributors. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of consideration is probable. The Company evaluates the following indicators amongst others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified product or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s products can be delivered to customers in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor or supplier or (iii) via electronic delivery of keys for software licenses. The Company’s shipping terms typically specify F.O.B. destination. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouse. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis. The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement, the Company provides direct warranty to the customer with the Company’s own personnel as the customer requires warranty on the solution and not individual vendor products. This type of warranty is sold integral to the overall solution quoted to the customer. The Company considers these service-type warranties to be performance obligations of the principal from the underlying products that make up a solution and therefore is acting as a principal in the transaction and records revenue on a gross basis over time. |
License and Maintenance Services Revenue Recognition | License and Maintenance Services Revenue Recognition SGS provides a customized design and configuration solution for its customers and in this capacity resells hardware, software and other IT equipment license and maintenance services in exchange for fixed fees. The Company selects the vendors and sells the products and services, including maintenance services, that best fit the customer’s needs. For sales of maintenance services and warranties, the customer obtains control at the point in time that the services to be provided by a third-party vendor are purchased by the customer and therefore the Company’s performance obligation to provide the overall systems solution is satisfied at that time. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer-approved invoice. For resale of services, including maintenance services, warranties, and extended warranties, the Company is acting as an agent as the primary activity for those services are fulfilled by a third party. While the Company may facilitate and act as a first responder for these services, the third-party service providers perform the primary maintenance and warranty services for the customer. Therefore, the Company is not primarily responsible for performing these services and revenue is recorded on a net basis. SGS’s professional services include fixed fee contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. For fixed fee contracts, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Anticipated losses are recognized as soon as they become known. For the three and six months ended June 30, 2022, SGS did not incur any such losses. These amounts are based on known and estimated factors. Revenues from time and material or firm fixed price long-term and short-term contracts are derived principally with various United States government agencies. |
Digital Assets | Digital Assets Digital assets (predominantly Ethereum) are included in current assets in the accompanying Condensed Consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company’s consideration of the consistent daily trading volume on cryptocurrency exchange markets, there are no limitations or restrictions on Company’s ability to sell Ethereum, and the pattern of actual sales of Ethereum by the Company. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. During the three and six months ended June 30, 2022, the Company recorded impairment of $1.2 million and $2.4 million, respectively. The Company did not incur any impairment losses for the three and six months ended June 30, 2021. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying Condensed Consolidated statements of cash flows. The sales of digital assets are included within investing activities in the accompanying Condensed Consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. |
Fair Value | Fair Value The Company follows the accounting guidance under FASB’s ASC 820, Fair Value Measurements for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accrued liabilities, and accounts payable, approximate fair value due to the short-term nature of these instruments. |
Derivative Liabilities | Derivative Liabilities The Company evaluates its convertible instruments, options, warrants, or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, Derivatives and Hedging. The Company evaluates whether the amount of common stock on a as converted basis is in excess of its authorized share total which, if in excess, would result in derivative accounting treatment. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to a liability at the fair value of the instrument on the reclassification date. |
Held for Sale and Discontinued Operations Classification | Held for Sale and Discontinued Operations Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy. An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset shall not be depreciated or amortized while it is classified as held for sale. |
