Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 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 | 2,484,426,501 | |
Amendment Flag | false | |
Entity Central Index Key | 0001737372 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
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 | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 141 | $ 659 |
Digital assets, net | 87 | 5,202 |
Accounts receivable, net | 924 | 3,023 |
Prepaid expenses and other current assets | 627 | 1,402 |
Assets held for sale | 7,006 | 10,182 |
Total Current Assets | 8,785 | 20,468 |
Intangible assets, net | 2,123 | 2,553 |
Goodwill | 1,634 | 1,634 |
Pre-funded right- in Ostendo | 1,600 | |
Operating lease right-of-use asset, net | 439 | 558 |
Other assets | 39 | 69 |
Total Assets | 14,620 | 25,282 |
Current Liabilities | ||
Accounts payable | 3,806 | 6,724 |
Accrued liabilities | 1,897 | 2,382 |
Short-term debt | 15,985 | 19,439 |
Conversion feature derivative liability | 7,531 | 8,355 |
Operating lease obligation, current | 212 | 49 |
Common stock derivative liability | 45 | |
Deferred revenue | 918 | 932 |
Total Current Liabilities | 30,394 | 37,881 |
Operating lease obligation - noncurrent | 311 | 509 |
Total Liabilities | 30,705 | 38,390 |
Commitments and Contingencies | ||
Stockholders’ Deficit | ||
Common stock, par value $0.00001 per share, 3,000,000,000 shares authorized; 736,609,855 shares issued as of September 30, 2022, and 145,713,591 shares issued as of December 31, 2021, 736,534,476 shares outstanding as of September 30, 2022, and 145,638,212 shares outstanding as of December 31, 2021 | 6 | 1 |
Treasury stock, at cost, 75,379 shares as of September 30, 2022, and as of December 31, 2021 | ||
Additional paid-in-capital | 44,275 | 36,156 |
Accumulated Deficit | (60,366) | (49,265) |
Total Stockholders’ Deficit | (16,085) | (13,108) |
Total Liabilities and Stockholders’ Deficit | $ 14,620 | $ 25,282 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Sep. 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 | 3,000,000,000 | 3,000,000,000 |
Common stock, shares issued | 736,609,855 | 145,713,591 |
Common stock, shares outstanding | 736,534,476 | 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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues | ||||
Product revenue | $ 2,559 | $ 1,232 | $ 9,977 | $ 2,831 |
Services revenue | 900 | 634 | 2,055 | 1,047 |
Total Revenues | 3,459 | 1,866 | 12,032 | 3,878 |
Operating costs and expenses | ||||
Product cost | 2,302 | 1,141 | 7,006 | 2,532 |
Services cost | 655 | 364 | 1,408 | 606 |
Sales and marketing | 267 | 320 | 928 | 619 |
General and administrative | 1,373 | 3,347 | 6,559 | 7,711 |
Impairment of digital assets | 71 | 325 | 2,494 | 325 |
Management fees | 322 | |||
Depreciation | 3 | |||
Amortization of intangibles | 144 | 143 | 430 | 264 |
Total Operating Costs and Expenses | 4,812 | 5,640 | 18,825 | 12,382 |
Loss from Operations | (1,353) | (3,774) | (6,793) | (8,504) |
Other Income (Expenses) | ||||
Merger charges | (22,004) | |||
Debt Restructuring fee | (2,000) | |||
Interest expense | (717) | (1,297) | (2,455) | (1,280) |
Realized gain on sale of digital assets | 227 | 3 | 1,498 | 91 |
Revaluation of conversion feature derivative liability | 1,147 | (814) | (1,559) | (814) |
Gain (loss) on extinguishment of debt | 436 | (1,008) | ||
Change in fair value of shares issued | 301 | 263 | ||
Other income, net | 17 | 39 | 20 | 11 |
Total Other (Expense) Income | 1,411 | (2,069) | (3,241) | (25,996) |
Income (loss) from continuing operations before income taxes | 58 | (5,843) | (10,034) | (34,500) |
Income tax benefit | ||||
Income (loss) from continuing operations | 58 | (5,843) | (10,034) | (34,500) |
Income (loss) from discontinued operations | (1,129) | 1,143 | (1,067) | 5,268 |
Net Loss | $ (1,071) | $ (4,700) | $ (11,101) | $ (29,232) |
Net income (loss) per share - basic and diluted – continuing operations (in Dollars per share) | $ 0.0001 | $ (0.037) | $ (0.031) | $ (0.262) |
Net income per share – basic and diluted – discontinued operations (in Dollars per share) | $ (0.002) | $ 0.007 | $ (0.003) | $ 0.04 |
Weighted Average Shares Outstanding - basic and diluted (in Shares) | 500,173,946 | 159,448,204 | 318,558,213 | 131,863,780 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Net loss per share - basic and diluted – continuing operations | $ 0.0001 | $ (0.037) | $ (0.031) | $ (0.262) |
Net (loss) income per share – basic and diluted – discontinued operations | $ (0.002) | $ 0.007 | $ (0.003) | $ 0.040 |
Weighted Average Shares Outstanding - basic and diluted (in Shares) | 500,173,946 | 159,448,204 | 318,558,213 | 131,863,780 |
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 | |||||
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 | |||||
Net Income (Loss) | (29,232) | |||||
Balance at Sep. 30, 2021 | $ 1 | 35,435 | (29,368) | 6,068 | ||
Balance (in Shares) at Sep. 30, 2021 | 144,538,212 | 75,379 | ||||
Balance at Mar. 31, 2021 | 539 | 1,075 | 1,614 | |||
Balance (in Shares) at Mar. 31, 2021 | 81,039,900 | |||||
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 | ||||
Convertible debt warrants | 810 | 810 | ||||
Stock-based compensation | 28 | 28 | ||||
Shares issued for services | 494 | 494 | ||||
Shares issued for services (in Shares) | 1,025,000 | |||||
Net Income (Loss) | (4,700) | (4,700) | ||||
Balance at Sep. 30, 2021 | $ 1 | 35,435 | (29,368) | 6,068 | ||
Balance (in Shares) at Sep. 30, 2021 | 144,538,212 | 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 | ||||
Convertible debt conversions | 2,909 | 2,909 | ||||
Convertible debt conversions (in Shares) | 72,717,883 | |||||
Reclassification of equity contracts to liabilities | (314) | (314) | ||||
Professional services | 240 | 240 | ||||
Professional services (in Shares) | 6,000,000 | |||||
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 | ||||
Net Income (Loss) | (11,101) | |||||
Balance at Sep. 30, 2022 | $ 6 | 44,275 | (60,366) | (16,085) | ||
Balance (in Shares) at Sep. 30, 2022 | 736,534,476 | 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 | ||||
Convertible debt conversions | $ 3 | 4,130 | 4,133 | |||
Convertible debt conversions (in Shares) | 257,005,140 | |||||
Issuance of restricted stock | 5 | 5 | ||||
Issuance of restricted stock (in Shares) | 100,000 | |||||
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 | ||||
Convertible debt conversions | $ 2 | 1,038 | 1,040 | |||
Convertible debt conversions (in Shares) | 241,990,865 | |||||
Net Income (Loss) | (1,071) | (1,071) | ||||
Balance at Sep. 30, 2022 | $ 6 | $ 44,275 | $ (60,366) | $ (16,085) | ||
Balance (in Shares) at Sep. 30, 2022 | 736,534,476 | 75,379 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows from Operating Activities | ||
Net loss from continuing operations | $ (10,034) | $ (34,500) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 430 | 264 |
Stock-based compensation expense | 111 | 28 |
Amortization of right of use asset | 119 | |
Amortization of debt discount and debt issuance costs | 1,055 | |
Realized gain on sale of digital assets | (1,498) | (91) |
Loss on extinguishment of debt | 1,008 | |
Change in fair value of debt conversion feature | 1,559 | 814 |
Gain on settlement of vendor liabilities | (1,533) | (38) |
Impairment of digital assets | 2,494 | 325 |
Issuance of shares in exchange for services | 240 | 2,377 |
Merger charges | 22,004 | |
Debt restructuring expense | 2,000 | |
Change in fair value of share derivative liability | (263) | (9) |
Changes in assets and liabilities: | ||
Prepaid assets and other current assets | 805 | (72) |
Accounts receivable and other receivables | 2,099 | 4,010 |
Accounts payable | (1,385) | (3,908) |
Accrued liabilities and other current liabilities | 737 | 442 |
Operating lease liability | (35) | |
Net cash used in operating activities – continuing operations | (5,146) | (5,299) |
Net cash (used in) provided by operating activities – discontinued operations | (1,795) | (500) |
Net cash used in operating activities | (6,941) | (5,799) |
Cash Flows from Investing Activities | ||
Proceeds from sale of digital assets | 8,023 | 3,670 |
Reverse acquisition of Sysorex business | 28 | |
Pre-funded right in Ostendo | (1,600) | |
Net cash provided by investing activities -continuing operations | 6,423 | 3,698 |
Net cash provided by (used in) investing activities – discontinued operations | (603) | |