Convertible Debt | Convertible Debt The Company’s debt instruments contain a host liability, freestanding warrants, and an embedded conversion feature. The Company uses the guidance under FASB ASC Topic 815 Derivatives and Hedging (“ASC 815”) to determine if the embedded conversion feature must be bifurcated and separately accounted for as a derivative under ASC 815. It also determines whether any embedded conversion features requiring bifurcation and/or freestanding warrants qualify for any scope exceptions contained within ASC 815. Generally, contracts issued or held by a reporting entity that are both (i) indexed to its own stock, and (ii) classified in shareholders equity, would not be considered a derivative for the purposes of applying ASC 815. Any embedded conversion features and/or freestanding warrants that do not meet the scope exception noted above are classified as derivative liabilities, initially measured at fair value, and remeasured at fair value each reporting period with change in fair value recognized in the Condensed Consolidated statements of operations. Any embedded conversion features and/or freestanding warrants that meet the scope exception under ASC 815 are initially recorded at their relative fair value in paid-in-capital and are not remeasured at fair value in future periods. The host debt instrument is initially recorded at its relative fair value in long-term debt. The host debt instrument is accounted for in accordance with guidance applicable to non-convertible debt under FASB ASC Topic 470 Debt (“ASC 470”) and is accreted to its face value over the term of the debt with accretion expense and periodic interest expense recorded in the unaudited condensed consolidated statements of operations. Issuance costs are allocated to each instrument in the same proportion as the proceeds that are allocated to each instrument. Issuance costs allocated to the debt hosted instrument are netted against the proceeds allocated to the debt host. Issuance costs allocated to freestanding warrants classified in equity are recorded in paid-in-capital. |
Net Loss per Share | Net Loss per Share Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Convertible debt, restricted stock, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the three and six months ended June 30, 2022, and as a result, all potentially dilutive common shares are considered antidilutive for this period. The Company includes potentially issuable shares in the Weighted-average common shares – basic that include warrants and other agreements that are exercisable for little or no consideration without substantive contingencies and others once any contingencies relative to the issuance of the shares is resolved. Computations of basic and diluted weighted average common shares outstanding were as follows for the periods reported: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Weighted-average common shares outstanding 438,012,811 110,063,554 305,731,572 139,087,196 Weighted-average potential common shares considered outstanding 3,000,000 8,004,813 3,000,000 14,009,685 Weighted-average common shares outstanding - basic 441,012,811 118,068,367 308,731,572 153,096,881 Dilutive effect of options, warrants and restricted stock units - - - - Weighted-average common shares outstanding - diluted 441,012,811 118,068,367 308,731,572 153,096,881 Options, restricted stock units, and warrants and convertible debt excluded from the computation of diluted loss per share because the effect of inclusion would be anti-dilutive 1,177,949,083 - 141,166,211 - |
Emerging Growth Company | Emerging Growth Company Sysorex is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). As such, Sysorex is eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended. In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, for complying with new or revised accounting standards, meaning that Sysorex, as an emerging growth company, can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Sysorex has elected to take advantage of this extended transition period, and therefore our financial statements may not be comparable to those of companies that comply with such new or revised accounting standards. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of basic and diluted weighted average common shares outstanding | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Weighted-average common shares outstanding 438,012,811 110,063,554 305,731,572 139,087,196 Weighted-average potential common shares considered outstanding 3,000,000 8,004,813 3,000,000 14,009,685 Weighted-average common shares outstanding - basic 441,012,811 118,068,367 308,731,572 153,096,881 Dilutive effect of options, warrants and restricted stock units - - - - Weighted-average common shares outstanding - diluted 441,012,811 118,068,367 308,731,572 153,096,881 Options, restricted stock units, and warrants and convertible debt excluded from the computation of diluted loss per share because the effect of inclusion would be anti-dilutive 1,177,949,083 - 141,166,211 - |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of balance sheet | June 30, December 31, 2022 2021 Mining equipment and facilities, net $ 7,812 $ 9,682 Investment in Style Hunter 500 500 Total Current Assets $ 8,312 $ 10,182 Total Assets associated with discontinued operations $ 8,312 $ 10,182 |
Schedule of statement of operations | For the For the For the For the Ended Ended Ended Ended 2022 2021 2022 2021 Revenues Mining income $ 1,286 $ 4,234 $ 3,268 $ 6,251 Hosting income 14 - 72 - Total revenues 1,300 4,234 3,340 6,251 Operating costs and expenses Mining cost 402 344 928 475 General and administrative 223 1 479 2 Impairment of fixed assets 961 - 961 - Depreciation 453 1,342 910 1,541 Total operating costs and expenses 2,039 1,687 3,278 2,018 Gain (loss) from Operations (739 ) 2,547 62 4,233 Other Income (Expenses) Interest expense - (46 ) - (45 ) Loss on disposal of fixed assets - - - (7 ) Income (loss) before taxes and equity method investee (739 ) 2,501 62 4,181 Provision for income taxes - - - - Income (loss) before equity method investee (739 ) 2,501 62 4,181 Share of net loss of equity method investee - 60 - 56 Net income (loss) from discontinued operations $ (739 ) $ 2,441 $ 62 $ 4,125 |