Net cash provided by investing activities | 6,423 | 3,095 |
Cash Flows from Financing Activities | ||
Repayment of loans | (3,346) | |
Proceeds received for convertible debt | 12,415 | |
Issuance of members’ interests | 100 | |
Cash paid for convertible debt transaction costs | (1,261) | |
Net cash provided by financing activities- continuing operations | 7,908 | |
Net cash used in financing activities – discontinued operations | (1,003) | |
Net cash provided by financing activities | 6,905 | |
Net (decrease) in cash and cash equivalents | (518) | 4,201 |
Cash and cash equivalents at beginning of period | 659 | 67 |
Cash and cash equivalents at end of period | 141 | 4,268 |
Cash paid for: | ||
Interest | 1,009 | 89 |
Income taxes | ||
Supplemental disclosure of noncash investing and financing activities: | ||
Conversion of debt to equity | 8,082 | |
Equipment exchanged for equity | 7,620 | |
Equipment acquired through lease purchase agreement | 2,130 | |
Debt discount attributed to the fair value of warrants | 810 | |
Debt discount attributed to the fair value of the conversion option | 2,077 | |
Settlement of loan with mining equipment | 1,091 | |
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 | 9 Months Ended |
Sep. 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. The Company is headquartered in Virginia. In addition to SGS, the Company has another wholly owned subsidiary, TTM Digital Assets & Technologies, Inc. (“TTM Digital”). TTM Digital is a digital asset technology and mining company that owns and operates specialized cryptocurrency mining processors and was previously focused on the Ethereum blockchain ecosystem. As of September 15, 2022, Ethereum switched from a Proof of Work model to Proof of Stake model. TTM Digital is currently exploring alternative uses and sales opportunities for its Graphics Processing Unit (GPU) assets and datacenter located in Lockport, NY. As discussed in the Heads of Terms agreement below, the Company had been in discussion with a third party to sell its mining assets and certain associated real property (“Assets”). Increase in Authorized Shares On September 22, 2022, the Company’s stockholders voted to approve an amendment to the Articles of Incorporation to increase the total number of authorized shares of the Company’s capital stock from 510,000,000 shares, par value $0.00001 per share, to 3,010,000,000 shares, of which 3,000,000,000 shares will be designated as common stock and 10,000,000 shares will be designated as preferred stock. In addition, the Company’s stockholders also voted to approve an amendment to the Articles of Incorporation to effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors, with any fractional shares being rounded up to the next higher whole share. Heads of Terms Agreement On March 24, 2022, the Company Heads of Terms Ostendo Assets Deposit Subsequent to September 30, 2022, the Company has in good faith worked with Ostendo to ensure all closing terms and closing conditions were mutually agreed upon, however, the parties have not entered into definitive transaction agreements and accordingly, it was determined in November of 2022 that the transaction will not proceed. In November 2022, the Company requested that Ostendo issue, pursuant to the Heads of Terms, shares equal to the initial deposit made by the Company of $1,600,000. |
Going Concern
Going Concern | 9 Months Ended |
Sep. 30, 2022 | |
Going Concern Abstract | |
Going Concern | Note 2 — Going Concern As of September 30, 2022, the Company had an approximate cash balance of $0.1 million, a working capital deficit of approximately $21.6 million, and an accumulated deficit of approximately $60.4 million. On October 18, 2022, the Company completed a $500,000 private placement. However, in light of the Company’s private placement, the aforementioned factors continue to 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 September 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. On September 22, 2022, the shareholders of the Company approved the authorization of 3 billion shares of common stock. Subsequently, the Company’s outstanding shares have been issued and reserved. As disclosed in Note 15, subsequent events, reverse stock split, the Company’s intent is to issue additional shares in the near future. 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, as disclosed in Note 1 – Increase in Authorized shares, the Company will need to further increase its available shares of common stock to settle convertible debt conversions. After considering the plans to alleviate substantial doubt, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. 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, as of September 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. Further, as of September 15, 2022, Ethereum switched from a Proof of Work model to Proof of Stake model and as a result, the Company is no longer mining Ethereum. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 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 nine months ended September 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. As of November 2022, the parties have not entered into definitive transaction agreements and accordingly, the transaction will not proceed. As of September 30, 2022, the Company has performed an assessment and determined that TTM Assets are held for sale and reported as discontinued operations. TTM is exploring future possibilities of hosting client computing, and TTM continues to evaluate all of its options, including the sale of its assets to maximize revenue streams utilizing its current assets. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 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 Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, see the Company’s December 31, 2021, consolidated financial statements included in its 2021 Annual Report 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 nine months ended September 30, 2022, the Company incurred $1.3 million and $2.3 million of impairment charges, respectively, which is included within loss from discontinued operations. No impairment charges were identified for long-lived assets during the three and nine months ended September 30, 2021. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in December, or more frequently if a triggering event occurs between impairment testing dates. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then the Company evaluates goodwill for impairment by reviewing the fair value of the reporting unit versus its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying value, then no further testing is required. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. The Company did not record any impairment of goodwill as of September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021, the total goodwill of approximately $1.6 million relates to the Sysorex Reporting unit. 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. 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 nine months ended September 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted-average common shares outstanding 497,173,946 144,086,582 315,558,213 121,310,970 Weighted-average potential common shares considered outstanding 3,000,000 15,361,622 3,000,000 10,552,810 Weighted-average common shares outstanding - basic 500,173,946 159,448,204 318,558,213 131,863,780 Dilutive effect of options, warrants and restricted stock units - - - - Weighted-average common shares outstanding - diluted 500,173,946 159,448,204 318,558,213 131,863,780 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 1,178,054,958 5,011,083 141,051,170 1,776,036 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 | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | Note 5 — Discontinued Operations The carrying value of the TTM Digital asset disposal group was $7.0 million as of September 30, 2022, and $10.2 million as of December 31, 2021. For the three and nine months ended September 30, 2022, the Company recorded $1.3 million and $2.3 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): September 30, December 31, 2022 2021 Mining equipment and facilities, net $ 6,506 $ 9,682 Investment in Style Hunter 500 500 Total Current Assets $ 7,006 $ 10,182 Total Assets associated with discontinued operations $ 7,006 $ 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 nine months ended September 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 $ 809 $ 2,993 $ 4,077 $ 9,244 Hosting income 24 - 96 - Total revenues 833 2,993 4,173 9,244 Operating costs and expenses Mining cost 457 377 1,385 852 General and administrative 199 10 678 12 Impairment of fixed assets 1,300 - 2,261 - Depreciation - 1,283 910 2,824 Total operating costs and expenses 1,956 1,670 5,234 3,688 Gain (loss) from Operations (1,123 ) 1,323 (1,061 ) 5,556 Other Income (Expenses) Interest expense - (25 ) - (70 ) Loss on disposal of fixed assets (6 ) (131 ) (6 ) (138 ) Income (loss) before taxes and equity method investee (1,129 ) 1,167 (1,067) 5,348 Provision for income taxes - - - - Income (loss) before equity method investee (1,129 ) 1,167 (1,067 ) 5,348 Share of net loss of equity method investee - 24 - 80 Net income (loss) from discontinued operations $ (1,129) $ 1,143 $ (1,067 ) $ 5,268 The following table summarizes the net cash flows from discontinued operations of TTM Digital (in thousands): For the Nine Months 2022 2021 Net cash used in operating activities – discontinued operations $ (1,795 ) $ (500 ) Net cash used in investing activities – discontinued operations - (603 ) Net cash used in financing activities – discontinued operations - (1,003 ) |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 6 — Intangible Assets Intangible assets as of September 30, 2022, consist of the following: Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (152 ) $ 908 Customer relationships 1,900 (685 ) 1,215 Total intangible assets $ 2,960 $ (837 ) $ 2,123 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 144 2023 573 2024 573 2025 266 Thereafter 567 Total $ 2,123 |
Credit Risk and Concentrations
Credit Risk and Concentrations | 9 Months Ended |
Sep. 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 nine months ended September 30, 2022, and 2021 (in thousands of dollars): For the Nine Months Ended For the Period April 15, 2021, through $ % $ % Customer A 7,100 60 % 607 13 % Customer B 2,834 24 % 2,499 55 % 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 September 30, 2022, and 2021 (in thousands of dollars): For the Three Months Ended For the three months ended $ % $ % Customer A 1,335 38 % - - Customer B 1,157 33 % 1,254 63 % Customer C - - 278 14 % As of September 30, 2022, Customer B represented approximately 60% of total accounts receivable. Two other customer represents approximately 36% of total accounts receivable. As of September 30, 2021, Customers B and C represented approximately 39% and 40% of total accounts receivable, respectively. For the nine months ended September 30, 2022, two vendors represented approximately 69% and18% of total purchases. Purchases from these vendors during the nine months ended September 30, 2022, were $6.9 million and $1.8 million respectively. In addition, the Company recorded approximately $1.5 million of settlement gains during the nine months ended September 30, 2022. Please see Note 12 – Contractual Commitments for discussion on the settlement gain. For the three months ended September 30, 2022, four vendors represented approximately 40%, 32%, 11% and 10% of total purchases. Purchases from these vendors during the three months ended September 30, 2022, were $1.2 million $0.9 million, $0.3 million, and $0.3 million respectively. For the period April 15, 2021, through September 30, 2021, three vendors represented approximately 55%, 17% and 10% of total purchases. Purchases from these vendors during the period April 15, 2021, through September 30, 2021, were $1.7 million, $0.5 million and, $0.3 million respectively. For the three months ended September 30, 2021, two vendors represented approximately 57% and 10% of total purchases. Purchases from these vendors during the three months ended September 30, 2021, were $0.9 million, $0.1 million respectively. 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. 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. As of September 15, 2022, Ethereum switched from a proof-of-work model to a proof-of stake model. The Company is no longer be able to mine Ethereum. |
Short-term Debt
Short-term Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Short-term debt | Note 8 — Short-term debt Short-term debt as of September 30, 2022, and December 31, 2021, consisted of the following (in thousands): September 30, December 31, 2022 2021 Convertible Debentures, including interest payable to the Convertible Debenture Holders $ 15,985 $ 19,439 Total Short-Term Debt $ 15,985 $ 19,439 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 matured on July 7, 2022. The Company intends to satisfy the debt through conversions of the debt to equity, and is considering offering incentives to renegotiate the terms of the debentures and refinancing the debt. There is no guarantee that the Company will be able to satisfy its debt with the additional issued common stock. 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 matured on August 13, 2022. The Company intends to satisfy the debt through conversions of the debt to equity and is considering offering incentives to renegotiate the terms of the debentures and refinancing the debt. There is no guarantee that the Company will be able to satisfy its debt with the additional issued common stock. 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 gain of approximately $1.1 million for the three months ended September 30, 2022, and a revaluation loss of approximately $1.6 million for the nine months ended September 30, 2022, for the change in the fair value of the conversion option. As of September 30, 2022, the derivative liability associated with the conversion option was $7.5 million. In addition, the Company recognized a debt extinguishment gain of approximately $0.4 million for the three months ended September 30, 2022, and a loss of approximately $1.0 million for the nine months ended September 30, 2022. as a result of the conversion of debt of $4.7 million during the period ended September 30, 2022. The Company recorded interest expense of approximately $0.6 million and $2.1 million for the three months ended September 30, 2022. The Company recorded interest expense of approximately $0.2 million for the three and nine months ended September 30, 2021. 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. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 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 September 30, 2022, and December 31, 2021 (in thousands): Fair value measurement at reporting date using Quoted prices in Significant active markets other Significant for identical observable unobservable Balance assets inputs inputs As of September 30, 2022: Recurring fair value measurements: Derivative Liabilities: Conversion feature derivative liability $ 7,531 $ - $ - $ 7,531 Common stock derivative liability $ 45 $ - $ - $ 45 Total derivative liabilities $ 7,576 $ - $ - $ 7,576 Total recurring fair value measurements $ 7,576 $ - $ - $ 7,576 As of December 31, 2021 Recurring fair value measurements Derivative liability: Conversion feature derivative liability $ 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 nine months ended September 30, 2022, the Company recorded a gain of approximately $1.1 million and a loss of $1.6 million for the change in fair value of debt conversion feature, respectively. 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 September 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 (2,383 ) (6 ) (2,389 ) Transferred from equity on recognition of derivative liability - 314 314 Increase (Decrease) in fair value included in earnings 1,559 (263 ) 1,296 Balance as of September 30, 2022 $ 7,531 $ 45 $ 7,576 |
Digital Assets
Digital Assets | 9 Months Ended |
Sep. 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: Nine months ended 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 4,077 9,244 Payment of mining equipment under lease to buy arrangement - (1,091 ) Mining pool operating fees (41 ) (96 ) Impairment of digital assets (2,494 ) (325 ) Management fees - (322 ) Owners’ distributions - (1,521 ) Proceeds from sale of digital assets (8,023 ) (3,670 ) Transaction fees (132 ) - Realized gain on sale of digital assets 1,498 91 Ending Balance $ 87 $ 2,334 Three months ended 2022 2021 Opening Balance $ 218 $ 105 Revenue from mining 809 2,993 Payment of mining equipment under lease to buy arrangement - (72 ) Mining pool operating fees (8 ) (31 ) Impairment of digital assets (71 ) (325 ) Proceeds from sale of digital assets (1,068 ) (339 ) Transaction fees (20 ) - Realized gain on sale of digital assets 227 3 Ending Balance $ 87 $ 2,334 |