Schedule of net cash flows from discontinued operations | For the Six Months 2022 2021 Net cash used in operating activities – discontinued operations (1,191 ) (117 ) Net cash provided by investing activities – discontinued operations - (103 ) Net cash provided by financing activities – discontinued operations - - |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (127 ) $ 933 Customer relationships 1,900 (567 ) 1,333 Total intangible assets $ 2,960 $ (694 ) $ 2,266 Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (74 ) $ 986 Customer relationships 1,900 (333 ) 1,567 Total intangible assets $ 2,960 $ (407 ) $ 2,553 |
Schedule of future amortization expense | Calendar Years Ending December 31, Amount 2022 287 2023 573 2024 573 2025 266 Thereafter 567 Total $ 2,266 |
Credit Risk and Concentrations
Credit Risk and Concentrations (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
Schedule of risk percentage of revenue | For the Six Months Ended For the Six Months Ended $ % $ % Customer A 1,677 20 % 1,254 49 % Customer B 5,765 69 % 492 19 % For the Three Months Ended For the Three Months Ended $ % $ % Customer A 507 15 % 1,254 49 % Customer B 2,181 65 % 492 19 % Customer C -- -- 302 12 % |
Short-term debt (Tables)
Short-term debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | June 30, December 31, 2022 2021 Convertible Debentures & Warrants, including interest payable to the Convertible Debenture Holders (A) $ 16,303 $ 19,439 Revolving Credit Facility (B) 900 - Total Short-Term Debt $ 17,203 $ 19,439 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of the Company's derivative liabilities | Fair value measurement at reporting date using Quoted Significant active markets other Significant for identical observable unobservable Balance assets inputs inputs As of June 30, 2022: Recurring fair value measurements: Derivative Liabilities: Conversion feature derivative liability $ 9,188 $ — $ — $ 9,188 Common stock derivative liability 347 — — 347 Total derivative liabilities $ 9,535 $ — $ — $ 9,535 Total recurring fair value measurements $ 9,535 $ — $ — $ 9,535 As of December 31, 2021 Recurring fair value measurements Derivative liability: Conversion feature derivative liability $ 8,355 $ — $ — $ 8,355 Common stock derivative liability — — — — Total derivative liabilities $ 8,355 $ — $ — $ 8,355 Total recurring fair value measurements $ 8,355 $ — $ — $ 8,355 |
Schedule of fair value of the Company's derivative liabilities | Conversion Common Total Balance as of December 31, 2021 $ 8,355 $ - $ 8,355 Transferred to equity on debt conversion (1,873 ) (5 ) (1,878 ) Transferred from equity on recognition of derivative liability - 314 314 Increase in fair value included in earnings 2,706 38 2,744 Balance as of June 30, 2022 $ 9,188 $ 347 $ 9,535 |
Digital Assets (Tables)
Digital Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Digital Assets [Abstract] | |
Schedule of digital asset activity | Six months ended 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 3,268 6,252 Purchase of mining equipment with digital assets - (1,019 ) Mining pool operating fees (33 ) (66 ) Impairment of digital assets (2,423 ) - Management fees - (322 ) Owners’ distributions - (1,521 ) Proceeds from sale of digital assets (6,955 ) (3,331 ) Transaction fees (112 ) - Realized gain on sale of digital assets 1,271 88 Ending Balance $ 218 $ 105 Three months ended 2022 2021 Opening Balance $ 1,237 $ 14 Revenue from mining 1,286 4,234 Purchases of Mining equipment with digital assets - (1,019 ) Mining pool operating fees (13 ) (45 ) Impairment of digital assets (1,187 ) - Proceeds from sale of digital assets (1,246 ) (3,080 ) Transaction fees (23 ) - Realized gain on sale of digital assets 164 1 Ending Balance $ 218 $ 105 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Stockholders' Equity Note [Abstract] | |
Schedule of stock option activity | Number of Weighted Outstanding, January 1, 2022 1,656,000 $ 2.00 Granted - $ - Exercised - - Forfeited or cancelled - - Outstanding, June 30, 2022 1,656,000 $ 2.00 Exercisable, June 30, 2022 1,656,000 $ 2.00 |
Schedule of warrants | Number of Weighted Outstanding, January 1, 2022 5,926,763 $ * Granted - - Exercised (418,931 ) - Outstanding, June 30, 2022 5,507,832 $ - Number of Weighted Outstanding, January 1, 2022 1,000,000 $ 0.48 Granted - - Vested 700,000 0.40 Unvested, June 30, 2022 300,000 $ 0.67 |
Schedule of share derivative liabilities | June 30, Warrants $ 282 Stock options 58 RSUs vested but unissued 7 Total share derivative liability $ 347 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum operating leases | Calendar Years Ending December 31, Amount 2022 $ 105 2023 214 2024 219 2025 92 Total future lease payments 630 Less: interest expense at incremental borrowing rate (64 ) Net present value of lease liabilities $ 566 |
Schedule of operating leases | Weighted average remaining lease term: 2.92 years Weighted average discount rate used to determine present value of operating lease liability: 8 % |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of prepaid expenses and other current assets | June 30, December 31, Consultants $ 116 $ 565 Rent - 17 Vendor Payments 133 - Insurance 44 162 License and Maintenance Contracts 590 658 Other 1 - $ 884 $ 1,402 |
Nature and Description of Bus_2
Nature and Description of Business (Details) | 6 Months Ended |
Jun. 30, 2022 USD ($) shares | |
Accounting Policies [Abstract] | |
Deposits (in Dollars) | $ | $ 1,600,000 |
Purchase of additional shares | 166,667 |