Equity
Equity | 9 Months Ended |
Sep. 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. On September 22, 2022, the Company’s stockholders voted to approve an amendment to the Articles of Incorporation to increase the total number of authorized shares of the Company’s capital stock from 510,000,000 shares, par value $0.00001 per share, to 3,010,000,000 shares, of which 3,000,000,000 shares will be designated as common stock and 10,000,000 shares will be designated as preferred stock, in accordance with the voting results listed below. As of September 30, 2022, 736,609,855 shares were issued, and 736,534,476 shares were outstanding. No preferred stock has been designated or issued. Stock Options A summary of stock option activity for the nine months ended September 30, 2022, is as follows: Number of Weighted Outstanding, January 1, 2022 1,656,000 $ 2.00 Granted - $ - Exercised - - Forfeited or cancelled - - Outstanding, September 30, 2022 1,656,000 $ 2.00 Exercisable, September 30, 2022 1,656,000 $ 2.00 Warrants The following table represents the activity related to the Company’s warrants during the nine months ended September 30, 2022: Number of Weighted Average Outstanding, January 1, 2022 5,926,763 $ * Granted - - Exercised (418,931 ) - Outstanding, September 30, 2022 5,507,832 $ - The weighted average contractual term as of September 30, 2022, is 3.8 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 3,219,824 warrants through September 30, 2022. The Company has recorded on the condensed consolidated balance sheets, accrued liabilities, approximately $0.2 million of accrued registration rights penalties and interest. * 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 nine months ended September 30, 2022: Number of Weighted Outstanding, January 1, 2022 1,000,000 $ 0.48 Granted - - Vested 1,000,000 0.40 Unvested, September 30, 2022 - $ - As of September 30,2022, there is no unrecognized stock compensation expense. Share Derivative Liabilities As the amount of common stock on an as converted basis as of September 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 September 30, 2022 (dollars in thousands): September 30, Warrants $ 38 Stock options 6 RSUs vested but unissued 1 Total share derivative liability $ 45 Reverse Stock split As discussed in Note 15 Subsequent events – reverse stock split, the Company has included below certain data points that are reported in the financial statements (“as stated”) and have been disclosed herein as if the effect of the reverse stock split (1000 for 1) has been implemented (“proforma effect”). Proforma As stated Effect Balance Sheet Common stock: Shares Issued: 9/30/2022 736,609,855 736,610 9/30/2021 145,713,591 145,714 Shares Outstanding: 9/30/2022 736,534,476 736,534 9/30/2021 145,638,212 145,638 Treasury Stock: 75,379 75 Three months ended September 30, Nine months ended September 30, EPS 2022 2021 2022 2021 Weighted Average Shares Outstanding - basic and diluted As stated 500,173,946 159,448,204 318,558,213 131,863,780 Proforma 573,174 159,448 318,558 131,864 Net income (loss) per share: Continuing operations As stated 0.0001 (0.0370 ) (0.0310 ) (0.2620 ) Proforma 0.1000 (37.00 ) (31.00 ) (262.00 ) Discontinued Operations As stated (0.002 ) 0.0070 (0.0030 ) 0.0400 Proforma (2.00 ) 7.00 (3.00 ) 40.00 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 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 $0.7 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 September 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 $0.09 million calculated based on a default rate and is included as a component of accounts payable and accrued liabilities as of September 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 September 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 September 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 September 30, 2022, future minimum operating leases commitments are as follows: Calendar Years Ending December 31, Amount 2022 $ 52 2023 214 2024 219 2025 92 Total future lease payments 577 Less: interest expense at incremental borrowing rate (54 ) Net present value of lease liabilities $ 523 Other assumptions and pertinent information related to the Company’s accounting for operating leases are: Weighted average remaining lease term: 2.67 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 | 9 Months Ended |
Sep. 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, which 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 nine months ended September 30, 2022, the Company recorded $0 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 nine months ended September 30, 2022, the Company recorded $0 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 expensed this advisory fee during the nine months ended September 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 nine months ended September 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 $93,750 and $103,125 of expense during the three and nine months ended September 30, 2022, which is recorded as consultant fees in general and administrative operating costs in the condensed consolidated statement of operations, and $21,875 of prepaid expense in current assets in the condensed consolidated balance sheets. Employment Agreements 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. On September 9, 2022, the Company entered into Second Amendment to the Employment Agreement for Wayne Wasserberg, the Company’s Chief Executive Officer. The Second Amendment provides a minimum bonus of $100,000 for achievement of the bonus milestone. The bonus milestone is based upon the following: 1. The sale of all or substantially all of the stock or assets of: (i) TTM, or (ii) Sysorex Government Services. 2. The raising of five million dollars in financing by or before December 31, 2022, in one transaction or a series of related transactions. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
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 September 30, 2022, and December 31, 2021: September 30, December 31, Consultants $ 22 $ 565 Rent 18 17 Vendor Payments 39 - Insurance 1 162 License and Maintenance Contracts 545 658 Other 2 - $ 627 $ 1,402 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 — Subsequent Events Private Placement Agreement On October 18, 2022, the Company sold to the Investors an aggregate of 500,000,000 Units, consisting of 500,000,000 shares of common stock, warrant 1s to acquire 500,000,000 shares of common stock, and warrant 2s to acquire 500,000,000 shares of common stock, for total consideration paid to the Company of $500,000. Pursuant to the terms of the SPA, the Company agreed to sell to each Investor a number of Units of securities of the Company (each, a “Unit”), at a purchase price of $0.001 per Unit, with each Unit being comprised of: (i) one share of common stock (each, a “Purchased Share” and collectively, the “Purchased Shares”); (ii) a warrant to acquire one share of common stock at an exercise price of $0.001 per share, which exercise price will not be subject to adjustment as a result of any forward or reverse split of the common stock (each, a “Warrant 1”); and (iii) a warrant to acquire one share of common stock at an exercise price of $0.001 per share, which exercise price will not be subject to adjustment as a result of any forward or reverse split of the common stock (each, a “Warrant 2”). Pursuant to the terms of the SPA, the Company agreed to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days of October 18, 2022 (the “Registration Deadline”). If such registration statement has not become effective by the Registration Deadline, and provided that the Registrable Securities cannot otherwise be sold pursuant to Rule 144 pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the Registration Deadline, then, subject to the provisions of the SPA and the Initial Registration Rights Agreement, the Company agreed to issue to each Investor: (i) A number of additional shares of common stock equal to 10% of the Purchased Shares acquired by such Investor on the closing date, with such