Business acquisition planned restructuring activities description | The definition of “TTM Assets” was amended and restated to read “(i) all of the Seller Parties’ GPUs and related assets, supporting equipment and software (including software licenses, if any), in each case wherever located, (ii) the Company’s equity interests in Style Hunter, Inc. (excluding options to purchase equity interests), (iii) the real estate comprising the Lockport, NY location, and (iv) any other assets directly or indirectly used in the operation of the Seller Parties’ crypto mining business.” |
Issuance to the seller | 4,697,917 |
Going Concern (Details)
Going Concern (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Going Concern [Abstract] | |
Cash balance | $ 0.4 |
Working capital | 21.7 |
Accumulated deficit | $ 59.3 |
Basis of Presentation (Details)
Basis of Presentation (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of common stock right to receive | 124,218,268 | |
Common stock par value per share | $ 0.00001 | $ 0.00001 |
Percentage of outstanding shares of capital stock | 80% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
Accounting Policies [Abstract] | ||
Impairment charges | $ 1 | |
Impairment chargers | $ 1.2 | $ 2.4 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of basic and diluted weighted average common shares outstanding - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule of basic and diluted weighted average common shares outstanding [Abstract] | ||||
Weighted-average common shares outstanding | 438,012,811 | 110,063,554 | 305,731,572 | 139,087,196 |
Weighted-average potential common shares considered outstanding | 3,000,000 | 8,004,813 | 3,000,000 | 14,009,685 |
Weighted-average common shares outstanding - basic | 441,012,811 | 118,068,367 | 308,731,572 | 153,096,881 |
Dilutive effect of options, warrants and restricted stock units (in Dollars) | ||||
Weighted-average common shares outstanding - diluted | 441,012,811 | 118,068,367 | 308,731,572 | 153,096,881 |
Options, restricted stock units, and warrants and convertible debt excluded from the computation of diluted loss per share because the effect of inclusion would be anti-dilutive | 1,177,949,083 | 141,166,211 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Carrying value of digital assets | $ 10.2 | $ 8.3 |
Impairment charges | $ 1 |
Discontinued Operations (Deta_2
Discontinued Operations (Details) - Schedule of balance sheet - Discontinued Operations [Member] - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Mining equipment and facilities, net | $ 7,812 | $ 9,682 |
Investment in Style Hunter | 500 | 500 |
Total Current Assets | 8,312 | 10,182 |
Total Assets associated with discontinued operations | $ 8,312 | $ 10,182 |
Discontinued Operations (Deta_3
Discontinued Operations (Details) - Schedule of statement of operations - Discontinued Operations [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Income Statements, Captions [Line Items] | |||
Mining income | $ 4,234 | $ 3,268 | $ 6,251 |
Hosting income | 72 | ||
Total revenues | 4,234 | 3,340 | 6,251 |
Operating costs and expenses | |||
Mining cost | 344 | 928 | 475 |
General and administrative | 1 | 479 | 2 |
Impairment of fixed assets | 961 | ||
Depreciation | 1,342 | 910 | 1,541 |
Total operating costs and expenses | 1,687 | 3,278 | 2,018 |
Gain (loss) from Operations | 2,547 | 62 | 4,233 |
Other Income (Expenses) | |||
Interest expense | (46) | (45) | |
Loss on disposal of fixed assets | (7) | ||
Income (loss) before taxes and equity method investee | 2,501 | 62 | 4,181 |
Provision for income taxes | |||
Income (loss) before equity method investee | 2,501 | 62 | 4,181 |
Share of net loss of equity method investee | 60 | 56 | |
Net income (loss) from discontinued operations | $ 2,441 | $ 62 | $ 4,125 |
Discontinued Operations (Deta_4
Discontinued Operations (Details) - Schedule of net cash flows from discontinued operations - Discontinued Operations [Member] - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash used in operating activities – discontinued operations | $ (1,191) | $ (117) |
Net cash provided by investing activities – discontinued operations | (103) | |
Net cash provided by financing activities – discontinued operations |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | $ 2,960 | $ 2,960 |
Accumulated Amortization | (694) | (407) |
Net Carrying Amount | 2,266 | 2,553 |
Trade Names [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 1,060 | 1,060 |
Accumulated Amortization | (127) | (74) |
Net Carrying Amount | 933 | 986 |
Customer Relationships [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 1,900 | 1,900 |
Accumulated Amortization | (567) | (333) |
Net Carrying Amount | $ 1,333 | $ 1,567 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of future amortization expense $ in Thousands | Jun. 30, 2022 USD ($) |
Schedule of future amortization expense [Abstract] | |
2022 | $ 287 |
2023 | 573 |
2024 | 573 |
2025 | 266 |
Thereafter | 567 |
Total | $ 2,266 |
Credit Risk and Concentration_2
Credit Risk and Concentrations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 10% | 10% | ||
Purchases from vendors (in Dollars) | $ 0.2 | $ 0.4 | ||
Consideration exchanged (in Dollars) | $ 14.2 | |||
Cash pain in common stock (in Dollars) | 12 | |||
Cash paid (in Dollars) | $ 2.2 | $ 2.2 | ||
Customers [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 10% | |||
Vendor One [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 53% | 4% | ||
Vendor Two [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 35% | |||
Vendor Three [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 28% | 28% | ||
Vendor Four [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 11% | 11% | ||
TTM Vendor [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Purchases from vendors (in Dollars) | $ 14.2 | |||
Vendor Two [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 35% | |||
Total Purchase [Member] | Vendor One [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 65% | 54% | 53% | |
Purchases from vendors (in Dollars) | $ 1.9 | $ 8.1 | ||
Total Purchase [Member] | Vendor Two [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 20% | 34% | ||
Purchases from vendors (in Dollars) | $ 0.6 | $ 5.1 | $ 0.9 | |
Total Purchase [Member] | Vendor Three [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Purchases from vendors (in Dollars) | $ 0.6 | |||
Customer B [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 12% | |||
Customer B [Member] | Accounts Receivable [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Number of customer | 55% | |||
Accounts Receivable [Member] | Additional Customer [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Number of customer | Three | |||
Additional Customer [Member] | Accounts Receivable [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Number of customer | 45% | |||
Customer A [Member] | ||||
Credit Risk and Concentrations (Details) [Line Items] | ||||
Concentration risk percentage | 56% |
Credit Risk and Concentration_3
Credit Risk and Concentrations (Details) - Schedule of risk percentage of revenue - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Customer A [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Purchases from vendors | $ 507 | $ 1,254 | $ 1,677 | $ 1,254 |
Concentration risk percentage | 15% | 49% | 20% | 49% |
Customer B [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Purchases from vendors | $ 2,181 | $ 492 | $ 5,765 | $ 492 |
Concentration risk percentage | 65% | 19% | 69% | 19% |
Customer C [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Purchases from vendors | $ 302 | |||
Concentration risk percentage | 12% |
Short-term debt (Details)
Short-term debt (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jan. 07, 2022 | Aug. 13, 2021 | Jul. 07, 2021 | Jun. 19, 2020 | Jun. 30, 2022 | Jun. 30, 2022 | |
Short-term debt (Details) [Line Items] | ||||||
Principal amount | $ 15,187,500 | $ 200,000 | ||||
Bearing interest rate | 18% | |||||
Percentage of debentures | 130% | |||||
Conversion of price description | (i) $18.00 and (ii) 80% of the average of the VWAP during the 5 Trading Day period immediately prior to the applicable Conversion Date. The number of Conversion Shares to be issued is determined by dividing the outstanding principal amount of the debenture to be converted by the Conversion Price. The Debentures are subject to mandatory conversion (“Mandatory Conversion”) in the event the Company closes a registered public offering of its Common Stock and receives gross proceeds of not less than $40,000,000 and at the completion of which the Company’s securities are traded on a national exchange (“Qualified Offering”). | |||||
Revaluation loss | $ 1,900,000 | $ 2,700,000 | ||||
Derivative liability | 9,200,000 | 9,200,000 | ||||
Extinguishment loss | 900,000 | (1,400,000) | ||||
Conversion of debt amount | 3,700,000 | |||||
Debentures provide | 50,000 | 50,000 | ||||
Judgement total | 5,942,559.05 | |||||
Principal sum | 3,341,801.8 | |||||
Prejudgment interest | $ 2,600,757.25 | |||||
Non-recourse factoring and security agreement. description | In addition, as a result of the events of default, the exercise price for the Warrant is the lower of: (A) $18.00 and (B) an amount equal to fifty percent (50%) of the average of volume-weighted average price for the common stock of the Company over the five (5) trading days preceding the date of the delivery of the applicable exercise notice or (C) the qualified offering price as defined in the Purchase Agreement. | |||||
Purchase order description | the Company receives 100% financing on purchase orders with 50% of the purchase order amount paid directly to the vendor/supplier and the remaining balance is paid to the vendor once payment is made on the Company’s customer invoice. Purchase order interest rates charged to the Company is calculated from the date funds are advanced on the purchase order to the date the Company’s customer invoice is verified and funded. The financing fees charged are 0.90% for the first 10-day period and 0.90% every 10-day period thereafter. | |||||
Purchase obligation | $ 900,000 | $ 900,000 | ||||
2021 Convertible Debentures & Warrants [Member] | ||||||
Short-term debt (Details) [Line Items] | ||||||
Bearing interest rate | 12.50% | 12.50% | ||||
Aggregate principal amount | $ 9,990,000 | |||||
Shares of common stock (in Shares) | 1,862,279 | 3,534,751 | ||||
Total gross proceeds | $ 3,535,000 | $ 8,880,000 | ||||
Percentage of debentures | 12% | 12.50% | ||||
Agent fees and expenses | $ 354,000 | $ 913,000 | ||||
Maturity date | Aug. 13, 2022 | Jul. 07, 2022 | ||||
Aggregate principal amount | $ 3,976,875 |
Short-term debt (Details) - Sch
Short-term debt (Details) - Schedule of convertible debt - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | |
Schedule of convertible debt [Abstract] | |||
Convertible Debentures & Warrants, including interest payable to the Convertible Debenture Holders | [1] | $ 16,303 | $ 19,439 |
Revolving Credit Facility | [2] | 900 | |
Total Short-Term Debt | $ 17,203 | $ 19,439 | |