number of Purchased Shares being adjusted for any forward or reverse splits of the common stock between the closing date and the date of such issuance (the “Additional Shares”); and (ii) A new warrant (each, a “Warrant 3”) equal to the number of Additional Shares in the applicable issuance. The Additional Shares and the Warrant 3 will, if applicable, be issuable to the Investors for each 30-day period, or portion thereof, that the registration statement registering the Registrable Securities has not become effective by the Registration Deadline. The Company’s obligation to issue the Additional Shares and the Warrant 3, if applicable, will not arise until the Company has amended its articles of incorporation, via a reverse split of the common stock, an increase of the number of authorized shares of common stock, or some combination thereof, such that the Company has a number of authorized but unissued shares of equal to (1) the number of Additional Shares that are otherwise to be issued plus (2) the number of shares of common stock that may be issuable pursuant to the Warrant 3. Equity Transactions Subsequent to September 30, 2022, the Company received notices to convert from its debtholders to convert approximately $1.6 million of debt into approximately 1.2 billion shares of stock. In addition, in accordance with an employment agreement, the Company issued 500,000 shares to an employee. Reverse Stock Split On September 22, 2022, the shareholders of Sysorex, Inc. have approved the Reverse Split and have granted to the Board of Director’s the power to determine the final ratio for the Reverse Split. On November 1, 2022, the Board of Director’s determined the ratio for the Reverse Split is to be 1,000 for 1, with one share of Common Stock being issued for each 1,000 shares of Common Stock issued and outstanding, with any fractional shares of Common Stock resulting therefrom being rounded up to the nearest whole share of Common Stock. The company has submitted the reverse stock split plan for review to FINRA on November 4, 2022. The effective date of the reverse stock will be determined after FINRA’s review. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 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 Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, see the Company’s December 31, 2021, consolidated financial statements included in its 2021 Annual Report |
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 nine months ended September 30, 2022, the Company incurred $1.3 million and $2.3 million of impairment charges, respectively, which is included within loss from discontinued operations. No impairment charges were identified for long-lived assets during the three and nine months ended September 30, 2021. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in December, or more frequently if a triggering event occurs between impairment testing dates. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then the Company evaluates goodwill for impairment by reviewing the fair value of the reporting unit versus its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying value, then no further testing is required. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. The Company did not record any impairment of goodwill as of September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021, the total goodwill of approximately $1.6 million relates to the Sysorex Reporting unit. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in December, or more frequently if a triggering event occurs between impairment testing dates. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then the Company evaluates goodwill for impairment by reviewing the fair value of the reporting unit versus its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying value, then no further testing is required. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches. The Company did not record any impairment of goodwill as of September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021, the total goodwill of approximately $1.6 million relates to the Sysorex Reporting unit. |
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. |
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 nine months ended September 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted-average common shares outstanding 497,173,946 144,086,582 315,558,213 121,310,970 Weighted-average potential common shares considered outstanding 3,000,000 15,361,622 3,000,000 10,552,810 Weighted-average common shares outstanding - basic 500,173,946 159,448,204 318,558,213 131,863,780 Dilutive effect of options, warrants and restricted stock units - - - - Weighted-average common shares outstanding - diluted 500,173,946 159,448,204 318,558,213 131,863,780 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 1,178,054,958 5,011,083 141,051,170 1,776,036 |
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) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of basic and diluted weighted average common shares outstanding | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted-average common shares outstanding 497,173,946 144,086,582 315,558,213 121,310,970 Weighted-average potential common shares considered outstanding 3,000,000 15,361,622 3,000,000 10,552,810 Weighted-average common shares outstanding - basic 500,173,946 159,448,204 318,558,213 131,863,780 Dilutive effect of options, warrants and restricted stock units - - - - Weighted-average common shares outstanding - diluted 500,173,946 159,448,204 318,558,213 131,863,780 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 1,178,054,958 5,011,083 141,051,170 1,776,036 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Discontinued Operations [Abstract] | |
Schedule of balance sheet | September 30, December 31, 2022 2021 Mining equipment and facilities, net $ 6,506 $ 9,682 Investment in Style Hunter 500 500 Total Current Assets $ 7,006 $ 10,182 Total Assets associated with discontinued operations $ 7,006 $ 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 $ 809 $ 2,993 $ 4,077 $ 9,244 Hosting income 24 - 96 - Total revenues 833 2,993 4,173 9,244 Operating costs and expenses Mining cost 457 377 1,385 852 General and administrative 199 10 678 12 Impairment of fixed assets 1,300 - 2,261 - Depreciation - 1,283 910 2,824 Total operating costs and expenses 1,956 1,670 5,234 3,688 Gain (loss) from Operations (1,123 ) 1,323 (1,061 ) 5,556 Other Income (Expenses) Interest expense - (25 ) - (70 ) Loss on disposal of fixed assets (6 ) (131 ) (6 ) (138 ) Income (loss) before taxes and equity method investee (1,129 ) 1,167 (1,067) 5,348 Provision for income taxes - - - - Income (loss) before equity method investee (1,129 ) 1,167 (1,067 ) 5,348 Share of net loss of equity method investee - 24 - 80 Net income (loss) from discontinued operations $ (1,129) $ 1,143 $ (1,067 ) $ 5,268 |
Schedule of net cash flows from discontinued operations | For the Nine Months 2022 2021 Net cash used in operating activities – discontinued operations $ (1,795 ) $ (500 ) Net cash used in investing activities – discontinued operations - (603 ) Net cash used in financing activities – discontinued operations - (1,003 ) |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (152 ) $ 908 Customer relationships 1,900 (685 ) 1,215 Total intangible assets $ 2,960 $ (837 ) $ 2,123 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 144 2023 573 2024 573 2025 266 Thereafter 567 Total $ 2,123 |
Credit Risk and Concentrations
Credit Risk and Concentrations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
Schedule of risk percentage of revenue | For the Nine Months Ended For the Period April 15, 2021, through $ % $ % Customer A 7,100 60 % 607 13 % Customer B 2,834 24 % 2,499 55 % For the Three Months Ended For the three months ended $ % $ % Customer A 1,335 38 % - - Customer B 1,157 33 % 1,254 63 % Customer C - - 278 14 % |
Short-term Debt (Tables)