[1]On July 7, 2021, the Company consummated the initial closing of a private placement offering (the “Offering”) pursuant to the terms and conditions of a Securities Purchase Agreement for up to $15,187,500 in principal amount (“Original Principal Value”) Convertible Debentures. To manage the administration of the Offering the Company entered into a placement agency agreement with Joseph Gunner & Co. LLC, a U.S. registered broker-dealer (“Placement Agent”). At the initial closing, the Company sold the purchasers (i) 12.5% Original Issue Discount Convertible Debentures (“Debentures”) in an aggregate principal amount of $9,990,000 and (ii) warrants to purchase up to 3,534,751 shares of common stock of the Company. The Company received total gross proceeds of $8,880,000 taking into account the 12.5% discount before deducting placement agent fees and expenses of approximately $913,000. The Debentures mature on July 7, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. On August 13, 2021, the Company consummated the second closing of the offering pursuant to the same terms and conditions of the Securities Purchase Agreement dated July 7, 2021. At the second closing, the Company sold the purchasers (i) 12.5% Original Issue Discount Senior Secured Convertible Debentures in an aggregate principal amount of $3,976,875 and (ii) warrants to purchase up to 1,862,279 shares of common stock of the Company. The Company received a total of $3,535,000 in gross proceeds following the second closing taking into account the 12 % discount before deducting placement agent fees and expenses of approximately $354,000. The Debentures mature on August 13, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. Under the conversion terms of the Debentures, the Debenture is convertible, in whole or in part, into shares of Common Stock at the option of the Holder at any time until the Debenture is no longer outstanding. The Holder executes a conversion by delivering to the Company a Notice of Conversion specifying the principal amount to be converted and the date on which the conversion is to be executed. The Conversion Price is set at the lower of (i) $18.00 and (ii) 80% of the average of the VWAP during the 5 Trading Day period immediately prior to the applicable Conversion Date. The number of Conversion Shares to be issued is determined by dividing the outstanding principal amount of the debenture to be converted by the Conversion Price. The Debentures are subject to mandatory conversion (“Mandatory Conversion”) in the event the Company closes a registered public offering of its Common Stock and receives gross proceeds of not less than $40,000,000 and at the completion of which the Company’s securities are traded on a national exchange (“Qualified Offering”). The Company determined that the conversion feature associated with the convertible debentures should be bifurcated and treated as a separate derivative liability. The Company recorded a revaluation loss of approximately $1.9 million and $2.7 million for the three and six months ended June 30, 2022, for the change in the fair value of the conversion option. As of June 30, 2022, the derivative liability associated with the conversion option was $9.2 million. In addition, during the quarter, the Company recognized an extinguishment loss of approximately $0.9 million and $1.4 million for the three and six months ended June 30, 2022, as a result of the conversion of debt of $3.7 million during the period ended June 30, 2022. Debenture Default The Debentures provide that any monetary judgment filed against the Company for more than $50,000, and if such judgment remains unvacated for a period of 45 calendar days shall constitute an event of default. On December 14, 2021, the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement was entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25. As a result, the Confession of Judgment was deemed to be an event of default under the Debentures although the Company only became aware of the Confession of Judgment on December 14, 2021. On January 7, 2022, the Company received a notice of default (the “Default Notice”) from the Placement Agent stating that the Company defaulted under the Purchase Agreement as a result of: (i) the Company failing to disclose certain material indebtedness of the Company outstanding as of the date of the Purchase Agreement; and (ii) the filing of a judgment relating to such material indebtedness. Due to such events of default, (i) the Debentures are now deemed to have begun bearing interest at the default interest rate of 18% per annum from the date of the issuance of the Debentures; and (ii) the holders of the Debentures are entitled to receive in satisfaction of the amounts owing under the Debentures an amount equal to 130% of the Original Principal Value of the Debentures (“Default Principal Increase”), in accordance with the terms of the Debentures. In addition, as a result of the events of default, the exercise price for the Warrant is the lower of: (A) $18.00 and (B) an amount equal to fifty percent (50%) of the average of volume-weighted average price for the common stock of the Company over the five (5) trading days preceding the date of the delivery of the applicable exercise notice or (C) the qualified offering price as defined in the Purchase Agreement.[2]Non-Recourse Factoring and Security Agreement Effective as June 19, 2020 (the “Effective Date”), the Company and SouthStar Financial, LLC (“SouthStar”) entered into a financing purchase order agreement. Through SouthStar, the Company receives 100% financing on purchase orders with 50% of the purchase order amount paid directly to the vendor/supplier and the remaining balance is paid to the vendor once payment is made on the Company’s customer invoice. Purchase order interest rates charged to the Company is calculated from the date funds are advanced on the purchase order to the date the Company’s customer invoice is verified and funded. The financing fees charged are 0.90% for the first 10-day period and 0.90% every 10-day period thereafter. |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | ||
Change in fair value of debt conversion feature loss | $ 1.9 | $ 2.7 |
Fair Value Measurement (Detai_2
Fair Value Measurement (Details) - Schedule of recurring fair value measurements - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Derivative Liabilities: | ||
Conversion feature derivative liability | $ 9,188 | $ 8,355 |
Common stock derivative liability | 347 | |
Total derivative liabilities | 9,535 | 8,355 |
Total recurring fair value measurements | 9,535 | 8,355 |
Quoted prices in active markets for identical assets (Level 1) [Member] | ||
Derivative Liabilities: | ||
Conversion feature derivative liability | ||
Common stock derivative liability | ||
Total derivative liabilities | ||
Total recurring fair value measurements | ||
Significant other observable inputs (Level 2) [Member] | ||
Derivative Liabilities: | ||
Conversion feature derivative liability | ||
Common stock derivative liability | ||
Total derivative liabilities | ||
Total recurring fair value measurements | ||
Significant unobservable inputs (Level 3) [Member] | ||
Derivative Liabilities: | ||
Conversion feature derivative liability | 9,188 | 8,355 |
Common stock derivative liability | 347 | |
Total derivative liabilities | 9,535 | 8,355 |
Total recurring fair value measurements | $ 9,535 | $ 8,355 |
Fair Value Measurement (Detai_3
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | |
Balance at beginning of year | $ 8,355 |
Transferred to equity on debt conversion | (1,878) |
Transferred from equity on recognition of derivative liability | 314 |
Increase in fair value included in earnings | 2,744 |
Balance at end of year | 9,535 |
Conversion feature derivative liability [Member] | |
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | |
Balance at beginning of year | 8,355 |
Transferred to equity on debt conversion | (1,873) |
Transferred from equity on recognition of derivative liability | |
Increase in fair value included in earnings | 2,706 |
Balance at end of year | 9,188 |
Common stock derivative liability [Member] | |
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | |
Balance at beginning of year | |
Transferred to equity on debt conversion | (5) |
Transferred from equity on recognition of derivative liability | 314 |
Increase in fair value included in earnings | 38 |
Balance at end of year | $ 347 |
Digital Assets (Details) - Sche
Digital Assets (Details) - Schedule of digital asset activity - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Schedule of digital asset activity [Abstract] | ||||
Opening Balance | $ 1,237 | $ 14 | $ 5,202 | $ 24 |
Revenue from mining | 1,286 | 4,234 | 3,268 | 6,252 |
Purchases of Mining equipment with digital assets | (1,019) | (1,019) | ||
Mining pool operating fees | (13) | (45) | (33) | (66) |
Impairment of digital assets | (1,187) | (2,423) | ||
Management fees | (322) | |||
Owners’ distributions | (1,521) | |||
Proceeds from sale of digital assets | (1,246) | (3,080) | (6,955) | (3,331) |
Transaction fees | (23) | (112) | ||
Realized gain on sale of digital assets | 164 | 1 | 1,271 | 88 |
Ending Balance | $ 218 | $ 105 | $ 218 | $ 105 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Equity (Details) [Line Items] | ||
Common stock, shares authorized | 499,560,659 | 499,560,659 |
Common stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock vote, description | one | |
Excess stock, shares authorized | 499,560,659 | |
Excess stock, shares issued | 494,618,990 | |
Excess stock, shares outstanding | 494,543,611 | |
Weighted average contractual term | 4 years 1 month 6 days | |
Warrants granted | 2,038,254 | |
Unrecognized stock compensation (in Dollars) | $ 50 | |
Common Stock [Member] | ||
Equity (Details) [Line Items] | ||
Common stock, shares authorized | 499,560,659 | |
Common stock, par value (in Dollars per share) | $ 0.00001 | |
Preferred Stock [Member] | ||
Equity (Details) [Line Items] | ||
Preferred stock, shares issued | 10,000,000 | |
Preferred stock, par value (in Dollars per share) | $ 0.00001 |
Equity (Details) - Schedule of
Equity (Details) - Schedule of stock option activity | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Schedule of stock option activity [Abstract] | |
Number of Options, Outstanding, Beginning balance | shares | 1,656,000 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 2 |
Number of Options, Granted | shares | |
Weighted Average Exercise Price, Granted | $ / shares | |
Number of Options, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Number of Options, Forfeited or cancelled | shares | |
Weighted Average Exercise Price, Forfeited or cancelled | $ / shares | |
Number of Options, Outstanding, Ending balance | shares | 1,656,000 |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | $ 2 |
Number of Options, Exercisable, Ending balance | shares | 1,656,000 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ / shares | $ 2 |
Equity (Details) - Schedule o_2
Equity (Details) - Schedule of warrants | 6 Months Ended | |
Jun. 30, 2022 $ / shares shares | ||
Schedule of warrants [Abstract] | ||
Number of Warrants, Outstanding beginning balance (in Shares) | shares | 5,926,763 | |
Weighted Average Exercise Price, Outstanding beginning balance | [1] | |
Number of Restricted Stock Shares, Outstanding beginning balance (in Shares) | shares | 1,000,000 | |
Weighted Average Grant Date Fair Value, Outstanding beginning balance | $ 0.48 | |
Weighted Average Exercise Price, Granted | ||
Number of Warrants, Exercised (in Shares) | shares | (418,931) | |
Weighted Average Exercise Price, Exercised | ||