Short-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | September 30, December 31, 2022 2021 Convertible Debentures, including interest payable to the Convertible Debenture Holders $ 15,985 $ 19,439 Total Short-Term Debt $ 15,985 $ 19,439 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of recurring fair value measurements | Fair value measurement at reporting date using Quoted prices in Significant active markets other Significant for identical observable unobservable Balance assets inputs inputs As of September 30, 2022: Recurring fair value measurements: Derivative Liabilities: Conversion feature derivative liability $ 7,531 $ - $ - $ 7,531 Common stock derivative liability $ 45 $ - $ - $ 45 Total derivative liabilities $ 7,576 $ - $ - $ 7,576 Total recurring fair value measurements $ 7,576 $ - $ - $ 7,576 As of December 31, 2021 Recurring fair value measurements Derivative liability: Conversion feature derivative liability $ 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 (2,383 ) (6 ) (2,389 ) Transferred from equity on recognition of derivative liability - 314 314 Increase (Decrease) in fair value included in earnings 1,559 (263 ) 1,296 Balance as of September 30, 2022 $ 7,531 $ 45 $ 7,576 |
Digital Assets (Tables)
Digital Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Digital Assets [Abstract] | |
Schedule of digital asset activity | Nine months ended 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 4,077 9,244 Payment of mining equipment under lease to buy arrangement - (1,091 ) Mining pool operating fees (41 ) (96 ) Impairment of digital assets (2,494 ) (325 ) Management fees - (322 ) Owners’ distributions - (1,521 ) Proceeds from sale of digital assets (8,023 ) (3,670 ) Transaction fees (132 ) - Realized gain on sale of digital assets 1,498 91 Ending Balance $ 87 $ 2,334 Three months ended 2022 2021 Opening Balance $ 218 $ 105 Revenue from mining 809 2,993 Payment of mining equipment under lease to buy arrangement - (72 ) Mining pool operating fees (8 ) (31 ) Impairment of digital assets (71 ) (325 ) Proceeds from sale of digital assets (1,068 ) (339 ) Transaction fees (20 ) - Realized gain on sale of digital assets 227 3 Ending Balance $ 87 $ 2,334 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 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, September 30, 2022 1,656,000 $ 2.00 Exercisable, September 30, 2022 1,656,000 $ 2.00 |
Schedule of warrants | Number of Weighted Average Outstanding, January 1, 2022 5,926,763 $ * Granted - - Exercised (418,931 ) - Outstanding, September 30, 2022 5,507,832 $ - Number of Weighted Outstanding, January 1, 2022 1,000,000 $ 0.48 Granted - - Vested 1,000,000 0.40 Unvested, September 30, 2022 - $ - |
Schedule of share derivative liabilities | September 30, Warrants $ 38 Stock options 6 RSUs vested but unissued 1 Total share derivative liability $ 45 |
Schedule of reverse stock split balance sheet | Proforma As stated Effect Balance Sheet Common stock: Shares Issued: 9/30/2022 736,609,855 736,610 9/30/2021 145,713,591 145,714 Shares Outstanding: 9/30/2022 736,534,476 736,534 9/30/2021 145,638,212 145,638 Treasury Stock: 75,379 75 |
Schedule of reverse stock split EPS | Three months ended September 30, Nine months ended September 30, EPS 2022 2021 2022 2021 Weighted Average Shares Outstanding - basic and diluted As stated 500,173,946 159,448,204 318,558,213 131,863,780 Proforma 573,174 159,448 318,558 131,864 Net income (loss) per share: Continuing operations As stated 0.0001 (0.0370 ) (0.0310 ) (0.2620 ) Proforma 0.1000 (37.00 ) (31.00 ) (262.00 ) Discontinued Operations As stated (0.002 ) 0.0070 (0.0030 ) 0.0400 Proforma (2.00 ) 7.00 (3.00 ) 40.00 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum operating leases | Calendar Years Ending December 31, Amount 2022 $ 52 2023 214 2024 219 2025 92 Total future lease payments 577 Less: interest expense at incremental borrowing rate (54 ) Net present value of lease liabilities $ 523 |
Schedule of operating leases | Weighted average remaining lease term: 2.67 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) | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | September 30, December 31, Consultants $ 22 $ 565 Rent 18 17 Vendor Payments 39 - Insurance 1 162 License and Maintenance Contracts 545 658 Other 2 - $ 627 $ 1,402 |
Nature and Description of Bus_2
Nature and Description of Business (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 22, 2022 | |
Accounting Policies [Abstract] | ||
Capital stock shares | 1,200,000,000 | 510,000,000 |
Price per share (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Convertible shares | 3,010,000,000 | |
Common stock shares | 3,000,000,000 | |
Preferred stock shares | 10,000,000 | |
Business acquisition planned restructuring activities description | Pursuant to the Heads of Terms, the Company and Ostendo agreed to certain terms related to the Company’s sale of its Ethereum mining assets and certain associated real property (“Assets”) to Ostendo for Ostendo preferred stock. | |
Deposits (in Dollars) | $ 1,600,000 | |
Purchase of additional shares | 166,667 |
Going Concern (Details)
Going Concern (Details) - USD ($) shares in Billions | 1 Months Ended | 9 Months Ended | |
Sep. 22, 2022 | Oct. 18, 2022 | Sep. 30, 2022 | |
Going Concern Abstract | |||
Cash balance | $ 100,000 | ||
Working capital | 21,600,000 | ||
Accumulated deficit | $ 60,400,000 | ||
Private placement | $ 500,000 | ||
Shares of common stock (in Shares) | 3 |
Basis of Presentation (Details)
Basis of Presentation (Details) - $ / shares | 9 Months Ended | |
Sep. 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 | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | |||
Impairment charges | $ 1.3 | $ 2.3 | |
Goodwill | $ 1.6 | $ 1.6 | $ 1.6 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of basic and diluted weighted average common shares outstanding - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Basic And Diluted Weighted Average Common Shares Outstanding Abstract | ||||
Weighted-average common shares outstanding | 497,173,946 | 144,086,582 | 315,558,213 | 121,310,970 |
Weighted-average potential common shares considered outstanding | 3,000,000 | 15,361,622 | 3,000,000 | 10,552,810 |
Weighted-average common shares outstanding - basic | 500,173,946 | 159,448,204 | 318,558,213 | 131,863,780 |
Dilutive effect of options, warrants and restricted stock units | ||||
Weighted-average common shares outstanding - diluted | 500,173,946 | 159,448,204 | 318,558,213 | 131,863,780 |
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 | 1,178,054,958 | 5,011,083 | 141,051,170 | 1,776,036 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Discontinued Operations [Abstract] | |||
Carrying value of digital assets | $ 7 | $ 7 | $ 10.2 |
Impairment charges | $ 1.3 | $ 2.3 |
Discontinued Operations (Deta_2
Discontinued Operations (Details) - Schedule of balance sheet - Discontinued Operations [Member] - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Mining equipment and facilities, net | $ 6,506 | $ 9,682 |
Investment in Style Hunter | 500 | 500 |
Total Current Assets | 7,006 | 10,182 |
Total Assets associated with discontinued operations | $ 7,006 | $ 10,182 |
Discontinued Operations (Deta_3
Discontinued Operations (Details) - Schedule of statement of operations - Discontinued Operations [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues | ||||
Mining income | $ 809 | $ 2,993 | $ 4,077 | $ 9,244 |
Hosting income | 24 | 96 | ||
Total revenues | 833 | 2,993 | 4,173 | 9,244 |
Operating costs and expenses | ||||
Mining cost | 457 | 377 | 1,385 | 852 |
General and administrative | 199 | 10 | 678 | 12 |
Impairment of fixed assets | 1,300 | 2,261 | ||
Depreciation | 1,283 | 910 | 2,824 | |
Total operating costs and expenses | 1,956 | 1,670 | 5,234 | 3,688 |
Gain (loss) from Operations | (1,123) | 1,323 | (1,061) | 5,556 |
Other Income (Expenses) | ||||
Interest expense | (25) | (70) | ||
Loss on disposal of fixed assets | (6) | (131) | (6) | (138) |
Income (loss) before taxes and equity method investee | (1,129) | 1,167 | (1,067) | 5,348 |
Provision for income taxes | ||||
Income (loss) before equity method investee | (1,129) | 1,167 | (1,067) | 5,348 |
Share of net loss of equity method investee | 24 | 80 | ||
Net income (loss) from discontinued operations | $ (1,129) | $ 1,143 | $ (1,067) | $ 5,268 |
Discontinued Operations (Deta_4
Discontinued Operations (Details) - Schedule of net cash flows from discontinued operations - TTM Digital [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash used in operating activities – discontinued operations | $ (1,795) | $ (500) |
Net cash used in investing activities – discontinued operations | (603) | |
Net cash used in financing activities – discontinued operations | $ (1,003) |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | $ 2,960 | $ 2,960 |