Number of Warrants, Outstanding ending balance (in Shares) | shares | 5,507,832 | |
Weighted Average Exercise Price, Outstanding ending balance | ||
Number of Restricted Stock Shares, Granted (in Shares) | shares | ||
Weighted Average Grant Date Fair Value, Granted | ||
Number of Restricted Stock Shares, Vested (in Shares) | shares | 700,000 | |
Weighted Average Grant Date Fair Value, Vested | $ 0.4 | |
Number of Restricted Stock Shares, Unvested (in Shares) | shares | 300,000 | |
Weighted Average Grant Date Fair Value, Unvested | $ 0.67 | |
[1]The exercise price will be determined by a 5-day VWAP price calculation on the exercise date. |
Equity (Details) - Schedule o_3
Equity (Details) - Schedule of share derivative liabilities | Jun. 30, 2022 shares |
Schedule of share derivative liabilities [Abstract] | |
Warrants | 282 |
Stock options | 58 |
RSUs vested but unissued | 7 |
Total share derivative liability | 347 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 6 Months Ended | |||||||||
Dec. 14, 2021 | Jul. 07, 2021 USD ($) | Aug. 15, 2018 USD ($) | Aug. 10, 2018 USD ($) | Jan. 29, 2018 USD ($) | Jan. 22, 2018 USD ($) | Sep. 05, 2017 USD ($) | Jun. 30, 2022 USD ($) ft² | Jan. 14, 2022 USD ($) | Jan. 13, 2022 USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | ||||||||||
Payment of unpaid invoices | $ 1,800,000 | |||||||||
Accrued liability | $ 200,000 | $ 600,000 | ||||||||
Interest | $ 80,000 | $ 100,000 | ||||||||
Judgment amount | $ 336,000 | |||||||||
Legal fees | $ 20,000 | |||||||||
Accrued liability | $ 200,000 | |||||||||
Principal amount | $ 6,849,423.42 | 3,341,801.8 | ||||||||
Interest rate per annum | 18% | |||||||||
Confession of judgment description | the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement is entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25. | |||||||||
Award excess price | $ 4,200,000 | |||||||||
Settlement amount | $ 1,375,000 | |||||||||
Gain on settlement | 1,500,000 | |||||||||
Convertible debenture principal and interest | $ 15,187,500 | $ 200,000 | ||||||||
Expire date | We lease these premises, which consist of approximately 5,800 square feet, pursuant to a lease that expires on May 31, 2025. | |||||||||
Square feet (in Square Feet) | ft² | 5,800 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of future minimum operating leases $ in Thousands | Jun. 30, 2022 USD ($) |
Schedule of future minimum operating leases [Abstract] | |
2022 | $ 105 |
2023 | 214 |
2024 | 219 |
2025 | 92 |
Total future lease payments | 630 |
Less: interest expense at incremental borrowing rate | (64) |
Net present value of lease liabilities | $ 566 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of operating leases | Jun. 30, 2022 |
Schedule of operating leases [Abstract] | |
Weighted average remaining lease term: | 2 years 11 months 1 day |
Weighted average discount rate used to determine present value of operating lease liability: | 8% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Jan. 15, 2022 | Jan. 13, 2022 | Jun. 21, 2022 | Jan. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |||||||
Hosting contract description | At the signing of the Hosting Contract an estimated 382 data mining rigs were covered at an estimated monthly cost of approximately $21,556 ($260,000 per year). | ||||||
Hosting costs | $ 64,667 | $ 129,334 | |||||
Services agreement description | The initial term of the Services Agreement runs from April 1, 2021, through December 31, 2022, and automatically renews thereafter for successive one (1)-year terms unless either party provides written notice to the other of nonrenewal within sixty (60) days of the expiration of the then current Term. The initiation of the Services Agreement required a one-time payment of $100,000. The monthly base management fee was set to $20.00 per GPU-based Mining System (approximately $20,000 per month), and $6.50 per ASIC-based Mining System. Base management fees are paid in arrears and due within fifteen (15) days of invoice receipt. If, during any calendar month of the Term, CoreWeave operates on average, more than 1,500 Mining Systems on behalf of the Company, the Base Management Fee with respect to the excess Mining Systems above 1,500 is discounted by 40%. For the three and six months ended June 30, 2022, the Company recorded $71,820 and $143,640 in mining costs within discontinued operations on the condensed statement of operations. | ||||||
Consulting agreement, description | Under the terms of the consulting agreement, the Company agreed to total compensation for services of $975,000 which of which $775,000 was paid during the year ended December 31, 2021. | ||||||
Additional payment | $ 200,000 | ||||||
Additional expenses. | $ 167,000 | ||||||
Gross advisory fee | $ 975,000 | ||||||
Fair value of installment payments | $ 25,000 | ||||||
Respective service | $ 125,000 | ||||||
Compensation amount | $ 500,000 | ||||||
Expense | 9,375 | ||||||
Prepaid expense | $ 115,625 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | $ 884 | $ 1,402 |
Consultants [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 116 | 565 |
Rent [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 17 | |
Vendor Payments [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 133 | |
Insurance [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 44 | 162 |
License and Maintenance Contracts [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 590 | 658 |
Other [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | $ 1 |
Subsequent Events (Details)
Subsequent Events (Details) | Aug. 10, 2022 |
Subsequent Event [Member] | |
Subsequent Events (Details) [Line Items] | |
Termination percentage | 100% |