Accumulated Amortization | (837) | (407) |
Net Carrying Amount | 2,123 | 2,553 |
Trade name [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 1,060 | 1,060 |
Accumulated Amortization | (152) | (74) |
Net Carrying Amount | 908 | 986 |
Customer relationships [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 1,900 | 1,900 |
Accumulated Amortization | (685) | (333) |
Net Carrying Amount | $ 1,215 | $ 1,567 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of future amortization expense $ in Thousands | Sep. 30, 2022 USD ($) |
Schedule Of Future Amortization Expense Abstract | |
2022 | $ 144 |
2023 | 573 |
2024 | 573 |
2025 | 266 |
Thereafter | 567 |
Total | $ 2,123 |
Credit Risk and Concentration_2
Credit Risk and Concentrations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | |
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 10% | 3% | ||||
Settlement amount (in Dollars) | $ 1.5 | |||||
Vendor One [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 57% | |||||
Purchases from vendors (in Dollars) | $ 0.9 | |||||
Vendor Two [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 10% | |||||
Purchases from vendors (in Dollars) | $ 0.1 | |||||
Other Customer [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 10% | 10% | ||||
Number of customer | 36% | |||||
Total Purchase [Member] | Vendor One [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 40% | 69% | 17% | |||
Purchases from vendors (in Dollars) | $ 1.2 | $ 0.5 | $ 6.9 | |||
Total Purchase [Member] | Vendor Three [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 11% | |||||
Purchases from vendors (in Dollars) | $ 0.3 | $ 1.8 | ||||
Total Purchase [Member] | Vendor Two [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 32% | 10% | ||||
Purchases from vendors (in Dollars) | $ 0.9 | $ 0.3 | ||||
Total Purchase [Member] | Vendor Four [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 10% | |||||
Purchases from vendors (in Dollars) | $ 0.3 | |||||
Customer B [Member] | Accounts Receivable [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 39% | |||||
Number of customer | 60% | |||||
Customers C [Member] | Accounts Receivable [Member] | ||||||
Credit Risk and Concentrations (Details) [Line Items] | ||||||
Concentration risk percentage | 40% |
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 | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | |
Customer A [Member] | |||
Revenue, Major Customer [Line Items] | |||
Purchases from vendors | $ 607 | $ 7,100 | |
Concentration risk percentage | 13% | 60% | |
Customer A [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Purchases from vendors | $ 1,335 | ||
Concentration risk percentage | 38% | ||
Customer B [Member] | |||
Revenue, Major Customer [Line Items] | |||
Purchases from vendors | $ 2,499 | $ 2,834 | |
Concentration risk percentage | 55% | 24% | |
Customer B [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Purchases from vendors | $ 1,157 | $ 1,254 | |
Concentration risk percentage | 33% | 63% | |
Customer C [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Purchases from vendors | $ 278 | ||
Concentration risk percentage | 14% |
Short-term Debt (Details)
Short-term Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Jan. 07, 2022 | Aug. 13, 2021 | Jul. 07, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Short-term Debt (Details) [Line Items] | |||||||
Principal amount | $ 15,187,500 | ||||||
Bearing interest rate | 18% | ||||||
Shares of common stock (in Shares) | 500,000 | 500,000 | |||||
Total gross proceeds | $ 12,415,000 | ||||||
Percentage of debentures | 130% | ||||||
Conversion of price description | 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”). | ||||||
Revaluation loss | $ 1,100,000 | $ 1,600,000 | |||||
Derivative liability | 7,500,000 | 7,500,000 | |||||
Extinguishment loss | 400,000 | 1,000,000 | |||||
Conversion of debt amount | 4,700,000 | ||||||
Interest expense | 600,000 | $ 200,000 | 2,100,000 | ||||
Debentures provide | $ 50,000 | 50,000 | |||||
Judgement total sum | 5,942,559.05 | ||||||
Principal sum | 3,341,801.8 | ||||||
Prejudgment interest | $ 2,600,757.25 | ||||||
Description of exercise price warrant | 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. | ||||||
2021 Convertible Debentures & Warrants [Member] | |||||||
Short-term Debt (Details) [Line Items] | |||||||
Bearing interest rate | 12.50% | 12.50% | |||||
Aggregate principal amount | $ 3,976,875 | $ 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 |
Short-term Debt (Details) - Sch
Short-term Debt (Details) - Schedule of convertible debt - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule Of Convertible Debt Abstract | ||
Convertible Debentures, including interest payable to the Convertible Debenture Holders | $ 15,985 | $ 19,439 |
Total Short-Term Debt | $ 15,985 | $ 19,439 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | ||
Change in fair value of debt conversion feature loss | $ 1.1 | $ 1.6 |
Fair Value Measurement (Detai_2
Fair Value Measurement (Details) - Schedule of recurring fair value measurements - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Derivative Liabilities: | ||
Conversion feature derivative liability | $ 7,531 | $ 8,355 |
Common stock derivative liability | 45 | |
Total derivative liabilities | 7,576 | |
Total recurring fair value measurements | 7,576 | 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 | 7,531 | 8,355 |
Common stock derivative liability | 45 | |
Total derivative liabilities | 7,576 | |
Total recurring fair value measurements | $ 7,576 | $ 8,355 |
Fair Value Measurement (Detai_3
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities $ in Thousands | 9 Months Ended |
Sep. 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 | (2,389) |
Transferred from equity on recognition of derivative liability | 314 |
Increase (Decrease) in fair value included in earnings | 1,296 |
Balance at end of year | 7,576 |
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 | (2,383) |
Transferred from equity on recognition of derivative liability | |
Increase (Decrease) in fair value included in earnings | 1,559 |
Balance at end of year | 7,531 |
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 | (6) |
Transferred from equity on recognition of derivative liability | 314 |
Increase (Decrease) in fair value included in earnings | (263) |
Balance at end of year | $ 45 |
Digital Assets (Details) - Sche
Digital Assets (Details) - Schedule of digital asset activity - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Schedule Of Digital Asset Activity Abstract | ||||
Opening Balance | $ 218 | $ 105 | $ 5,202 | $ 24 |
Revenue from mining | 809 | 2,993 | 4,077 | 9,244 |
Payment of mining equipment under lease to buy arrangement | (72) | (1,091) | ||
Mining pool operating fees | (8) | (31) | (41) | (96) |
Impairment of digital assets | (71) | (325) | (2,494) | (325) |
Management fees | (322) | |||
Owners’ distributions | (1,521) | |||
Proceeds from sale of digital assets | (1,068) | (339) | (8,023) | (3,670) |
Transaction fees | (20) | (132) | ||
Realized gain on sale of digital assets | 227 | 3 | 1,498 | 91 |
Ending Balance | $ 87 | $ 2,334 | $ 87 | $ 2,334 |
Equity (Details)
Equity (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Stockholders' Equity Note [Abstract] | ||
Capital stock conversion description | On September 22, 2022, the Company’s stockholders voted to approve an amendment to the Articles of Incorporation to increase the total number of authorized shares of the Company’s capital stock from 510,000,000 shares, par value $0.00001 per share, to 3,010,000,000 shares, of which 3,000,000,000 shares will be designated as common stock and 10,000,000 shares will be designated as preferred stock, in accordance with the voting results listed below. | |
Common stock, shares issued | 736,609,855 | 145,713,591 |
Common stock, shares outstanding | 736,534,476 | 145,638,212 |
Weighted average contractual term | 3 years 9 months 18 days | |
Warrants granted | 3,219,824 | |
Accrued liabilities (in Dollars) | $ 0.2 |
Equity (Details) - Schedule of
Equity (Details) - Schedule of stock option activity | 9 Months Ended |
Sep. 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 | 9 Months Ended | |
Sep. 30, 2022 $ / shares shares | ||
Schedule Of Warrants Abstract | ||
Number of Warrants, Outstanding beginning balance | shares | 5,926,763 | |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | [1] | |
Number of Restricted Stock Shares, Outstanding beginning balance | shares | 1,000,000 | |
Weighted Average Grant Date Fair Value, Outstanding beginning balance | $ / shares | $ 0.48 | |
Number of Warrants, Granted | shares | ||
Weighted Average Exercise Price, Granted | $ / shares | ||
Number of Warrants, Exercised | shares | (418,931) | |
Weighted Average Exercise Price, Exercised | $ / shares | ||
Number of Warrants, Outstanding ending balance | shares | 5,507,832 | |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | ||
Number of Restricted Stock Shares, Granted | shares | ||
Weighted Average Grant Date Fair Value, Granted | $ / shares | ||
Number of Restricted Stock Shares, Vested | shares | 1,000,000 | |
Weighted Average Grant Date Fair Value, Vested | $ / shares | $ 0.4 | |
Number of Restricted Stock Shares, Unvested | shares | ||
Weighted Average Grant Date Fair Value, Unvested | $ / shares | ||
[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 | Sep. 30, 2022 shares |
Schedule Of Share Derivative Liabilities Abstract | |
Warrants | 38 |
Stock options | 6 |
RSUs vested but unissued | 1 |
Total share derivative liability | 45 |
Equity (Details) - Schedule o_4
Equity (Details) - Schedule of reverse stock split balance sheet - shares | Sep. 30, 2022 | Sep. 30, 2021 |
As stated [Member] | ||
Equity (Details) - Schedule of reverse stock split balance sheet [Line Items] | ||
Common stock Shares Issued | 736,609,855 | 145,713,591 |
Common stock Shares Outstanding | 736,534,476 | 145,638,212 |
Treasury Stock | 75,379 | |
Proforma Effect [Member] | ||
Equity (Details) - Schedule of reverse stock split balance sheet [Line Items] | ||
Common stock Shares Issued | 736,610 | 145,714 |
Common stock Shares Outstanding | 736,534 | 145,638 |
Treasury Stock | 75 |
Equity (Details) - Schedule o_5
Equity (Details) - Schedule of reverse stock split EPS - EPS [Member] - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Equity (Details) - Schedule of reverse stock split EPS [Line Items] | ||||
Outstanding - basic and diluted (in Shares) | 500,173,946 | 159,448,204 | 318,558,213 | 131,863,780 |
Net income (loss) per share: | ||||
Continuing operations | $ 0.0001 | $ (0.037) | $ (0.031) | $ (0.262) |
Continuing operations Proforma | 0.1 | (37) | (31) | (262) |
Discontinued Operations | (0.002) | 0.007 | (0.003) | 0.04 |
Discontinued Operations Proforma | $ (2) | $ 7 | $ (3) | $ 40 |
Equity (Details) - Schedule o_6
Equity (Details) - Schedule of reverse stock split EPS (Parentheticals) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
EPS [Member] | ||||
Equity (Details) - Schedule of reverse stock split EPS (Parentheticals) [Line Items] | ||||
Weighted Average Shares Outstanding - diluted Proforma | 573,174 | 159,448 | 373,247 | 131,864 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 9 Months Ended | |||||||
Dec. 14, 2021 | Dec. 08, 2021 ft² | Aug. 15, 2018 USD ($) | Jan. 22, 2018 USD ($) | Sep. 05, 2017 USD ($) | Sep. 30, 2022 USD ($) | Jan. 14, 2022 USD ($) | Jan. 13, 2022 USD ($) | |
Commitments and Contingencies (Details) [Line Items] | ||||||||
Payment of unpaid invoices | $ 1,800,000 | |||||||
Accrued liability | $ 200,000 | |||||||
Interest | 90,000 | |||||||
Judgment amount | $ 336,000 | |||||||
Legal fees | $ 20,000 | |||||||
Accrued liability | 200,000 | |||||||
Principal amount | $ 3,341,801.8 | |||||||
Interest rate per annum | 18% | |||||||
Confession of judgment description | 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. | |||||||
Award excess price | $ 4,200,000 | |||||||
Settlement amount | $ 1,375,000 | |||||||
Gain on settlement | 1,500,000 | |||||||
Convertible debenture principal and interest | 200,000 | |||||||
Square feet (in Square Feet) | ft² | 5,800 | |||||||
Expire date | May 31, 2025 | |||||||
Contractual Commitments [Member] | ||||||||
Commitments and Contingencies (Details) [Line Items] | ||||||||
Accrued liability | 700,000 | |||||||
Interest | $ 100,000 | |||||||
Tech Data [Member] | ||||||||
Commitments and Contingencies (Details) [Line Items] | ||||||||
Principal amount | $ 6,849,423.42 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of future minimum operating leases $ in Thousands | Sep. 30, 2022 USD ($) |
Schedule Of Future Minimum Operating Leases Abstract | |
2022 | $ 52 |
2023 | 214 |
2024 | 219 |
2025 | 92 |
Total future lease payments | 577 |
Less: interest expense at incremental borrowing rate | (54) |
Net present value of lease liabilities | $ 523 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of operating leases | Sep. 30, 2022 |
Schedule Of Operating Leases Abstract | |
Weighted average remaining lease term: | 2 years 8 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 | 9 Months Ended | ||||
Jan. 13, 2022 | Jun. 21, 2022 | Jan. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
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 | $ 0 | $ 129,334 | ||||||
Services agreement description | 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 nine months ended September 30, 2022, the Company recorded $0 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 | |||||||
Gross advisory fee | $ 975,000 | |||||||
Fair value of installment payments | $ 25,000 | |||||||
Respective service | $ 125,000 | |||||||
Compensation amount | $ 500,000 | |||||||
Expense | $ 93,750 | $ 103,125 | ||||||
Prepaid expense | $ 21,875 | |||||||
Accrued but unpaid bonus | 100% | |||||||
Minimum achievement bonus | $ 100,000 | |||||||
Financing amount | $ 5,000,000 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets - USD ($) $ in Thousands | Sep. 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 assets | $ 627 | $ 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 assets | 22 | 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 assets | 18 | 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 assets | 39 | |
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 assets | 1 | 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 assets | 545 | 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 assets | $ 2 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Sep. 22, 2022 | Oct. 18, 2022 | Sep. 30, 2022 | |
Subsequent Events (Details) [Line Items] | |||
Percentage of purchased shares | 10% | ||
Debt | $ 1.6 | ||
Sale of stock | 510,000,000 | 1,200,000,000 | |
Shares to an employee | 500,000 | ||
Reverse stock split, description | On September 22, 2022, the shareholders of Sysorex, Inc. have approved the Reverse Split and have granted to the Board of Director’s the power to determine the final ratio for the Reverse Split. On November 1, 2022, the Board of Director’s determined the ratio for the Reverse Split is to be 1,000 for 1, with one share of Common Stock being issued for each 1,000 shares of Common Stock issued and outstanding, with any fractional shares of Common Stock resulting therefrom being rounded up to the nearest whole share of Common Stock. The company has submitted the reverse stock split plan for review to FINRA on November 4, 2022. The effective date of the reverse stock will be determined after FINRA’s review. | ||
Subsequent Event [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Private placement agreement description | the Company sold to the Investors an aggregate of 500,000,000 Units, consisting of 500,000,000 shares of common stock, warrant 1s to acquire 500,000,000 shares of common stock, and warrant 2s to acquire 500,000,000 shares of common stock, for total consideration paid to the Company of $500,000. Pursuant to the terms of the SPA, the Company agreed to sell to each Investor a number of Units of securities of the Company (each, a “Unit”), at a purchase price of $0.001 per Unit, with each Unit being comprised of: (i) one share of common stock (each, a “Purchased Share” and collectively, the “Purchased Shares”); (ii) a warrant to acquire one share of common stock at an exercise price of $0.001 per share, which exercise price will not be subject to adjustment as a result of any forward or reverse split of the common stock (each, a “Warrant 1”); and (iii) a warrant to acquire one share of common stock at an exercise price of $0.001 per share, which exercise price will not be subject to adjustment as a result of any forward or reverse split of the common stock (each, a “Warrant 2”). |